Informa plc (LON:INF)

Earnings Call: H2 2016

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Mar 6, 2017

Summary

Revenue rose 11% reported and 1.6% organically; adjusted operating profit increased 13.8%, with £306m free cash flow and a 4.3% dividend increase. 2017 guidance targets growth in revenue, earnings, dividends and cash, supported by exhibitions, BI investment and Penton synergies.

Right. Everyone settled? Should we get started? We ready to go? Yeah. Great. Well, good morning, everybody, and welcome to the 2016 Informa annual results. Thank you very much for coming in person. For those of you who are here, we are broadcasting this live as a webcast. For that reason, I will stay firmly behind the podium. That's for reasons of filmic clarity rather than defense. I'm joined on the stage by Gareth Wright, our Group Finance Director, and I'm delighted to see our Chairman, Derek Mapp, in the audience, and some other colleagues. The theme of today's presentation, as well as taking you through the numbers, is balance and breadth, which we will talk about in a variety of different ways, and was part of what lay behind the development of the business last year when we announced the addition of the Penton Information Services business to the Informa Group. To get straight into the numbers, we published our results this morning at 7:00, and some of you will have had a chance to see them, and this gives you a summary and our take on how we would guide you to interpret them. At a headline level, the growth was good year-on-year, both at a reported level and at an organic level. That growth was significantly aided by a mixture of a steady performance from the acquisitions that we added, and also a material gain from the increasing weighting of the business towards North America and the strength of the American dollar. At the organic level, we were just over 1.5%, 1.6%, slightly shy of where we would have wanted to be, largely driven by a lumpy and bumpy performance in our conference business within KNN, which we'll come back and talk about. At a return level, our dividend policy remains very much in line with the GAP promise, which is a 4% year-on-year increase, just over 4% in 2016, which follows on from our previously stated commitment within GAP. Our return on capital numbers constant 16 on 15. Cash, which Gareth will talk about in quite some detail, we feel increasingly robust on, both on the free cash flow in the business and also on how we're managing the working capital. 2016 was a big year of investment for us in GAP, probably the peak year of investment in our investment program. The tough news is that we felt that in the numbers. The good news is that gives us a material level of product innovation, which will begin to flow through, particularly in business intelligence, but also in global exhibitions and academic in 2017 and into 2018. We continue our path to expansion, and increasingly our expansion is focused around developing strength in verticals. We made a number of additions to the group over the years. Within Penton, I pick out here the additions in health and nutrition and agriculture, in construction and real estate, TMT, and also last week, the addition of the YPI business, which we have been tracking for a while, which puts us in a very strong market leading position in the international Yachting business. Then finally, we confirmed a final review of our five remaining national domestic conference businesses in Germany, Switzerland, Singapore, Brazil, and Australia. For those of you who have been tracking the business for some time, we have been progressively refining that portfolio. We have already made a number of disposals over the previous 2 or 3 years, and this will result in that business being focused entirely around three end markets, TMT, global finance, and life sciences. I will talk more about that as we go through. In summary, it gives a picture of a steady year, which sets us up well for 2017. To go backwards to go forwards, this is the path that we have been on from 2014 through 2016 and into 2017, and progressively we are building strength and consistent predictability in the performance of the business. The currency picture has changed over the period, but more materially, the weight and shape of the group has changed quite significantly over the period. Our reliance on conferences has gone down. Our position in exhibitions has gone up materially. Our performance in BI has improved significantly. The steadiness of the academic business has been a recurring theme, and the fundamental fitness and operating performance within the business, both financially and operationally, has steadily improved. Our dividend commitment over the period has progressively risen year on year and will continue to do so through 2017. One of the advantages of doing the 2016 results at the beginning of March is that the year has well and truly started. For Informa, the front half of the year is a particularly important part for us. If you look at the first quarter, it is about 30% of the profit in the year trades in the first quarter, so index is slightly higher than the natural calendar flow. In some of our businesses, it is particularly important, specifically in global exhibitions. Just a snapshot on where we are on current outlook, just working left to right. Our global exhibitions business has started well, strong start to the year. We have seen seven of our top 20 shows trade already. One of them trading as we sit here in Anaheim, our health and nutrition brand. I am going to deep dive into where we are in health and nutrition because it was a big ingredient, if you excuse the pun, in the Penton acquisition, which I am keen to showcase. We also have very good forward visibility on forward bookings in exhibitions. So we feel steady about how that business is performing. To try and second guess the question that may come in the Q&A, this is now quite a big business, so we may well see mid single digit growth rather than high single digit growth, but nevertheless, a very strong performer in the group. Academic publishing in January and February has started solidly, I would say. What do I mean by that? To give it a bit more color, what we haven't seen is a January, February dip following a December peak, which always gives us some reassurance. The journals business is actually performing well both on subscription and cash collection, and the alignment between those two is where we'd want it to be. Books trading has been pretty steady in those first 2 months. I'm sure we'll get further into academic, but it feels to us a very steady business looking into 2017. BI, probably the business we were most pleased with in a sense in the performance in 2016 because we delivered what we wanted to deliver a year ahead of our original plan. We've had a very good renewal season in November and December, and then into January and February. Later on I'll take you through where we are on both the business pipeline and on tracking ACVs and pre-contract renewal percentages. Generally speaking, it feels very steady. Knowledge and Networking, a stable start to the year, but actually January and February are quiet months for that business. But the top 20 events actually, which is where this business is increasingly going to focus around post the decision we've made on domestic conferences, is trading well. Penton is on track both on integration and on synergies. Our forward guidance for 2017, therefore, is another year of growth in revenue, earnings, dividends, and cash. Just to step out of our business a little bit to look in on where we trade. This is our view of the markets that we trade in. Working from my left and across. The business intelligence market, the market for providing intelligence and Insight to businesses looking to make smarter decisions and more informed decisions. Very much a U.S. weighted market. Nearly 70%-75% of the global profit pool in information services is U.S. based. A market in growth, but open for innovation, very demanding of digitization of content, increasingly demanding of free access. It is important that you make the necessary level of investment in your products, which has been a large part of what we've been doing in GAP in order to drive future growth. At a market level, that is a market in growth, and it's still the case that our business, whilst we feel good about where it is growing below the market. In global exhibitions, the market for what we describe as platforms for trade and commerce, the convening power of markets. There are particular features in the exhibitions market which we've chosen to focus on and I'll unpack that a bit later. There what we've seen, despite the rise and rise of digitization, is actually an increasing demand for face-to-face interaction. That market similarly is in growth. We're actually performing slightly ahead of that market, and have been consistently for the last few years. What we're seeing is an increasing drive to industrialization of key verticals, and that's where we've chosen to park ourselves in the market. We've identified a series of verticals where we think there is more growth for us to take. Academic publishing. Here this is like all markets but particularly this one, there are many neighborhoods that you can live in in this market. We live in what we call the upper level reference neighborhood. That's where we specialize. It is a business that is reference and research, and then reference and monograph and books. In research, the research market we believe is steadily in growth and we have seen that consistently for the last few years. The books market, even at the upper level, is facing some challenges, some structural challenges. But in the round in our portfolio, we feel we are reasonably well insulated. Knowledge and Networking, which is the place where we have seen most change. This was, as you will recall, and certainly when I first joined the board of Informa, this was a very, very central part of the group. The conference business had been the driving heart of our events business. It was nearly 65% of our revenue in events back then. And here we have seen significant change. Paid for delegate thematic conferences over the last seven to eight years have been significantly challenged by a combination of disintermediation from technology, freely available information, many people entering into the so-called conference market as a marketing activity, but not one where they are seeking to monetize. And what we have therefore finally concluded and what you see today in our announcement is that where we believe there is a defensible long-term position is if you are in an end market rather than a language-based thematic spot conference business. We will unpack that a bit more. We do not believe that is a super growth market, but we think we have some assets and brands in those three end markets which are very defensible in the long term. The other point on this chart is the balance and breadth in the business. If you take those three businesses, business intelligence, global exhibitions, and academic publishing, they are all now broadly equal a piece. They are about a third of the business in revenue, and that gives us a more balanced footprint for the group on a going forward basis. Just to pick out what has underpinned the GAP program for the last few years. Simplification of the operating model from multi-distributed independent businesses to divisions increasingly operating at scale and driving commonality and standardization where you can. A significant increase in predictable and recurring revenues from low 40s to mid 50s. A material shift towards North America, now over 50% of the business and growing. A very focused investment program trying to drive growth where we see growth. A shift in the incentive structure within the business to move it away from being an in-year earnings, in-year profit driven business, to being a more balanced business, where equity performance and equity growth is the material part of equity compensation. A shift in the revenue mix towards exhibitions and subscriptions away from delegates and retail revenues, and a consistent underpinning in operational performance. This gives you a sense of what that has then produced as a shape shift in the change in the business and the two things I would highlight, the revenue by geography, shown quite starkly there. The shrinkage of our exposure in continental Europe and the growth in North America. The change in our revenue mix in subscriptions and exhibitions, and the balance by division in the three divisions that I talked about earlier. Going into 2017, before I hand over to Gareth, this is the way we look at the market on a going forward basis. The knowledge and information economy, as we describe it, feels to us to be a business and a series of markets that are broadly favorable. There are growth features and there is significant market share for us to take and gain in each of those markets. The growth acceleration plan is delivering real benefits for the group, both in performance and capability. Our international expansion, our shift to the U.S., has served and is serving us well, and our increasing shift towards verticalization is going to be more and more the focus of the group's operating model. The portfolio improvement has allowed us, at appropriate points in time, to change out the portfolio to give it more robustness and avoided us sacrificing significant revenue at a point where the business was not ready for it, and today's announcement on the conference businesses is another example of that. We have seen pretty consistent improvement in financial performance and operational progress. On that note, I will pass over to Gareth. Gareth? Thank you, Stephen. Good morning, everyone. As Stephen said, welcome to the Informa 2016 results presentation. I will start by talking you through the headline financial results. We are reporting organic revenue growth of 1.6% for the year. Reported revenue increases by 11%, reflecting the dollar currency benefit arising from our purposeful expansion into U.S. markets. The increase in reported revenue results in a 13.8% increase in adjusted operating profit. The increasing scale of our highest margin division, Global Exhibitions, drives a 70 basis points mix improvement, taking our group margins up to 30.9%. These profits deliver earnings of 42.1p, a year-on-year increase of around 6.5%, ahead of 2015 earnings restated to reflect the rights issue. The full year dividend has increased by 4.3% to 19.3 pence per share. The minimum commitment that we made for the remaining period of the growth acceleration plan was 4% growth, so this payout is slightly ahead of that benchmark. Despite the increase, we retain comfortable dividend cover of 2.2 times earnings. The ability to turn profits into cash continues to be a key strength of the group, and this has been demonstrated again in 2016 with the group delivering over GBP 300 million of free cash flow. The group's balance sheet is robust and healthy with year-end leverage at 2.6 times, in line with what we said it would be at the time of the Penton announcement in September. Going forward, we are positioned to return within the 2 to 2.5 times leverage range that we have communicated to you previously as our target. In summary, the 2016 results continue to deliver on our promise to reposition the group through the growth acceleration plan whilst delivering a progressive trading performance. One of the big bits of news for us in 2016 was the addition of Penton to the portfolio. As you'd expect from us, we're taking a measured approach to the integration, being led by Patrick Martell who's now based in the U.S., to ensure we maintain operating and trading momentum through the transition. On that note, I can report we have achieved the integration targets set for 2016 and that 2017 trading in the key Q1 period is on track. At the announcement in September, we said we were targeting GBP 14 million of synergies by 2018. We made a good start on this target and to date have achieved synergies of over GBP 4 million on an annualized basis. We expect to realize at least half of the GBP 14 million target in 2017. Like Informa, Penton is a people business. Over 1,000 colleagues joined us at the start of November. We've been struck by the positive buy-in and enthusiasm, both from the Penton staff and Informa staff for the combination of the two businesses. Focusing on the Penton financials as a standalone business, you can see the progress and performance that business has delivered over the last couple of years. As we outlined in September, Penton's revenue performance in recent years has been flat to slightly down, but delivering increasing profitability as the mix of the business has changed. The year-on-year performance in 2016 delivered 2% reported growth in U.S. dollars and about a 1% decline if you strip out the TU acquisition completed at the end of 2015. Within this, events in digital grew at about 10% and print continued to decline as expected. Looking to 2017, our expectations for the business are a similar revenue performance overall, flattish, maybe a touch down, as we integrate the business and drive to future growth in 2018 as the mix of the business shifts further. During the first half of 2017, we'll integrate Penton into the existing Informa divisional structure, and as guided at the time of the announcement, the split is broadly 45, 10 into our three divisions by revenue. Moving on from Penton, last week we announced the latest addition to the Informa portfolio, Yachting Promotions, Inc, a business that we've tracked for a number of years. This is the leading U.S. boat show operator with a portfolio of five leading exhibitions, including the Fort Lauderdale International Boat Show, the largest of its kind in the world. This business is a great portfolio fit for us, complementing our existing Monaco Yacht Show brand and giving us the leading position in the international yachting vertical globally, another example of how we like to build vertical strength in our business. It also adds further scale in U.S. exhibitions. The headline price is around 11 and a half times EBITDA. Additionally, we've acquired accumulated historic net operating losses with the business. The eagle-eyed may have noticed that the values on the slide for the NOLs and their NPV is slightly different to the announcement on Thursday. Following updated technical advice on the tax structure of the acquisition, we can now confirm that it will bring higher NOLs than originally stated, now estimated to be about $40 million-$50 million, but available over a longer time period than was initially advised, which brings the NPV down to between $15 million-$18 million. The key point for us, however, is that the post-tax multiple paid for the business remains less than 10 times a level we are comfortable with. Turning to the growth acceleration plan, we are now beginning to go live with projects launched under the investment arm of GAP. The projects on this page are good examples of what we are delivering. They are customer-facing initiatives, which will drive improved levels of revenue performance going forward. They use technology effectively, more extensively than Informa has previously, which is consistent with customer expectations. We are rationalizing our IT systems to focus on the most efficient solutions and to remove duplicate costs in our infrastructure. The headline is, all the growth acceleration plan projects remain on course to go live by the end of 2017. Moving back to the financial results. I will now talk you through the revenue and adjusted operating profit by division. Starting with Global Exhibitions, which has delivered another excellent result in 2016. The 8.7% organic revenue growth was underpinned by strong performance from the top 20 events. We believe this demonstrates that our strategy of targeting above exhibition industry average revenue growth by operating leading events in growth verticals is delivering. The full-year revenue result is slightly lower than the Q3 growth, but we flagged this at the time of the Q3 announcement that we were expecting this because the fourth quarter is our quietest trading quarter in Global Exhibitions. The operating margins improved by 1.5 percentage points year-on-year, benefiting from the drop through of the strong revenue growth and benefiting from our increasing exposure to the structurally higher margin U.S. exhibition industry. The result is a 13.5% organic increase in operating profits. Business Intelligence has had a good 2016. This year, the division delivered our growth acceleration plan objective for it to return to organic revenue growth. The achievement of this objective, one year ahead of the target we set in 2014, is a result of three years of significant change in the business and a huge amount of work from the teams involved to become more customer and market-oriented. The full-year organic growth was 1.1%, representing a further improvement on the revenue performance since the Q3 update. There was a 3% year-on-year organic profit decline in Business Intelligence, as expected, reflecting further investment in business capability. In summary, this result gives us a great foundation on which to complete the delivery of the product rollouts under the growth acceleration plan. This underpins our confidence in driving increased sustainable and profitable growth from Business Intelligence in 2017. Moving to Academic Publishing, the full-year organic growth was 0.3%. This is a touch behind where we were at the Q3 update, with a robust and predictable performance in the journals business offset by a slightly soft growing market for books. Stephen will talk about books in more detail in a minute. The 2% organic decline in operating profits reflects a number of management cost initiatives to improve performance, partially funded by the restructuring of the books operation into a single global business. Finally, the reported revenue growth, almost 10%, and the reported OpEx growth, almost 14%, both reflect a stronger U.S. dollar. Knowledge and Networking is reporting a full-year organic revenue decline of 4%. At the heart of the division, the top 20 events grew 8% year-on-year. These top 20 events represent around 30% of the division's revenue, and their growth reinforces our view that our strategy to focus on the larger branded annual events is the right one. A key part of our strategy to deliver growth in Knowledge and Networking will be a review of the five remaining domestic conference businesses which Stephen's mentioned and will talk about further in a minute. These five businesses delivered close to GBP 15 million of revenue in 2016, but with an organic revenue decline of around 15%. Stripping them out of the K&N results would leave the organic revenue result flattish in 2016. The full-year organic profit decline was around 19%, principally reflecting the drop through of the organic revenue decline. Despite this result, our overall target remains unchanged, to return the Knowledge and Networking division run rate to at least a flat organic performance by the end of the growth acceleration plan. Finally, the addition of Penton adds 2 months of trading to the group results for 2016, but is excluded from our organic growth. The trading for the 2 months was in line with our expectations. The results are lower than you might expect from the business on an annual run rate basis, but that's because none of the main exhibitions trade in this 2-month period. Moving to the income statement as a whole, we can see the group has generated GBP 416 million of adjusted OpEx or pre-exceptional EBITA. Net interest payable increases year-on-year for four main reasons. We've increased the proportion of private placement financing during the year. This debt gives us greater long-term stability in our financing, but does come at a higher cost than bank borrowings. Our borrowings are circa 80% denominated in U.S. dollars, and the strengthening U.S. dollar has increased our reported interest charge. 2015 included interest accrued on loan receivables, which has not been repeated in 2016. And obviously the addition of Penton increased borrowings at the end of the year. Moving down the income statement, there are GBP 200 million of adjusting items. While I would highlight that almost GBP 117 million of this is intangible amortization. I'm going to talk about the effective tax rate in more detail on the following slide. And the result is earnings increasing 6.6% year-on-year ahead of 2015 earnings restated for the rights issue. On that note, in our 2017 diluted earnings calculations, people should be thinking around using about 826 million shares for that calculation. Increasing free cash flow remains a key area of focus for us. You might remember that at the half year we reported a free cash flow result almost GBP 50 million lower year-on-year. But we also reported that we were confident about a stronger free cash flow performance in the second half of the year. And we've delivered that with almost GBP 306 million of free cash flow in 2016, slightly up year-on-year. Drilling into the four specific dynamics noted on the slide, working capital was weaker than 2015 when we received two payments in academic publishing relating to Swets. We have funded the extra CapEx investment relating to the growth acceleration plan, an increase of almost GBP 20 million year-on-year without reducing free cash flow. 2015 included lower cash tax payable in the U.S. after a one-off benefit following the addition of the Hanley Wood exhibition business. Cash interest payments increased because of the higher U.S. private placement debt cost and because of the strength of the U.S. dollar. In conclusion, our focus on free cash flow will continue in 2017, and with a full year of pension included, we are targeting free cash flow in excess of GBP 400 million. Focusing on our adjusted tax rate, the left-hand graph reconciles the U.K. tax rate of 20% to the Informa ATR of around 18%. It shows that based on jurisdictions profits are generated in, the starting point for the tax rate would be in high 20s. The ATR is actually 18% because of the benefit from U.S. goodwill amortization and because of inter-group financing principally between the U.S. and the U.K. These factors represent a low risk approach to tax management. Looking forward to 2017, we are expecting the ATR to tick up to around 21.5%. Firstly, as I mentioned at results announcements previously, certain U.K. tax rules have changed with effect from the start of 2017, and the unwind of a financing structure as a result increases our tax rate going forward. Secondly, the extra profits generated in the U.S. increase the group's tax rate. This doesn't fully impact our cash tax payable, as the increases will be partly mitigated by acquired losses. But it does impact the income statement as the losses are on the balance sheet in the form of deferred tax. It's worth noting that the 2017 ATR is before any changes in the U.S. tax landscape initiated by the new political leadership. As I said at the start, the group's balance sheet is robust and healthy, with year-end leverage of 2.6 times. In October, we announced a further U.S. private placement raise for $500 million, and I can confirm this was funded as planned in January. This issuance refinances the majority of the $675 million acquisition facility we put in place for Penton. After the January issuance, our combined PP borrowings are an interest rate of just over 4% with an average maturity of six years. The long-term nature of PP financing gives us good visibility of the future refinancing requirements, and the maturity profile illustrated on the slide shows good spread over the next 10 years. Within the context of our debt financing, I want to take a moment to focus on the currency denomination of the borrowings. Over 80% of Informa's debt is U.S. dollar denominated. That's why the strengthening U.S. dollar in 2016 has resulted in a GBP 146 million increase in reported net debt. That's why the strengthening U.S. dollar has contributed to increased interest payable in 2016. However, the reason for this U.S. dollar weighting is that it hedges the cash Informa generates as a business, which is almost entirely U.S. dollar denominated on a net basis. Finally, the pension position remains relatively small compared to the size of the balance sheet. The year-on-year increase in the liability arises around half from the addition of the pension schemes and around half from changes in actuarial assumptions relating to the legacy Informa schemes. To confirm, all group defined benefit pension schemes are closed to new accrual. One of our growth acceleration plan objectives was to improve the operating performance of the business, and this remains a focus. in 2016, we delivered a consistent performance, maintaining ROCE at the 9.2% level we achieved in 2015. Despite 2016 being the peak year of GAP investment with returns starting to flow in 2017, and despite the addition of pension in the year, which is initially dilutive to group ROCE in 2016. Looking at the growth acceleration plan investment arm as a whole, this slide confirms that we remain on track to deliver the targeted financial results. What we're seeing come out of the projects that have gone live or the prospects of the projects in testing is supportive of this position. Our focus going into 2017 is to get all the projects deployed and then drive the business to achieve the targeted returns in 2017 and 2018. To wrap up, let's consider what the post growth acceleration plan financial characteristics of Informa will be. We'll have a trading mix that gives us good visibility over future revenue. We'll have strong free cash flow generation in excess of GBP 400 million per annum. We'll have a relatively low capital intensity business. Although the growth acceleration plan has taught us that CapEx of around 3% to 5% of revenue is what is required to sustain growth going forward. We'll have attractive margins, we'll have a robust balance sheet position for growth, and we'll be focused on delivering consistent returns for shareholders. Thanks for listening, and I'm going to pass you back to Stephen. Okay. For the next few minutes, I'd just like to dig down a little bit into each of the individual businesses just to pick out a couple of performance areas and perhaps question areas, and then we'll throw it open to general questions. This is the chart from earlier, which gives you a sense of the mix of the business. What I'm going to do is just briefly step through each of the divisions and highlight exactly what the priorities are for 2017, our view of the market, and then a couple of examples which illustrate that. So let's start with what is now our smallest business, KNN. What was, as I said earlier, once upon a time the central part of our events business. I suppose the headline here is the change in the commercial attractiveness of what used to be known as the volume spot conference business. Which in its heyday was a business doing. Actually, in its absolute heyday, it was doing nearly 15,000 events in a year. If you go back to 2009, it was doing about 12,000 events. One of the things we've been progressively doing as we've built a position in an alternative events market, what we call global exhibitions, business to business trade shows, is managing this portfolio down. The decision that we've made or the announcement that we've made today to review our five remaining national conference businesses in those five locations will, in financial terms, take about GBP 50 million of revenue out of the P&L. That business, if you looked at all those businesses in aggregate, they're about a 10% margin, those businesses, so diluted both to the division and certainly to the group. They have been declining materially over the last few years. They vary depending upon which of the individual businesses you go into. In Brazil, there have been particular challenges, which are unique to that market. Some of that's to do with currency, some of that's to do with local market situations. In Australia, some of it's to do with the fact that that domestic business is very exposed to mining and commodities. Nevertheless, the central conclusion that we've come to is that our future is going to lie on focusing in the verticals where we believe we have a sustainable long-term position in finance, life sciences, and TMT. In each of those areas, we have 50 or 60 events which we believe have a market position. In many instances, have brands, have a higher level of forward visibility. They are higher margin. They're not constrained by one geography. They may be operated out of the United Kingdom or the U.S., it depends upon which vertical you're talking about. Actually, they're not constrained by language or by subject matter that's only attractive in one geography. So they have a more international feel to them. We made a couple of changes in 2016 in TMT in particular, which is the largest of those three by some margin, and probably our strongest vertical. That was what drove us to put the Light Reading business, and merge it with an asset we already had, which was telecoms.com. Also led us to make an investment in a U.K., unusually for us, a U.K. festival event called London Tech Week, which will run this year in June. We think the net consequence of all of this will make this business considerably more focused on where we think there's a long-term sustainable position. That simplification will then allow us to get it to where we want it to be going into 2018, which is at a minimum flat and ideally ticking to growth. I'll give you one case study that highlights one of the strengths, and that's in the life sciences vertical. We own a brand called EBD, which if you operate in that market you may know of, which actually operates in a very specific area, which is in what we would call biotech pharma partnering. We have a proprietary partnering technology there, which works very well. There are seven branded events we run under the EBD headline brand. We've expanded it and geo-cloned it internationally. As a market, it's worth about $20 million in revenue. It's growing significantly. Has very high retention and recurrence rates and has had consistent levels of growth. We have a series of sub-versions of these in each of the three verticals, which this strategy will allow us to focus more on than has historically been the case. Stepping out of conferences and into academic publishing, here I'm going to wander around this market a bit because I suspect it's an area of some interest for people. Before we get into Taylor & Francis' business, I have some observations on the market. The view of the market, our view of the market in which we operate, is that the core market is stable. That comes through a mixture of different features. The market for research, and international research in particular, and international research in HSS, which is where the majority of our business is actually predictably and consistently in growth. The market for reference and monograph textbooks, and for upper-level reference books is declining, but declining in what we would describe as a measured way. I'm going to break that down a bit into categories. One of the truths of the market as a whole is that discovery is digital, no doubt about that. Digital discovery is where this market is going. But interestingly, digital discovery, particularly as it relates to books, actually oftentimes drives physical usage. Usage is the key imperative in maintaining and driving revenues. Because one of the features of the market is that all-you-can-eat pricing in this market has driven up unit pricing to a different place. You have to replace unit pricing with high levels of high-value usage. Where that leads you, is it leads you to a point whereby you need to have deep data and digital understanding of your end customers' usage patterns. That's where we've been investing in GAP, is driving our knowledge of what our end users, as well as the institutions, are doing with the content that we produce. Because our unique point of difference is high-quality content. So when you're looking at the aggregate in the market, you come to one set of conclusions. When you're looking at the specifics in the market, you often come to a number of others. If you then take that down into our business, what have we seen in our business? We've seen a very consistent performance despite ongoing softness in both textbooks and in parts of the U.S. books market, which we predict will continue in 2017. We have very high renewal rates in journals, in the 97%-98% renewal rates, and steady growth in journals, both in the volume of journals that we are publishing and producing, subscription journals, contract journals, and open access journals, and also the quality ranking of those journals. In books, in our books business, we've seen softness in the area of our books, which I'll break out in a second, which is in textbooks. We've seen pressure on budgets, particularly on library budgets, mainly in the Western markets, although there are significant markets which are investing significantly in new institutions, new libraries, and access to existing licensed knowledge. We actually have seen quite a bit of evidence of cross-border buying. Ironically, our U.K. books business had a good year last year, but we think that was a bit of jurisdictional shopping driven by currency rather than an underlying trend change. There are definitely some pressures in the supply chain, and rental is becoming a bigger feature of the market. That is the picture in books, and the question is: how does it all net off when you look at it in the round? We have a change in our business, material change happening in 2017, which is Roger Horton, who a number of you know well and who has led this business fantastically successfully, I know that because he tells me on a regular basis, will be retiring in 2017. We are quite significantly through the succession management process, and I am comfortable that we will be in a position to confirm that before we hit Roger's departure in the midpoint of the year. As I said, in GAP, which where we have stepped up the level of investment in our academic publishing, all focused around digital discoverability, our content management systems, and making this business as robust on digital and data as it has been historically on content and productivity. Just to break out the business to one further level of detail. If you look at where what I described earlier as the neighborhood in which we operate, we describe it as the specialist upper-level market. There, your typically end user is a specialist, an individual or an institution that has chosen to specialize in a subject matter, whether they are a final year undergraduate, a post-graduate, or a professional. We have seen consistent growth in our journals business over that period, and we have seen stability broadly in upper-level books. Although where we have felt pressure is if you drop down to the bottom left of that chart, is where we do have businesses that are in the lower-level undergraduate or textbook market, mainly in medical or under our Garland Science publishing imprint. That business has had a tougher time. That business has been declining at about 15%. As a proportion of our books business, it is a very small proportion of our books business. I think one of the questions for us in 2017 is how do we manage the overall books portfolio to ensure that we are not overly exposed to that market? Two points I would like to highlight is the average price in our market. The reference price in the market is not relatively that high. Stating of the obvious, it is not a volume business. We are not in the volume business. If you flick to the top right of the slide, our books business operates in 62 sub-markets, 62 categories. Our single biggest category is about GBP 15 million of revenue. There is not, as you look at our books business, a single point of failure or a single point of weakness. It is one of the great strengths of our business. It is very spread. I have picked out these five because these five categories in books were all in growth in 2016. When one looks at the market and says books are in decline, of course, that at the aggregate level is true, and we would agree with that, but at the specific level, it is not always true. Some of that is to do with subject matter, some of that is to do with institutional subject preferencing, some of that is to do with where the research money goes, and a lot of it has got to do with the quality of the content and where you are connecting your knowledge of your authors with your knowledge of your end users, and that takes you back to digital discoverability. Final point on books, not all markets are declining either. All five of these markets were in quite significant growth last year, of very low bases. Nevertheless, these were all markets that were investing significantly in bringing in more English language upper-level content. Just a little bit more depth on what we think is happening inside academic publishing, and I hope that gives you some context for where we are operating. I picked out this GAP project just to highlight what we are doing around digital discoverability. I think colleagues inside Taylor & Francis would be the first to tell me that the history of our business was very strong on content, very strong on productivity, actually very innovative and robust on pricing. I think all our peers would say that. But historically, materially under-invested in digital knowledge, data management, and customer profiling. All of the GAP investment in academic publishing is in that area, driving a higher level of digitally uploaded, tagged, tracked, and analyzed content. The depth of the strength in our business is in our content library. Our ability in the future to monetize it will be driven entirely by the knowledge of the digital footprint that our customers are leaving behind as they use it. That is the focus of investment in that business. Flipping into our other publishing information and subscription business intelligence, which has been an area of quite some focus back since 2013, where we made a decision that in the mid to long term, this was a rich territory for us. As I said at the beginning, it is an end market that is growing, and there was no reason why we couldn't take the assets, brands, and information we had and convert that back into growth. The track there from 2014 to 2016, going into 2017, gives us confidence that we have a business that is now back in growth. That has largely been driven short-term by a focus on improving in sales excellence, sales training, contract value, and contract renewal. That we have seen across all of our verticals, bar one, I will come and show you in a second, which is finance, has driven a progressive increase in all the key factors we have tracked, all the key metrics we have tracked, I apologize, apart from in the finance vertical. The good news going into 2017 is the GAP investment here has largely been around improving the product offering. We have about 20 new products, features, capabilities coming to market in 2017. That accounts for about 50% of what we believe will be the revenue uptick year-on-year, 2016 to 2017. Penton brings further brands, and their subscription businesses are performing nicely going into 2017. But what it also brings, which we have long, or certainly I have long harbored the desire to have in the group, is a marketing service capability. Because one of the great things about Informa is we have driven predictable revenues, but actually our revenues come from rather predictable places. We take subscription revenues. We take exhibitor revenues. We take attendee revenues. We take very little in revenue in consulting, in marketing services, and in database revenue exploitation. Our ambition is to use some of the capability that came in with the Penton acquisition to build a marketing services capability we can then move out across the portfolio that we have within the business. We see 2017 driving more growth and capability, and here is a bit of a breakdown. If you look at the circle on the top right, this business, this is the old BI business pre-Penton, is a mixture of essentially two products, Insight and Intelligence, with the Intelligence being much more databased, Insight being more generalist, but nevertheless valuable to the user in a contextual sense. Its majority Intelligence, 65% of the revenue in the subscription is in that area. We have seen steady growth pretty much across the portfolio, with the exception of finance. Again, even that is an aggregate. The place where we felt most pain in our finance business is in the FX products in our IGM business, which has had a particularly tough time. The credit business was not exactly in growth either. It was probably flat year-on-year. Actually, we had some good spots in our finance portfolio. Our fund flow business, EPFR, had a very strong year, and so did our investment services business, IIS. So it is a mixed picture, but in the round, finance was a bit of a drag. TMT, pharma, maritime, and agri all in growth. The thing that gives us most forward confidence is where we are on books on deferred revenue, where actually progressively and successively across all verticals, we see a progressive and steady increase in booked and deferred revenue in the business. What is driving that, we believe, is that our products are just progressively becoming more relevant to our end users. This is the most extreme example, which is why it makes great PowerPoint, but nevertheless, it highlights it well, which is one of our agri products, IEG Vantage. We had fantastic content, great data, but it was Neolithic in its presentation. It was essentially large volumes of PDF analysis, which if you were a trader or a user, you had to take and then key input into all your own work. What we have been investing— Someone is nodding their head, they have obviously used it. What we have done with that product, and we are progressively doing across the piece, is moving it to being a digital-based data set, which allows people to manipulate it, to work with it, to use it in real time, to take data cuts, to do one-off transactions. It makes it far more part of the everyday work of an end user or a customer. What we've seen as a result in this particular one is a material increase in usage, in valuation, in customer satisfaction, and importantly, in the amount of time that customers then spend not just using it themselves, but also coming to our site and then using our site to then roam around into further data analysis across the portfolio, which is, of course, a cross-selling opportunity for us to drive other products and other services and other features. Global exhibitions, which gets a lot of focus, and rightly so, because it's turned out to be a good business for us. We were a small player in the global exhibitions business. We made a decision to become a reasonable-sized player. We now are a reasonable-sized player. I think post-YPI, we're the third player in the market. We still very much see ourselves as the challenger in this business, and we'd like to continue to see that. We've identified some key markets, both geographies and verticals that we wanted to move into. We've always historically had very nice businesses in the Middle East, which we still cherish and nourish, and they're doing well and growing well, but we wanted diversification to de-risk the portfolio. We moved deliberately into the U.S. because the U.S. is basically one in $2 in exhibitions in the world is spent in the U.S. Margins are structurally higher in the U.S. The U.S. is not a single market, it's multiple markets, and it has world-beating infrastructure with very little bandwidth or capacity issues. It's very attractive for lots of reasons. We started early with a step into the market with the Virgo acquisition in health and nutrition that complemented our Vitafoods business, and then we have slowly upped the pace of building out our business. One of the things that gives me most confidence in that business is the quality of the management that we've brought in to run our exhibitions business. We have Charlie McCurdy, who is a long-time. He hates me describing him this way, but given he's not here, he's a long-time veteran in that business with years of experience running successful growth businesses. In our two key verticals, Rick McConnell, who came to Informa through the Hanley Wood exhibition deal, and Fred Linder, who came to us through the Penton deal of running our two largest verticals globally, real estate and construction, and health. As Gareth said, we've just added another business to the portfolio, the five strong yacht show portfolio in the U.S., which is a very nice complement to the very international Monaco business. Just a little deep dive into health and nutrition. This was the one we spotted first. We saw it through the lens of Vitafoods, which is our European business, which was growing very nicely on its own, in a particular subset of the health and nutrition market. But all the features of this market are growing very well. It's international, it's fragmented, it's growing. It's got features which suit an international exhibitions market. Compound growth in that market, the end market, has been about 6% or 7% a year for the last few years. In our business, it's growing at just over 10%. That's a $110 million business now for us as a standalone business. If you looked as that as a standalone business, that's a highly valuable business in its own right. That is what we're marching towards across this portfolio, is getting scale at the shared platform and real depth in value-adding verticals where we can drive more and more growth. You see that a little bit as you look at the verticals that we've clearly got some market position in already. Construction, real estate and health and nutrition, our two biggest verticals, life sciences coming up fast. Agriculture, same size as life sciences and international Yachting by size, smaller, but now we are by far and away the market leader in those markets. On the top of this slide, what I've identified there are the features of exhibitions markets that we find most attractive. They are B2B, not B2B2C, because it's much more predictable. Fragmented, because then there's a role for the convener to bring together the buyers and the sellers in a place where they have unique value. High value, i.e., where the sellers are selling a product which has high value and high margin, and therefore, the cost of participation is relatively a small percentage of their marketing or sales expenditure. Truly international, because then you can drive internationalization and you can move it into multiple markets, and self-evidently growing. If you get those features correct, you can drive real growth into your business. We now have built a very attractive portfolio of exhibition brands. I've broken these out by dollar bands. We have at the top end, over $5 million of revenue. We have about 50 brands at over $5 million of revenue. So there's a very nice spread. We're not exposed to any single point or any single market or any single geography. That has been a very purposeful building of a portfolio over the last three or four years, and one that we intend to continue to develop. Just looking more broadly at North America, we made a decision, the Chairman will recall at the first strategy meeting we had as a board, we looked at our geographic footprint, we looked at where growth was, we looked at where the markets were, we looked at our distributed portfolio, and we realized that actually there was a real opportunity for us to scale in North America. I remember being in this room, with slightly fewer people, and someone asking the question, there's a long list of British companies that have gone into North America and then ended up in a sort of graveyard just off the East Coast. How are you going to try and approach that and avoid that outcome? We've tried to do it in a very steady, measured way. We now find ourselves in a situation where North America is our largest market by revenue. It is north of $300 million of revenue for all three of our mainstay businesses. It's our single largest market for colleagues. We are organized, as you can see there, through a mixture of shared service backup, doing different things in different locations, vertical strength, and then country HQs in New York and Toronto for our Canadian business. Steady growth with more to come with a lot of runway ahead of us. Looking at how we're developing what we call the operational fitness of the group, what are we trying to build into the business? What we're trying to build into the business is systems strength. Depending on where you go in the business, you would say we have a long journey still to go, or we've made some good progress. Other colleagues can make their own judgment on where we are on that. Generally speaking, I think everyone would accept the business is more robust today than it was yesterday, across pretty much every operating function in the business. We are now, this year, going to deploy a standard ERP program across the business. We have a distributed set of financial reporting systems. For a business of this size and scale, we don't need that. We're partnering with SAP and PwC to deploy an ERP program across the business to give us standardization, not just in reporting but also in customer provisioning. That will make us much more fluid and fast to customer response, as well as give us more accurate real-time data to manage the business more tightly. Our operational performance, our productivity per head, has gone up materially over the last three or four years from about 170,000 three or four years ago to about 200,000 a head. The yield in the business is becoming higher. We're a people-based business. We say that a lot. That means operational leverage is important. We've invested in our people. We've invested in leadership and training. We've invested in a graduate program, an apprenticeship program, to try and drive the quality and understanding of the business. We've invested in rewards, mainly around equity. We didn't really have equity participation in the business. We now have a one-for-one matching scheme. If you're any colleague in the company, you can buy a share, get one for free up to a certain level. It's capped. You have to hold it for a period of time, just to put the caveats out there. The senior management packages are much more weighted towards equity than was historically the case. We've balanced out the reward schemes. Also, we've driven quite a lot of time and effort into a whole series of shared activities around the group to drive commonality of purpose in the business. That snapshot hopefully gives you a little bit more granularity of what's going on underneath the bonnet. Here is our outlook for 2017. We are aiming to deliver a further year of growth on revenue, profit, earnings, and dividend, as well as cash. As that breaks down by the portfolio, that's a strong year of growth in GE focused around those verticals. Improving growth in BI, at the same time as combining the Penton assets and further investment in the verticals in that business. Penton will, by the time we report the half year, be fully integrated into the business and into the divisions in the proportions that Gareth alluded to earlier, and we'll take the strength they had in their key verticals and use that to drive the way in which we manage our end markets. Knowledge and Networking, we are going to simplify that business to pivot around the three end vertical markets of TMT, life sciences, and global finance. Academic publishing, we see remaining strong in journals. We need to manage our books business tightly to aim off of the decline trend in textbooks. We have fresh leadership coming in at the midpoint of the year, and we believe we have a defensible position through our strength in specialisms. This is the picture that we would like it to produce for a post-GAP business, which Gareth has touched on. Now it is time to tell you that this is not my new boat. We were going to do an investor day, and the Chairman very kindly offered to share his boat. Gareth exercised the cost rigor for which he is renowned. We will be holding an investor day, which we postponed last year because of the Penton addition. I think we are scheduling to do that in June, so if that date is free in your diary, please put it in, the 15th of June, and we will do a deep dive there on where we have got to on the Penton integration. We will probably have a pretty clear update of where we are on the KNN portfolio, and we will be able to showcase our plans for the business fully on a post-GAP basis. If you could mark your diaries, you will be very welcome to join us at that event. Now I will take questions. No? Is there a microphone? I think there is one. Hi. It's Will Packer from Exane BNP Paribas. Three questions, please. Firstly, could you just clarify the guidance around the Knowledge and Networking division? You've announced the strategic review of these underperforming assets. Is the return to growth inclusive or exclusive of that business? Secondly, could we have a breakdown of the growth within your books business between monographs, reference materials, and textbooks, which you mentioned, but we didn't get the detail. Finally, on a wider question on M&A. If we think of post-financial crisis M&A in the professional information space, a lot of it's been buying growth. You recently acquired Penton, which has a slower growth rate than your own whole business. The Yachting portfolio, my understanding is growing slower than your own exhibitions portfolio. Could we go into the detail there? It's the industrialization of events and exhibitions, I understand, and verticals. Should we think of this as deferred growth, which will come through later, or is this more of a cost story? Could you just expand there? Thanks. Sorry, just so I'm clear, Will. The cost story, your question is in relation to YPI or more generally? More generally with M&A recently. Okay. Why don't I try and take the third and the first, and Gareth, if you want to come in on the breakdown on the books portfolio. On the first easy one, it's exclusive. I would encourage you to look at our KNN business, ex the domestic conference businesses. On your third question, you're correct. The YPI business is growing, just to take that last point, is growing slower than our GE business but higher than the aggregate group. Penton, I think we were clear from the beginning, we're not anticipating revenue growth in 2017 from Penton. We do believe going into 2018 and beyond, once that business is fully integrated and the mix of that business rests at where we think it will rest, with a larger events business, a larger subscriptions business, and a larger digital business and print, I don't actually think print will unwind in total, but print winds out to a resting point, then I think that business will come back into growth. Did we buy it for cost reasons, either of them? No. But actually, it does give us some capabilities which are useful on cost, particularly in procurement, particularly in some back office provisioning. Actually, what we bought it for was to give us strength in verticals, and we believe ultimately that is what drives our market maker strategy, is we become an essential part of end markets. And when you become an essential part of an end market, and you're integrated into that sales, marketing, product innovation, product launch ecosystem, that's a very strong place to be, as long as you're giving enough back to the market. And that gets to the heart of how do you innovate through content and the way in which you keep your events relevant. Which I think is a change for the exhibitions industry generally, and one that I think we are trying to lead through the markets that we know most about, and that's where we have most strength in those verticals. I'd say our leading example of that today is health and nutrition, by some margin. That is a deep, rich content business, which also has powerful exhibition brands. I think we're beginning to get there in agriculture. I think we're beginning to get there in real estate and construction. I think we've got work to do in our other markets. But work to do is a good thing because that gives you some further runway for investment and growth. Do you want to come in on the books breakdown, Gareth? I'd say, Will, your appetite for data on academic publishing never ceases to amaze me. On this particular one, I think you've beaten me. To be honest, we don't really look at the business that way. We think about it in terms of subject areas. As Stephen said, circa 60 subject areas in the business, we think of it that way. We think of it in terms of geographies. We don't really do the analysis in that sort of format, though. Maybe to think of it a different way. If we think of the growth in spending between spending by students on your books business and between libraries on your books business, are they both in decline? Is libraries, is that more resilient? I genuinely don't have the data to answer that. You don't. You want my gut answer. My gut answer would be that individual unit purchasing is probably declining faster than institutional purchasing. We do not track that data. That would be my gut answer to that. Thanks. Matthew. Thanks a lot. It is Matthew from Credit Suisse. Two questions, please. I know your ultimate ambition is to get the business up to 3% roughly organic growth or more. Maybe you can give a timescale for when you think you might achieve that. The second question is, given the integration, is there a scope for a sale of the textbooks business? Gosh. Two challenging opening questions, Matthew. Yes to your first question, and as to a date, we deliberately do not give forward guidance, specific guidance, but I think that is our post-GAP ambition. I would hope to see the group go into 2018 with all of our businesses in growth. It will be a mix, depending. I think GE will be mid-single digits. I think BI will be better than it was this year. I am hopeful that academic will hold. KNN has been the swing vote for some time, and I think we can tidy that up. I do not know what that produces in maths, probably somewhere between 2 and 3. When we get through 3, we will see. On the portfolio, the discipline we have taken is that we are now becoming much more rigorous, I think, on an annual basis of where we have got bits of the portfolio where we cannot see long-term value, we will take action. What we have commented on today is our KNN business, and I think that makes sense. We will see how 2017 trades in books. There is this forest of hands. You choose. Thank you. Thanks. Naseem Whitaker from Liberum. Three questions, please. First of all, you mentioned the statement about post the GAP plan, there will be continued investment of around 3%-5% of revenues. Could you just give us an idea how we should think about that in terms of breakdown between the P&L and CapEx, and then also as well, just a few ideas of what that is on. Second of all, just actually coming back to what you just said in terms of academic, that you hope academic will hold its weight. Should we expect from what you are saying that basically flat organic revenue growth, maybe slightly positive in terms of a couple of basis points in terms of organic should be the way that we are looking at things given perhaps the pressure on books within the business. Third of all, just going back to 2016 numbers and the guidance. I think for the 9 months you talked about academic being perhaps a touch below 2015's 1.6% organic. Obviously, it came in a bit below that. If you take Knowledge and Networking you were talking about flat for the full year, it obviously came in at -4%. Now that was at the 9-month statement and obviously you would have thought that you would have had good visibility on those businesses, particularly given their patterns. Just wondering if you could perhaps tell us what exactly happened there in terms of your guidance and whether that should actually have any consequence in terms of how we should think about visibility moving forward. Yep. Let me come in on those and Gareth add if you like. Those two businesses that you are probing on are our two retail businesses, KNN and Academic Books. They are also the two businesses that are most back-end weighted. I think we were very transparent. I remember being lightly toasted by Patrick in Barcelona and asked those questions, and I think I said, and I think I may be quoting, "The outcome could be good, it could be average, or it could be bad." The difficulty is, it is very difficult to predict, because it is a very back-end weighted business. In KNN, in November alone, KNN does something like 40% of its annual profit. So it is a very retail business. So let us take it down a notch. What did we see in KNN to your what happened? We saw delegate numbers at the back end of the year come off materially. We felt that in the numbers. If you take the minus 4% year-end picture, and you take out the domestic conference businesses, the business as a whole would have been about minus 1%. To, I cannot remember whose question, I think Will's opening question, if you take that out of the 2016 numbers for the purpose of looking at 2017 to your forward visibility, that gives you some sense of where the underlying business was. There is still work to do in the underlying portfolio, but it is much more predictable. In books, I think if I were you, I would be doing what you are suggesting, which is I would be modeling year on year, steady. Marginally positive in the breadth of the portfolio, books and journals. We would hope to beat that. I think that would be sensible caution, looking at the forward year in academic. I hope that answers your. It does. Just a quick follow-up question. I do not want to put you in the same camp as Pearson, but one of the things that has impacted. No, I sort of honestly do not. One of the things that has impacted Pearson is trying to sort of guide the market on the top line, where it does have the sort of back-end issue that you mentioned, and particularly with the academic books. Do you think perhaps it maybe would be better of moving forwards not to try and guide the market on something which is so unpredictable? Because some of the trends that you are outlining with books are some of the things that we have seen with Pearson in terms of the whole things, for example, with book rental. There has always been this argument that you are more protected because you are at the higher end of the market. I think you said yourself that sort of your books may be relatively not that expensive, but if they are still, let us say, $200 or whatever. Just in relatively may not be the same as in absolute terms. Perhaps it might be better just to sort of scale back on maybe some of the predictions. Hey, look, I often say to Richard, to lay it off on him, that I would be much happier if people were more focused on cash than on revenue in our business. Because ultimately, I think that is one of the key indicators of the health of the business. If you look at the group as a whole in going into 2017, what is the pro forma revenue? Roughly GBP 1.7 billion in the year. Yeah. Books is GBP 200 million and a bit. Of that GBP 200 million, the textbooks portion, the bit where we have seen most variability, is probably 15%-20% of that. So actually, as a proportion of the overall revenue, it is relatively little. Which is why people like you not unreasonably, pushes for revenue guidance and cash guidance. And I understand that. It is not my place to comment on other companies and what neighborhood they are in. But the variability in our business, I take your point about where we were. But let us put hard numbers around this. The difference between us doing 0.3% and 1% growth is about GBP 4 million of revenue. So the variabilities you are talking about here are very small. Now, that is partly the nature of our business. And if I am proven wrong, I am sure you may not be the first to tell me, there might be a long queue. But my prediction would be that we are all, as an industry, going to see progressive change in and around reference and monograph books. And that is what I was trying to lay out in the presentation. I think the question is: What is the pace and rate of that, and how do you manage for that? We believe, and we think we can evidence it, that the pace and rate of what is happening in our part of the market is manageable if we react to it. And that requires us to become much more of a digital business, much more of a data business, and be much more rigorous in our portfolio as to where we drive content expansion rather than just doing it across the board. And that I think, is what gives us confidence that we can hold the business steady. Sorry, the investment question as well, please. Sorry, remind me. The 3%-5%. Oh, right. The comments in the release. Yeah, that's a CapEx number, and that's not an OpEx number. That is our view coming out of the growth acceleration plan. Our feeling going into the growth acceleration plan was that we'd under-invested in the business over a period of time, and that we needed a bit of catch-up. What we've learned from the growth acceleration plan is that is correct, and that running it at previous, like returning to previous levels of CapEx, I think would impair the ability of the business to grow going forward. So we're saying 3% to 5% as a guidance, as a percentage of revenue. It depends on the mix of the business, because obviously areas like academic publishing and business intelligence are more CapEx-intensive. Something like GE is relatively CapEx light. So it depends on the mix of the business. And I think you asked about the assets. Generally, a lot of it is IT infrastructure, really. That's kind of the key area of spend, both in terms of infrastructure, platforms, and the ability to take the product to market in AP and BI in a way that's efficient, in a way that's discoverable for our customers, in a way that helps us monetize it, are the key sort of areas of focus for us. Nick? Yeah. Hi, Nick Dempsey from Barclays. Three questions left, please. First of all, on KNN and the GBP 50 million that you're doing a strategic review on, is one outcome of that that you could just close those shows? In which case, that would impact your organic growth in a pruning way like UBM, which I reckon would be 3.5 points if you pruned out all of them on a full year organic growth. Second question, new management coming in at AP. If they come in and say to you, "The way that we get this business to grow a bit more is by taking 2-3 points off the margin," how do you respond to that? And third question, on your P&L charges, integration restructuring, I think that the combined number is about GBP 40 million in the P&L, but in the cash flow, it looks like quite a lot less. Is there a timing issue there? Do we have to stick in a chunk of cash restructuring incentive? Okay. I will let Gareth take the third question. On the second, let me start with that. We had a similar discussion, I think, and I don't want to put words in your mouth, Nick, but I think we had a similar discussion about BI, actually, when we were laying out Because in fact, we laid out our strategy for BI before Patrick joined the business. And whenever you bring in executive leadership, you want it to do exactly that. You want it to be executive, and you want it to lead the business. What I would say is, in the course of the search and selection process that we have been engaged in, we have been having very detailed conversations with prospective candidates about what the challenges are in the markets, and we've touched on some of those today, what the fundamental strength is of the business, and its contribution to the Informa Group, and how you make the necessary level of change in order to future-proof that business. But not in such a way as you have to go radically backwards in order to go attractively forwards. I think that path of measured change has been really how we've approached the group as a whole. It's how we approached BI, and I think we will similarly approach AP. Will there be some trade-offs at the margin to be made on the margin? We don't know enough yet to know. But what I'm very clear on is that we want to see that business sustainably in growth in the mid to long term, as well as contributing short term. I think we can navigate our way between those two things. So that's how we're approaching it. I hope that gives you some color. On KNN, you'll forgive me if I don't get drawn on that. Actually, if you were inside, I was going to say all of those businesses, certainly most of those individual businesses, and I'm conscious that there will be colleagues watching this webcast who are inside those businesses. Actually, there's value in those businesses, in the domestic market. And we believe not that they are bad businesses, but that actually it's probably the case that someone else in whole or in part would be a better owner of those businesses because they would focus in their end market, often in their own language, and often in the subject matter that's very relevant to that end market and that geography. In that, I think there's value to be had. We'll see how that plays out through the year. On the P&L charges, Gareth, do you have some detail on that? Yeah, sure. Just on the organic point, when we shut down product, we don't strip that out of our organic result. That's part of the overall mix of the business. So we're not stripping that out of the numbers. I'm not sure. As Stephen said, who knows what will happen to those businesses in 2017, but product rationalization is not something we normally strip out. In terms of the exceptionals and the cash, yeah, I think you're right there. I think there is basically primarily on the acquisition cost side, principally around the pension costs. We've taken the charges for those in 2016, but not all the cash has flowed in 2016. So probably about a GBP 10 million cash outflow, GBP 10 million-GBP 15 million cash outflow that needs to be incorporated in the 2017 cash flow as you start the year to show the settlement of those liabilities. There is a question behind you as well. Take Ruchi first, but there is a question there as well. Thank you. It is Ruchi Malaiya from Bank of America Merrill Lynch. On the exhibition side, the Yacht Acts acquisition that you made, you talked about it being a complement to the Monaco Yacht Show. Could you just give us some idea, is that part of the same ecosystem? It brings something additional. Are they direct competitors? In which case are you gaining something on the pricing ability in that vertical by owning both? On the academic side, could you talk a bit whether you have mentioned that you have seen some elements of pressure from rentals and the other market factors that others have talked about. I know that is specific to the more undergraduate level market. But on that textbook rental side, do you have in place revenue shares with your partners if the market does shift more in that direction? Or is there something to do on that side? Thanks. Okay. Let me take the first one, and then Gareth, you might want to come in on the second as well. Are you okay? Sorry. I am always very nervous when people talk about pricing power. It is not that we are naive about the value that we bring to a market. But rarely when you expand in a market is it a good idea to start with pricing power. If you look at the ecosystem of that market, what really drives it is the interrelationship between the brokers, the shipyards, the designers, the owners, and then all of the ancillary services around those markets. Today, if you looked at that market, the U.S. is a powerful driver of purchasing in the international yachting market. Some of that is to do with what is happening in other parts of the world. So an awful lot of innovation and participation in that market is coming out of the U.S. Monaco is geographically in Europe, but the show is a truly international show. The ability to be able to have a non-geographic conversation with those communities is very helpful. We also believe that there is growth opportunity in the North American market. We also believe there is international growth opportunity as international Yachting expands in other geographies. To own and operate all of the major shows in that market is a very good place to be. The reverse of what you say, I think is also true, it allows us to become really the major player in that end market, and I think that gives us some price protection, which might be another way of saying what you are saying. I think it secures our position, but also gives us some future growth. On your second question on revenue share, do you want to come in on that, Gareth? I am not sure about that one. That is something I will have to come back to you on, I think. Thank you. Morning, Katharine Tate from Goldman Sachs. You talked a lot about the margin improvement in the group being driven by business mix. If I look at GE and Academic Publishing, you saw 115 and 140 basis points improvement in those two divisions separately. I wonder if you could break down what the key drivers were of the improvements there. Secondly, just coming back on M&A, you very clearly illustrated why the rationale for expanding in the U.S. within Global Exhibitions. I wonder if you could talk about your ambitions going forward. Are you happy now with your geographic exposure and your verticalization, I think you coined, or how should we think about further acquisitions going forward? Should I take the second one and then come in on the margin mix? I think on M&A, for obvious reasons and good reasons, we are pretty focused on the Penton integration as a group. As Gareth said in his presentation, it is going well, but it is 3 and a half months in, so we have got a job of work to do. We are intending to fully integrate that business. We are not going to be running it as a sort of separate island. In a sense, that makes the integration task not harder, but there is more work to do, as you can understand. We are integrating it in the main into two operating businesses, GE and BI. So there is quite a lot of moving parts in that. We feel comfortable about those moving parts, but that is quite a lot of leadership change. It is quite a lot of system change. Generally, and Gareth is right, we have been very pleased by the human reaction within the business. I think if you were to do a straw poll, certainly if I measure the inflow of traffic on my own blog inside the company, I am having more conversations with the 1,000 colleagues from Penton on a proportional basis than anyone else. So there is a high level of enthusiasm within the company to join within the Penton company, to join the group. That is good. But we are very focused on getting that done. Are we alive to other opportunities? When they come along, we are. Generally speaking, we have found, and this is not an exclusive approach, but we have found where additions have worked best for us is when we have been having long-term bilateral conversations. It was true with Virgo, it was true with Hanley Wood, it was true with Penton, it was true with YPI. Generally, that allows us to get to know the business. We understand where it sits and fits. We know how it integrates, and it means that our prior planning is more rigorous, because acquisitions are important, but what is much more important is integration and then operating the acquisition. It is always getting that balance right. Short-term focus on Penton, we are alive to opportunities, particularly in key verticals, and we constantly scan the market, but not a short-term priority. On your first question on the margin mix. Margin point, yeah. The two main divisions driving the margin improvement year-on-year, Global Exhibitions and Academic Publishing. In Global Exhibitions, it is a combination of the fact that the revenue growth drops through at a very high rate into the AP results, and that gives you a good operational gearing in terms of your margin and the numbers. Also the U.S. exhibition industry is generally a higher margin business because the venue costs are lower in the U.S. So those two points both help Exhibitions. In terms of Academic Publishing, you have got a mix effect here because the revenue is quite heavily weighted towards the U.S. and therefore U.S. dollar revenue streams, but actually the production costs in the division are weighted towards the U.K. and therefore sterling. So the uptick in the margin in Academic is primarily a currency effect rather than a trading effect. Patrick. Yeah. It's Patrick Wellington at Morgan Stanley. A couple of questions. Firstly, you mentioned the deferred revenue growth of Business Intelligence. Can you give us an idea of what the rate of that deferred growth is? Secondly, on GAP, and the GAP expenditure, you've got a bit of a range, $70 million-$90 million, but we're in the final year, so it should be possible to sort of zero down on that a bit more. Have we just had the announcement of some of GAP? Because 3%-5% is GBP 50 million-GBP 80 million a year, which is pretty punchy. It's also quite a big range. Is this your incremental sum of GAP that's just been announced? Or daughter of GAP. Thirdly, growth and acceleration plan. I'm not sure, because last year you did 0.1% EBITA growth, 2015. This year you did zero organic growth in EBITA. As we've just heard, it got a benefit from currency in academic publishing. So actually going backwards. If I did a different checklist of yours on what's gone well and what's gone badly over the last three years, I reckon it's two all. Which is that you've done a good job in global exhibitions and a reasonable job in BI, although coming from a very low base. Whereas KNN hasn't worked at all, and academic's gone backwards. So how are we fixed going forward for a growth and acceleration plan? Thank you, Patrick. I've written down six questions. I know. Patrick didn't say I've got three, unlike everybody else. Let me see if I can work my way around those. Deferred revenue growth. Can you come back on the specific growth rate? Yep GAP, you're right. We've always said, I think it's between 70 and 90. I think, based on what we know here today, it'll be nearer 90 than 70, would be what I would say. Based on the forward plan of projects. Again, I think we have been consistent. GAP has never been a big chunky project. It's a series of very targeted activities. Many of the work streams are very specific, granular in nature, and we approve them in a pretty rigorous cost-controlled way. So, in a sense, I would take some reassurance that we don't know specifically what the end number is, but the range hasn't changed. Is it son of GAP? Colorfully put, but broadly accurate. I think what we've learned about operating this business, as Gareth said, is that particularly as the Intelligence and data side of the business grows, you need to have a sustainable level of expenditure. Whether it's 50 or whether it's 80, because the 3-5 is a big range, I think will vary partly depending upon the size of the portfolio. Where GE is as a proportion of the business, because that's the lower capital demand business than BI, and where we think the investment can drive a return. I think as a model, I think we've been pretty consistent that when we pop out the other side, that I think is a standard level. Is it 2 all or 3-1? I'm never going to trade football statistics with you. I think our view would be that the fundamental operating strength of the portfolio is in a better place. Conferences was always going to be a market we were going to have to find a way of exiting. National conferences and moving to a market which we could defend in events, exhibitions, and in end markets. AP, it's definitely gone backwards from its headline growth. I think the highest growth number, your memory will be better than mine, Patrick, I think was about 5%, certainly in my recent memory. Certainly, that's some way off 0.5%. But the fundamental strength of that business and its contribution to the group remains there. The attractions of that business in margin, in cash generation, in the market position, we would strongly defend. We think we are very good owners of that business, and it will, in the balance of a broader group, be a significant contributor to the health of the company. Do you want to come in on the deferred revenue? Two points. On the deferred income in BI, what we really look at is annualized contract value there. That then takes out some of the vagaries of timing of closing subscriptions, et cetera. We would say the annualized contract value is kind of growing at about 1.5%-2% per annum for BI as a whole. The other point I will just come in on was on the organic operating profit being flat in some of the businesses. You mentioned currency benefit. Currency is stripped out of that number. That is not a contributor to the performance, the operating profit growth performance in the business. Just quickly to follow up. Yep. The group margin then. When you look at that GAP investment, how should we think about a group margin of 31% over the next couple of years? There is mix in there as well, but are we looking for that to rise, or what is the general direction going to be? If it's a modeling question, I'm looking at Richard here for guidance. I don't want to say something that he would disagree with. I would feel comfortable with you holding the margin there. Notwithstanding your point that we want to invest in the business, or your observation that we're investing in the business, we try to see if we can drive improvement in the margin where we can. I think margins at that level are attractive. If we can maintain the business with those operating margins, I think we would feel very comfortable. Yeah, slightly depends on the mix. As GE's growing as a proportion of the business, that helps the margin mix overall. Are there any final questions? Okay. Thank you very much for coming in person. Thank you for your questions. I hope you found that useful. Hopefully we'll see many of you at the investor day.

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