Hello, and welcome to today’s Pearson 2016 Interim Results Presentation. And throughout this, all participants will be in listen-only mode, and afterwards, there will be a question-and-answer session. And just to remind you, this call is being recorded. And today I’m pleased to present John Fallon, Chief Executive Officer; and Coram Williams, Chief Financial Officer. Gentlemen, over to you.

Well, good morning, everybody. Thank you for taking the time to join us on a busy day at the end of a busy week. I know you’ve a lot else to do today, so we’ll crack on with the presentation as quickly as we can and leave plenty of time to answer all your questions. I’m John Fallon, and I’m here, as you heard, with Coram Williams, our CFO. Key headlines, I think from this morning are that, we are making good progress in implementing the growth and simplification plans that will get us to £800 million or more of operating profit by 2018. So far this year, our markets, our competitive performance, and our trading are overall tracking in line with the expectations we set for 2016. As usual, trading in Q3 and Q4 will be all important in determining where we land the year. While we have some visibility, we don’t have the full picture on important variables like, for example, Fall enrolments. And consistent with the approach we laid out in January, Coram, myself and the executive team have done a vigorous bottom-up analysis of all of the risks and opportunities that we can see. And, based on everything that we can see, we are confident that we will deliver within our guidance range. And, if current exchange rates persist, that range obviously will be higher than it was a few months ago, due to the current weakness that we’re seeing in sterling. As Coram will report in more detail, the decline in sales year-to-date is due to three factors, all of which are heavily weighted to the first-half: the loss of U.S. school assessment contracts last year; the impact of regulatory changes on the take-up of UK vocational qualifications; and the phasing of sales and returns…

Thank you, John, and good morning, everyone. As John has already said, with some ups and downs, as you’d expect, we’ve had a decent start to the year. As a result, we are on track to land in our guidance range of £580 million to £620 million of operating profit, and 50p to 55p of earnings per share. That’s all based on December 31, 2015 exchange rates. I’ll start with an overview of first-half performance, and then I’ll talk in a little bit more detail on three specific areas. Firstly, our simplification plan; secondly, our strong pension funding position; and thirdly, the impact of currency on our P&L and balance sheet. Here I’ve repeated the key assumptions behind the guidance that we gave you in February. As we’ve said in our Q1 trading update, the impact of many of the negative factors in this guidance is weighted towards the first-half, whereas the more positive factors are weighted towards the second-half. In particular, the lion share of H1 sales decline was driven by two key factors. Firstly, U.S. testing contract losses; and secondly, UK vocational assessment registration declines. We’ve got good visibility that the impact of both of these is heavily weighted to the first-half, given the timing of revenue recognition in the assessment businesses. Approximately 80% of the estimated full-year impact of these revenue declines was booked in H1. In addition, the phasing of gross sales and returns in U.S. Higher Education courseware had an impact on the first-half results. Gross sales were down as the timing of key loose-leaf programs related to the REVEL ramp-up last year moved out of June and into H2. Meanwhile, returns were up. For context, this is only about $25 million, as physical retailers took a more cautious view on stock levels than last…

Thanks, Coram. You may remember this slide, which we used back in February to set out these milestones against which we can all track our progress over the next few years, so this is my first interim report on them and we are making good progress. We are, as you’ve heard on track to make our guidance for 2016, which is the first step towards our 2018 goal. We are making good progress on the big program of work underway to simplify the company and return it to growth. Our competitive performance remains good, despite this very significant program of internal change. If you’ve seen our recent efficacy and impact reports, you’ll know that we are making decent progress on this front too. Our efficacy studies are giving us better data to innovate and also providing crucial evidence for educators that in turn instills both confidence in our products and gives them the encouragement to accelerate the shift to digital. And this work, along with the successful launch of our new brand helps our reputation and supports the future growth of the company, and we are making good progress on strategy too. A big part of the simplification and growth agenda is to ensure that we really focus everything Pearson does on what we’re best at, and simply put, it is this. It’s about world-class content and assessment powered by technology and service, leading to more effective teaching and more personalized learning at scale. It means new digital services, such as the ones I’ve talked about earlier that enable our customers increasingly our partners to scale online reaching more people and ensuring better outcomes. And those of you who joined us at our Investor Day in June heard some of what that means in practice. Digital presents risks and transitions for us to mitigate and manage and we have clear plans in place to do that. But digital actually creates much larger opportunities over time for Pearson to play a bigger role in education through delivering online degrees, for example, and by helping our customers to make education more efficient and more effective and the strategy is all about doing that at scale right across Pearson. So, our progress in the last six months gives us confidence in our 2016 guidance whilst, of course, remembering that the next two quarters are all important. And we’ve demonstrated real progress in implementing our growth and simplification plan, getting Pearson to £800 million or more in operating profit by 2018. As we deliver on our commitment, improving productivity and student outcomes, we will have a larger market opportunity, a sharper focus, and stronger financial returns. And with that, Coram and I will be very happy to take your questions. So, back to you, Hugh.

Thank you, John. [Operator Instructions] Our first question is over the line of Sami Kassab at Exane. Please go ahead, sir. Your line is open.

Good morning, gentlemenits Sami at Exane. I have two or three questions. The first one, can you confirm that you guided for Group organic revenue growth to be flat in H2 this year, please? Secondly, can you elaborate a bit more on the issues with returns in higher ed in North America? We had the issue last year. I thought, perhaps wrongly so, that we would have a positive impact perhaps this year. And now you’re saying that retailers are returning more text books. Can you please elaborate a bit on that? And that’s it, thank you.

Okay. Thanks, Sami. Coram, do you want to take both of those?

Sure, of course. Hi, Sami.

Hi, Coram.

I can confirm that we did say that the second-half needs to be flat on last year for us to land in the guidance range. So that’s what we are working towards. Obviously, there are some ups and downs in that, as we’ve described. In terms of returns in North America, I think it is important to differentiate between what happened last year and what we are seeing this year. Last year was a very specific single retailer going through a fairly dramatic change of strategy and indeed, change of management, which meant that following a high stock availability strategy in 2014 and 2015, they abruptly reverse that and sent a significant amount of product back to us. I think what we’re seeing this year is really a reaction to something that caught the whole of the industry out in the second part of last year, which is that we all overestimated the level of enrollment growth, because we all underestimated the speed at which unemployment would continue to improve. And so, I think what we’re seeing in the first-half of this year is really caution in terms of stock levels, because people don’t wish to get caught out in the way that perhaps they were at the end of last year and beginning of this year. It’s really a hangover from that enrollment surprise we had.

But that, Coram, just to add to that, Sami’s assumption about lower returns is correct in terms of the second-half of the year.

Yes. So that’s a very good point. And, Sami, I did mention in my script that in the second-half of the year we do think returns will be just slightly lower than we saw in the second-half of last year, reflecting how exceptional we think that single retailer return was in the second-half of last year.

Okay?

Thank you, gentlemen. Yes, thank you.

I’m sorry.

We are now over the line of Nick Dempsey, Barclays. Please go ahead, Nick. Your line is open.

Yes, good morning, guys. I’ve got three questions. So, just to start flogging that horse a bit more, in terms of US higher ed. I guess you are suggesting the weakness from the bookstores in June means you won’t see such painful returns in Q3. Is it not possible that the bookstores are just reflecting lower student demand from wherever that comes from, whether it’s enrollments or whether more people are renting more people secondhand books. And therefore, what you are seeing here is the start of student demand overall being a bit less than you might predict, or, at least, what gives you confidence that it isn’t that one? And my second question, UK driving theory contract, that was quite complicated. I think you’ve still got it now. When you set your guidance, did you think you were going to lose it and does that move the needle in anyway? And third question, just on the Penguin-related pension payment in 2017. I wasn’t aware of that. Is that of reasonable size, do we need to be factoring that in to cash flow?

Coram, do you want to pick up on those?

Yes. I’ll take all three of those. So in terms of the returns, as you’d expect, we are staying very close to our retailers on this. And what they are telling us is that, they are being cautious, both in terms of stock levels and in terms of their ordering patterns, because they don’t want to get caught out in the way that a number of us were at the end of last year. They are not reporting any fundamental change in underlying student demand. And I think what we are seeing is exactly what we laid out at the Investor Day a couple of weeks ago, whereby there are some mild negatives in the shape of secondary and OER, which are offset by institutional selling in the digital shift. And that that leads to biggest single driver of growth in this market as unemployment driving enrolments. So we don’t see that there is any significant change in that analysis. We think this is a channel shift and a channel adjustment caused by the surprise on enrolments in the back-end of last year. In terms of the DVSA, we are very pleased to have that contract extended. It’s a great contract and it’s testimony to the VUE team that they’ve done that. To be clear, in the context of the Pearson Group as a whole, the profit is not material, so it does not change our guidance. On pensions, actually, this relates to a deal that was struck when Penguin Random House joint venture was formed. It relates to the Section 75 liabilities – pension liabilities for Penguin. And it is actually flagged in our annual report. Just to be clear, it is not a payment that is contingent on a transaction. This is a payment that we have to make in the middle of 2017, regardless of whether we are holders or sellers of the business. I can’t put an exact figure on it, because given the current volatility in FX and other assumptions. But what I would say is, it will be roughly twice the size of the FT contribution that we made, and obviously, that would be a non-operating cash flow item.

So, I mean, just to, sort of, perhaps, at the risk of flogging the dead horse a bit further, I think, Coram, just to sort of confirm was saying that we think the – what’s happening in the channel is understandable cautionary hangover from last year. And the detailed guidance we set out in the investor seminar that says, we expect the higher ed courseware market to sort of average 0% to 2% growth over the next three years is still very much where we are.

Yes, exactly.

Where we are at. And, Nick, I think you heard me say right at the front, inevitably in a business of this size, some things are going a little better, some things a little worse. The DVA theory test is one of those things that are going a little better.

Sorry, just a quick follow up, Coram. Can you remind us what the FT pension contribution was? We could all go and look it up, but it would be helpful on a busy day.

No problem, £90 million.

Brilliant, thanks.

Okay.

Okay. Now we are now over to Tom Singlehurst at Citi. Please go ahead.

Yes, good morning. It’s Tom Singlehurst from Citigroup. So I had a couple of questions. One was on the testing business, again, in particular the Tennessee contract. Can you – is it possible to quantify that? And also, I mean, it appears like it’s a sort of one-year emergency contract, what’s the sort of timeline on finding out whether that’s going to be a sort of proper win back rather than a short-term infill? And then the second one, just in terms of the trend on working capital, I noticed in the slides you didn’t include a working capital as a percentage of sales chart, at least, I don’t think you did. So, I was just wondering whether you could just talk about that in terms of the longer-term trend, whether there is any potential efficiencies that could be extracted there? Thank you.

Okay. Hello, Tom, and I’ll deal with Tennessee. So Tennessee is a one-year emergency contract. We don’t expect it to carry on into next year. But as I flagged, we have renewed and rolled over the Florida contract and we’re feeling more optimistic on a number of other contracts that we have in flight as well. And so, I think one of the things that’s actually quite encouraging is, whereas this time last year we were having to report on a number of contracts lost. This year we’ll be able to give a more positive sense of contracts renewed and retained. And I think what Tennessee is – what you will see more generally is that, competitors and peers in the industry looking to Pearson for the scale and operational expertise we can bring in helping them as a subcontractor in other ways to deliver, which is an important part of our strategy going forward. And, Coram, do you want to pick up on the working capital to sales point?

Yes, sure. And, Tom, you are right. We didn’t include it in the deck this time just because I’m trying to be efficient in terms of the slides that we do show. You can see on the balance sheet page and on the cash flow pages that there are – there was actually a much smaller movement in working capital in the first-half of this year than the first-half of last year. And that’s really, because – primarily because of the reinstatement of the annual incentive provision, so that has helped. If we were to do it as a percentage of sales, then it would be up a couple of points. And the reason for that would be, obviously, we’ve got the phasing effect of the sales declines coming through and you’ve also got return – a small increase in returns, I quantified it as about $25 million. So that would mean that the working capital to sales ratio would have risen a little bit in the first-half. And I do think that’s a temporary phenomenon. I think you’ve seen we’ve got a real track record of bringing that ratio down over time. It moves about a little bit between the periods, but it’s primarily driven by the benefits of digital in terms of faster cash collection and lower inventory levels. So I think you will see a return to trend in the near future.

Perfect. Thank you.

Thanks, Tom.

We are now over to Chris Collett at Deutsche Bank. Please go ahead.

Good morning. It’s Chris at Deutsche. I just had a couple of questions. One was, can I just confirm that you said that you expected the U.S. Higher Education courseware, is that, you are expecting it to be down for this year? I think you said you were expecting gross sales to be down, but returns to be better, or that you’re expecting the two of those to net out? The second question was just, given some of the moving parts on currency and so forth. Could you just help us where you expect net debt to finish the year end at current exchange rates and based your guidance? And then just lastly, your £800-plus for – target for 2018, where does that stand or where would that stand at current exchange rates? Thanks.

Okay. Coram, I think those are all for you.

They are, yes. Good morning, Chris. And so you did hear right, we have said that we think that gross sales in our higher ed business will be down just slightly in the second-half. And I think that reflects what we’re hearing [Audio Gap] ]from our retailers and the caution that they and we are approaching this with. And then on returns, they were up slightly in the first-half of the year, up by about $25 million. And we said they will be slightly lower in the second-half than the elevated levels that we saw in H2, 2015. So net-net you can assume that that means the returns across the year will be broadly level. But obviously with the gross sales line that’s down slightly, that means our higher ed business will be down slightly. And there are some puts and takes in the numbers. There are some other areas that are up, and as a result, what we are guiding to for the second-half is that, we think we’ll be flat. In terms of currency, it’s had a £300 million adverse effect on net debt, so we are standing at about £1.4 billion. And in the – obviously, the second-half is a cash inflow, it’s a substantial cash inflow. But we also have some cash restructuring costs to go out in the second-half, because they are lagged after the P&L effect. And so, I don’t want to give a precise number, because it does move around, there are plenty of variables. But if you were to take a couple of hundred – £200 million to £300 million off the current level that we’ve got and assume that FX rates were to stay where they are now, that would get you to roughly the right place. On the £800 million – on the FX impact, we said that the impact this year is 4p. That’s across a basket of currencies. So, obviously, that is a – that’s basically seven-month effect on the average rate. So there would be a little bit more in a full-year and a little bit more, because the profit number has risen. I don’t want to quantify that, because frankly, it’s a very long way out in terms of predicting the rates and there are quite a few currencies moving around in that basket. But a little bit more than the 4p and you won’t go wrong.

Great. Thank you very much.

Thanks, Chris.

Thanks.

Okay. We are now over to David Reynolds of Jefferies. Please go ahead.

Good morning, John. Good morning, Coram. Just one question from me, please. Actually just reflecting a couple of incoming calls from investors, I mean, I think I’m with you on your approach to your fiscal year 2016 guide. But I wonder if you could just share whether you had a debate about actually whether to formally move your guide towards a 54p, 59p range or whether it was a very simple, straightforward conservative decision to hold it formally at this point?

Well, I think that the way that we – the way that we traditionally do it is to show you the guidance through the year on the same exchange rates, as we set the guidance at. And that’s 50p to 55p at December 31. And then we tell you what the impact is of currency on top of that. Just so that you can be clear that the underlying guide has not changed. So that’s very much in line with the way we’ve done it in the past, and we think that gives you the clarity as to what’s happening in the underlying business and then the effect currency has on top.

But to be absolutely clear, our guidance pound for pound is completely unchanged.

Yes. That’s helpful. Thanks

We are now over to Sarah Simon at Berenberg.

Yes, I’ve got two questions. First one was back on higher ed, I’m afraid. You said you’ve been very close to your retailers and so on in the first-half. Would you say that they have any greater visibility on what’s happening in the second-half than they did last year? And the second was on Brazil. Can you just take us through in a bit more detail what was happening there in terms of public sistemas versus private sistemas, and also on the English language business? Thanks.

Yes, so, well maybe I’ll try the first one, Sarah, and then sort of Coram can pick up on Brazil. I mean, I think, clearly, as I flagged, you can imagine after the sort of lessons we all learnt from last year, we and our management team are all over this. And retailers, who are also caught out are also all over it. The truth is, we are only now moving into the key selling-through season. Fundamentals are unchanged. The primary driver will be Fall enrolments, we won’t see them until we see the student-clearing house data in November. But the best lead indicator of Fall enrolments are US employment data. And the US employment data is tracking exactly in line with what we thought at the start of the year. The second piece of visibility we have is how our field-based salesforce are telling us that we are tracking in adoptions. And, as I flagged, we think overall we’d gain some share in adoptions with some good performance in B&E and science offset by a little softness in foundational math. And then, as we signaled in June, we expect some positive uptake from digital. So, for example, the growth in REVEL and from the new institutional deals, the extra ones that we’ve announced today, and that gets offset a little bit by some modest further uptake in OER and a further sort of rationalization of secondary with the sort of book rental – with the growth in book rental. So all in all, what that means is that if the employment data translates into stable enrolments, that’s very much the way that we are thinking through the year, and that’s broadly consistent with what the channel is thinking as well. But understandably, they are just being a little bit more cautious in terms of the level of inventory they want to carry at this point in the year.

Sorry, can I just clarify one thing? When you gave your numbers for global registrations for MyLab and so on, does that include REVEL?

Yes, it does.

Okay, thanks.

And just on that, I mean, Sarah, just to remind you the guidance we gave there, from a revenue point of view, we are expecting about a sort of 10% growth or thereabouts in digital revenues for the full-year. About a third of that made up of registration growth and two-thirds coming from mix and price.

Thanks.

Shall I pick up on Brazil?

Yes, pick up on Brazil.

Yes. I mean, Sarah, as you know, the Brazilian economy is finding life rather tough at the moment. I think the current forecast for this year is that GDP will be down 6% year-on-year, and obviously there is a fair amount of instability at a political and governmental level in Brazil. So our business in the first-half was down slightly, as both John and I mentioned in our scripts. I think splitting out the various parts of the business, the public sistemas are the ones that are most affected by this, for obvious reasons. It’s not only the economic pressure but then the impact of that government instability comes together in one pressure point on that business. And private sistemas and the English language learning schools are more resilient, and that’s because they are providing education that the middle classes is prepared to pay for, but they’re not completely immune to the cycle. So has more of an effect on the public sistemas, a little less on the private side, but Brazil was still slightly down.

I think as I flagged before, we’ve got a really strong management team now in Brazil, particularly post the multi acquisition. And where we have a lot of confidence in that team is the competitive performance remains very strong, which is important for as and when the economy does start to show some signs of recovery and in the meantime, sort of reaching out a lot of cost savings and efficiencies, which means that the sort of the bottom line of the business is largely protected.

Great. Thanks.

Okay.

Okay. We are now over to Katherine Tait at Goldman Sachs. Please go ahead.

Good morning. Katherine Tait at Goldman Sachs here. And just a couple of questions from me. You mentioned in your outlook for 2016 key assumptions that you are seeing a smaller adoption opportunity for US K-12. I wonder if you could talk about what you’re seeing for that opportunity in 2017,2018, and whether you expect any particular changes there and how you are seeing competitive dynamics play out, too? And then secondly, just on core, you talked about the UK vocational courses, or the negative impact of those being more 1H weighted. Can you remind us the sort of visibility you get into that business going forward, and give us some sort of color on your views into how that might improve in the second-half? And then finally just on FX, I wonder if you could give us the sort of pound exposure to your cost base. Obviously, we have it for the revenue, but just interested to see if it’s particularly different from a cost perspective? Thank you.

Thanks, Katherine. On the US K-12, the adoption opportunity is bigger next year and our participation rate is greater. And secondly, I think just something to underline a point that Coram made, I think that one of the things that we are feeling good about this year is a really much improved performance in open territories. As you know, it’s something that we had struggled with back in 2013, 2014. The work that [indiscernible] and the team there have done to really rebuild, both from the effectiveness of our sales teams and new products to market is meaning that, we’re having a really very good year there. And then in terms of visibility in the UK on our qualifications, we are – I think, as Coram said, we are revenue – we are recognizing now revenue that related to qualifications that were registered for late last year. So we have very good visibility on that. We have seen registrations for AS levels, which are now sort of voluntary rather than required a little lighter than we expected, but that’s already flushed through and recognized in the first-half numbers. So I think, as Coram said, on both the UK and U.S. testing front, these are sort of if you like lagging indicators and the most of the pain is now behind us and the rest of it flushes through in the second-half of the year and then we’re pretty much through it. And that stability is obviously one of the things that gives us confidence in our ability to get to £800 million by 2018.

Let me pick up on the cost base point. Broadly speaking, the percentages of our costs mirror the percentages of our revenues. There are very few outliers. There are one or two contracts in the business, which are global contracts and are priced in a currency other than sterling. And we are working through those, but we don’t think the effect of those is material on Pearson’s profitability.

Perfect. Thanks very much.

Okay. We are now over to the line of Ian Whittaker, Liberum. Please go ahead, Ian.

Thank you very much. I had a couple of questions, please. First of all, just normally what you do is that you give a breakdown by actual units as well, so it’s just higher education and so forth, which I can’t see initially in your presentation. I know, Coram, you said you were trying to be efficient. But perhaps you could give us a breakdown sort of by unit as to what actually happened? And, excuse me, the second question is just on digital. In North America, it looked as though the numbers only grew 1% for digital enrolments. I mean, was there anything particularly sort of at issue there on the sort of the timing-wise, or how should we think things for the second-half? And then the third question just on your guidance for the full-year, where you talk about being based on flat college enrollments. I sort of – just wondering sort of what the mix is in that, because obviously what you’ve had is that the community colleges have underperformed the total enrollment market in the first-half of the year. And one of the slides you had at your Investor Day very helpfully showed how you are over-indexed on community colleges. And so if you get that sort of pattern continuing in the second-half of the year, where the actual community colleges do underperform the general enrollment market, will you still meet your numbers?

Okay. So – hi, Ian, it’s John. Let me pick up on the third point. Let me just – the slide from the way you’ve described, I’m concerned the slide perhaps wasn’t quite as helpful as we thought it was. The point we were making was that five years ago, we were over-indexed and over-weighted to the community college in the for-profit college sector. And over the last five years, we have more sort of redistributed our sales to be more weighted to the market as a whole. Our guidance of flat enrollments for the years is a composite number, so which is the aggregation of community college enrollments for-profit sector and the not-for-profit sector as well. So it includes what we would expect to happen within community college in that. On digital, first six months of the year is barely a quarter of our higher ed sales for the whole year, so I think much better to look at where we are at the full-year and that’s pretty much where I said it would be sort of earlier. But in terms of revenues, we’d be looking at about 10% growth or thereabouts with a third of that coming from registration growth and the other two-thirds from price and mix. And, Coram, do you want to pick up on the first one?

Yes. I mean, Ian, we report on the basis of our primary segments, which are the geographies. So obviously you can see the sales movements there. I was pretty clear in my script that the lion share of the underlying sales decline is driven by assessments, and that 80% of that assessment issue or decline has been booked in the first-half. Now, I also mentioned that returns were about $25 million. So you can extrapolate that the lion share of the sales decline is driven in the assessments units. And if we were to show it to you on a segmental basis, that’s what it would demonstrate. The point on also to make on higher ed is, we’ve done less than 25% of our business in the – in first-half of higher ed. So, even a movement of $25 million would create a significant percentage, but that’s not dramatic in the context of a business where we do most of our work in the third and fourth quarters.

John, I just want to come back on your answer to the first question. Slide 27 of your investor presentation, you say Pearson sales by institutional channel. So the title is total enrollments versus Pearson revenues by segment 2015. When you breakdown on the right-hand side the revenues sort of versus enrollment, the enrolments for two-year community college is up 31% of total enrollments. So your revenues in 2015 two-year community college is up 43% of your 2015 revenues. So it looks as though you are actually, in fact, heavily over-indexed to two-year community colleges. So sort of – given that, sort of, again, it goes back to this point. If the two-year community college trends are far weaker than the general U.S. college enrollment trends, will you still meet your numbers?

Yes, and the reason for that is, when we talk about flat enrollments, that is a composite number, which assumes the four-year public universities are growing and that there’s some decline in the community college in the private sector, and that…

And just to confirm that your community college, you are indeed over-indexed to community colleges as per the slide that at your Investor Day presentation?

To confirm that our guidance is for flat enrollments, which assumes growth in the four-year public and the scope for decline in community college overall.

Thank you.

We are now over to Patrick Wellington at Morgan Stanley. Please go ahead.

Yes. Good morning, guys, can you hear me? And a couple of questions. Firstly, just going back to US higher education. One could read all this quite positively, if retailers haven’t overstocked in the first-half and they see decent sales in the second-half, presumably they can reorder. So my question is, how quickly can a retailer order, presumably this is just in time, so they can respond very quickly to a higher level of demand than they might presently be expecting, that’s my assumption, is that true? Second question is, you briefly mentioned Brexit, as you raced through the UK business, is there anything in that 10% in the UK that you feel you’re particularly vulnerable on? And my third question is South Africa. At Q3 last year, South Africa was highlighted as one of the problem areas. And from my memory, both at the full-year stage now, the half-year stage, South Africa seems to be doing perfectly well, so what’s going on there?

Thanks, Patrick. I mean, your first question, yes, that is absolutely right, which is why I think the thing to stress here is, we are seeing a bit more caution in the channel. We are not seeing any change in our assumptions about fundamental student purchasing behavior, which is the important factor. Second, on Brexit, I think we are flagging it as something to just keep an eye on. But I don’t think, Coram, we have any specific issues or concerns?

No, I mean, it’s – Patrick, it’s 10% of our business, obviously the lion share of that is the UK qualifications business. I think if you were looking for a part of the UK that we serve that is going to be under pressure, it would UK Higher Education, it’s a relatively small part of that 10%. But we are just highlighting it, because we do think there will be some disruption there.

And then on your third point around South Africa and the textbook business there, I think, you will see that in our guidance we’ve taken a much more cautious view of spending there this year than we did last year. If anything, at this point in time, it’s an area that we are – I mentioned there is some things going better, this is one of the things that’s probably looking a little better than we thought at the start of the year, but not something that, at this point, we get too excited about.

And just quickly on the UK, I mean, if you look at university websites, there seems to be some doubt amongst universities about foreign students in the context of Brexit, there is kind of, occasionally you see signs up saying, you have to – uncertainty about what the process will be. Is that the sort of thing you are referring to?

Yes, that is the sort of thing that we are referring to, it’s not material in the overall context of Pearson, but it is something, obviously that we are just keeping a careful eye on, yes.

Thank you.

Well, at that stage, John, can I please pass it back to you for any closing comments?

Yes. Thank you all for joining us. I know that you’ve all got busy days ahead of you. But just to sort of reaffirm absolutely on track for our guidance for 2016, absolutely on track to deliver £800 million or more of operating profit by 2018. And I’m sort of just incredibly pleased with the immense efforts that have been made by colleagues right across the company to do some very, very heavy lifting on a growth and simplification plan that I think sets Pearson up, not just for the next three years, but for longer-term and sustained growth beyond that as well. So thanks for joining us. As ever, Simon and Tom are on the call and can follow-up with any questions, and Coram and myself are around as well. So thanks very much indeed.

This now concludes today’s presentation. Thank you all very much for attending and you can now disconnect.