ICON PLC (ICLR) 2011 Q4 法說會逐字稿

Good day, and welcome to the ICON plc Fourth Quarter 2011 Results Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Brendan Brennan, Chief Financial Officer.

Thank you, Elaine. Good day, ladies and gentlemen. Thank you for joining us on this call covering the quarter ended December 31, 2011. Also on the call today, we have our CEO, Mr. Ciaran Murray, and our Head of Investor Relations, Mr. Sam Farthing.

I would just like to note the call is Webcast, and there are slides available to download on our Website to accompany today's call.

I'll now make the cautionary statement in relation to forward-looking statements. Certain statements in today's call are or may constitute forward-looking statements concerning the Group's operations, performance, financial conditions, and prospects. Because such statements involve known and unknown risks and uncertainties and depend on circumstances and events that may or may not occur in the future, actual results may differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties and that forward-looking statements are not guarantees of future performance, investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

In addition, the following commentary specifically excludes restructuring charges taken in quarter one and three 2011 amounting to $9.8 million. These charges relate to lease write-offs taken (inaudible) costs.

On a US GAAP basis, including the above charges, operating profit for the year was $29.4 million, or 3.1% of revenue. Net income was $22.9 million, or 2.4% of revenue, and EPS amounted to $0.37 per share.

As noted, this presentation includes selected non-GAAP financial measures. For a presentation of the most directly comparable GAAP financial measures, please, refer to the press release statement -- that is consolidated income statement, unaudited US GAAP. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, we believe certain non-GAAP information is more useful to investors for historical comparison purposes.

We will be limiting today's call to one hour and therefore would ask participants to keep their questions to one each with an opportunity to ask one related, follow-up question.

In the fourth quarter, net revenues were $243 million, compared with $232 million in the same period last year, which represents an increase of 5%. Revenue growth in the quarter was impacted by FX volatility. However, on a constant-currency basis, quarter-on-quarter revenue grew by 3.3%. For the full year, revenue was $946 million, up 5.1% from 2010. On a constant-currency basis, growth was 2.2%.

In 2011, our top client represented 13% of revenue, compared with 9% last year. Our top five clients represented 37% of revenue, up from 33% last year. Our top ten clients represented 52% of revenue, compared to 50% last year, while our top 25 accounted for 69% of revenue, compared to 71% in the prior year. We continue to expect client concentration levels to increase, given the shift towards deeper partnerships with our clients.

Globalization of trial execution continues. In 2011, 58.3% of our revenue was generated from revenue outside the US, up from 57.6% last year. Asia-Pac and Latin American revenues grew to 12.1% of Group revenue from 10.8% last year.

In quarter four 2011, gross margins increased to 34.8% from 34.2% in Q3. The decrease in gross margin in the second half of the year has been the result of the previously announced on-boarding of additional staff ahead of revenue expected from some of the larger deals we announced during 2011. We added over 700 staff to the business in 2011 and, at the end of Q4, had 8,468 staff.

SG&A amounted to $67 million, or 27.6% of revenue. This represents a decrease from $71.6 million in Q3. The decrease quarter on quarter results from improved cost management, a modest FX benefit, and a $1.7-million benefit related to the accounting treatments of (inaudible) on past acquisitions, offset by $1.6 million of increased acquisition-related professional fees in the quarter.

US GAAP operating income for the quarter was $6.65 million. Operating margin was 2.7%, compared with a modest loss in Q3 and 9.5% in the prior period -- or in the prior year.

The interest charge was $751,000 in the quarter due to acquisition accounting related to the Firecrest acquisition.

The effective tax rate in Q4 2011 was higher than usual, at 30.3% due to the geographic mix of profitability in the quarter. We continue to expect our longer-term average tax rate to be in the range of 18% o 20%.

US GAAP net income in the quarter was $4.1 million, equating to US GAAP EPS in the quarter of $0.07.

At the end of December 2011, our DSO improved to 47 days, compared to 52 days at the end of September 2011. Given the contractual terms of our key partner relationships, our long-term DSO targets will remain in the region of 50 days.

Operating cash flow generated in the quarter was $37.8 million. We spent $9 million on the share buyback program. CapEx for the quarter was $10.7 million. So, at the end of December 2011, net cash was $174 million.

I'd like to hand over to Ciaran now to talk about the business environment and our strategic plans and outlook for 2012.

Good morning, and good afternoon, everyone. Before I get to the outlook for 2012, I just want to spend a few minutes reviewing our execution against the plan we set ourselves for 2011 and set the context for how we intend to progress the business as we go into 2012.

If you recall, at the end of 2010, we articulated ICON's strategic plan, which was to capitalize on market dynamics that present a significant growth opportunity for a small number of global CROs with the scale, the reach, and the capabilities to become global partners to our customer base. ICON was well positioned then to benefit from this market opportunity, but we set ourselves the challenge of enhancing our overall capability to ensure that we were at the forefront of the CROs who had the value proposition that the market required.

We set out a plan to provide a more integrated service offering from across all of our business units. We planned to enhance our global footprint by increasing our presence in Asia, to develop leading-edge, integrated information solutions, and we wanted to enhance our capabilities in the fast-growing late-stage and biomarker spaces. We also set ourselves the goal of returning our central lab to profitability and to continue to develop its global presence.

In the course of 2011, I believe we made significant progress in the execution of our plan, which will position us well for future growth.

In 2011, we were successful in winning a number of strategic accounts; notably, Pfizer and Shire, but, also a number of others across all of our businesses, which was a very important element in driving a 19% increase in our backlog last year. In quarter four, we saw significant revenues start to flow from our Pfizer alliance, and so we started to gain leverage from the investment in resources we made in Q3. Revenues are flowing as expected and will continue to increase gradually throughout 2012.

We acquired Oxford Outcomes, a leading health economics and outcomes research consultancy, which has significantly enhanced our late-phase capabilities. In quarter four, the late-phase business continued to perform to plan and deliver profitable growth.

We continue to develop our biomarker capability. Notably, we formed alliances with the Foundation for the National Institutes of Health and Empire Genomics.

Our early-phase business had another good quarter and posted reduced losses as it continues to move towards breakeven on the back of revenues increasing from strategic accounts that were won earlier in 2011.

We also acquired Firecrest in July, a leading provider of investigator site support technology, and we launched ICONIK, our market-leading, integrated study information platform. Both of these offerings provide exciting ways to enhance the timeliness and quality of clinical trials while reducing costs.

In December, we announced the acquisition of BeijingWits, a leading Chinese CRO. This significantly adds to our leadership, scale, and service offering in the Asia-Pac region. We also announced a partnership with ACRONET in Japan. We were delighted during the year to be chosen by Tasly Pharmaceuticals to run their trials for the first traditional Chinese medicine seeking FDA approval.

Our central lab won over $130 million of gross new business for the year and returned to profitability in Q3 and Q4. In Q4, the lab reported $22 million in net new business, revenues of almost $19 million, and operating profit of $1.3 million. However, the profit included some one-time yearend credits. So, if you exclude these, the lab had a good quarter and posted operating margin of about 3.5% to 4%.

Our DOCS clinical staffing business and our medical imaging business both delivered solid performances, achieving targets in 2011, and they're both well positioned for further growth in 2012.

For 2012, our plan is to continue the progress that we've made in 2011. We remain focused on enhancing our value proposition and to make sure we have the team and structure in place to deliver profitable growth. We're committed to delivering sustainable value to our customers, and this, in turn, drive sustainable returns to our shareholders.

In terms of having the right team in place, we've made a couple of significant appointments since the Q3 earnings call. Firstly, we announced the appointment of Stephen Cutler as the Global Head of Clinical Research Services. Steve comes with vast operational experience gained at both Quintiles, and, more recently, Kendle.

And then, today, I'm delighted to announce that Brendan Brennan has been formally appointed to the position of CFO, in which he has been acting since October.

We continue to see our informatics capability as having the potential to change the way clinical trials are run. In February, we combined our individual technology groups, medical imaging, interactive voice response, Firecrest, and ICONIK into one technology business that will sit within the core clinical business. The new group will be tasked with integrating our existing offerings to further drive value from our information platform and to differentiate our clinical service offering.

We plan to continue to enhance our capabilities and identify growth areas, late-phase and biomarkers, and we'll continue to ensure that our global reach and clinical trial execution and central laboratory support is sufficient to be attractive to our customers.

So, turning to the outlook, RFP volumes continue to be healthy, and RFP values increased about 50% in 2011 compared to 2010. In 2011, we have net new business awards of $1.3 billion. That represents a book to bill of 1.37. Accordingly, we enter the year with a strong backlog, which positions us for revenue growth. We continue to engage with clients by deepening our strategic alliances, and we're also involved in a number of discussions in relation to the formation of new alliances.

We expect our revenue to grow in 2012 and be in the range of $1.07 billion to $1.1 billion. This is an increase of 13% to 17%, which is a little lower than what we expected in Q3, largely as a result of volatility in the euro/dollar exchange rate.

Our backlog coverage of the next 12 months' revenue provides a healthy 76% of the midpoint of this guidance.

As a result of increased revenue and improved leverage from our cost base, we expect EPS in the range of $0.90 to $1.10.

We remain focused on driving recovery in our operating margin. And, as the revenue expands throughout 2012, we expect operating margins to improve progressively to high, single digits in Q4 2012.

CapEx spend for the year is forecast to total about $35 million, which includes investments in our informatics systems.

Free cash after CapEx and tax is forecast to be in the range of between $50 million and $60 million.

Before I hand over to questions, I want to take this opportunity to say thank you to the whole ICON team worldwide. We are a people business. It is our people that drive our success.

Elaine, we'll clear questions now, please.

(Operator instructions). John Kreger, William Blair.

Hi. This is Beth Rosen for John Kreger this morning. Our first question is about M&A. How have your recent acquisitions, including Oxford Outcomes, Firecrest, and BeijingWits, tracked relative to your expectations?

And the other question was just --

We should say we restricting the call to one hour today, so we're restricting everyone to one question and, possibly, one follow-up, so, if you could keep that in mind. Thanks.

Okay. Then, I guess, that was my question.

You sure that's the one you want to ask me now? Yes?

Yes. That's the one I want. Thank you.

Okay. Yes. I'll start with BeijingWits. We announced the acquisition of BeijingWits back in December, and we also announced that it would require regulatory approval to close, which --

It has done, actually. Yes.

It has done just last night. So we haven't started to operate the business yet.

Firecrest and Oxford are both performing very well. They're both exceeding expectations, exceeding plan, and both on target to meet their earn-out targets, so we're very happy with both of those acquisitions.

Okay. Thank you.

Robert Jones, Goldman Sachs.

Congratulations, Brendan, on the official promotion to CFO.

So, I just had a question on the revenue. And I've jumped between calls this morning, so I apologize if I missed this. It looks like the guidance for 2012 a little bit lower than what we were looking for before. Is that -- ? Maybe if you could just walk through the components, Ciaran, of what maybe changed or what you have better clarity on today than what you had before.

And I'll sneak my follow-up in, since I know the Q&A seems a little stricter now. But, with the book to bill, could you maybe give us, if you haven't already, the book to bill ex Pfizer?

Okay. With relation to guidance, Bob, nothing significant changed in terms of the underlying business. We have been working on forecasts right through from September and October. We gave some preliminary guidance on the Q3 earnings call at the end of October.

If you go back to when we were working on our forecast, the US dollar exchange rate was about $1.40. As we speak today, it's in the early $1.30s. We've recast our forecast for this year at about $1.31. So the primary driver -- and we had spoken about expecting revenue to be in the range of 15% to 20%. We're coming out now with a refined forecast with a revised foreign exchange rate of 13% to 17%, therefore 15% midpoint. So it's substantially just foreign exchange and then just the normal refinement that you get as you move through -- after, what, four or five months ago and move through your business plan and your forecasting.

So nothing significant there.

Book to bill, we've given, but we did not -- you didn't miss anything. We didn't give it ex Pfizer. We really are reluctant to speak in too much detail about specific client numbers. And so all I'll say is that our wins from Pfizer were significant, and we were happy with them. They were on target. But our new business was healthy across all of our business sectors and customers, and we're happy with the performance.

Great. Thanks so much.

Todd Van Fleet, First Analysis.

Ciaran, on the revenue guidance, then, for the year, what kind of environment do you think we're looking at now in 2012? I know, as you guys -- well, perhaps, as you guys think about the business maybe in terms of the strategic partnerships versus kind of the non-strategic variety, is the growth rate kind of on par between the two sets of clients? Or is one kind of outstripping the other? Any kind of commentary you could provide there to give us a better sense as to what we're looking at in 2012? Thanks.

Yes. I think where I draw the point of reference -- when we look at 2012 and come up with the revenue guidance, we look at a number of things; I suppose, principally, three elements. We look at how our backlog is positioned, and it grew 19% last year. We think look at just the tone of business and the RFP flow. We've seen the value increase significantly of RFPs, which reflects a number of large RFPs that are out there for deals of a more strategic nature, I would say. And then we look at -- where there are existing strategic accounts, we look at how spend plans are and how we expect to work with our partners during the course of the year. So we take that cocktail of three things, and we look at revenue guidance.

Specifically to your point, I think it would be fair to say that there's healthy activity across the market. But I think that what's driving what's a fairly significant level of revenue growth at a midpoint of 15% is really some of the revenues that are coming from the strategic accounts that we've won in 2011 and some of the outlook of the larger RFPs of a more strategic nature that are in the market at the moment.

All right. Thank you.

Eric Coldwell, Robert W. Baird.

The question is actually on the RFP value increase of 50%; I guess, kind of a two-part question. First off, could you confirm whether or not that includes the Pfizer deal in 2011? And then, secondarily, is this perhaps a component of these larger, strategic deals bundling a number of project together in a single RFP, whereas, historically, you would have won those contracts with the clients ratably through the year? I'm just trying to get a sense on how meaningful the value increase of the RFPs is or whether the overall dynamics of contracting have changed such that that metric may not be as relevant as it used to be. Thanks.

Just to answer your first question, I suppose it is -- I mean, the metric is supposed to be on a like-for-like basis and, as such, does not include in the prior year period the Pfizer business that we talked about or, indeed, this year.

It doesn't include Pfizer, Eric. It's not in the RFP for the kind of core, strategic deals where we're dealing with them on reshaping development models and working through them. We don't move that through our transactional RFP model. So that's not in the numbers that we quote.

But you do raise an interesting point about what does the RFP metric mean now? Is there some bundling in the numbers? And there is. I mean, when I looked at the increase and we got the number through and I looked at -- RFP volumes were up modestly, a couple of percent, and, yet, there was a large spike in the value of the RFPs to 50%. And the first question you ask yourself is why. What's going on here?

As you peel through the analysis, there are a number of larger RFPs that have not yet sort of moved into a strategic arena but do indicate a number of our customers bundling sort of services together. We're seeing more RFPs which reach across the full range of our services, from clinical to late-phase to -- some of them even include pieces of work for central lab. And I think, in the past, those things would have been separate, and they would have had a different flow on the timing.

So I think what we can safely say is that, and it has been our experience that, as we prosecuted strategic deals, you tend to get larger numbers up front. You tend to move into some fairly complex trials. And these deals don't -- because they've been done earlier, because of the planning cycle, they don't start up as quickly. And I think that's been reflected over the years for the whole sector in terms of seeing the revenue conversion numbers decrease year on year. Our own revenue conversion would have been one of the higher numbers in the CRO sector.

But this quarter, in Q4, we saw it move down to about 10.8%, and that just, very simply, reflects that, in the back half of last year, we booked quite a significant amount of strategic related business that we've talked about in previous calls. And some of that doesn't start up as quickly as transactional business did in the past. So the change in that mix also impacts conversion rates. And I think your point is well made.

Thank you very much. That was helpful.

Steve Unger, Lazard Capital Markets.

Just a quick question just regarding the revenue ramp that you expect for 2012. It looks like that the conversion rate was slower in the fourth quarter. And I'm wondering if you're feeling that you expect that conversion rate to improve right away, in the first quarter, or are we going to be seeing sort of a gradual improvement in the conversion rate over the year?

No. I think the ramp in revenue isn't so much connected to the conversion rates. What we're going to see is that business flows from some of the bigger, strategic accounts picking up in the back end of the year. The conversion rate should improve in Q1. We expect it to. As I say, the lower rate in Q4 was a result just of the pattern in some of the wins we got and the length, then, in startup time. So we'll see it improve in Q1 over Q4, and we should then see it continue to improve progressively through the year.

Got it.

Some of that (technical difficulties) by foreign exchange.

And, then -- yes. That's my follow-up question. As far as -- there's a couple things that I missed in your rather dense comments on the quarter. As far as just the metrics, could you go over, just quickly, the central lab revenues, net bookings, and profit for the quarter and then the FX impact and acquisition impact on revenues for the whole Company in the fourth quarter?

Yes. I think we mentioned -- Ciaran mentioned in his comments that we had a decent quarter of net revenue from the lab of about just over $18.5 million. We did have a very good profit in the lab, at $1.3 million. But, again, I think Ciaran mentioned that there were some yearend credits there that (inaudible) 3.5% to 4% of the run rate in op margins in the lab.

On the second point, an overall FX impact for the whole organization, actually, in my comments at the beginning of the call, actually, I kind of made reference to the fact that we did have a slight uplift, but it wasn't a hugely material number. It was a couple of hundred thousand dollars and no more than that. So that obviously went through the SG&A line and helped that a little bit as well.

You're looking for the foreign exchange impact. On constant-currency basis, the revenue went up 3.3% Q4 versus Q3.

In organic growth in the quarter?

Year on year, I suppose, if you look at constant currency -- again, I just have these numbers off the top of my head, Steve. So, year on year, if you just look at constant currency, we said it was 5% in absolute terms but 3% in constant-currency terms and a little closer to flattish when you take out acquisitions.

Got it. Okay. Thank you.

Ramesh Donthamsetty, J.P. Morgan.

Just a follow-up on that same question that just came in. It seems like one-time activities increased op margins for the central lab. You said 3.5%, I think, to 4% op margins for that business. We had very good momentum, $16 million, $17 million, $20 million, and then $19 million in the fourth quarter. How do you see the central lab business going, I guess, through 2012 now, both on sales and margins?

We see that -- we expect revenue to increase sequentially throughout the year. We're expecting margin to increase again in Q1. I think Q1 will be around the 4% to 5% margin in the lab. It will move up progressively through the year as revenue increases, probably moving to mid -- to above mid, I suppose. By the end of the year, you should be around the 7% to 8% range in margin.

Okay. Great. And, then, you know, just a quick follow-up, if I can, on maybe a prior question. What do you guys have for operating cash flow and free cash flow in your model?

We're saying, for free cash flow, excluding tax and then CapEx, about $50 million to $60 million, Ramesh.

We don't guide operating cash flow.

Okay. Great. Thank you.

You can work that out.

Greg Bolan, Sterne Agee.

Ciaran, now that you are into the Pfizer deal for some time now, probably six months or so, what surprises have you found? Obviously, this is an evolving partnership. I mean, are there -- ? Both from a positive and a negative perspective, what are you finding? What are you learning that maybe you didn't really know

Greg, I'm hardly likely to talk to you about that. I think the -- Surprises? I don't know if you could say there are any real surprises because everybody knows we've been through a number of strategic deals in the past, going back in the last few years. Pfizer was just the latest of these things. Sometimes I think the commentary -- when I read it, you would think we only had one customer, and this is the first thing we ever did.

And you know when you embark on the strategic deals, we saw it in the course of the year, that you have to load up on resources to get ready to do the work. The nature of a strategic deal involves a pretty large transformation program in your customer. That's subject to the normal sort of ups and downs of managing change and managing timelines. If you talk specifically about Pfizer, we knew we were looking at a large wave of studies that were already in progress, transitioning over to us. So everyone was aware that the sort of D-day nature of that would provide certain challenges.

As the year came to -- as 2011 progressed, some of those timelines slipped out from original forecasts, but we still had to hire the people. We saw the impact of that in Q3, when it depressed our margins. And then we saw the impact in Q4 of margins start to recover as the revenues flow through.

So it's hard to say that you're really surprised. You know the risks when you enter these. You flag them. To some extent, you can mitigate them, and, to some extent, you can't. It's just the inherent nature of it. We have to have the staff in place and get ready to do the work for our customers. The long-term benefit of multiyear deals of this kind of volume, in our view, merit the investment and the project startup. So there's been nothing new or different in the Pfizer deal, I'd say, that we haven't seen before. And I think, perhaps, it's just the scale of this one makes it a little bit more complex.

But we're very encouraged by the progress we've made in Q4, further encouraged by the outlook in Q1. So I would say things are progressing. They're currently progressing as we would expect, and I'm happy about that.

That's fair. And, just for my follow-up on this partnership, and this is more just kind of a broad-based question around the structure of this deal. Just kind of thinking about as revenues come in over and increasingly fixed cost base, I mean, is it -- ? You obviously can do this mathematically, so I'm just looking for directional color here. I mean, you know, saying -- thinking about, potentially, revenues from a deal like this going from, say, $1 to $2, is it fair to kind of think of incremental type margins in the 40% to 50%

No. I don't think it is because, if you look at the structure of our cost base, 80% of our staff -- I mean our big cost is staff cost. 80% of our staff are billable staff. So, when you look at deals of this nature, you will get some -- if you look at it sort of holistically, you will get some leverage off your SG&A bit, but that's a pretty small proportion of our total cost. So, you know, for every incremental dollar of revenue that we're going to get from any big account, no one specifically, we're going to have to hire for it. What we saw last year was we hired the best part of 500 people in Q3 with very little revenue flow. As we moved into Q4, we saw some revenue flow in, good revenue flows, as we expected, to soak up some of that base. And, meanwhile, we only hired another, probably, around 100 --

Less than 100.

Less than 100 people. So the hiring rate slowed down a bit. But we were still hiring in Q4 for a forecast in Q1. In Q1, revenue will flow in and soak up more of the excess, direct cost. But, at some point, as revenues keep increasing, you're adding new heads from that 80% billable pool, that's how we generate revenue. So the leverage is only going to come from the SG&A bit. So, over time, I think we may expect as we grow, if we grow 10% or 15% or 17% a year, we'll see our SG&A come down from the 25%, 26%, 27% historic range. It will come down gradually as we get some leverage. But I don't see incremental cost of 40% -- or incremental contribution of 40% or 50%.

But still safe to say fairly material, incremental operating leverage from a deal like this. Is that fair?

There is -- it depends how you look at it. But there is significant operating leverage. I'm always nervous, Greg, about terms like material because it means something different to everybody. It's not clearly defined. But there is leverage. There's decent leverage off your SG&A bit. If you look at the structure of strategic deals in a sort of holistic way, the way they're structured is the objective is to take out costs from the development cycle pro forma, to speed up development time, and knock out sort of links and layers and whole chains, some of them from our customer side, some of them from our side as we use our systems and processes more closely and integrate them together. But then that involves sort of being able to develop drugs at reduced cost for everyone.

So you will get some leverage off the SG&A bit as you move forward. It can be significant, but I wouldn't overstate it as necessarily material. And the pricing model that we have, our guidance for the year, our long-term target margins that we talk about -- they're all modeled on the tradeoff between direct cost and what you're billing customers, offset against the savings that you get with reduced BD effort, with improved leverage off technology platforms, with improved leverage off the SG&A bit.

So I think, when we speak to our guidance for the year and when we speak to the fact that we still think we have a business that, in the medium term, our stated margin target is 12% to 14%, all of those factors are baked into what we're saying.

That's great. Thanks for all the color, Ciaran.

(Operator instructions). Tim Evans, Wells Fargo.

If I just use your client concentration numbers to back into the absolute dollar amount of revenue for your top five clients in the quarter, it looks like it declined both sequentially and year over year. That seems to be kind of backwards from what I was expecting. I would expect your top five clients to be ramping their revenue at this point. Can you just kind of give an idea of what's going on there?

Yes. I'm not sure, Tim, if I understand that. Our client concentration for the top five was 37%, compared to 33% last year.

Well, that's a yearly number. I'm looking at it on a quarterly basis, just kind of using the numbers you give each quarter to back into the quarterly amount, on a dollar amount. I'm showing like $75 million or $76 million in your top-five client revenue in fourth quarter and $99 million last quarter, for instance.

Actually, maybe we should qualify that a little bit. When you're looking at those numbers, concentration is always presented on a year-to-date position, Tim, for a start. So that would skew, I suppose, the numbers that you're looking at. So, when I would have read out last quarter concentration number for our top five, I would have meant nine months at that point. And the same is true of the 12-month position.

And so what we're looking at here in absolute terms is 37% for top five for the full year 2011 and 33% for the full year 2010. So there has been a significant -- a movement up towards the top five clients in the (inaudible) period.

Okay. Can you just give the backlog number to a couple more decimal places as well?

No. I don't have that in front of me, Tim. (Inaudible).

I think we're just shy of $2.3 billion, $2.29-something, off the top of my head, Tim.

Okay. Thank you. All right. That's all.

(Operator instructions).

In the meantime, Brendan has got the couple of decimal places on the backlog for Tim's question.

What we said was the backlog was $2.244 billion. So there you go.

Nelson Obus, Wynnefield.

I wonder if you could give us an update in regard to Peter Gray's continuing involvement in whatever capacity with the Company.

Peter moved to the position of Vice Chairman, in fact, in October. In that capacity, he's working with me to the extent that I need assistance on the transition. He's still involved with a number of customer clients, where he has a traditional relationship, a fairly limited number at this stage. Transition is a lot of his workload. So that's about the extent of Peter's involvement.

Do you see that evolving to a point where he would, in the short or medium term, resign as Vice Chair and completely sever his arrangement with the Company?

I wouldn't have any insight into Peter's thinking in that. As things stand at the minute, he's in the Vice Chair. That's where he is. I suppose it's been a significant move for Peter stepping down from CEO, but he's still engaged. We're still working together, and we're still enjoying it. So I'll leave those decisions to Peter.

Well, it is a pretty important role, and I would think the Company would have some say in that. So I simply ask that you keep us up on that.

We will. You'll be the first to know anything in the event that there are any developments. Don't worry.

Is he participating in any strategic planning or simply customer relationships?

Peter's working on day-to-day transition to the extent that I need him for any historical or legacy issues. And he's working with us on one or two customers but not in a strategic planning sense, just in a customer relationship way.

Okay. Thanks.

(Operator instructions). It appears we have no further questions at the moment. I would like to turn the call back to Ciaran Murray, CEO, for any additional or closing remarks.

Okay. Well, I'd like to thank everyone for taking the time to dial into our call today.

We continue to see opportunity in our market, and we look forward to working through 2012 and to continuing to progress towards our aim of being the global CRO partner of choice for the industry by delivering the best-in-class information solutions, performance, and clinical outcomes and research.

Good day, everyone.

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen.