Earnings Call: H2 2015

Feb 11, 2016

Summary

2015 organic revenue grew 1%, adjusted operating profit rose 9.5% to £366m, and free cash flow reached £300m. 2016 priorities are growth and disciplined investment amid macro headwinds.

Good morning, everybody. Thank you very much for coming to the Informa annual results presentation for 2015. We are also being broadcast live on our webcast, so I am going to, unfortunately, stay a little bit podium-bound in order that the recording makes sense for those people who are watching it that way or following it that way. Obviously, this is our annual results presentation, so the normal safe harbor rules apply. For those of you in the room, thank you very much for coming, making the effort. I know this is a busy earnings season. There are plenty of other shows in town, so we appreciate people taking the time to come and be with us in person. To make the trip particularly worthwhile, we have provided you with a party bag to take home, which is in this rather nice little Hessian sack here, which you can take away. I was reading yesterday that at the Oscars this year, there is apparently a party bag, for those of you who have either received an invitation or are thinking of attending, with a set of freebies worth $200,000. I can assure you ours are not. Nevertheless, are hopefully quite interesting. You get a little bit of a selection of our products, which we thought we would try and bring to life a bit. There are a few free subscriptions, trials to some of our intelligence products, discounts to go to some of our easier-to-get-to conferences and major events. An old-fashioned physical book on how to run your businesses better. No insult intended. Some free access codes to the digital version. So it gives you a chance to roam around some of what we do in person, as well as listening to us talk about it. We have also put in a little helpful note in the front telling you what everything is and a contact name and number in case something goes wrong. So you have end-to-end customer service. Anyway, to get into the results presentation, I am joined by Gareth Wright, who most of you know very well, our Group Finance Director. Gareth and I will tag team through the presentation, then we will throw it open to Q&A. We published the results release at 7:00 A.M. U.K. time this morning. I think our summary is pretty clearly laid out in that document. We, I think, have been pretty consistent in trying to set ourselves the task last year of delivering a combination of progress and performance. We would highlight the progress in a number of areas and the performance you can make your own judgments on. Our portfolio, for those of you who have been following the company for a while, is really a lot more focused now than it has been for some time. We have been through a pretty rigorous portfolio assessment. We have disposed of a lot of what are largely small businesses, but nevertheless, quite time-consuming in management time and attention, and not particularly profit enhancing. That has given us a better platform to go forward with. We are in investment mode. We have been clear about that. We now have a significant number of investment projects underway across the group, which Gareth will talk about in a bit of detail later. We really now have an operating model which we are now very familiar with. We are in our second full year of operating it. The business now very much works and operates, is run, and in the way in which it is reported. That makes for alignment with strategy and execution easier to achieve. You see that, I think, in the results. You see it in some less obvious areas, such as our working capital and cash flow performance, where the management controls in the business are just considerably tighter. Our acquisition strategy has been very focused, and we have been, I think, hopefully consistent about that, which is largely around the U.S. I will talk a little bit more about that. Trying to improve our post-acquisition integration and execution skills. The business feels pretty robust financially. The balance sheet is healthy. The disciplines we put around working capital and cash management, Gareth will return to. We are in investment mode for two reasons. One, to improve returns over the medium to long term. Secondly, to build capabilities for further scale and growth. These numbers you have seen. A notch up in organic terms in revenue, but good performance on the acquisitions we made. Flowed through nicely on the profit. The EPS benefiting from a small equalization on tax, given the weighting of the portfolio towards more U.S. assets. Cash flow growth very strong. We have taken the decision, or should I say more accurately, the board, after quite a detailed and thorough conversation, took the decision to up the minimum dividend commitment for the remainder of the Growth Acceleration Plan from a minimum increase of 2% a year to 4% a year for the next two years. That gives us, I think, a good platform to go into 2016. But for those of you who are looking at market share screens today, you do not need me to tell you that there are some headwinds. Although I was trying to find a new word to describe what a headwind is today. A body wind. There are a lot of movements in the market. I am not putting this up to be a sort of random commentator. We are very consistent, I think, in making the point that one of the great strengths of Informa is that we are a super specialist business. Therefore, I personally would draw no general conclusions from the specific circumstances of the specialist markets in which we operate. It actually gives us quite a lot of resilience and strength, but it does not make us a market commentator. The relevance of these points on this slide are they affect our business in a very practical sense. We are an international company, so currency fluctuations are material. We have a significant exhibitions and events face-to-face media business, so travel, terrorism, and travel health issues are material. Recession or economic challenges in markets in which we operate, like Brazil or Russia, affect us. All of those things combined were definitely things that we had to deal with during 2015, like everyone else. Really the point of this is to say that some or all of these continue, but I think the reassuring news is, if you are an investor in our company, is that notwithstanding those facts in 2015 and probable challenges in 2016, the business remained pretty resilient. There are, I think, an emerging number of reasons for that. These are some, but not all of them. The first, to work from the top of the slide, is the point that we try to make increasingly, is that we are a niche business. I describe it inside the company and to people who are thinking of joining the business as the God of small things. We operate in very, very narrow niche markets. Many of them are very fragmented markets. In many of those markets, we are the number 1 or 2 player in what we do. That provides us with a high degree of value and protection. The margins are strong because of that unique position. We are a portfolio business. We are not a pure play publisher. We are not a pure play data business. We are not a pure play exhibitions business. We are deliberately and purposefully a portfolio, and we believe that portfolio gives us strength. We believe in content, because ultimately content provides you with information that other people need, either in its purest form or in its interpreted form. We increasingly, at the group level, drive our shared services across the group, to improve the operating performance in each of the four portfolio businesses. We have tried to drive up our predictable revenues, and we go into 2016 with probably north of 50% of our revenues, either in subscription or advanced booking forward planned revenues in our events business. We give ourselves more revenue predictability than was previously the case. We are now a very significant, in our terms, U.S. business. About $800 million of our revenue is in the U.S., and that has been a very conscious decision to pivot towards that market. It still makes us a very small player in that market, with multiple opportunities for further expansion. We know we need to become more and more of a digital business. It was one of the things we needed to materially change, and that has been a large part of the investment focus for the last couple of years and will continue to be so for the next 2 to 3 years. We see more scale benefits as we get larger in each of our businesses. We think the international reach of our sales and distribution capability makes us very effective as an acquirer of small niche assets, which we can then integrate and expand internationally. The net of all of that means we are in a position to be able to manage our business effectively to drive both capital growth and consistent dividend growth. Those are fundamental strengths of the business that we seek to manage on a regular basis. This is a little snapshot of the divisions. The two lead horses of the group in terms of growth and performance for the last 2 years have been global exhibitions and academic publishing. One is a relatively new market for us, the other is a relatively old market for us. We made a very conscious decision to begin to scale in exhibitions. We are now, I think, the third largest player in the world in that market, and we have ambitions to continue to grow. It is nearly a third of our profit. We have strong positions in five or six key market verticals. We are spread in four or five locations internationally, and we are investing now in procurement, data management, marketing, and customer management capabilities to further scale that business. We performed a second year of double-digit growth. At the moment, as the challenger in that market of size, we feel good about where we are. The biggest business in the group remains Taylor & Francis, academic publishing, where we remain resilient in a market that is facing significant challenges in usage, in format, in distribution, in pricing. Some of the things that give us strength remain true. We are an upper-level publisher. We are not a textbook publisher. We are not a large-scale college publisher. We are not a K12 publisher. We are a specialist provider of high-level content for subject specialists, either teachers or students. We have a business that is weighted towards journals, but we have a significant books business. In our books business, the majority of it is in humanities and social sciences. In humanities and social sciences, we are largely the number one or two player in the markets in which we operate. Last year was a tough market, particularly in a particular corner of our business, which was in science. We saw the revenue guidance that we were hoping for, which was to hit 2% organic growth in the year. We had a slight miss on that. We go into 2016 confident that we can be there or thereabouts, in another year of consistent growth. The margins and profitability of that business remain really very attractive. These are our two repairing and recovering businesses, business intelligence and knowledge and networking. Much discussion about business intelligence. Long time or mid-time followers and holders will remember there was quite a debate about whether we should exit this market and these assets. We took a view that there were some we should exit, but many that we thought had long-term value. We needed to get it back into growth. To do that, we needed to focus around the markets, to materially change the operating model within our own business so that we had a market-facing approach to the five verticals we chose to operate in. In the first instance, we put most of the effort around changing our sales and go-to-market structure, and focusing deeply on subscription value and subscription renewal. Those three changes are really what has driven the improvement in performance. The first thing I would like to do is pay testament to the management team, who I think have done a really sterling job over the last 18 months to 2 years. We found ourselves in growth in the fourth quarter of last year, which in and of itself is not remarkable given market norms in that market, but is remarkable for us because it is the first time we have been in growth in that market in 6 years. We now feel comfortable going into 2016, with a target for a full year of growth across that division. Knowledge and networking, what people often call Informa's old conference business, which is in part what it is really a kind of sleeping giant of future capability in my own view. I've often seen it as the engine for what I describe as content and communities. We've simplified that business now around three market verticals: life sciences, finance, and TMT. We are pruning the portfolio significantly so that it is moving more and more towards larger scale events and protectable, defensible content. We've done a lot of pruning of the remaining long tail of businesses. We're also making quite a significant level of investment in people and in technology in the way in which we do marketing and data management in that business. This is our events and exhibitions portfolio, which I put up just to kind of give you a sense of the breadth and range. You'll all have a variety of reactions, which I won't ask you to share with me when you read these. The thing that always strikes me, I think I pretty much have attended all but two or three of these over the last three or four years. The thing that is most striking about them is that if you're not in those markets, why on earth would you go there? That actually fundamentally is the great strength of the business. Because for the people who are in those individual communities, they are must-attend events. The value of face-to-face must-attend events is progressively going up and up and up. Its contribution to the sales, business development, and marketing proposition for the increasing number of discrete specialist business-to-business communities is also going up. This is 40 of our major brands and events across the portfolio. Many of which we have bought or built over the last three to four years, and we are continuing to give ourselves range and breadth. I think in our top 25 events in 2015, we had nearly 1 million attendees. We have got a range of different styles of events, from festivals to a highly accredited learning confexes, through to major large-scale indoor or outdoor business-to-business trade shows. It really is, if you do what we do for a living, a fantastically exciting set of brands and businesses to grow and develop. We take a lot of pleasure in the improvement in our reach and our scale. In our academic publishing business similarly, this gives you a little bit of a sense of the markets in which we operate in books and in journals. We make the point often that our differentiation is our content, the depth of our content, the range of our content. In our books business, we have nearly 115,000 to 120,000 titles. We publish between 6,000 or 7,000 new titles a year. We are in pretty much every one of those categories bar a couple, the number one or two publisher in those areas. Similarly, in journals, we have over 2,200 journals ranking with material impact factors in sectors and categories where we are the must feature journal or publisher for the students or teachers of those academic subjects. In BI, we are a specialist in business intelligence niches, and I've picked out a couple here, in agribusiness, in pharma, maritime, TMT. In each and all of those areas, what we are increasingly trying to do is move from a one-off advertising copy sale, or unpredictable revenue mix, to a recurring subscription-led and predictable subscription-led business model. We spend a lot of time, as we said earlier, driving up our percentage of revenue from subscriptions, the value of the annual contract, when we do that renewal, what the value of the renewal rate is, significantly improving the pre-expiry renewal numbers because that is an easy or easier sales channel, and at the same time, driving up our new business pipeline and the absolute value of that pipeline. Each and all of those have been what has contributed to taking that business from a 9, 10% annual decline down to a sub below 2% and going into 2016 in growth. We are an international business. As I said, we are spread now. The U.K. is about 12% of our revenue. We are now, as you know, firmly back here in the United Kingdom in headquarters, but it is actually just over 10% of our revenue as a group. Obviously, there are more people here than that, but in revenue terms, North America and the rest of the world makes us a truly international business. As I said in my opening remarks, if you look at the subscription and the portion of those exhibitor revenues, which are predictable, we are now at a point where north of half of our revenue is pretty predictable at the beginning of the year. If you flick back to, can I flick back two slides? Can I do it again? Yeah. If you flick back to these ones here, if you look at our top 40 events, there is a range between sort of 30% advance booking through to best in class where you have 85% advance booking. So you really are getting to a point where you have a higher level of forward visibility in the revenue. This program, which we have talked about often over the last couple of years, the Growth Acceleration Plan, remains pretty much the template in the way in which we are driving the business. As I said, the operating structure is pretty much in place and is the way we both report and run the business. We made a lot of change in management in the divisions, and now in the layer below the divisions. The portfolio, we are pretty happy with the portfolio we have now got. Now we are adding to it rather than subtracting in the main. Our acquisition strategy is focused around specific market verticals and in geography are weighting towards North America. Our investment program is still on track to be no more than the GBP 90 million over the period that we have outlined. Our balance sheet and our financial and funding position remains reasonably robust. With that, I will now hand over to Gareth to take you through the details of the financial reports. Gareth. Thank you, Stephen. Thank you to everyone in the room and those watching by the webcast for taking the time to listen to our presentation. These are 2015 results which continue to deliver on the promise made when Stephen and I first stood in front of you two years ago to proactively reposition the group whilst continuing to deliver a robust trading performance. On that note, you have already heard Stephen refer to 2015 as a year of progress and performance. There has certainly been much in the way of progress. The Growth Acceleration Plan remains on schedule, with the investment program tracking on budget towards the delivery of its targeted objectives. We have delivered increased funding flexibility through the US private placement issuance and the one-year extension on our revolving credit facility. We continue to strengthen our controls and the quality of our financial reporting to better enable us to track initiatives in the business and crystallize value. That progress has occurred against a backdrop of ongoing good performance. Organic revenue growth improved to 1% in 2015, representing an acceleration on last year, particularly when you strip out events phasing. Cash generation continues to be an area of strong performance, with over GBP 300 million of free cash flow generated in the year. We have increased the minimum dividend commitment from 2% growth to 4% growth, a commitment we are making through to the end of the Growth Acceleration Plan. If you can stand back and consider that this progress and performance has been delivered against a backdrop of challenging macro trading conditions, especially for our Knowledge and Networking division, and a degree of uncertainty in our business as we continue to implement the organizational changes as part of GAP, I think there is plenty to be pleased about in the 2015 results. However, we are adamant that we will continue to drive forward into 2016 and into the delivery phase of the Growth Acceleration Plan. Moving into the financial results, I will start by talking you through the headlines. We are reporting organic revenue growth of 1% for the year. As well as a year-on-year acceleration, this is an improvement on the 0.3% growth announced for the year to date in Q3, as we saw improved organic revenue performance in three of the four divisions in Q4. Total revenue increases by 6.6% as acquisitions in Global Exhibitions and Academic Publishing benefit the reported results. These acquisitions are partially offset by disposals in Knowledge and Networking. The higher reported revenue results in a 9.5% increase in adjusted operating profit as the extra revenue in Global Exhibitions comes through at a high margin. I am pleased to report that we are delivering earnings of 42.9p, a year-on-year increase of around 4.5%. This is a touch ahead of consensus because of outperformance in the EBITA results, but also because of a better than expected tax rate. Driving cash flow remains a key theme for us, and we have delivered GBP 300 million of free cash flow in 2015. That is a 30% increase year on year, and it represents a free cash flow yield of almost 8% at yesterday's closing share price. The balance sheet is robust and positioned for growth. The ratio of net debt to EBITDA is 2.2 times at the year-end, well within the 2 to 2.5 times range that we've communicated previously. The full-year dividend has been increased by 4% to GBP 20.1p per share. Longer-term Informa watchers will remember that at the start of the Growth Acceleration Plan, we made a commitment to a minimum growth of 2% per annum in the dividend for the period 2014 to 2017. The board has assessed the group's position at the end of 2015 and its outlook for the remainder of the Growth Acceleration Plan, and in response, elected to raise the dividend commitment to minimum growth of 4% per annum to the end of the plan. For 2015, with the growth in earnings delivered, we've maintained comfortable dividend cover of 2.1 times earnings. Moving into the income statement, I'll start by talking you through the revenue and adjusted operating profit results by division. Academic publishing, the full-year organic revenue growth is 1.6%. This is ahead of where we were at the Q3 update, representing growth of about 2% in Q4. This performance across the year reflects a slightly softer books market, most noticeably for Informa in the U.S. medical books market. This growth, plus the start of the GAAP investments, have been delivered with an operating profit margin maintained at just under 37%. Business Intelligence has had a good 2015, delivering progress and performance. The full-year organic revenue decline was 1.9%, representing a further improvement on the revenue performance since the Q3 update and a return to organic revenue growth in Q4. If we rewind to this time last year, the FY 2014 decline was 8.5%, and our target for 2015 was to halve the decline in organic revenue. By the half year, this organic decline had improved to 3.5%, and today we're reporting a full-year 2015 decline of 1.9%. The achievement of this objective of return to growth a year ahead of our original target is a result of two years of significant change in the business and a huge amount of effort from the management teams involved. We will now press on with delivering the Growth Acceleration Plan to further drive sustainable and profitable growth in Business Intelligence. The operating profit margins declined year-on-year as expected, reflecting a combination of revenue drop through, investment in management capability, and the launch of GAAP initiatives. Global Exhibitions has delivered another excellent result in 2015. The double-digit organic revenue growth was driven by strong performance from the top 20 events, which Stephen has already highlighted. Actually, the year-on-year growth was slightly reduced by the absence of the quadrennial IPEX as well as the biennial ForMóbile in Brazil. The operating margin has improved year-on-year as the high profit margin of the Hanley Wood exhibition business seen at acquisition has been maintained under Informa ownership following a smooth and effective integration process. Sorry. Knowledge and Networking is reporting a full-year organic revenue decline of 4%. The biggest driver of the decline has been weakness in the energy and resource vertical, directly impacting events we operate in that vertical, and indirectly impacting activity in regions such as Middle East and Russia. Our target is to return the business to at least a flat organic performance while assuming no improvement in its residual exposure to the energy and resource vertical. K&N is also reporting corresponding organic growth in operating profit of 4%, driven by the benefits of the portfolio management program which has improved the quality of the business and driven by cost efficiency improvements crystallized within the division as part of the 2015 business restructuring. Together, these benefits have resulted in a year-on-year increase in the operating profit margin for Knowledge and Networking. So having explained the division by division organic growth in adjusted operating profit, let's pull it together to explain the actual 9.5% increase in group reported OP. Organic growth ex GAAP is mainly driven by the strong growth in global exhibitions. There is a foreign exchange benefit in 2015, principally because of the strengthening in the US dollar. The improvement for acquisitions is principally the full-year benefit of the Hanley Wood exhibition business acquired in December 2014. The GAP investment program is well underway and has started to be a headwind on reported OP, but we remain convinced by the overall returns the investments will deliver. As I mentioned on the previous slide, portfolio management has improved the quality and operating margin in K&N, but has resulted in a year-on-year decrease in OP. So that's how we've delivered almost GBP 366 million of adjusted operating profit in 2015. Turning to the income statement as a whole, you can see that the GBP 366 million of OP represents an operating profit margin of just over 30%, broadly a one percentage point increase year on year. Moving down the income statement, there are GBP 120 million of adjusting items, although I'd highlight that GBP 100 million of this is intangible amortization. The effective tax rate for 2015 is 17.7%, and the 2014 ETR has been restated to 18.9%. This is lower than the 20% tax rate previously reported for 2014, and which most commentators would have been expecting for 2015. This change follows review of our reported U.S. cash tax deductions for goodwill amortization. These deductions increase year on year following the Hanley Wood Exhibitions and Virgo acquisitions in 2014. To align our adjusted tax charge with our cash tax paid, we are recognizing the credit in the group's effective tax rate, something we've not done previously as the credit was insignificant. This updated approach brings us in line with the approach adopted by our peers. At the half year, we reported strong free cash flow performance and predicted the improvement would not reverse in the second half of the year. As you can see from the results, we've delivered on that prediction. The working capital performance is GBP 39 million better year on year, which includes a phasing benefit relating to Swets' bankruptcy at the end of 2014. There's also good underlying improvement that continues into 2016, reflecting the strength of the BI subscription receipts and the strength of the GE exhibition bookings. In addition, tax savings in the U.S. result in a year-on-year reduction in cash tax payable. If you put all that together, our continuing focus on cash flow has increased free cash flow by GBP 70 million year-on-year, allowing us to self-fund the extra GBP 19 million of CapEx investment relating to the Growth Acceleration Plan, and deliver free cash flow yield of almost 8% at yesterday's closing price. The strong free cash flow generation in the year of GBP 300 million has covered our dividend payments more than twice, and still left substantial cash flow to fund our targeted acquisition program. The year-end financial position is strong, with net debt EBITDA at 2.2 times, calculated per our bank agreement using average exchange rates and including a full year of EBITDA in respect to acquisitions completed in 2015, leaving us well within the 2 to 2.5 times range that you would have been expecting. Headroom on our facilities of over GBP 500 million at year-end provides real flexibility going into 2015. We have further increased our funding flexibility in the year. Firstly, on our revolving credit facility, where we extended our five-year RCF by one year so that it now matures in 2020. There's a further one-year extension exercisable at our discretion in 2016, which means the RCF will mature in 2021, as shown on the graphic. Secondly, we issued $250 million of US private placement notes, which mature in 2022 and 2025. This was achieved at an interest rate favorable to other groups going to market at the same time, reflecting the perceived quality of our cash flows. Our overall balance sheet strength is maintained with year-end gearing of 2.2 times. Finally, focusing on other balance sheet commitments, our pension obligations remain immaterial, with no cash contributions to be made in 2016. Turning to the Growth Acceleration Plan, the investment program is well underway. Our financial guidance is unchanged from previous briefings we have provided. Specifically, we are reconfirming the overall cost of the investment, and we are reconfirming the timing and quantum of returns that will be delivered. We continue to exercise real discipline over the investments being considered. I've previously mentioned the design authority, which allocates capital and approves investment in specific projects before they can commence. With well over half the projects now in flight, the design authority focus is on testing the projects on a regular basis as they pass through prescribed stage gates to demonstrate that the projects warrant further ongoing investment, and will deliver the predicted returns. There continues to be much interest in what sort of programs we've launched as part of the Growth Acceleration Plan. The actual projects vary and are all specific to the strategic repositioning that each of the individual divisions is undertaking. But if we look to provide some headline categories that are consistent themes, these are three. Product development across all four divisions, and this is an area in which we believe the appointment of the CTOs in each divisions particularly add to our capabilities. Customer value propositions, again, in all four divisions, seeking to ensure that we get even closer to our customers. Talents and capabilities, making sure we have the tools, both in our teams and in our infrastructure, to deliver the objectives of the Growth Acceleration Plan. So 2015, a year of progress and performance. To summarize, I'm going to highlight themes that we're focusing on. Improving returns. I talked previously about driving an improvement in return on capital employed being a key objective of the Growth Acceleration Plan, and this is demonstrated by the 40 basis points increase in group ROCE in 2015, which is now just over 9%, compared to a consistent cost of capital of around 7.5%. The improved returns demonstrate real value creation for our shareholders. Enhancing visibility by increasing our exposure to sticky subscription and exhibition revenues, and by enhancing our processes and system externally, we are giving ourselves greater visibility over our future revenues. Building capability by adding management capability in the executive management team, and by adding technology and digital delivery capability in the four divisions. Maintaining discipline. We remain focused on delivering the 2014 to 2017 Growth Acceleration Plan. We will continue to improve the efficiency of operations, and as you can see, we will continue to drive strong cash generation. Funding firepower to provide flexibility and to enable a program of targeted acquisitions. Looking forward into 2016, I just wanted to flag what you can expect from us in terms of investor communications for the year. We have decided not to release a Q1 update going forward, given its proximity to year-end reporting. Instead, we will make a short statement on trading at our AGM in May. Then we will have the standard half-year results announcement in July. In the second half of the year, we will continue to do our nine-month trading update, and we intend to host another investor day. Those of you who attended the 2015 investor day in Washington, D.C. will know we had a great turnout, and the format of the 2016 investor day will be very similar to last year's, but with the content focusing on knowledge and networking and on business intelligence. Thank you for listening, and I'll hand the baton back to Stephen. Thanks, Gareth. Right. We're in the closing stages. I just wanted to talk a little bit about a couple of things, to broaden out how we think about the business, and then we'll throw it open to questions. The first really is to talk about the investment in talent. It's one of those things that is hard to quantify. Informa is a people business. We're a knowledge and information business. We definitely have processes. We definitely have brands. We have contracts. We have data. We have infrastructure, and we're investing in all of those things. Ultimately, we are a people business, whether it's our authors, our editors, our salespeople, our technology people, or indeed the people in group and global support. Ultimately, those are the ones that make the difference. Getting the balance right in the mix of people is an important differentiator. We've made some changes in the leadership team, the top 120, 130 people in the group worldwide. It's now about 75/25, so we've got a good blend of historical experience and quite a significant shift in new blood, which the company was at the time and the stage where it needed, not a complete change, but a blending. My judgment so far is that that blending has been for the benefit. We have shifted, quite dramatically for us, from a very fragmented, multiple individual operating units, who on a good day, kissed and punched, on a bad day just did one of those things, to an operating model whereby there are four operating divisions and they are very clear about the line of sight, and operating tasks and targets for each of those businesses. We've got a lot of category experience in our business. In all of our categories, and in all of our markets. That's critical because we set our stall to be a specialist, an expert. When you're engaging with individual communities, they can spot a fraud at 100 yards. An area where we were under-invested and underrepresented was in technology. We both under-invested in cash and capital, and we were significantly under-invested in people. That manifested itself in lots of different ways, whether it was in the basic reporting systems, plumbing, enterprise architecture, all the way through to our applications and our product format and product capability. We're on a journey. We're a long way from finished on that task, but we're on a journey. We now have a digital leadership team. We have technology heads in each of the four divisions and in group. Over the next three to four years, that will be a continuing growth of capability for the company. The board, we're joined today by the Chairman, Derek Mapp, who many of you know. The board has also seen some significant refresh. Certainly, the non-executives are a lot better than they were in my day. We've also added some international experience in the shape of Stephen Davidson and David Flaschen, who've both got significant international experience. David is, in fact, resident and operating in the U.S. We also are a significant recruiter of young people, although Gareth and I are trying our best to dissuade you of that notion. Last year, over 75% of our hirings were people under the age of 35. We started the Informa Graduate Fellowship Scheme. We've got five or six of last year's graduates in the room today to get a sense of what it all adds up to. So we're trying to bleed in a mix of new talent as well as experience into the group. On the products and the portfolio, we did a lot of pruning in these two divisions, the divisions I described earlier as kind of in repair and recovery. Really the headline is to say we're now pretty comfortable with what we've got. The M&A and portfolio management business planning team will now do a very thorough annual process of reviewing our portfolio to see whether or not we are still good owners of our assets on an annual basis. But as we go into 2016, we feel pretty good about the market verticals we are in, the products and brands that we have got, and now the task is how do we make them grow, rather than how do we either remove, dispose, or close. We have been very focused in Exhibitions and in Academic in building our strength in verticals, and building our strength in how do you identify, acquire, integrate, and operate. That is a skill set which is very important because we regard acquisition in those verticals as a key part of our growth capability. To do that, obviously from a financial point of view, you need to be able to demonstrate returns. What allows you to demonstrate those financial returns is to have the operating capability to be able to take a business in, fold it into the business, and then move it on. In both these divisions, in GE and in Academic Publishing, I think we feel we have got very effective acquisition, integration, and operation capability. North America, for us, has been a focus. It is where I spend a lot of my time now. We have been buying quite a lot of businesses in America. In many instances, what we have been doing there, as well as buying brands or positions in market, is also bringing talent into the group, in markets where we did not know how to operate. We started quite purposefully small and then kind of got a bit bigger so that we got comfortable as we went along. So far, we feel good about the businesses that we have added and reassuringly, all of them are tracking ahead of the acquisition cases. We are on a journey. We said back in 2013 when we first started looking at this, that we thought this would take us to the end of 2017, and there is nothing that we are reporting today that would change my view on that. I personally would not have predicted that the external markets would have been where they are in 2016 and 2017. Gareth is not wrong to point out that we are facing some pretty choppy headwinds, particularly in some categories. The fundamentals of our business feel good. The operating strength is getting better. Our performance is nudging up. But we have got quite a journey to go. If you were to step inside the company, and there are a few colleagues in the room will hopefully agree with this, we have got a lot going on. I think broadly, we feel good about the journey that we are on and our ability to deliver further growth and improved returns through to 2017. This is the summary, therefore, of where we finish 2015. The truth of the matter is 2016 is already well underway. Our business trades pretty heavily in January, actually. As you probably know, it is a busy month for us as well as closing the year. Our task to ourselves, our Promise to our shareholders is that, in 2016, we want to see that organic revenue growth number go up again. We want to see further growth in earnings. We have already made a forward decision, or the board has made a forward decision, to keep us tight, particularly on cash and margins. The dividend floor will be 4% for the next two years rather than 2% as a minimum increase. We will continue to acquire and expand, particularly in exhibitions and particularly in North America. Of course, 2016 is the fullest year of the Growth Acceleration Plan investment program, both in CapEx and OpEx, and its impact, therefore, on our earnings in the year. Our theme for ourselves, which you will hear us talk about a lot, is that this is a year of delivery. Disciplined delivery, I hope. I would hope in 12 months' time, when we meet to report another year, we can demonstrate that we have demonstrated that discipline. Thank you very much for listening, and I will throw it open to questions. This is always the invidious bit because I never like to choose the first person. I will just go with the front of the room. Will? There is always got to be a prize for being the person sat in the front row. Gentleman here in the front, please. Hi, it is Will Packer from Exane BNP Paribas. Three questions, if I may. Firstly, in terms of business intelligence, strong Q4 performance. Could you perhaps talk a little bit about the performance by the vertical, especially in the subscription parts of the business, where you see the best momentum? Are there any areas of weakness? I suppose related to that is, as a second question, some of your peers in financial professional information have had some difficulties. Could you comment on the potential headwind there and how you see that related to your new guidance of growth in 2016 for BI? Finally, I suppose the tone around academic books was perhaps a little bit different to what we heard in November at the Investor Day. There is talk of softness. There is cautious language. Could you split out the performance of the books business and perhaps talk a little bit about why it was weak and whether you see them as structural or more kind of temporary trends? Thanks. Why don't I take academic? Gareth, do you want to come in on BI on the verticals and finance? You can come in on the academic as well if you want. Tone is always a difficult thing, isn't it? We're not hiding Roger and Jeremy and Ian. If they were here, there's nothing that we said in November that they would not stand behind. What are we saying in terms of guidance? We're saying at a minimum, we would want to do again what we've done this year. So you're between 1.5% and 2%. We grew 2% in the fourth quarter, 1.6% in the year organically if you take the growth number. Look at the margins. Margin's very robust. You look at the integration of the acquisitions we did, very effective. You look at the overall revenue, adjusted admittedly for acquisitions, it's growing very nicely. Headline, we have a very nice business. We feel good about that business. We feel good about that business for the reasons that we talked about in November in Washington. We think specialism counts. It's not a complete moat, Will. It doesn't completely defend you, but it definitely helps you. We feel being an HSS publisher right now is a slightly better place to be. We feel the nature of our authoring product allows us to be a volume content publisher, and that allows us to put quite a good value proposition out to our customers in terms of retention and subscription renewal and new deals. But, and it's a but that I'm sure you've heard from every publisher, there are a lot of changes. As I said in my opening guidance, usage patterns are changing. Distribution methods are changing. Consumption patterns are changing. They're not changing, however, at a pace and rate that we don't believe we can stay alongside and slightly ahead. That, I think, really was the core message of Washington, which is this is a market at change. We recognize those changes, but we think we can stay alongside or ahead of them. As a very practical matter, and we talk about this in the release, one of the things that I think objectively is true, and this was long before I came along, but we certainly remain focused on this. We're a very efficient publisher. We intend to continue to be so. We're making some changes within the company. We are turning our books business into a single global books business. Historically, it was divided both by geography and by subject. So we're making really, within our business, quite significant change there. We're doing that to kind of keep pace on the efficiency side, and we think that will help us on production, on distribution, and indeed on content generation and authoring. So we think we've got some things we can do ourselves to deal with the external changes. Do we think 2.5%-3% is a realistic target, if you want to put numbers around it? We think that might just be a target we could fail on. If we tried so much to do that, we probably wouldn't be building the business for the long term. Despite the fact we intend the group to get bigger in Exhibitions and Events, and we're delighted to see BI back into growth, academic's still a big part of the group, and therefore it requires its own investment. There we are investing at scale for digital capability as well, that has probably been the one area where we have made the most change in the last couple of years. If we think about that 2% organic revenue growth, how does the book business contribute to that? Is it a drag? Is it negative? No. STM has been tough, but I would not say books has been a drag. Journals is a much more recurring business, and it is a much more predictable business because there are no intermediaries. I do not know what the numbers are, but we probably have, if you take sales as a proxy, we probably have 50 salespeople in journals, and we have probably 150, 200 in books. Order of magnitude. So it is just a much more distributed market. It is much harder to predict and see your way through to the end of the year. But definitely, let me be really clear, we are very proud of our books business, and we are very committed to it, and we can see long-term commercial opportunities for us. Do you want to come in on the BI questions? Yeah, sure. On BI, I think if you want sort of color by vertical, I think what we would say is that, or if you are trading five verticals, as we talked about in the slides. I think some of the areas like pharma in particular, but also agri and maritime have been good in 2015, and have traded well. We are pleased with the progress in those verticals. I think if we had to single one out that we say we are probably least pleased about, I think it would probably be our performance in the TMT vertical. Where I think looking at the backdrop of the opportunities in that space, we feel our performance should be better than we are currently delivering. We have made a few changes there. We have changed the leadership of that vertical, or rather Patrick Martell and the BI management team have changed the leadership of that vertical in 2015. We focused them on core products and core offer in their space. We are also looking to increase their exposure to the U.S. market, which obviously a massive TMT market, but actually one in which Informa's BI TMT practice was a bit underweight, really. So we think those target improvements will begin to deliver benefits in the TMT vertical in 2016. The final vertical, and to your question around finance, I would say finance is a bit neutral really at the moment as a vertical for us. It is a space in which we service niche products, and some of them are going well, some of them less so. But I would not have it in the list of the first three that are flying, and I would not have it alongside TMT. So I would say kind of neutral overall for us. Next question. Thanks. Gentleman in the second row and then the lady in the middle. Thank you. It is Matthew Walker from Nomura. Two questions, please. The first is on GAP. GBP 25 million invested in 2015. GBP 50 million coming in 2016. Can you split that between the various divisions for us? Is it still 70/30 CapEx, OpEx? Second question was on, boring one really, which was on tax. Can you give us some adjusted tax rate guidance for 2016? Also, in the statement you talk about some tax changes coming in 2017 in the U.K., which could impact about GBP 7 million of profits. So if we could just get some guidance on adjusted tax rate for 2017 as well in the light of that statement. It's with great pleasure that I hand both of those questions to I thought I'd give you a break. I was going to ask the books question, but Oh, no. Thanks, Matthew. It's give, give, I know. But over to you, Gareth. Thanks. Yeah. Taking them in order, I think in terms of the Growth Acceleration Plan, yeah, you're right. Those are the numbers that we've quoted, so GBP 25 million cash investment in 2015, GBP 50 million cash investment in 2016. I think our experience so far shows the split is about 25% OpEx, 75% CapEx. So that's a slight variation of what we talked about 15, 18 months ago. And that's what I would expect as a range to continue into 2016. That looks the most likely. We haven't given guidance by division. I think if we get into that level of granularity of detail, you start getting lost in the trees a bit. So we've just generally given the guidance at a group level overall. I can assure you that internally, we spend quite a lot of time tracking it on a project-by-project basis, but that is quite a lot of detail involved in that, and there are quite a few people internally who help us do that. It is part of our BAU, but not something we have talked about externally. In terms of the tax side, yes, we have announced the change for the tax rate in 2015 in terms of the U.S. tax-deductible goodwill amortization. That goodwill amortization continues into the future. So we would expect the 2015 effective tax rate to be the starting point for 2016, in terms of guidance. In terms of 2017, there are rules that come into effect around international transfer pricing that will tend to make some structures that we currently have, which previously were acceptable to the U.K. tax authorities. They are changing some laws, and that will be a bit of a headwind on the tax rate in 2017. But offset by the reduction in the U.K. CT rate in 2017, I would expect the ETR effect to be somewhere around 1.5 percentage points in 2017 as things stand. So 1.5% up over 2016? Yes, correct. Yeah. Correct. Over 2016, yes. Yeah, thanks. Okay. Lady in the middle. Morning. Catherine Tate from Goldman Sachs. Three questions from me. Firstly, just on business intelligence. Can I ask what proportion of that business is actually still declining versus growing? Secondly, which brands within that have been particularly strong from a retention rate perspective? Just some thoughts around. I know clearly the fantastic improvement on the average renewal rates, but if we can get an idea of the spread, that would be fantastic. Lastly, just on global exhibitions. Any color you can give around which markets and verticals have been particularly strong or particularly weak over the last quarter and year? I'm trying not to be offensive, Catherine, but I'm going to slightly decline to answer your question a bit because we don't tend to give product or brand performance for kind of obvious reasons really, because there are quite a lot of people who'd like to know those numbers. Most of them not helpful to us. I mean, I'll give you an answer on global exhibitions as best as I can, and then maybe Gareth do the same on BI. Actually in GE I think I would be accurate in saying I don't think there is a vertical that has been in decline. I'm just ratcheting through them in my head. Life sciences, very good growth. Culture, pop culture, very good growth. Construction, real estate, very good growth. Technology, good growth. Industrials, good growth. Pretty much if you went through each category. Within the categories, might there be a particular brand or geography that has done particularly well and others that haven't? Or sub-niches? It depends how far you might go. Are pools and patios doing less well than surfaces and tiles? How much detail do you want? But at a category level, I think our view is that the business-to-business, face-to-face trade show in the categories that we're in are strong. I'd make one last portfolio comment, because I think it is relevant to anyone judging the value of our assets, and it's certainly the way we think about it, is one of the things we've been doing, as well as trying to get bigger, because being bigger gives you some scale benefits when you're negotiating with venue owners and when you're negotiating with build, and when you're trying to build data platforms. The other thing it does is it de-risks your portfolio by geography and by vertical. Because there are undoubtedly some of our verticals that are a little bit more cyclical than others. To take the two probably obvious extremes, healthcare and life sciences, particularly healthcare, is generally a more robust through-the-cycle vertical than real estate. It's kind of obvious. Equally, we are pleased to see our revenue now spread a bit more evenly around the world by geographic location, so that if you hit a bump in a location, for obvious reasons, all of our conference and exhibition activity in Paris and Brussels closed in November and December of last year, for all intents and purposes. When you have a face-to-face trade show business, actually that spread in the portfolio, both by geography and by vertical, is very advantageous. That is one of the hidden benefits of scale. On BI, is there anything you want to add on that? Yeah. I think on BI, what we would say is the renewal rates are improving. We talked about renewal rates being in the mid 70s, if you go back 12, 18 months, and we said it was going to be a key area of target for us. I think we now talk about renewal rates being somewhere in the mid 80s, say. So we are definitely making progress with it, but it is not where we want it to be ultimately. Ultimately, we are targeting getting up into the 90s in terms of renewal rates. And one of the key areas of focus has been pre-expiry renewal rates. So do not let the subscription product lapse and then try and win it back. Make sure you are out proactively talking to the customer throughout the year and getting them to renew before the product expires. I think another area if we want to cover, I think something that is going well in BI renewals is the focus on key customers, key accounts. That is an area that has been retargeted by the management team and by the sales teams, and that they made good progress with during 2015. Next question. I will leave you to see the hands. You are better at it than me. Good morning. It is Chris Collett from Deutsche. I have just got two questions. One is on price increases. I wonder if you could just tell us, particularly in BI and in academic, what sort of realized price increases did you put through last year, and what have you put through for 2016? And then second question was on acquisitions and exhibitions. You are currently growing well ahead of the market, and you said you want to grow the exhibition business, but is not there a danger that as you grow your portfolio, your overall growth rate is just going to normalize at the market’s growth rate? And I suppose the second part of that is also, should we expect another platform style acquisition like Hanley Wood this year? And would you be funding that out of cash flow or doing another rights issue to fund it? Anything else you would like to know? I will stop there. I will attempt to answer the second one, and maybe Gareth can come back in on how we have modeled price and how we approach price. I think you make a fair point on GE. By definition, the bigger you get, the harder it is to keep pumping out double-digit organic growth numbers. At what point the law of large numbers starts to apply, I just do not know. We think we have got more growth to go for, both in our existing portfolio and through acquisition. We have, by and large, been growing. If you look at it over 3 or 4 years, we have by and large been growing about 50/50. 50% of it we have bought, 50% of it we have built, either through brand extension or geo-cloning or better performance or improved pricing or more sophistication in the product and content offer. But of course, the corollary of that is that as you get bigger, you have other benefits, too. On acquisitions, I think all we have said, and I hope, anyway, we have been pretty transparent, and we have certainly tried to be very transparent because there seemed to be what I think I could describe as a little bit of hiccup in understanding around Hanley Wood, where I certainly thought we had been clear. We are very open to acquisitions, or more accurately, the board is, if we can demonstrate that they are value-adding to the business and offer a level of return. And we actively look at every asset in the market. And we have now got pretty good in-house capability, both on the M&A side, which I think we are always pretty strong on, but now we have got even deeper capability, and we have been focusing on improving our post-acquisition integration skills. Beyond that, I don't think it would be helpful particularly to comment. On pricing, Gareth, do you want to- Yeah, on pricing, I think, one of the things we said about BI pricing is that we were robust on pricing through the years where we were in decline. Pricing wasn't an area that the division sacrificed to try and recover its revenue position. The revenue challenges were very much in the volumes. I guess that's helpful, and not become a culture of price cutting, both internally but also with our customers. So we're not having to therefore discount to recover the revenue numbers in 2015. There's no discounting sacrifice to help grow the revenues in 2015. In actual fact, I would have thought that pricing, and the management team has said that pricing is probably an opportunity for us going forward- in BI as we look to grow that business, and that pricing offers opportunities for us in terms of how we go to market. In terms of academic publishing, there's no change, really, in the pricing policy in 2015 over what we've seen in previous years and how we've approached it. That's very much a policy where you have to justify usage, and base your price increases on demand for the content, both volume demand in terms of sales, but also in terms of usage, particularly in journals in the academic institutions. If you're seeing a change in dynamic in pricing in the academic markets, it's really around that usage-based pricing, which I think is going to increasingly become a feature of that market going forward, but one that I think we're well tuned into, and one that our Growth Acceleration Plan projects are specifically designed to deliver on. Next question. The gentleman just here. The gentleman there. Yeah, hi. It's Nick Dempsey from Barclays. I've got two questions left, please. Just thinking about CapEx as a percentage of sales, I guess looking at 2016 and 2017, we're probably talking about 3%-3.5% on average, depending on exactly how that balances out. But where do you expect that to go after that? Is there definitely going to be a step down after that, or is that the sort of level going forward? The second question, you took GBP 20 million of costs below the line in 2015. I think it's roughly the same number as 2013 and 2014. Should we start penciling that kind of amount in going forward in the extraordinaries line? Good questions. Why don't I try the first one, you try the second this time. I don't think we've given guidance. I'm kind of looking at Richard a bit here, on forward CapEx. Not as a percentage. But I guess if you give me guidance around GAAP for the next couple of years. Yeah, I think the next couple of years are pretty. I was thinking of the GAAP one. You are talking about post- Yeah 2017, aren't you, really? I am wondering where it goes post-GAAP, because you have given us rough guidance on CapEx. The honest answer, we haven't taken a view on that yet. Partly, I think, I mean, stating the obvious, the answer will be determined by what the shape of the business is at that point. Because not all of our businesses are equally capital demanding. So, if our business intelligence business was considerably larger, then you would probably by definition end up with a higher percentage of sales capital investment demand. Which is not to say that there isn't some need to invest in technology and capital in exhibitions, because I actually think that is coming, but relatively, these are capital-light businesses. My own view is I certainly don't see us going back to kind of 1%, but what the number is, I think it would be hard to put a percentage point on it. Yeah, I think that is the key thing is that, you know the levels from 2012, 2013, it will not go back to those levels. No. But I think that it should stabilize somewhere between where it is now and where it was then. If you look at our peers, you get a view of what they spend, but as Stephen just said, you have got to really look at the mix of the business. Some of those peers have much larger BI businesses with much larger platform strategies in BI, and therefore incur quite a lot of CapEx in those spaces. So I think looking at the mix of the business is key. Below the line? In terms of exceptional costs- Explain yourself. We do challenge everything that goes into exceptional costs. It is an area of focus, certainly for the group team to challenge all the divisional teams on what is going into those numbers, what return you are making on those exceptional costs, why are they exceptional, et cetera. We look to minimize them. I am sure you appreciate that as we are going through a strategic repositioning through 2014, 2015, those sort of programs do not come without a degree of restructuring costs. What I would say is if you look at the segmentalization of those exceptional costs, they are weighted towards KNN and BI, which are the two divisions where we are doing the most heavy lifting in 2014 and 2015, in terms of changing the shape and nature of those businesses. Thanks. There are three questions there. Morning. It is Patrick Wellington at Morgan Stanley. Just going back to academic, is it not just the case that you are a smaller player than your peers and you are underperforming the market? I do not see other market forecasts at around 2%. Secondly, if you look at slide 13, with your little pie charts of your progress in GAAP performance, you appear to be only 25% the way through your acquisition activity. Is that by value or volume of acquisitions? Then thirdly, can you remind us of the level of print in the group, in 2015 and the rate at which it is declining? Can I just check, Patrick, when you say print, are you including books? You are really talking about our academic business then. You can exclude e-books if you like. You can give us the answer you have. Okay. Well, I will try. Well, let us take them in reverse order. In our books business, I think the current percentage is about, I am going to say 70/30. 75. 75/25 is physical to digital. So in favor of physical. That weights a little bit differently depending on which category you are in. So if you look at the print to digital migration, it is a bit faster in STM, it is a bit slower in HSS. Because we are more weighted to HSS, we therefore have a higher portion of physical. Actually, beyond academic, we do not really have print, to be honest. We do at some exhibitions and events. We do do branded magazine product contract publishing. But we do not break it out as a revenue line, and it is normally part of an integrated sell to a community off a franchise. So if I was looking through that window, if I am understanding your question, apologies if I am not, I would say it is really a question for our books business. On your point on the Harvey balls, I am looking firmly at Richard here. I think he is sending a visual subtle cue that has been missed on me, but not on you, as is often the case, Patrick. It is not supposed to be an indicator of volume, value, activity, promise, or hint, I do not think. Is it, Richard? No. I do not think they are here to rule around. Is it- What is the point of it? That's it. That's a more existential question, which I'll leave you to take offline with Richard. On the kind of underperformance point, well, ultimately that's obviously a judgment for every individual and every individual shareholder to make. We feel good about our performance in academic. In both books and journals, in the last 2 or 3 years, we've had, I think, a strong performance. It's a very robust business with strong brands, a strong market position, good relationships, good margins, good cash flow. The organic number was a little light in the middle point of the year. I think there are some market reasons for that. I think there are a couple of operational reasons for ourselves, which I feel pretty confident we can address. So I kind of take what I take to be a kind of gentle observation. On the scale point, that one I would contest, actually. On any objective measure, we have more than enough scale. And it's allowing us certainly to be a destination acquirer for any small or mid-size publishing asset that becomes available. A bit like in GE, we now see pretty much all the deal flow that we would want. We don't act on it all, but when we see assets we like, we did a couple of good size last year, Maney and Ashgate. We take them. We did a whole range of smaller bolt-ons, and we continue to do that. So we don't feel we have scale issues. The performance, that's obviously a judgment call. Question behind. Good morning. I've got just one question for you. I should just introduce myself as well. It's Jonathan Barrett from Singers. Just on the deferred revenue growth number, obviously it's a really good number for the end of the year. Just could you add some color on that, by giving us the split in 3 areas if possible, one for events and the second and third elements for the subscriptions in academic and subscriptions in BI so we can get an idea of what the true like for like constant currency numbers are, please? To be honest, as I've said, as a fairly consistent message in the last couple of years, to be honest, we don't really look at deferred income balance sheet to balance sheet as a realistic view of what's happening in the business. I've tried to. We often get questions on it, so we sit back at the ranch and try and analyze all that and make sense of it. But it's so open to timing differences in terms of receipts and movements that actually, I think our outlook statements and how we try and help you understand where we feel the business is going to go is a better indicator of what's going on in the business. In terms of academic, the overall feel of the subscription renewal season has been pretty consistent in line with our expectations. We've seen no surprises. It's a bit better than 2014 year-end because of some of the phasing delays in the 2014 year-end subscription renewal process. So 2015 looks a bit better, but it's kind of in line with our expectations. Exhibitions continue to book well. We're comfortable with our outlook statement around exhibitions of another year of good growth in terms of exhibitions. BI, we've talked about the renewals and the progress we're making with the renewals approach and the renewals tactics in BI, so we're pleased with that. So overall, I think we're comfortable with what the deferred income position says about our business, but we don't hang too much weight on it as an individual metric. That's good for me. Thank you. Sorry. I thought you were reaching for a supplementary there. You've been. Yep. Morning. Steve Liechti from Investec. Just on academic, just a question on the bulk sales you used to do that used to be a feature quarterly. You seem to have gone quiet on those. Is that a feature why, or is that potentially why like-for-like growth has slowed down because bulk sales have disappeared? There are still ongoing sales in that nature. As you go through time, the sales teams are very good at tracking them down. They tend to be quite slow burn, long-term sales negotiations with teams. But I think why you're seeing us talk about it less is because they're less material. I think when you really saw the advent of e-books and digital content platforms in the market, there were quite a few institutions who did sort of catch-up purchases of lots of historic content. That was a feature of sort of 3 or 4 years ago, really, in the market. You don't see that quite so much in the market now. Therefore, it's not as material a dynamic, and therefore, it's not something that we're talking about in our numbers. But just to be clear, that's not an effect on the reason that the like-for-like growth has slowed- Not in 2015, no. as far as you are concerned. Okay. Second question on Academic. In terms of, say you are doing 1.5%-2% organic growth next year, what does that imply for margin? Because your margin edged up slightly in the current year. I am presuming you have got more investment stuff going through. There is normal inflation, things like that. Is there going to be margin pressure in Academic at that sort of ongoing growth rate? In terms of 2016, we would say no. That is our start point for 2016 margins is our exit point from 2015. 2014 to 2015 improves a bit, but in the rounds, it is 37%, and that is kind of our start point going into 2016 that we are looking for from the business. Okay, thanks. Finally, on Knowledge and Networking or the old-fashioned conferences business, my recollection is that is quite painfully cyclical. Given where we are on macros, who knows where we are going, but are you concerned on that conference business now? Can you just remind us, well, tell me whether you think it is cyclical or not, I guess. It is probably the most cyclical of our businesses. That hasn't changed, although as you look at what we now report as Knowledge and Networking, probably a third of that portfolio now is large-scale conferences or confexes. We have some businesses in there where you have got 8,000 attendees. So these are not spot conferences in the way in which when that business was much bigger. Also, I cannot remember off the top of my head, I am just reaching for it is about 11% of the group. Is that roughly right now, Richard? Yeah. It is about 11% of the group in profit terms. When you break it down, our exposure to those cyclical bumps as a group is much less. Where did we feel it most last year? We felt it in energy, resources, and commodities. This is earnings without the bad stuff. If that sector had not had the tough year it had, I suspect K&M would have been in growth, and you could run the numbers through as to how that would have affected the overall group. We have modeled off that base for 2016. Net-net, I would be disappointed if we ended up with another year of significant revenue decline, but it is the place where you feel the cycle most. To go back to your point on Academic, it is slightly related to Chris Collett's comment on our GE business. I think we were targeting north of 2% growth in the year. We missed it by what is equivalent to about a day and a day-and-a-half's trading. In my judgment anyway, it is not fundamental. I would not over-interpret a trend in our business off the back of a day-and-a-half's trading. Any other questions? Supplementary there. Thanks. Yes. Sorry, just to come back on the margin in Academic. Obviously, you have got the transaction benefit this year from USD to sterling. Would you not be expecting a material uplift on margin just as a start point for the year? You have got extra Growth Acceleration Plan costs as well, though. I think overall in the mix, I think we are saying that we would expect to be broadly flat as a starting point year on year. Okay. Thank you. I think there is a final question here. Yeah. Hi. It is Tom here from Citigroup. I had a couple of questions. The first one is just on visibility in the business. Talked about Knowledge and Networking, but within Academic and Exhibitions, should we assume that you have at least sort of 6-9 months of just straight flat-out visibility? And then linked to that, what are the early signs of some of the headwinds working through, in particular on the Exhibition side? Would we see that in the pace of bookings? Or if you can just give us some color on what we should be looking out for to see whether some of the pressures more broadly are working through to numbers. Second question, just very simply, CapEx versus depreciation. It looks like the CapEx overall run rate is running at sort of twice the level of the depreciation going through the P&L. Will those numbers converge in short order, or will it just take time to work through? Thanks. You want to take the second one? I'll take the first one last. Yep. Ultimately, yes, they will converge. At the moment, what you're seeing is in the second half of the year, a higher level of CapEx principally in relation to the Growth Acceleration Plan. The majority, if not all of those CapEx programs haven't gone live yet. Therefore, you're not seeing a depreciation charge in 2015 for those programs. So what you would definitely see over the course of 2016, 2017, you would see the depreciation increase as a result of that extra investment. The two of them will come together in terms of figures. You're not seeing it yet, as I say, because the programs are not live. On visibility, you're right. The two businesses where we have most obvious visibility are, well, actually, sorry, the three businesses where we have most obvious visibility now are GE, BI, and Academic, but we have more forward visibility in academic journals than we do obviously in books. As we stand here today in GE, we have seen three of our largest events already, World of Concrete, Arab Health, and BIO, and all three of those performed strongly. On advanced bookings and forward bookings through to the six months, we're tracking to our plan. Subscription renewals November, December, and January is an important quarter in our data products. It was a strong quarter if you viewed it as a quarter. Obviously, it straddles two years. As Gareth said earlier, the journals renewal season is performing to plan. But that still leaves quite a big chunk of the books business. We have much less visibility, and as was asked earlier, the K&M business where you have much less visibility. But gives you a flavor. I hope that's useful. Unless there are any other burning questions, I'd like to say thank you very much for your time and for the questions. Do enjoy the goodie bags. I look forward to seeing some of you in a Darth Vader, Stormtrooper, or Princess Leia costume at a Fan Expo near you. If you want any individual questions afterwards, Gareth and I'll hang around.