Earnings Call: H1 2018

Jul 26, 2018

Good morning, and welcome to RELX's Interim Results for 2018. Thank you for coming and for those of you on our webcast, thank you for joining us. RELX continued its positive development in the first half of the year. Underlying sales and operating profits again grew satisfactorily across the board and constant currency earnings per share were up 7%. This is reflected in the board's decision to increase both PLC and NV dividend by 6%, although it is as you all know purely by chance that this year the formula produced the same growth rate for the dividends of each company. We have also had a more active acquisition period since the beginning of the year and Eric will describe the thinking behind our most recent highly targeted additions. This is the last time that we will announce 2 separately calculated but linked dividends because the measures to remove complexity and increase the transparency of our corporate structure that we announced this February were overwhelmingly approved by RELX PLC and NV shareholders in late June and they will become effective on September 8. From then we will be 1 company RELX PLC with all the simplification that that implies going forward. From September 10, the new RELX PLC shares will be listed and traded in London in sterling, Amsterdam in euros and New York in dollars with full weighting immediately in the FTSE 100 Index and we also expect full weighting in the AEX Index by the end of the year. So we've had another very busy and successful period. Thank you very much and I will now hand over to Eric and he and Nick will take you through the results presentation. Thank you, Anthony. Good morning, everybody. Thank you for coming and for taking the time to be here today. As you've probably seen from our press release this morning, our positive financial performance continued in the first half of twenty eighteen. We continued to make good progress on our strategic and operational priorities, and we received approval from our shareholders for the simplification of our corporate structure. Our underlying revenue growth was 4%. Underlying adjusted operating profit growth was 6% and earnings per share growth at constant currencies was 7%. All four business areas again delivered underlying revenue growth as well as underlying operating profit growth. Our STM business grew 3%, slightly higher than prior year, with key business trends remaining positive. Overall, electronic revenue growth continued, and print declines moderated slightly. In primary research, we continue to enhance customer value by building out broader content sets and more sophisticated analytics, and subscription renewal completions remained in line with prior year. Databases and Tools and Electronic Reference continue to drive good growth across market segments. Print books, which represent less than 10% of divisional revenues in the first half, saw stable sales and return rates in line with historical levels. Print pharma promotion saw a slightly steeper decline than in recent years. Going forward, our customer environment remains largely unchanged. Overall, we expect another year of modest underlying revenue growth with underlying profit growth to exceed underlying revenue growth. Risk and Business Analytics grew 8%, in line with prior year. In Insurance, growth was driven by enhanced analytics, extension of data sets and by further expansion in adjacent verticals. The market environment remained in line with historical trends. In Business Services, growth was driven by further development of analytics across financial and corporate sectors in a positive market environment. The Government Healthcare segment continued to develop sophisticated analytics and data services continued to drive growth through organic development. In addition to organic development, Risk and Business Analytics have announced 3 acquisitions so far in 2018: ThreatMetrix, SST and Safe Banking Systems. Going forward, the fundamental growth drivers of risk in Business Analytics remain strong. We expect underlying operating profit growth to broadly match underlying revenue growth. Legal revenue growth was 2%, in line with prior year. Underlying profit growth was strong. The margin increase reflects organic process improvements and decommissioning of systems, partly offset by portfolio effects. Overall, continued growth in online revenues was partially offset by further print declines. The rollout on new platform releases continued across our U. S. And international markets with broader data sets and the continued expansion of early stage legal analytics. Going forward, trends in our major customer markets are unchanged, continuing to limit the scope for We expect underlying profit growth to remain strong. Exhibitions' underlying revenue growth was 5%, down slightly from 6% in the prior year. The higher underlying profit growth reflects cycling in and timing effects. We launched 17 new events, completed one acquisition and piloted several data analytics opportunities. Europe saw good revenue growth, and the U. S. Continued to see differentiated growth rates by industry sector. Japan and China grew strongly, and most other markets continued to grow well. Going forward, we expect underlying revenue growth trends to continue, and we expect cycling in effect to increase the reported revenue growth rate by around 4 to 5 percentage points this year. Our strategic direction is unchanged. It is still to be a company that delivers improved outcomes to professional and business customers across industries, with our number one priority being the organic development of increasingly After an After an unusually light year for acquisitions in 2017, we completed 5 acquisitions in the first half of twenty eighteen for a total consideration of £697,000,000 Our overall approach to acquisitions is unchanged. We continue to focus on targeted data sets, analytics and assets that support our organic growth strategies and are natural additions to our existing businesses. Our aim is to further strengthen our strongest businesses and to gradually push out their boundaries into near adjacencies, both market verticals and geographies. For example, in risk and business analytics, we have made 3 acquisitions so far this year, the largest of which was ThreatMetrix. Based authentication solutions with device profiling. Although it is not included in underlying growth, ThreatMetrix is currently seeing annualized revenue growth in the 40% range, and we expect to leverage a larger sales force with a broader geographic footprint going forward. In July, we acquired Safe Banking Systems, strengthening and expanding Acuity's position in anti money laundering and Know Your Customer. In STM, we acquired Via Oncology, which strengthened Elsevier's clinical solutions business by providing patient specific decision support tools for the treatment of cancer. We also made small acquisitions in legal and in exhibitions in the first half. Alongside our full year results in February, we announced a set of measures that would further simplify our corporate structure, moving from a dual parent structure to a single parent company to remove complexity and increase transparency. In June, these measures were approved by both RELX PLC and RELX NB shareholders with over 99.9 percent of votes cast in favor. The simplification will become effective on the 8th September with a single parent company listed in London, Amsterdam and New York. RELX PLC shares will be included with a full weighting in the FTSE 100 Index from the 10th September, and we expect that it will be included in the AEX Index with a full weighting before the end of the year. I will now hand over to Nick Luff, our CFO, who will talk you through our results in more detail. And I'll be back afterwards for a quick wrap up and our usual Q and A. Thank you, Eric. Good morning, everyone. Let me start by reiterating and expanding on the financial highlights. Underlying revenue growth was 4% and underlying operating profit growth was 6%, resulting in an improvement in the adjusted operating margin to 31.5%. Constant currency growth and adjusted EPS was 7%. Cash conversion was ahead of the prior period at 93%. Leverage, including leases and pensions, was 2.5 times, up from 2.2 times at the 2017 year end and from 2.4 times a year ago. The interim dividends were up 6% for both PLC and NV. As the Chairman said, following the approval of the corporate simplification, this is the last time that we will declare a separate sterling and euro denominated dividends. From the 2018 final dividend onwards, we would declare only the sterling dividend with conversion to euros for those option to receive euros at the time of payment. In the first half, we deployed £500,000,000 on the share buybacks, leaving £200,000,000 typically completed in the second half. Here's the income statement in sterling. Note that the results are presented incorporating the adoption of 3 new accounting standards: IFRS 9, IFRS 15 and IFRS 16. 2017 comparatives have been restated to reflect this, albeit the impact on profit is pretty small. Reported revenue was GBP 3,700,000,000 with underlying revenue growth of 4%. The combined impact of PortfolioFX and Exhibition cycling in was net neutral overall. The revenue contribution of businesses acquired this year, including ThreatMetrix, was offset by a number of disposals, mostly in Risk and Legal, that took place during the course of 2017. Constant currency revenue growth was therefore also 4%. First half to first half, the dollar was a fair bit weaker against sterling in 2018 versus 2017. That was a drag on sterling reported revenue, which was down 1% in total. Adjusted operating profit was £1,150,000,000 up 6% on an underlying basis. Dilution from disposals left constant currency growth at 4%, which is offset by sterling strength to leave sterling reported adjusted operating profits flat. Margins were up 50 basis points to 31.5%, driven by underlying profit growth being ahead of underlying revenue growth. The impact on group total margins of the lower initial margin from newly acquired businesses was offset by a net currency benefit. The net interest charge now includes interest in Putil on operating leases per IFRS 16. The first half charge of £95,000,000 was broadly in line with the prior period, with high average borrowings being offset by currency effects. The effective tax rate declined slightly to 22.2%, helped by the lower federal rate in the U. S. This gave adjusted net profit of $818,000,000 up 5% in constant currency and up 1% in sterling. Reported net profit was down 1% to £678,000,000 The average share count was down 2% due to the share buyback program, converting the 5% constant currency growth in net profit into 7% constant currency growth in adjusted earnings per share. The relative weakness in the dollar meant that adjusted earnings per share in sterling was up 3% to 41.1p and the euro was up 1% to €0.46.9 Moving to the business areas. You can see how all four areas contributed to underlying revenue growth with Risk of Business Analytics again delivering particularly strong growth. The differences between constant currency and underlying growth rates are mainly as a result of portfolio changes. These were a net drag in RMBA and on Legal and net positive for STM and for Exhibitions. The effects include the transfer of small number of health care products to STM from RBA in late 2017, following a change in where those products are managed. The reported underlying revenue growth in both businesses of 3% 8%, respectively, were the same, including or excluding the revenue growth from the transferred products. Cycling and time effects added 3% to Exhibitions' overall growth rate. With the dollar weaker against sterling, all the business areas saw their revenue growth lower by between 3% 7% when reported in sterling rather than constant currency. All four business areas have generated underlying profit growth, with the highest growth coming from Legal and from Exhibitions, both up 9%, the latter boosted by cycling. RBA saw underlying profit growth of 8%, with STM up 3%, both in line with their respective underlying revenue growth rate. Portfolio changes were a drag on profit growth, most notably for RBA and for Legal, which no longer has any profit contribution from the Martindale Hubbell joint venture. STM's profit was protected by the hedging program, resulting in sterling reported growth being higher than constant currency growth. For the other businesses, dollar weakness resulted in reported growth in sterling being lower than constant currency growth by between 4% 8%. Turning to margins. You can see that there was an improvement for STN, mainly due to currency effects, including a benefit from the hedging program. The Legal margin increased by 20 basis points with a significant underlying improvement offset by portfolio effects, including the reduction in joint venture profit contribution. Margins for ARBA and Exhibitions were largely unchanged. We continue to generate most of our revenues in U. S. Dollars, with substantial revenues also generated in euros and other currencies. We do hedge certain of our future cash flows to smooth the year on year variations in revenues and profits, primarily in STM subscription revenues, giving more stable euro and sterling reported results. In the first half of twenty eighteen, that has reduced the impact of the weaker dollar on reported sterling revenues and profits. Compared to the prior period, sterling was 9% stronger against the dollar and 2% weaker against the euro. Combined with other currency movements, these results in a net drag of 4% to 5% on sterling reported revenue growth growth in revenue profit and earnings per share. Currently, sterling is around the same level against both the dollar and the euro as it was in the second half of last year. So if exchange rates were to stay at current levels, sterling EPS growth would be roughly in line with currency EPS growth for the second half. The full year differential between sterling and constant currency growth would therefore be about half the differential we've seen in H1. Turning to cash flow. CapEx as a percentage of sales was slightly lower than the first half of last year, rounding to 4% rather than 5%. Cash flow conversion of 93% was up slightly compared to the first half of last year, benefiting from the timing of customer receipts. Cash interest was down on the prior year, while cash tax paid was higher, mainly due to the timing of payments. Overall, free cash flow was up 1% at 724,000,000 pounds with currency impacting sterling reported revenue cash flow in a similar way as it did profits. And here's how we use the free cash flow that we generated. The spend on acquisitions was £694,000,000 in the first half, including most significantly threat metrics. The final dividend typically accounts around 70% of the full year total and is paid in May. Growth in dividend per share and the impact of currency translation slightly by the lower share count, saw the spend on dividends increase by 5%. As usual, we have biased the share buyback to the first half, spending £500,000,000 out of the total of £700,000,000 planned for the year, the same as last year. After currency movements, the net cash outflow left net debt at $6,200,000,000 including net lease liabilities for IFRS 16 of around 300,000,000 However, with a lower net pension obligation due primarily to high interest rates and continued growth in EBITDA, leverage did not increase in line with the increase in net debt. Including leases and pensions, the net debt to EBITDA ratio came in at 2.5 times. Finally, this slide sets up the maturity and currency profile of our bank and bond borrowings. You can see that our debt portfolio consists predominantly of dollar and euro debt, affecting the currency of our cash flows. Our debt maturity profile is well spaced with no large amounts coming due in any 1 year and no large gaps between maturities. We have successfully termed out the debt we took on to fund the acquisitions in the first half. In March, we issued 2 bonds, a $700,000,000 denominated bond with a coupon of 3.5% and a maturity of 5 years and a €500,000,000 denominated bond with a coupon of 1.5 percent and a maturity of 9 years. Maintaining a balanced debt maturity profile across multiple currencies limits the year on year fluctuations in interest expense. The effective interest rate on gross debt in the first half, excluding leases, was 3.2%, down from 3.4% in the first half of last year and in line with the average for the 2017 full year. With that, I will hand you back to Eric. Thank you, Nick. So just to summarize what we covered this morning. During the first half of twenty eighteen, our positive financial performance continued. We made further strategic and operational progress, and the simplification of our corporate structure was approved by our shareholders and will be implemented in September. As we enter the second half of twenty eighteen, key business trends are unchanged. And we're confident that by continuing to execute on our strategy, we will deliver another year of underlying growth in revenue and adjusted operating profit, together with growth in adjusted earnings per share on a constant currency basis. With that, I think we're ready to go to questions. Okay. Why don't we start over here today? Thanks. It's Matthew from Credit Suisse. Two questions, please. First on science and the other one's on CapEx. So on the STM business, how have you managed to absorb the hit from 1 or 2 cancellations? You know the ones I'm talking about. You haven't really called out I mean, databases are still growing, but you haven't called out a significant improvement there. Obviously, books has improved. But how have you managed to absorb that hit? And can you confirm that all the people who've joined that consortium are, in fact, not contributing revenue? Second question is on CapEx. So CapEx went slightly down. Is that just a timing effect? Is CapEx in legal finally coming down after a number of years? How do you feel about CapEx for this year, next year? Thanks. Okay. Well, I'm going to hand over the second one to Nick in a second. But let me just cover the first one here. Talked about STM growth. Well, as I think I said, our overall electronic growth continued pretty much in line with history. And we had a slight improvement in the print declines due to the fact print declines due to the fact that print book sales were basically stable in the first half. As you know, print book is smaller in the first half than the second half, but it's just a bit less than 10% of our revenues overall for the full year and probably a couple points below that for the first half. But that was stable, so that's the difference. When you're asking how do we manage to absorb whatever changes you're talking about, as you know, I don't talk about any individual customer, any customer negotiations at any point in time, and I'm not going to start that today. But what I can do in general is to say that we have, as you probably know, a very, very large and global customer base. As a matter of fact, for electronic research products, which we're talking about now, we probably have around 12,000 customers around the world. And every year, many of those are renewed. Many of those are extended. I told you earlier in the year that our renewal completion rate this year was the same as before, and that's still the case at the half year. So renewal completions are in the same rate. And I think I also mentioned earlier in the year that our new sales for the year were doing well. So you add it all up, there are many different ways to use and pay for our products. And that's the way we tend to look at the business as a whole. Again, I can't comment on anybody in or out, but I can tell you that we only recognize revenue for signed contracts. Okay. Nick, on the second one? Yes. So the CapEx question, Matthew. Of course, the biggest change in the first half of 'seventeen to first half of 'eighteen is currency because a lot of the CapEx is in dollars. So but if you take it as a percentage of sales, it's dropped a little bit in 4.7 to 4.4. But I wouldn't read anything into that. I mean, just the normal variation of timing of projects. It is true that legal spend has come as a percentage of revenue has come down a little bit after it's gone through that big migration. It's come down a little bit. But generally, I wouldn't expect anything different than the sort of averaging around 5% that we've been doing. It's Catherine Tait from Goldman Sachs. Two questions from me. Firstly, on ThreatMetrix. Can you just give us a little bit more color on who the main customers are for that product and how that compares to the existing customer base you have within risk and how much of that is new customers? And then I suppose linked to that, I mean, growth in the 40s is obviously quite an impressive place to be. I think when you acquired the company, you said not to expect too much in terms of accretion to earnings from the acquisition. Does that statement still stand? And how should we think about the contribution it's going to make going forward? Okay. I think I'm going to ask Nick to cover both of those because he's just spent some time with these guys over the last week or 2. Yes. So ThreatMetrix customers, I mean, primarily banks and other financial institutions, but also expanding into anyone that does transactions online. So online retailers, gaming gambling companies, the any airlines, a whole range of different customers, anyone who needs to be able to verify quickly whether interacting with them online through a particular device, is that coming from a trusted device or not? And those and the scope to do that is wide and broadening. And that's why we see the opportunity that we see in the business. There is quite a lot of overlap with the customers that we serve already, particularly for some of the fraud and identity products in the financial services sector in the U. S. But ThreatMetrix is a very international footprint, so it's a totally international product. So it gives us scope to cross sell into our existing customer base, but also to expand the offering outside of what's traditionally been a U. S. Base. In terms of your the impact on earnings, I think we were just making the point that it's whilst cash positive, it's not contributing a lot of profit in the year of acquisition. So that's why we weren't saying for the current year, we're not expecting any enhancement. Clearly, over time, we expect to be able to run the business in a way that means it's profitable once we've integrated it. So over time, it will contribute. It's Ian Whittaker from Liberum. Three questions. First of all, just in terms of apologies if I missed if you made any comments on this earlier. Should we see the 3% organic revenue growth rate for STM as new base case sort of moving forwards? You talked about print declines moderating and so forth, again, the smaller part of the group. 2nd of all, just in terms of piracy when it comes to academic journals, can you tell us what steps you're actually taking to ensure your materials are not being piloted? Because it does seem as though sort of most of your materials are available on piloted sites. And the third thing is just in terms of RBA, obviously the U. S. Economy is going very well at the moment. Could you just give us a sort of couple of thoughts on how we should think a strengthening U. S. Economy would help you in terms of the various aspects of that division? Okay. Let me go through these in order. So you asked about the growth rate in STM going forward. Well, I think I mean, you will have to make your own projections about what you think will happen. But at this point, I'll explain where we are today and what is happening so you can be informed about what we know, which is that the growth rate in well, as you know, the print declines, the print book declines. Well, print declines overall, which is largely now print books, even though there are some other print components as well. They do not stay in a very predictable straight line. They sometimes drop a little faster and sometimes they moderate. In the first half this year, the overall print decline was moderated, right? So the print decline continued, but it was a lower rate to decline because print books sales were essentially stable so far this year. We don't know what will happen to those even going forward. I mean, so far in July, it's the same as it has been, but that's 2 weeks into the second half. So I can't draw any conclusions from that. But as you know, this can go at different rates at different times, even during a year. I don't know what that will do going forward. But on the electronics side, what has happened looks very similar to what you've seen over the last couple of years. So that's where we are today. So on the second question, on piracy. I mean, we have addressed this in the past. We see different types of piracy in all parts of our business, just like all intellectually property based companies do, whether that relates to original sort of published text or content sets, whether it applies to data sets or analytical algorithms or software tools and so on, you will always see that in intellectual property industries, and that will always continue. We approach it the way we have in the past and the way other industries do it as well, which is that whenever we identify it or somebody else in the industry identifies it, they bring it to the attention of the Industry Association and the related service organizations that work with intellectual property industries. And they then approach the individual corporation or the website and try to explain to them what's going on. Most of the time, that's normally what is required to come up with a solution that complies with what, for us, in our industry, the question you're asking about the science synergy, are very generous and very flexible sharing policies that they can work on. So in most situations, that's resolved relatively quickly. In other situations, it takes longer, and it's more complicated. And it needs to be worked through with specialist advisory firms and so on that are related to the industry associations. But and some of them take longer. But this is exactly the same process that I've seen in other intellectual property industries I've been involved in over the last 30 years. And ultimately, I think that large institutions or large organizations ultimately do not want to systematically break the law on an ongoing basis. That's not the intent. So I think we're moving down the same path as we have before. The last question, Risk and Business Analytics, the U. S. Economy. We have seen in the past that when the economic cycle moves around in the U. S, we have seen that some of our business segments, of course, are impacted by it, to some extent. We've talked about all our different business segments. You're familiar with legal and science and so on, but you're specifically talking about risk. The largest individual piece of risk is, of course, the insurance segment. During the last major economic downturn, which you're now approaching 10 years ago and the follow on to that, the organic revenue growth inside the insurance business for us did not slow down. And we are not sure exactly why that is. We can, of course, in retrospect, try to justify why in terms of insurance switching or shopping or pricing. But the fact is that at that time, it did not slow down. We had some other risk segments then, including pre employment screening and other things, that were cyclical and cycled with those with the U. S. Economy. The largest one of those was, of course, the employee screening business, which we sold a few years ago. So that's no longer a part of what we do. But there are other things that relate to mortgage origination or lending that are smaller pieces of our business than most other sort of information based businesses. But I think you would assume that some of them would have some impact from the cycle. But I can't tell you how much or what that would be. Okay? Okay. So, come back, come over here. Go to this way, on this side. Thank you, Eric. It's Samik Casaubatexan. I have two questions, please. I understand you cannot comment on the outlook for the books at Elsevier in H2, but would you be able to comment on the size of the front list whether there is any particular movement in the front list up or down that may indicate any performance in Q3? And secondly, in the release, you referred to adjacencies that you are addressing in the Data Services segment? Can you expand a little bit on that, please? Yes. I'm going to hand the acquisitions and adjacencies over to Nick because he spent a fair amount of time on that recently. Let me first address the question around books in STM. The book list at this point, what I know and what I've seen is that both the first half this year and the second half look fairly typical, that there's no major there was no major timing thing or strength in the first half, and there's no major strength in the second half. It looks to me at this point, of course, the first half is a historical fact that it wasn't particularly unusual. The second half is, of course, a guess on what the list is looking like. We know which title, but how are they going to do. And to me, again, they look like fairly typical years to me when you look at the front list, broadly speaking. But the fluctuations that you do see in the in particular in the U. S. Distribution and retail segments into academic environments on the book side, there's a bit of a fluctuation about when they order, how much they order, how much they take in inventory, when they flush it back. And that's what we've seen over the last 3 years, as you probably know. We had a time when there was a pretty bad year, and then it sort of stabilized again. So we don't know what's going to happen in the second half of that. And also, of course, there are market impacts and market factors that impact how big a front list will be even on the new side. Of course, it impacts the back sort of the back list in those sense, but also the front list a little bit. So but at this point, we haven't seen any major fluctuation kick in yet. But we're 2 weeks into the second half, as you know. So, turning on the adjacencies, I think we refer to that both under insurance and under Business Services. So, on insurance, it's things like if we already do auto insurance moving into commercial and life and so on, it's moving into different parts of the insurance continuum. So we're very strong in underwriting, but moved into other parts of the insurance process, whether it's quoting or claims, etcetera. And it also includes moving into new geographic markets. If you look at risk diversification as a whole, though, the acquisitions are good examples of adjacent markets. So ThreatMetrix, where we've been very strong in identity and digital identity and device identity. So that's an example of adjacency there. SST, which is in the agricultural segment, again, that's using some of our data sets to help in the agricultural sector. And Safe Banking Systems is another good example where that was where Safe Banking Systems is an existing partner of ours. They had built good piece of analytics that sits on top of the Microsoft the Focusoft filter. So our focus of our filter, throwing out exceptions that Safe Banking Systems were then putting through their analytics to reduce false positives. So it's a very natural fit for us and a natural adjacent market for us to push into. Okay. So we keep going back on this side here. Thank you. Hi. It's Liam Dempsey from Barclays. So two questions, please. So Westlaw Edge, they put that out a few weeks ago. They're making some claims about the enhancements they've made to search through AI for that. Last time Westlaw put out a big improvement to their platform, you spent a lot of money catching up. I guess we're not quite in that situation now, but what difference does that make to the competitive dynamic between the 2 of you? And second question, trade wars in the news quite a lot at the moment. To what extent are you comfortable that that won't have any impact on your on trade. Yes, Westlaw Edge. Well, in the on trade. Yes, Westlaw Edge. Well, in the Legal business, as you know, we have we are in a market where of our large market segments that we operate in, this is one where there actually is a competitor that competes in a similar market environment, slightly larger than we are in the U. S. Market. And we take all our competitors seriously and pay attention to what they do, of course, but we're no expert on what they've actually done at the moment. We take what Thomson does, What I do know is that What I do know is that if you listen to other people who cover the legal industry or you listen to customers or people speaking on behalf of customers, they have said over the last couple of years often that it looks like LexisNexis has taken the lead in legal analytics, both organic development and in terms of the small acquisitions that we've made. And we believe that we also have the technology base and the technology analytical tools that we share with the other divisions and what we've learned from the risk side that are very strong and very powerful. So we believe that we can continue to build on what we've done so far and deliver a lot of value to our customers by continued deployment of legal analytics. It's not a surprise to me that in our markets, in the large markets, including legal, that other players, large competitors, would also try to pursue that avenue over time because if they see that our customers are deriving additional value from what we are doing, why should they not try to do something similar? But I think we're in a very different position from when you referred back to prior replatforming when we were in the process of designing a strategy for replatforming. Modernized modular replatforming that's based on very modern technology, very flexible and very data- and analytics driven inherently in its design. So I think we're in a different position. But I think you'd have to ask them more details about what they're really doing. Okay? Can we keep going here? There was another question on the trade wars, which I thought the EU and the U. S. Sorted out last night, but perhaps not. I mean, clearly, there are some parts of the Exhibitions business which could be impacted by all sorts of economic factors, including anything around trade. Equally, we have a very diverse portfolio, 500 plus shows across a whole range of sectors, some of which are very unlikely to be impacted by trade wars. So there are all sorts of things affecting all of our acquisitions all the time. And part of what we have to do is manage that, react to that. We do have a strategy that's based around launching into fast growing sectors and moving out of slow growing sectors, and we'll keep adjusting. So clearly, there could be an impact, as there could be of many things. But we do have the diversity, which provides a measure of protection. Okay. No more here. Morning. It's Chris Collett from Deutsche. I just had a couple of quick questions about legal. One is, when you think about your market shares within the Legal business, do you view any growth within the Legal department in those business development areas being part of your market share? Because the reason I ask is that it looks like that's an area where Bloomberg has been growing within law firms. So just wondering, do you view that as a market share gain? Or do you sort of ignore that because it's not classic legal research? And second question gets back to the what you're saying about the growth of legal analytics. What do you see in terms of the customer demand and adoption of legal analytics? Are we getting to a point where it is becoming more widely viewed as a legal tool for a broader adoption within law firms? Okay. I'm not sure I understand what you meant by the question. You mean business development functions inside law firms or business development functions in corporations? Business development functions within law firms. Within law firms, yes. I mean, we look at us as our primary objective to help improve legal decision making, the value of legal decisions and not primarily help the administrative functions of running a law firm or things that are around marketing of law firms, if you look at it that way. There are historically, you have had doing the legal work is one block of what you do, meaning what do you actually do in terms of analyzing a case, deciding on a case, the economics of a case and the outcomes of the case. You then have the process of several business systems or software solutions for companies to run a law firm, the business of law, as some people call it. And some people put in that business or also the separate category of marketing tools for law firms to generate revenue. We have, over the last several years, deemphasized strategically the segment of helping law firms run their offices and their firms, right? And we've also deemphasized the segment of marketing services for law firms and focused on the economics of legal decision making, legal cases, contracts, economics, etcetera. That's where we are focusing our time strategically. So that's our main emphasis in that market. Other people do different things, and there are several other providers of the other 2nd question, legal analytics. It is something that where our customers see it and pay attention to it, they see significant value, get very excited. And the growth rates for those tools, the growth rates are very high. But they're very small at the time, the separate revenue for them. So we have some analytical tools that are sold separately, and you have to understand and sell and work your way through. The people who get involved in them will get excited, and they buy a lot more. So they're growing very rapidly in separate revenue. We also have some analytical tools you put on the broader platform that you embed in the whole platform analytical functionality, so to speak, that we also see increased use of. But as you know, the legal industry is one where most people involved in it are spending their time on legal cases. And adoption of new tools and so on is not as fast as you would see it in the consumer market or consumer device market where things can change very quickly. This is a very sticky marketplace, and people see these as tools that are needed for them to do their jobs, which is a good thing in many ways. But when you have new and high value added tools, they tend to roll out perhaps more slowly than you would think in a sort of consumer type of media environment. It's Richard Deary from UBS. Just three questions. First thing, just going back to the print books stabilization in the first half. Just I don't know, Eric, you can provide a little bit more color in terms of why that actually physically happened. Was it better volumes, better pricing, better segments? The second question just in terms of the impacts on the M and A in the first half, which is obviously inflated through ThreatMetrix. It looked as though there wasn't any significant increase in revenues out of those acquisitions. So just wonder whether you can give us some color in terms of the revenue impact going forward. And lastly, just on M and A, how do we actually think about that as we go through the course of the rest of the year? It's obviously inflated this year. How do we think about that? Okay. I'll cover the first and the third here. I'll ask Nick to cover the second. Is that okay, Nick? Yes. So the first one, print books in the first half. My impression, and this may not be right because as you can hear, this is a this is under 10% of 1 of our 4 divisions. So we're probably not the expert on print. But I'll tell you my impression is that in the first half that this was actually a general market environment. And it's that the units were that the unit volumes in the market were actually relatively stable. So I don't think it was that we had unique titles or unique pricing or anything else. I actually do think that the market the first half is smaller and later. So I wouldn't draw too many conclusions to that about the whole industry. But my impression is that this was a market stabilization for a 6 month period. I'll let Nick do the M and A later, but I'll comment on the overall M and A approach. Our approach to acquisitions has not changed. Our approach is the same as we talked about, targeted data sets analytical tools that where we are the natural owner. In terms of the volume so far this year, if you put threat metrics to the side just for a second, just threat metrics over here, I'll get back to it. The rest of what we've done in the first half and what's in the pipeline right now and for the second half, to me, looks like a very typical year for us as a company. If you compare over the last 5 to 10 years, what is the normal rhythm, of course, it sometimes stacks up a little bit and sometimes it spreads out. But the rhythm of what we've seen, we've looked at and what we seem to come to conclusion on, this year looks very similar to any other year, right, or any average year, I should say, or typical year. ThreatMetrix is the exception because that was slightly larger than what we've done on average, even though it's not particularly large, slightly larger than what we've done on average. And we've worked on it late last year and slipped into early this year, right? So if we had closed that last year, last year would have just looked just a little bit above average, and this year would be an average year. So I think that's how you have to think of it. It's more of a question of time shifting and sort of the pacing of this as opposed to there's no change in strategies, no change in approach. We haven't seen a decreased deal for an increased deal flow. I mean, as you might have noticed, last year was an unusually low number for us. Our net spend last year was virtually 0. So you could argue that that's just because a couple of things slipped into this year. Eric, does that mean that this year we're thinking about 800, 900 as the total for the year if we add on what the historical run rate has been plus that metrics? Well, I can't comment on what will happen because when we work on things that haven't happened yet, they have a tendency to sometimes take longer or sometimes go very quickly. And we're not always 100% in control of transactions that involve another party either. So I don't want to look forward. But I can tell you what has happened in the first half, both in terms of what we have closed and what we have worked on, looks like a typical year, excluding the threat metric part. So that's it's a different way of trying to help you answer your question. But I'm going to let Nick talk about the second one. So Richard, on the revenue, as you identify, the constant currency growth actually is slightly below underlying growth, even though there's a slight boost from cycling in. But that's because of the disposals that we made, quite a lot of disposals during last year, particularly around the middle of the year. So if you're going first half to first half, things like the SIS, Property Services Joint Venture, New Scientist that we sold and things that were in the first half of twenty seventeen, but nothing in the first half of twenty eighteen. The acquisitions we made, of course, ThreatMetrix is the big one, but there's only 4 months of that in this first half we've just reported. So if you look forward, based on what we've done so far, obviously, you'll see those acquisitions we've made this year will contribute a full 6 months in the second half. And the disposals year on year won't be quite as significant because we'd actually sold them by midpoint last year. So you will see it shift a bit during the second half and then into next year, depending on what else we do. Can you give some more color in terms of the numbers around that 6 month impact in the second half? Well, we're not going to disclose exactly the financial metrics of each one, but you can I think people have speculated as to what the revenue run rate of Setmetrics might be, which gets into triple digits in terms of dollars 1,000,000? So that will give you a sense of its how big that particular acquisition is. Thanks. Okay. I have one over here. Last one. Thanks. It's Tom here from Citigroup. Two questions. First one on academic. Obviously, whether it stays at 3% for the full year, as you've mentioned, it's probably down to what happens in sort of print books. But just wanted to, if we just think about the sort of broader pot of money available for the sort of core sort of electronic piece, if you will, Are we seeing sort of RELX maintain share of budget? Are you gaining share of budget? Can you talk as well about some of the newer products? I don't suppose we could describe Saival as a new product anymore, but is that having a disproportionately positive impact within the mix? So just understanding some of the sort of market dynamics behind that 2% or 3% top line for STM? And then very simply, financial leverage, 2.5x, is that as high as you're willing to go? Or are you happy to go higher? Okay. Well, let me ask the first one, and I'll hand the second one over to Nick again. In STM, yes, as you said, we covered, I think, the books cited off. If you look at the rest of Elektron, you at all of STM now, all the different product sets and tools that we're selling, you can, of course, if you want to look at all of them on a continuing where we started originally, if you go back almost 200 years in some of the parts of that business, as a publisher of content sets, original published content sets. And then over time, over the last 20 years, we've gone from print reference to sort of electronic research and reference available as information sources. And then we built databases on top of those, sort of primary original data sources, first building databases on top and then we build some tools and fast moving analytical tools on top and even keep introducing some newer decision tools on top that actually have people make decisions with real sophisticated analytics. And of course, we're migrating the whole division out of print reference into electronic, out of electronic flat information into more sophisticated analytical higher value add decision tools. And if you look at this today, the growth rates, of course, not maybe in the 1st 6 months, but the growth rates over several years have been that the print segments continue to decline in sort of an average decline rate, which, of course, can be volatile in a 6 month period, but it continues to decline and become a smaller and smaller piece. Whole division, They are growing, but they're growing moderately because there's continued growth in content set, continued growth in users, continued growth in users, continued use in demand. You asked the question about are we gaining share in total. Well, we know in these areas that we have higher quality content sets and more sophisticated platforms than others, and we offer these at lower prices than other large major providers. So if you add that up, we actually do think that we can continue to gain in many of these, but we'll do it carefully and slowly, one little piece at a time. Then many of these broad based information sets are then transitioning to databases. And these databases have been built over the last primarily over the last 10 to 15 years, and they're growing slightly faster, right? Slightly faster for the slightly newer, their database that lay on top of underlying contents. They're going slightly faster. And the tools we put on top then, some of them grow even higher and up into high single digits or the fastest growing, newest tools grow into double digits. So that's how we look at our environment. And we don't focus so much on share as we focus on increased value add to the customers because we believe that in the science, research and health world, just like in the legal world or in the risk world, that if we add more value to the customer, demonstrably higher value in a way that they can see, measure, quantify and see the impact, If we add more value, our customers will want more of it. And if they want more of it, we will ultimately also capture some of the increased value we're giving to our customers. And we believe in these segments that we should we are the leader. We should be the leader both in terms of quantity and quality and innovation. And we should continue to innovate and push new tools that we can launch that add more value. And if that over time means that we are gaining shares, so to speak, in a defined market. That's okay, but it's not our primary objective. The primary objective is to keep adding more value and leading the industry and adding value to the customer so that we have sustained growth rates and high value add to our customers. And if we do that, we believe that it will be a good financial model too. That's how we think of the science and research market over time. Okay? Okay. One more over. Sorry, Nick. Question about leverage. So, Tom, so I mean, as you know, we've been in a range of 2.1x to 2.5x leverage over the last few years. Clearly, at this particular June mid year point, which mid year is often higher than year end, we're at the high end of that range. But it is a consciously conservative range. We have set it knowing there are variables like currency and pension deficits that you're not in complete control of. So those can put you over it, but it's a conservative, so you've got room for maneuver. And also to give us flexibility, should something come along, an opportunity that means we wanted to pursue. So So, in normal circumstances, that's the sort of range we aim for, but it's not we wouldn't it's very conservative, so it wouldn't be a problem if we're outside of it for a period of time. One more over there. Hi. Gisela Salati from Macquarie. Three questions, please. First, can you give us an update on the STM breakdown by geography? Clearly, I'm primarily interested in how big is Germany for STM. I think that's a fair question. And secondly, one for Nick. I think you mentioned the currency benefit on margins in H1. If rates stay where they are right now, do you expect the same benefit in H2? Or is there a reversal? I know that is a very complex calculation you only can do. And the third one more broadly. This at this point in the cycle, it's typically prime time for professional publishers. Ortezkura achieved a 4% gain, first time in 10 years. Experian is trending for 8% organic at this point. RELX is again 4%, as it's been for the last 5, nearly 10 years now. Are you Eric, are you happy with 4% organic right now? Or you think you could do more, you want to do more, you want to push for further growth at this point? Okay. Well, I'll handle the first and the third, and I'll let Nick handle the second in the end. So you're saying geographic breakdown of STM, you're now seeing the whole division, right? Yes. I think we've said before, if I'm remembering right, we have said that Europe as a whole represents about 25% of STM and that we have also said in different conversations, Pat, that the U. K. Is a fairly large part of that. And we said that roughly mid single digits of that or slightly higher, which means that Continental Europe is slightly below 20% of all of STM. If you just look at all our products, that's on a geographic basis, right? And of course, that's our definition or the geographic definition of everything that's geographically in Europe as opposed to an EU definition. Let me see the second question. I might not be recording the underlying growth rate history as well as you do, but I actually think we've had 4% underlying revenue growth for the last 2 years and the first half of this year. I think that's what I remember, but that can be easily verified. And the way we look at our growth rate going forward is that we can never predict what the actual growth rate would be in any one 6 or 12 month period in any point in time because we think that our actual growth rate is impacted by 2 main categories of factors. 1 is what we do, what we control over have control over what we do with our customers and so on. And the second one is what happened in the world around us, where economic cycles and customer industry growth rates, inflation, all these different things, right? We don't tend to spend much time on the second. We spend all our time on the first, meaning what can we do to make sure that we increase the value that we deliver to our professional and business customers in the industries that we serve. How do we make sure that the decisions they make when they use our information, our tools, that we help them make get more value from those decisions, that we improve the quality of the decision and the economics of those decisions. And if we do that all the time, we can see revenue growth that can 1st of all, we can see revenue growth that accelerates because the customer sees something that adds more value. They will want to use it more. If they want to use it more, our revenue goes up. And if you look at what I talked before about the STM, we're trying to migrate the market, our whole business profile out of print declines to electronic reference lookup tools, but also from electronic lookup tools to more sophisticated higher value add decision tools and analytics, which is what we do across all our businesses. If we are successful at doing that and adding more value to our customers, you should see a gradual improvement of the value add to our customers and therefore a gradual improvement in the quality of our business, meaning it should become more predictable, it should become higher growth and we should have higher returns because we're focusing on it primarily organically. I think that's what you've seen if you go back 5 or 10 years. I don't think you will have seen a flat growth rate or flat returns over the 10 years that I think you signaled there. I think you've seen a gradual improvement if you do a 10 year history. And of course, our objective is to continue to improve. But what exactly that is in any one single year depends on many factors outside of our control. Okay. Hedging? So Jason, the hedging question, we give you a breakdown in the appendix between of how the hedging for STM affects the numbers and how the other currencies affect the numbers. And you see it's a bit less than half of the currency benefit is the hedging, and the other half is just the other currency movement. The hedging, you might expect to continue the benefit from that into the second half, but the other piece is very hard to predict. And FX rates are already quite different today than they were than average for the first half. So you certainly shouldn't assume that, that piece would continue into the second half. Okay. Thank you very much for taking the time, and look forward to seeing you again soon.