RELX PLC (RELX) 2010 Q4 法說會逐字稿

Ladies and gentlemen, good morning, and welcome to Reed Elsevier's 2010 results presentation. For those of you who are here, thank you very much for coming; and for those of you on our webcast, thank you for listening in.

I hope you agree with me that these results are a great improvement on where we were a year ago. I'm particularly pleased that during 2010, we resumed organic growth with underlying revenues in constant currencies up 2%, compared to a reduction of 6% in the year before.

Also, despite more investment with tight cost control, underlying profit was only very marginally down, 1%, compared to a reduction of 9% a year ago, and reported net profit was up 64%. And this big increase reflects the fact that, as we previously said would happen, the bulk of the major restructuring programs and the exceptional costs that have gone with them are now behind us.

The somewhat lower adjusted earnings per share of apparent companies, that is 5% for Plc and just 1% for NV, reflect the final impact of the placing that we did in July 2009. And the strong performance of reported earnings per share again reflects the lack of goodwill impairment and much lower restructuring costs, which I view as a very positive sign in this stage of the development of the Company.

I'm also very pleased with the progress that management is making business by business. Having split LexisNexis and reorganized RBI, Erik has put in place unit teams to really sharpen focus on value creation and operational execution. I'm confident that the good progress that is being made on individual business priorities will deliver further improvements in performance as our markets continue to recover.

Mark will now take you through the results; and then Erik will describe the progress on the business priorities in more detail, and go through the outlook for each of the businesses, and for Reed Elsevier as a whole.

Mark?

Thank you, Chairman. Well, good morning. And, firstly, the highlights for 2010. As the Chairman indicated, 2010 saw an improved trading performance, with underlying revenue growth of 2% against a 6% decline in the previous year, as many of our markets stabilized of improved.

The step-up in new product development and sales and marketing, particularly in the Legal business, was largely offset by cost actions and efficiency gains across the Group to restrict the underlying profit decline to 1%. Adjusted operating margin was 20 basis points lower at 25.7%, including some benefit from the sale and closure of low returning assets.

Including the 4% dilution from the July 2009 share placings, adjusted EPS was 5% lower at 43.4p for Reed Elsevier Plc, and 1% lower at EUR0.78 for Reed Elsevier NV.

Reported net profit, as the Chairman indicated, was up strongly, reflecting no goodwill and intangible asset impairment in 2010, and significantly reduced exceptional restructuring charges, which in 2010, related only to the restructuring in RBI.

Cash flow was strong, with a cash flow conversation rate of 98% despite increased CapEx, and free cash flow before dividends was over GBP1 million.

Net debt reduced by $960 million from $6.3 billion to $5.4 billion; and net debt-to-adjusted-EBITDA came down from 2.9 times to 2.5 times on a pension and lease-adjusted basis; in the middle of our target range.

Return on invested capital post tax increased from 10.4% to 10.6%.

I'll begin presenting the figures today as usual in sterling. The same charts with euro figures can be found in the appendices. And in discussing the results, I'll mostly be focusing on changes at constant currencies.

The chart here sets out the adjusted profit and loss statement. At constant currencies, revenues were 1% lower, and adjusted operating profit 2% lower, which included a 1% impact from disposals. Adjusted pre-tax profits were 1% lower, as was the net profit.

Looking at the components further, excluding acquisitions and disposals, underlying revenues grew 2%, reflecting the much more stable market environment. The growth was helped by the net cycling in of biennial exhibitions, which contributed 1 percentage point to overall revenue growth, and this will reverse in 2011.

Underlying adjusted operating profits declined 1%, with increased spending, particularly in the Legal businesses, in new product development, the related operational support, and in sales and marketing; largely offset by cost savings across the Group, including the incremental benefits of the earlier exceptional restructuring programs.

After the sale or closure of marginal or unprofitable titles and businesses, the overall adjusted operating margin was 20 basis points lower at 25.7%.

Our definition of underlying strips out all acquisitions and disposals made both in the year under review and in the prior year, i.e., in 2010 and in 2009, to give us a pure comparison.

The next two charts summarize the constant currency growth rates across our businesses for revenue and profit, both in total and underlying. Elsevier saw underlying revenue growth of 2%; LexisNexis was up 1%; Reed Exhibitions up 8%; and RBI down 2%, giving the overall 2% underlying revenue growth for Reed Elsevier. After taking into account the disposals in RBI, the reported revenues were in fact down 20%.

Turning to profit; for adjusted operating profit, Elsevier, Reed Exhibitions, and RBI all delivered 4% underlying profit growth, whilst LexisNexis saw profits down 12%. Erik will later go into more detail on the performance of each business and on the outlook, and talk about the separation of the Risk Solutions and Legal & Professional businesses within LexisNexis, and their pro forma profitability in 2010.

My next chart sets out how the underlying operating profit performance is derived from changes in revenues and changes in the cost base. In Elsevier, underlying costs grew 1%, against revenues up 2%, to deliver the 4% profit growth. Additional cost savings were made in offshore production, procurement, and operations, while continuing to add staff in new product development to sales and marketing.

At LexisNexis, underlying cost growth was 6%, after a 1% decline in 2009, reflecting the increased spending in the Legal business on new product development, infrastructure support, and in sales and marketing, together with additional restructuring costs charged above the line.

This has, in part, been mitigated by the further outsourcing of production and engineering activities, procurement savings, the consolidation of activities and staffing reductions, as well as the continuing integration within Risk Solutions. The loss of high margin Legal revenues, together with the cost increases, has reduced underlying operating profit by 12%.

In Reed Exhibitions, the net cycling in of biennial trade shows boosts both revenues and costs. Excluding cycling, revenues were 3% lower. However, this was not mirrored in the cost base, reflecting the costs necessary to put on successful shows, as well as investment in new launches and innovation.

At RBI, the cost reduction of 3% reflects the significant restructuring actions taken last year and this year to deliver an improvement in underlying margin and profits, despite the revenue decline. Taking into account the sale and closure of businesses, RBI's total costs were down 22%.

So for Reed Elsevier as a whole, underlying cost growth was 3%. Taking into account the disposal of marginal or unprofitable businesses, the total costs for Reed Elsevier actually declined 1%, and this follows on from the 5% reduction in the cost base in 2009.

Turning to cash flow, the adjusted operating cash flow was GBP1.5 billion, and represented a very high 98% conversion of adjusted operating profits into cash, despite the step-up in CapEx.

Net working capital improvements were after additional pension contributions, and included some benefit in 2010 from the timing of subscriptions, which are not expected to repeat in 2011.

Capital expenditure rose from 4% of revenues in 2009 to 5% in 2010 as investment was stepped up in product platforms and operational infrastructure at LexisNexis, which Erik will talk about later. CapEx are expected to remain at or around 5% of revenues, although this will fluctuate year to year.

Going further down the profit and loss account, the lower net interest expense reflects the strong free cash flow and the benefits of the July 2009 share placing, although the impact is somewhat limited by the low marginal interest rates. This was partly offset by the higher coupon term debt issued in 2009 to repay certain of the relatively low cost ChoicePoint acquisition facilities.

With very little term debt to be repaid in 2011, the interest on free cash flow will largely reflect prevailing short-term rates.

The effective tax rate is broadly unchanged. A modest increase is expected in 2011, with rising profitability taxed to the marginal standard tax rates.

My next chart shows how the Reed Elsevier net profit is divided between Reed Elsevier Plc and Reed Elsevier NV. Taking into account the July 2009 share placings and share option exercises, the average number of shares in issue increased year on year by 6%. This gives adjusted earnings per share down 5% for Reed Elsevier Plc, and 1% for Reed Elsevier NV.

This chart sets out the adjustments we make to the reported IFRS pre-tax figures in arriving at our adjusted figures, which we use as key performance measures. The adjustments relate to amortization of acquired intangible assets, slightly lower this year; impairment charges against goodwill and intangible assets, of which there were none this year; last year's changes -- charges principally related to RBI US and some of its international businesses.

Exceptional restructuring costs, which in 2010, as I said, relate only to RBI; and the 2009 figure includes the major exceptional restructuring programs that we first announced in 2008. And, as mentioned, regular restructuring spend as been charged within the adjusted operating profit of GBP31 million.

Next are acquisition integration costs, which principally relate to the ongoing ChoicePoint integration. And a similar charge is expected in 2011 as the large major pieces of the technology migration take place.

Under IFRS, tax and joint ventures is charged against operating profit, whereas for adjusted purposes, we reclassify this to the tax charge. Also excluded are gains and losses on disposals and revaluation gains on venture investments.

After interest and tax paid, free cash flow before exceptional restructuring and acquisition integration spend was GBP1.1 billion, up 8% in sterling.

Taxes paid were unusually low after tax repayments from prior years relating to crystallized tax losses on the RBI-retained US assets. In 2011, taxes paid will be up at more normal levels.

Cash paid in respect of exceptional restructuring, principally in RBI, and acquisition integration, amounted to [GBP103 million] net of related cash tax relief.

Free cash flow after exceptional spend was, therefore, GBP1 billion before dividends; and ordinary dividends of GBP483 million relate to the 2009 final and 2010 interims, with the increase reflecting the increase in the number of shares in the 2009 final versus the 2008 final, giving free cash flow post dividends of GBP540 million.

Most of our net debt is denominated in US dollars, so I've included on this chart the movement in net debt expressed both in sterling and in dollars. With limited acquisition spending, and this offset by disposal proceeds the reduction in net debt is driven by the free cash flow. Currency translation increases net debt expressed in sterling, but reduces it in dollars.

Net debt at December 31 was $5.4 billion, which compares $6.3 billion at the beginning of the year, and $8.3 billion a year before that. Following this debt reduction, net debt to adjusted EBITDA was 2.5 times on a pension and lease adjusted basis, and our credit metrics are set out in more detail in the appendix.

Turning to our balance sheet, no significant changes to its shape; dominated by goodwill and intangible assets; a small reduction in the pension obligations, with rising asset values, partly offset by the effects on liabilities of a reduction in discount rates. Negative working capital largely from advanced subscription receipts is GBP1 billion. Net debt reduces as discussed, and current and deferred tax is a little higher, and follows receipt of the tax recoveries that were netted in the 2009 balances.

Currency translation overall has some positive effect on net asset values as the dollar strengthened against the beginning of the year, slightly offset by the weakening of the euro.

Our post tax return invested capital was 10.6%, up 20 basis points; and while post tax adjusted operating profits were flat on the prior year invested capital was a little lower through strong cash generation and limited acquisition activity, coupled with the disposal and closure of low returning assets. The invested capital here includes -- is after adding back the cumulative amortization and impairment of acquired goodwill and intangible assets, and so is gross, and the calculation is set out in an appendix.

Lastly dividends, the Boards have proposed equalized dividends unchanged at 5.4p for Reed Elsevier Plc, and up 3% to EUR0.303 for Reed Elsevier NV. This gives an unchanged Plc dividend for the of 20.4p, and an increase our 3% to EUR0.412 for NV, the difference in growth rates reflecting the weakening of the euro against sterling since the previous year dividend announcement dates.

The equalization calculations for these dividends are set out in the appendix, and this gives dividend cover of 2.1 times for Reed Elsevier Plc, and 1.9 times for Reed Elsevier NV, broadly consistent with our goal of at least 2 times over the longer term.

Now let me pass to Erik.

Thank you, Mark. Well, good morning; and again, thank you for coming and for taking the time to be here.

As you already heard from Mark, 2010 saw a significantly improved trading performance, with underlying revenues up 2% against the 6% decline in 2009; and increased spend on product development and sales and marketing, almost entirely offset by cost efficiencies across the business.

But just as important is the fact that we made considerable progress in the development of the business. In Elsevier, renewals were as expected, and we developed new content sets and new tools, including the launch of SciVerse, and the expansion of our SciVal suite. LexisNexis Risk Solutions captured increased market activity in its markets through good growth in their core products, as well as a very strong and active new product pipeline.

LexisNexis Legal & Professional continued to build out the next generation product architecture, and saw initial launches of several new features and content sets, including Lexis Advance for Solos, and Lexis Advance -- or Lexis for Microsoft Office.

Risk Solutions and Legal & Professional are now positioned as separate businesses from January 1; and they now have two separate teams that are up and running, with very positive momentum.

Reed Exhibitions stepped up launch activity to 35 new shows, invested in innovation, and continued to build out their technology capabilities. RBI re-thought their strategy, reshaped their portfolio, reduced costs, and completed management succession. And that means that over the last 12 months, we have now completed management succession and set up new teams in three of our five major business divisions in LexisNexis, Risk LexisNexis, Legal & Profession, and in RBI.

We've also announced the appointment of a new Chief Legal Officer for Reed Elsevier, and we've also changed the management team leading our Reed Elsevier Shared Technology infrastructure.

Going forward, we expect gradual recovery and a continued improvement in performance.

Now let me first walk you through each one of our businesses.

Elsevier saw modest revenue growth of 2%, essentially as expected, and thanks to continued pursuit of cost efficiency and process innovation, we were again able to keep cost growth below revenue growth and, therefore, expand our margins slightly.

Science & Technology saw revenue growth of 3%. In research, we saw continued growth in quality, quantity and in usage, but academic budgets remained constrained in many of our markets, even though there were significant differences throughout the world. And as a result, the 2010 subscription revenues turned out as expected.

Reference and education had solid growth in electronic reference, and the print revenue declines moderated somewhat. Databases and tools saw continued good growth, both in usage and in revenues.

Health Sciences saw growth of 1%. Medical research experienced exactly the same dynamics, and science research had similar growth rates. Clinical reference and decision support saw good growth in online revenues, and very high increase in customer interest, in customer sales pipelines; however, we experienced slightly longer sales cycles in some of those markets, and I think our customers were grappling with some uncertainty of the impact of US Healthcare reform during the year.

Nursing and health professionals again saw continued good growth in integrated solutions. But print growth moderated somewhat as student budgets were tight during the year, and as career schools reduced their enrollment in certain areas. They dropped the enrollment in anticipation of potential gainful employment legislation coming through. In the US, that would then reduce future ability for student funding. And pharma promotion remained weak.

Elsevier also made great progress on its different product and operational priorities during the year. We launched SciVerse, which is an integrated hub that includes Science Direct, Scopus and SciVerse, all the major electronic products and tools of S&T are now built in to the SciVerse hub. It also includes an application marketplace where individual researchers can develop, post and disseminate/distribute their own tools and applications.

We expanded our SciVal suite, a suite of institutional performance and planning tools, and we launched several new tools in the growing health professional markets. We divested the Excerpta Medica pharma promotional agency business, and we made progress on several new initiatives in China, one of them is listed here.

And last but not least, we continued what we labor our relentless pursuit of cost efficiencies in Elsevier, with modernization of some of the editorial systems, and improved workflows in production.

Going forward, we expect strong demand for electronic tools to continue across Elsevier's markets, and we plan to make further progress on many of our innovative solutions. We expect to launch new tools in high growth markets, and continue our expansion in emerging markets.

However, we do expect the budget environment to remain constrained in many of our markets, even though the large variations between customer sets are expected to continue. So overall, we expect another year of relatively modest revenue growth at Elsevier.

LexisNexis saw underlying revenue growth of 1%, with a margin decline of 340 basis points, as increased spend on legal product -- legal product development and sales and marketing was only partly offset by cost efficiencies. And as you know, as I mentioned, Risk Solutions and Legal & Professional have now been split.

And as you can see on the left, our LexisNexis Legal & Professional business now includes Legal Research & Litigation, Marketing & Business Solutions, News & Business Databases, and Government Patent Services; i.e., this means that all our sales to law firm markets, all our sales to legal markets are now in the Legal & Professional division, whether that is legal tools or other tools.

We also have the sale of legal tools to non-legal markets in that business unit. And as you can see, we have some sales of other professional tools that are not legal into corporate markets, such as news and business database to corporate customers.

On the right side, as you can see, the Risk Solution business includes our Insurance business, our Government Risk Services, risk tools, our Screening business, and other business risk management tools and services for receivables management, for other financial purposes, as well as the corporate risk assessment.

Now as we've said before, this separate was done to improve the management focus on the businesses on their markets for us, but I also hope that it will actually in the end also help you get more visibility and more transparency of the different businesses inside LexisNexis.

And I think it's important to point out though that while these are two separate market facing units and two separate market facing teams, these businesses will continue to sell each others' products, and they will continue to share product technology, and they will continue to share internal services and functions.

Now as you can see on this page, the adjusted operating margin of LexisNexis in 2010 was 22.6%, with Risk Solutions estimated at 38.2%, and Legal & Professional at 14.1% on a pro forma basis. Now this means that for LexisNexis as a whole, the margin has dropped over the last two years since 2008 from 26.4% to 22.6% since 2008. In that same time period, we can look at the two different businesses.

Risk Solutions, in the Risk Solutions business, ChoicePoint now represents, and still represents, the majority of the revenue base. When ChoicePoint was acquired in 2008, it has a pro forma operating margin as a standalone business of 24%. At that point, the existing LexisNexis Risk business had an operating margin in the mid to high 30s.

Since then, the combined Risk business, including ChoicePoint [the] existing Risk business, has benefited from the cost efficiencies that were created by leveraging across Risk Solutions, across LexisNexis, as well as across all of Reed Elsevier to drive the margins up to what's now the 38%; the significant increase from what ChoicePoint was as a standalone business only two years ago.

In Legal & Professional, as you can see, the margin has declined from somewhere in the low 20s two years ago in 2008, to about 14% in 2010. Now this is due to a combination of revenue declines and slight continued cost growth.

As you can see here, the revenue declined an average of 3.5% per year for those two years, meaning in reality, it declined 5% in 2009, and 2% in 2010. And that's partly due to what we label structural declines in some of our revenues, such as direct re-listing, some news and business, and possibly some print reference; that's structural disappearance of revenues; but to a large extent, the cyclical downturn in the legal market, the unprecedented cyclical downturn.

At the same time, ours costs grew about 2% a year in this business, as restructuring savings, cost management, efficiency gains that we obtained throughout the sourcing of operational streamlining, etc., was offset by our increased spend on product development, sales and marketing, that we have talked about, for a net overall growth of the cost base of about 2% a year.

Now if we'd seen this cost growth, and this replacement of reducing costs in one part of the business and growing costs in the other, if we'd seen that during a period of revenue increase, it would have been a very different picture. But when you combine it with the revenue decline, you get this impact on margins.

Now going forward, we expect to keep margins broadly flat in 2011, and a gradual medium term recovery thereafter. We expect this because we expect to maintain our current investment levels at roughly the same levels as we did in 2010, and the same for the levels of spend on product development and sales and marketing; also to maintain those roughly at the current levels. But as we see a return to revenue growth, we believe that it's very possible for us to again keep cost growth below revenue growth and, therefore, over the medium-term, as our advanced infrastructure becomes more operational, and as we continue our ongoing focus on cost efficiency, that we continue to gradually expand margins in the medium-term.

So in 2010, Legal & Professional saw revenue decline of 2%. In US law firms, renewals continued to reflect low but stabilizing levels of activity and employment. New sales were significantly higher, and our customer retention was stable, including stable attrition levels and win loss ratios.

In US Corporate Government and Academic, budgets remained under pressure, and we saw significant declines in news and business sold to corporations.

International continues to see good growth in online legal solutions, offset by print declines.

We also made good progress on our operational priorities during the year. Our Next Generation Tools and infrastructure is on track. Our initial market introductions of Lexis Advance for Solos, Lexis Advance for Microsoft Office, and LexisNexis Verdict and Settlement Analyzer, were all done during the year. We also expanded our sales and marketing efforts, and we launched several new international tools. And as we said, we position it as a standalone business and sharpen the focus on our markets.

As we enter 2011, law firm markets appear to have stabilized, with some signs of pick-ups in activity and in billings, but no real significant increase yet in hiring or in law firm spend. Our corporate news and business revenues are continuing their decline at this point, all with somewhat reduced level, and we're seeing good demand for integrated solutions to improve our productivity and outcomes continuing.

We will launch further new segments, specific tools and content sets in the US and in international, and we will continue to develop and implement our new advanced operational infrastructure. Overall, we expect revenue recovery in Legal & Professional to be gradual. And as I said, we expect 2011 margins to be broadly flat before they can start to recover in the medium term.

Risk Solutions saw revenue growth of 6%. In Insurance, strong growth continued, driven by high transactional activity and increased demand for data and analytics. Our Government markets were strong, but offset by some budget uncertainty at both the federal and the state levels.

Screening saw strong growth sustained throughout the entire year, and other financial services in corporate markets returned to growth in the second half, with the exception of receivables management still was slightly weak, even towards the end of the year.

We also made good progress on our operational priorities during the year in Risk Solutions, with good growth in existing products such as Data Prefil, which moves our Insurance business upstream in the underwriting and policy process. We also launched -- we also saw new products that were launched during the year doing well. And we have a very active pipeline of new launches and early stage initiatives in our existing markets, as well as in some adjacent markets. And we continued to extract cost savings in content technology and operations.

Going forward, we expect good market fundamentals to continue. We expect to continue to see strong growth in Insurance, and other markets improving. We expect to see growing demand for risk assessment and data driven analytics across our markets, and we will continue to introduce new data services in Insurance, and we'll continue to maintain an active new product pipeline across our other risk markets. Overall, we expect the good growth to continue.

And now, since this is the first time we're breaking out our Risk Solutions business as a separate business, we have decided to hold a Risk Solutions business unit seminar in May this year so that you can hear more about the business, learn about our different business segments, and you can meet the team that actually runs this business. And we expect to follow that up over the next 12 months to 18 months with other business unit seminars for the rest of our business, the other major units of Reed Elsevier.

Reed Exhibitions saw underlying revenue growth of 8%, as net cycling in of biennial shows contributed an additional 11 percentage points to that growth, and annual shows returned to growth in the second half of the year. Now the modest profit growth overall, as Mark mentioned, reflects lower full-year revenues at annual shows. For the full year, annual shows were still down about 3%.

Now during 2010, we saw our exhibition markets return to growth. We saw gradual recovery in our larger, more mature markets, and we saw strong growth in our emerging markets, most of them well into double digits.

We also saw that our customer value proposition of exhibitions remained robust, with high visitor attendance and growing exhibitor numbers in our large shows. We also operated many successful events in many markets, even where there were challenging economic conditions.

We significantly stepped up our launches in high growth markets and sectors, with 35 new events in 2010; and of those, 14 events were in Asia. Also, we invested in technology and in innovation to drive increased insight into customer needs and economics.

It's very clear to us that the exhibition business is becoming more technology-driven, and it's becoming significantly more analytical.

Outlook going forward into 2011; we see clear momentum building in annual shows. And while the speed and impact of economic recovery will vary by sector and geography, we will continue to develop existing shows aggressively, and we'll launch new shows in high growth markets, high growth economies; and we will support that by the occasional select small acquisition.

We will also continue to expand our technology and analytics, and overall, we expect positive like-for-like organic growth in 2011. However, the net cycling out of biennial shows will have about a 10% negative impact on revenue growth in the year.

RBI saw their revenue decline moderated to negative 2% during the year compared to 18% decline in the previous year. And underlying profit returned to growth, with 4% growth compared to a 34% decline in the previous year.

And during the year, we completely redefined the strategy for RBI. We refocused the business by key asset group. We defined strategies and action plans to increase the value of each asset group separately. We reshaped portfolio within that, and we addressed or removed several of the low return assets. We also implemented extensive cost actions across the business.

Now as you can see here, we have tried to illustrate the four different asset groups that we now think of in this business, their value creation drivers, and the progress we made in 2010. So let me just walk you through what these are and how we think about them.

The major data businesses, including ICIS, Bankers Almanac, etc., these are businesses that are inherently high margin, high growth, and have relatively low cyclicality, perhaps with the exception of RCD, the Construction Data business. Our value creation strategy for these businesses is very similar to what we would do if these assets were sitting in Risk or in Elsevier, which is that we're going to continue to grow these businesses organically, we're going to continue to invest in these businesses.

In 2010, we saw organic growth of 4%, but that includes a decline in the construction data and a double digit increase in the others. We also continued to expand here by closing on the majority stake in CBI China, a leading petrochemical energy information business that's been folded into ICIS.

Our major online marketing services, like Totaljobs and Hotfrog, these are businesses that at this point in the cycle may have low to medium margins. They're inherently high growth throughout the cycle, structural high growth, and you'd say, as what we saw in this downturn, they might have medium cyclicality. Therefore, what we're going to do to drive value there is to capture the cyclical recovery and the structural growth that's inherent in this market through organic growth.

These businesses grew a total of 10% underlying during the year, as Totaljobs saw recovery and recruitment, and Hotfrog expanded internationally.

The third group, leading brands; these are high margin but slightly lower growth businesses that, as we've seen, have more low to medium cyclicality in these markets. These are unique businesses that offer unique value to their specific audiences, and they need to be managed individually for value creation. And we need to take each asset at a time and decide what to do with each one and how to drive its value. During 2010, their revenue stabilized, and we continued to expand their margins.

And then finally, other business magazines and communities. These are inherently lower margin than the others, inherently lower growth, and they experienced relatively high cyclicality over the last two years. Here, we're focused on reshaping the portfolio, improving margins, and manage them for value in groups or in clusters, because they do have to belong together when you do something with these businesses.

As you can see, they still declined 9% in 2010, and we continue to exit clusters of magazines in the US, Europe, and Asia, several European countries, and have pursued cost efficiencies across this portfolio.

Now going forward, we expect these changes to the portfolio and the improving market to benefit 2011, and we expect RBI to continue to see a positive improvement trajectory.

Now you might be asking yourself, why did I spend so much time on RBI? Why did I talk so much about something that's 5% of our profits? Well, I did it for two reasons. One is, because we never talk about it, and it's such a small part of our business; I figured I'd talk about it once. Also, because this is not a business. This is not one business. This is a collection of assets that we have held under the umbrella of Reed Business Information, and it's not right to talk about it as a business. As you've seen, these are very different businesses, have very different characteristics, and fit into the rest of the Company's [economics] very differently.

And I also did this because it's a very simple illustration of how it is we think about what we're doing in each one of our businesses across Reed Elsevier. What I just walked you through here, what we've done with Reed Business this year, to go asset by asset, market by market, and understand exactly who it is we're serving, exactly what the professional audience is, exactly how we create value for them, and the dynamics of that asset throughout an economic cycle, to come up with a strategy and a value creation plan, and then execute step by step on it. This is exactly what we're doing for every asset in the rest of our portfolio in all the other divisions. So this is a good illustration with this asset group of what we're doing throughout Reed Elsevier.

So talking about the rest of Reed Elsevier. Now that we've broken out the two businesses in LexisNexis separately, this is now the way our pie chart looks, the one we often put in our slides. You can see on the left the revenue split, and you can see on the right the profit split between our different business units.

And here, on the next page, you can see our revenue by format, our format migration over the last 10 years. As you can see, this has been a steady migration over several years. And at this point, we're just about to cross the threshold where print represents less than 25% of Reed Elsevier.

So within that business, what is Reed Elsevier today, and what are we trying to do with it? Well, clearly, this is our management view of how we run and how we try to create value in Reed Elsevier. We're clearly a professional solutions company, or professional information solutions company, or whatever you'd like to call us. But what exactly does that mean, and what are we trying to do?

Well, that means that we are in the business of trying to create value for professional customers. We are only prioritizing value creation for professional customers across our business. And the reason I emphasize that is that professional customers, and professional institutional customers, only buy products from us over time if we offer true value, if they get something they can truly value and that they can put a price on over time; different from consumer branding, or consumer distribution, or consumer media.

So number one priority, therefore, is to create value for professional customers. This is our institutional skill. We have to help our customers achieve better outcomes, meaning achieve their objectives, achieve better objectives. We have to help them also increase their productivity or their cost efficiency, something that they can truly value. In order to do that, we will need to have very, very deep customer understanding. We have to have domain expertise, of course, but we have to have the professional skill and analytical tools to understand our customers, our professional end user workflows, as well as our institutional customers' economic and leverage points.

What we then have to do is to build solutions that leverage our existing content, that leverage our technology skills, and then put those together in solutions that really truly create value that our professional customers can see, either for the end user or for the institution. And we can put these solutions together in all formats. Sometimes, it can still be a combination of an electronic solution, a print package, and some face-to-face activity. So it's a question of building solutions in all the formats that are available to us.

And it's important to note that we are in businesses, and we continue to target businesses, where the total cost to our institutional customer of all the products we offer, all the information and tools that we offer, and our competitors to those audiences, it's typically 1% to 2% of our customers' cost base. We are serving customers where we normally cost 1% to 2% as an industry, of our customers' cost base, but we attempt to have a very significant impact on the economics and the leverage they have in the remaining 99%. And if we can do that, if we can enable them to have leverage in the 99%, or increase their effectiveness, their productivity, that's when we can have a significant basis for continuing to offer increased value. And this is the institutional skill that a professional information solutions company needs to have; and that's what we're focused on building at Reed Elsevier.

Now then we need to operate each business, so creating value in each business, the second point on this chart. That means we need to leverage our existing assets -- we have high quality assets -- that are in long term growth markets. We need to make sure that we focus on organic growth on those assets, that we focus on new product development, increasing sales and marketing, and that we build our assets organically, with good levels of investments and ongoing efforts to drive organic growth. But also that we remove low returning assets that we can't create growth in, or value creation in, within our portfolios, and that we add selective acquisitions to support our growth plans when they are available and fit the organic growth strategy.

But it also means that we need to put emphasis on high growth markets with good returns that are adjacent to our markets, or that we put more of our efforts into high growth and high return markets; and it means that we have to relentlessly pursue ongoing process innovation and cost efficiency to make sure that we can continue to maintain margins or increase margins over a period of time.

And last but not least, we need to make sure that we create value across Reed Elsevier. We need to continue to build and leverage our institutional skill, the institutional skill number one up here, across the Company. We need to do that in professional customer analytics; we need to do it in product development; we need to do it by sharing knowledge, by sharing methods, by sharing people.

We also can continue to do what we've done successfully, which is to share resources. Software applications, technology, and infrastructure over a period of time. These two points have significant leverage across Reed Elsevier.

And in addition, of course, like any corporation, we need to share corporate functions across, so that we can create a company corporation that is efficiently managed and increases in value.

But the first two points are what really define how it is we can create value across Reed Elsevier. And just to remind you how we can illustrate these, if you go back 10 years/15 years when Elsevier was a print publisher, a publisher of print journals, we built ScienceDirect entirely on the infrastructure, the application structure, the software base, on LexisNexis. ScienceDirect was built on LexisNexis, and still operates out of Dayton, Ohio, in the LexisNexis old headquarters. And as a result, we could go from a print publisher to the world's largest scientific electronic database with tremendous quality and uptime and reliability by leveraging across divisions.

Then of course, over time, then we've upgraded modular -- we've done modular upgrade to Elsevier Scientific Products and built new tools that we're now leveraging back in to our new legal architecture and infrastructure. We've also built the entire Risk business, as you know, by leveraging LexisNexis traditional businesses into the Risk Solutions business and making that more efficient.

And then, over the last 24 months, as I illustrated before, ChoicePoint was a separate standalone company, with all the pressures of a public company operating in these markets, with a 24% operating margin. We take them in, put them together, leverage across Risk Solutions, leverage across LexisNexis, across Reed Elsevier, and we've driven it up to 38% margin and continued good growth.

So in summary; in 2010, we returned to organic revenue growth. We made considerable progress on our individual business unit priorities across Reed Elsevier. And going into 2011, we're currently seeing most of our market stable or improving, and we're continuing to build on actions taken in 2010 to create value for our professional customers and to create value in our businesses. And overall, we expect a gradual recovery and a continued improvement in performance.

Thank you.

Now let's see if we have any questions. Let's start in the front.

Could I just start with a question on the margin in Legal and Risk, you've shown us the split-out now, and talk about a gradual recovery from 2012 onwards in the legal market? Could you maybe give us an indication of what you think that -- is an achievable number there, albeit obviously in the [out] years, what short of margin should a business like that be doing?

And also on the Risk side, 38% margin, obviously, a very impressive number, but given that there are some cyclical businesses in there which I guess are coming back, and the integration is still ongoing, is there still a further upside there to that 38%?

Yes. I always find it easy to talk about what you're doing to work on your margins; how it is you're trying to drive your margins in your existing businesses. I always find it very hard to discuss where is it going to end up, what's the ultimate perfect margin for this business. And I've said this before that I remember my first time in front of this group in 2005 with Elsevier, I was asked that question several times, if Elsevier's margins were compressing a bit for a year or two, and what margin can you maintain? And I said, I don't know. We will try to keep it at least flat in our existing business while we try to drive revenue growth and we try to drive cost efficiency, with relentless pursuit of process innovation and cost efficiencies. And over the last six years or so, we've done exactly that inside Elsevier, starting with very high margins.

Now can you still do that -- can you do that in Legal, when you start with what now looks like, relative to the others, very low margins? I say why shouldn't you be able to? I absolutely believe that we will be able to apply that methodology and that approach to gradually increase margins over several years in Legal once we get through the bottoming out of margins.

Now exactly where that will end, I find difficult to judge, and I don't want to put a number on the table. I want to make sure that we go through the bottom and then that we can start to see continued gradual margin improvement. And then maybe we have a slightly better judgment in a few years, but I'm guessing that we're not to set an absolute margin target for the Legal business. We're going to try to work it out the way we have in our other businesses.

And now that, of course, goes to your second question, which is Risk. Well, Risk now has a margin that's a few points higher than Elsevier even. Can we continue to -- can we sustain those margins, or can they even grow? Well, the way I see it is, the number one priority in Risk is not to cut cost and grow margins over the next five years, because they're pretty high; the number one priority is to make sure that we continue to capture the growth that exists in those risk markets, and we continue to drive growth by capturing market opportunities and continue to innovate and launch new products in the markets we're in and in other markets. That's our top priority in risk.

I think it's possible to do that while also working on process and cost efficiencies. So again, I'm going to say from now on, we're going to try to keep the margins at risk at least flat.

Three questions. Firstly, could you just talk about the wash-through of multi renewals at Elsevier? And do you see scope for revenue acceleration at Elsevier next year in 2012?

Secondly, just following on from Colin in Legal, can you give us a sense of the margin differential between the US Legal and the International Legal business? My sense is that US Legal is up 10%. Is that a right assumption to make?

And then thirdly, the outlook is quite light in terms of specific targets. Would you like to frame your overall aspirations at a Group level for organic growth and margins?

And maybe one for Anthony. The market's anticipating 5% earnings growth this year for Reed Elsevier Plc. Do you think that's an acceptable growth rate at this stage in the cycle?

Okay, shall I start with the multi renewals at Elsevier? All of you know this business well. You've analyzed it; you understand the multi renewals that Elsevier have works on the - you're talking about the research side, the Journals related business, right? -- where broadly speaking, these are not the exact numbers, but if you want to think about it, it's a very, very simple thing. It's, let's say, a quarter of our business is annual on the subscription side, and that the rest, three-quarters, is roughly a three-year average contract.

It's not that simple; it's bigger spread and so on, but if you think about it that way, you can then say how much comes up every year and how long does it take you to roll through the full pipeline. And I would say that, therefore, we are still for 2011 going through a process with our customers that is similar to the process we went through last year. We have the same method, we have the same approach. The environment is more stable, and we have gone through the process at the same speed or slightly faster this year; slightly ahead of where we were same time last year in the closing of the process.

Now so that's for 2011. And overall I'd say is like what we said in the document, which is another year of relatively modest growth is essentially what we'd expect at Elsevier this year.

When that then works its way through in a process that some higher growth would come back in, I think it's too early to tell, because we go through these processes one year at a time, and the world sort of resets its economic expectations and budget expectations then during the year and we get more visibility going forward later in the year. So I think it's too early for us to judge what would happen in 2012.

But our markets are definitely more stable, and some stable at a low level and some stable under a lot of pressure; but more stable than they were if you go back 12 months/18 months when there was still a lot of volatility and uncertainty in those markets.

So that was the (inaudible) of Elsevier. You said margin differential in US versus International. Well, I don't think about that business that way, unfortunately, because our Legal and Professional tools are increasingly being built on infrastructure that's shared across countries, and content is being leveraged across countries. And it would all depend on then how you think about where should the cost structure belong; where it's primarily driven by; and if you build something, you set up an operations infrastructure, technology infrastructure, build next generation, when do you count it where?

So I think it's not particularly useful for us internally, it's not something that we focus much time on, to look at the margins by geography that way. So I'm not sure I would think about it that way.

The outlook for growth and margins, I think at this point, again, we're setting ourselves the objective of continued improvement in performance, and I'm confident we will deliver continued improvement in performance. Exactly what the rate that is for 2011, I'm not sure we're going to try to go out with specific numbers.

I would back that up entirely. Real life to my mind is not about setting targets; real life is about improving businesses, improving your competitive position, and taking advantage, getting yourself positioned to take advantages, trends in the market, and all of that. And what comes out at the end of that is the residual, not the beginning.

And I feel, as I said at the beginning, very confident that the priorities that Erik has set, and the journey that the Company is on, is going to deliver continued appropriate improvements in market in the results.

Now I'm not going to turn round and say, well, what does that mean in terms of earnings this year, or next.

Two questions. Firstly, could you give some flavor on the competitive dynamics in Legal? How potent a thread is Bloomberg Law proving to be? How concerned are you about the loss of share to Thomson? And perhaps talk about your response to that. You've been investing for a couple of years now. We've had a couple of product launches last year. Should we expect the pace of launches to accelerate this year?

And then the second question is on your annual shows. Some of your peers are giving rebooking levels for next year. I just wondered if you have one you want to share with us.

On the competitive dynamics, the companies that you mentioned, Bloomberg and Thomson Reuters, are both very large, very rich companies that have broad customer base, broad revenue base, lots of money, and they are playing in these markets. Bloomberg has been going at the legal market now for many, many years. They've done several different small launches and efforts in this market, and they're continuing to do that.

We take a company of the scale of Bloomberg as a very serious player, and we watch everything they do. However, to build out the kind of in-depth content set, the kind of in-depth understanding of the legal profession, the legal customers, law firms across the US or across the world, as we operate, takes a very long time. It's a very sophisticated knowledge; it's a very deep content set. And we do believe that in the near-term, Bloomberg is finding it difficult to compete against the broad based, large legal information providers.

That does not mean that we are dismissing them or taking them lightly in any way, but it's just our judgment that they are in a very different place from where people are who have operated in this diverse, complex business for many years.

You said Thomson Reuters, and you used the term loss of share. I'm not actually sure that if you look at the data we have access to that we can identify any material changes in share in the legal markets that we serve versus the legal markets that they serve. If you look at their public results, which I'm not an expert in, but it seemed to me that they had flat growth in that whole division; but they highlighted some areas in International, and I know they've talked about Government Risk Services in there that they still keep in legal that are growing rapidly and all that.

So if you then figure out where are they really in law firm markets versus our growth rate, really in our law firm market, they don't seem that significantly different to me.

And we've also seen, as I said, during the year a significant increase in news sales, but also stable attrition levels and win loss ratios, and so on. So it is very possible that there are fluctuations on an annual basis; and I've said that before. It's very possible that there are some fluctuations here and there, and throughout cycles of product launches, you would expect to see some slight differences over a period of time coming in and coming out, but they don't seem material to us.

And we also have to remember that while we often mention -- they often mention us, we mention them as competitors in these markets, historically, we have competed differently. We compete differently. We have different strengths, different content sets, different solution sets, and we appeal to different lawyers doing different things at different times, even though there's a significant amount of overlap in some of the core information.

And the way they have launched -- you talked about their launch -- the way they have launched WestlawNext is a different approach to launching a next generation product to what we are doing in launching a next generation information architecture by customer slice and by functionality.

So again, we're coming at this market differently, and quite frankly, if I were a customer of a large law firm, I would like to have the two largest competitors approach the market differently and try to solve for different solution, and provide increasing value in different ways on an ongoing basis, because that benefits our customers.

So you also asked about pace of launches. Well, when we were here last year, I said that we were working on this and we will see successive individual launches of different features at different times over a period of time; and we didn't commit to any specific time or date, or announce any time or date. And I think that served us very well in 2010. It looks from some of the comments of other people in the marketplace that they weren't always anticipating exactly what it was we would do when, and I think that helps us and, therefore, I'm going to continue down that path, and I'm going to let the product managers and marketing people in LexisNexis decide exactly when they're going to talk about what new launch and in which way.

Last, you said annual shows. Yes, I've also heard that some people look at this as sort of, what's the forward booking ratio number? As I said in my presentation here, I think Exhibitions is becoming significantly more sophisticated than that. It's more analytical, it's more data driven, it's more technology driven. And if you look at bookings, we don't look at booking ratios, we look at booking curves. We look at booking curves by date. We look at booking curves by customer, by location in the show. We look at booking curves by space, how much space they take and what's the commitment, what type of commitment. And we look at the accumulated rate of firm commitments. We look at the accumulated rate of cancellations. We look at close out growth towards the end of the show. And it's a combination of several numbers that actually drive the revenue growth rate.

So I wouldn't try to say what's your current forward booking in top 50 shows against somebody else. I don't think that would be comparable. I think in the end we can tell you this, that as we look into 2011, we are clearly seeing positive growth in all those forward booking trends that I talk about. All the curves are pointing up across the portfolio, with differences within regions and within sectors and within certain dynamics.

As you said, if you're trying to compare the competitors, if you look at the growth rates that have been expressed and you analyze them by sector or by geography, they don't appear to me to be significantly different. And if you try to strip out organic growth rates in what actually happened in different geographies, they also seem to match the market progress.

Two questions. Just to come back to Paul's question on the renewals in Journals, I wonder if you can give us an indication of whether the -- on the non-annual renewals, are we still building in the same sort of pattern of price escalation, of ability to cancel? I'm wondering whether there's a sense in which you're working harder with your customers and protecting your revenue up front, or whether you're working harder with your customers and helping them out in budget terms upfront. So, can we think about this business returning to growth, or seeing accelerating growth in the way that it would have done coming out of previous cycles?

The second question probably for Mark is CapEx. You've given us the split for Lexis. Could you give us an idea of the split within that for CapEx to sales for Legal and for Risk? And then is there a reason why Elsevier structurally is a much less CapEx intensive business than Legal, or than Lexis overall?

Let me start with renewals in Journals. I'm not sure I exactly understand what you're trying to get at when you say renewals, price escalation contracts, but let me try.

We are working our way through. As I said the long-term contracts on average are three years, let's say, for simplicity. And we are working our way through those renewals, as you said, customer by customer, and we're reshaping those contracts, which are also becoming much more complex over time because they include different archive rights, different sets of content, different tools, different platforms, and often different sets of users and institutions in or out of the contract negotiation. As we're going through that, you then put all those factors together and you agree on a three-year contract typically, maybe up to five years, that then encompasses those sets, those tools for those audiences, and you agree to the spend on that plan. And that's a combination of factor drives that are agreed upon contractual spend.

So as you work your way through that, and some institutions in some countries have reduced spend on many things, including information, and others have then started to grow again. And many countries in the world are significantly increasing their spend on research well into double digits, and now back on growing those again.

So as we work our way through that, as I said, 2011 I think will be broadly similar levels to the past year in general. After that, I think it's too early to tell where general economic environments will go, as well as where the people who drive the funding will decide to spend things and, therefore, how they will invest in growth in science and research.

But to try to draw a parallel between this downturn economically and previous ones, you would assume that history tends to repeat itself somewhat, but I think this economic downturn, the way the world economy looks or not is different. So I wouldn't necessarily try to project from a previous recovery cycle and say it will be the same thing this time again, because I think that might be -- the world might be different this time around.

But I think again it is important to note that, typically, information spend at most of our target institutions represents (inaudible) 1% of their total cost base. So it is not the number one driver of their cost base.

Does that somewhat answer your question? Now on CapEx.

On CapEx, the figure for LexisNexis is difficult to split out between the two, simply because they leverage each other. But the majority is more in the Legal and Professional business, which has the heart of the technology platforms that Erik was mentioning; ScienceDirect has leveraged off historically and maintains the [Dayton] infrastructure.

The other point I'd make is that the risk platforms came in not by building, but also by acquisition, and so we have highly sophisticated, very modern infrastructure there. So the amount of maintenance CapEx in terms of keeping it at cutting edge is less than the major build programs we're going through at LexisNexis at the moment in terms of the next generation of online legal platform, and also the advanced operation infrastructure to support that. And so on balance, that's where the balance the bulk of the CapEx is going.

What Elsevier also is leveraging off the infrastructure that LexisNexis have, and also has been, is in a different market and building in a different way.

Yes, and I think there's also one other slight factor. I agree with both the ones that Mark mentioned, that some of the reasons the Elsevier is lower is the leveraging off some of the investment in LexisNexis. But also, most of the CapEx in these businesses go towards the electronic businesses. The print related businesses have slightly lower CapEx ratios inside their business operations, and they tie up capital instead inside some working capital processes.

So as you migrate to electronic gradually. you would think that the ratios in electronic businesses -- what we define as CapEx here might be higher, but the overall capital intensity might not actually be higher, because you have less working capital in the physical print business. And then the physical print business [goes away].

I've got a couple of quick questions. It looks in the second half as if Health Sciences was flat, and you've given us the reasons for that, but how should we think about that number going into next year, into 2011?

My second question is on the business news. Again, it looks as if the decline has accelerated in the second half there. Can you point to why that is, and is this a business you need to be in strategically? It doesn't seem to have grown for some time now.

And my final question is for Mark. Mark, I think you said there was GBP31 million of exceptional restructuring in 2010. What's that number going to be in '11, and is the bulk of that in Legal?

Okay, on the first half/second half issue in Health, most of our businesses are annual businesses at Reed Elsevier. We have some transactional businesses that offer daily, weekly, and so on, right? Clearly, there's certainly some in RBI, some in insurances that are very transactional driven and you can look at them [on that basis].

Most of our businesses, however, have an annual cycle. They have to do it with annual subscription cycles, annual student cycles, annual enrollment cycles, etc., etc. So, therefore, I don't want to put as much emphasis on first half/second half as maybe some other businesses.

But having said that, in Health, it was clear that in the second half of the year, the issues around potential gainful unemployment -- gainful employment legislation in the US and its impact on some career schools trying to take pre-emptive action and actually reduce the intake to try to adjust to some of those issues, even if advance of potential legislation, that those were impacting us more in the second half than in the first.

But if you -- so I don't think of that as happy [ratio]; it's something that came up during the year.

If you look at it going forward, if you take that -- just stick with that one specific issue for a second, which reduced -- the growth rate in those businesses didn't decline, but it reduced the rate in it a bit, you would say that those issues are probably going to continue to have an impact on the enrolments in 2011, this semester coming in. But this business unit serves a market that inherently has very, very strong unit volume growth drivers over the next few years. Nursing and other health professionals in the US are going to grow significantly; non-doctor health professionals. It is -- if you take a US listing of top 20 professions, top 20 growth professions in the US over the next 10 years, due to all statistics, you're going to find almost all the time that half of them or so are health professionals. And this is what we're trying to help here and target.

So there can be some short-term pressure on specific sales into certain channels, but if you look at it over a period of time, these are strong markets that we're working with, and have strong needs for good educational and professional tools.

Now, so if you look at that, yes, there should be some impact continuing in 2011 and that will mute the growth a bit. But I think it's too early to say where that issue and some of these other US healthcare reform issues, and the what they call meaningful use legislation on the clinical decision support side, where it's about in order to get certain types of reimbursement for electronic [health tracking], and so on, you need to demonstrate meaningful use in the stage of healthcare of the [ARA] reimbursement that's coming up during 2011, so that those will drive some of these things during the year.

And I think it's a little bit too early for us to say now in February how that will all play out throughout the year on an exact percentage point. But I do expect that overall, if you talk about Health, health sciences, I would say again, muted revenue growth for 2011.

Let's see; you were talking about news and business; here again saying first half/second half. I look at that -- the strategic question about news and business. News and business we are in for two different reasons. News and business sold into law firm legal markets, legal departments and corporations, etc. That's the legal aspect of using that, and it has 1,000s of different content sources, some proprietor, some external, that we operate with and sell that, and we use that. To me, that's an important piece strategically to what we offer to some of our markets.

Now in addition then we run the news and business, information business service to corporations and other non-legal customers, because the same content sold -- so packaged slightly differently, but sold to commercial corporations. And that's a business that has been more cyclical in this downturn than others because it's regular commercial spend, corporate spend. And also I think structurally that is not a high growth market.

Now the question is, coming back, will it flatten out and will it have -- will it sustain the current revenue levels, will it come back to slight growth, or will it still decline a bit? Again, I'm not sure I want to express any forecast on that one at this point. But we're in it for strategic regions, not as a separate standalone business that we can decide to be in or out of.

Mark, did you want to comment on the news and business first half/second half issue?

No, I'm just going to pick up on the restructuring. The -- just to be clear, I mentioned GBP31 million of restructuring. That's charged against and in the adjusted operating profit. So in 2009, we had the second year of major restructuring programs across Reed Elsevier that we first announced in February '08 and added to in February '09, and so the exceptional restructuring charges in 2009 were GBP180 million; GBP182 million.

In 2010, all of those programs are over, apart from RBI. And the RBI charge in 2010 was GBP57 million, so that showed why we had significant reduction in exceptionals.

But over '09 and '10, in addition to those major restructurings, there's everyday ongoing restructuring within the businesses, not of the dimensions before, but within labor costs, there's always a shift and a reshuffling and a progress and an evolution. So in '09, we had against our adjusted [operators] a normal restructuring that you find typically in your cost base of GBP21 million; and in 2010 that was GBP31 million. So that's GBP31 million, so it's charged against all the profits you see in the divisions.

My question was what's [in '11].

(Laughter). I do apologize.

Is it all in Legal?

Yes, well, it's still a good story so I wanted to tell it. But in 2011, there will be no exceptional restructuring charges, absent some bright idea to have an exceptional restructuring. But the ongoing level of normal restructuring will be broadly similar to what it's been in 2010, and it will fluctuate with circumstances as we go through the year.

Yes, and you made a little side comment there, is it all in Legal, or something, right? No, it's definitely not all in Legal. The only way you can continue to drive operating cost efficiencies across a business over a period of time is if you're not afraid of always continuing to incur some short-term -- some near-term charges to change your operations on an annual basis in each business. And you treat this, in our view, as an ongoing part of running the business.

You may not even use the word restructuring inside the business; you may just say this is what we're doing; here are programs; this is what we're doing. And sometimes, you have one-off costs to drive the costs down. And we do that in all our businesses on an ongoing basis; and sometimes, it will be higher in one versus the other, and then it'll step up and down. But you have to build that fluctuation into how it is we look at it. And we don't want to treat those on an ongoing basis as exceptional restructuring charges.

Only three questions, please. Mark, you mentioned some timing issues in net working capital. I wonder if that is just cash, or we should also look at some adjustments in revenues in divisions. Maybe directories was the case recently. And anything else in the P&L?

Secondly, management changes throughout the Group have been quite substantial and have gone on for a couple of years. Would you say now that we've come right to the end of it and you're very happy with the management team and everybody is committed to stay for several years, say, five years, and this restructuring or reorganization will last?

And lastly, I'm wondering, when you came to look at the Legal business and you decided to increase investments, what was the canary in that mind which signaled that. And when you look at STM margins now, what would be the risk of seeing those actually going down?

And we are allegedly at the lowest point in terms of growth, and it's going to be the second consecutive year in STM with possibly, on my numbers, historically the highest margins every achieved after adjusting for a hard quarter business in 2001. So what is the risk of actually margins going down in that division?

Okay, let me go through this. You said management changes, and you put that in the tone of, are we going to keep restructuring management almost. I'm putting words in your mouth. But I think that the management changes that were done this year, if you go back 12 months, in our business unit, if you say the LexisNexis split and the RBI, these were not restructuring. And this was not me saying I'm unhappy I want to change these people; this was requested retirements by the individuals in charge.

That perfectly then suited our strategic view of splitting Legal and Risk apart, and then to some extent eliminating some of the layer of overhead in between and putting some into the two units, but eliminating some, quite frankly. And, therefore, we did a natural internal succession.

The person who had been in charge of driving the Risk Solutions' growth and integrating ChoicePoint now runs Risk Solutions as a separate standalone business. So it's the team that's been working on this and driving this successfully for several years.

So it's not a turmoil, it's not a disruptive change to managers. It's build on the people who've been driving it in Risk.

If you look at the Legal side, you asked two questions; first, the question around management team as it applies to the places where we changed; Legal is one of them. The person who is in charge of that now, the team that's in charge are the people who have been devising this growth strategy and investment strategy over the last few years and now are executing on it, and they will continue to execute on it.

So am I happy with the management team now at Reed Elsevier, was your question. I'm very happy with the management team at Reed Elsevier today. I think we have a very strong set of executives that are passionate about their customers and their markets; they're very knowledgeable about what they do, and they understand what it is to be in a professional business like ours.

So I'm very pleased with the team, and I think they're very strong. That does not mean that nobody will retire. The person who ran RBI came in to my office said, I would like to retire, and then we again organized an internal succession. The person who's been driving the growth in the strongest assets and been driving them significantly over the last two years stepped up and was promoted up. We eliminated a layer essentially of organizational infrastructure, and he continues to drive that business in the same way that he's done before.

So, again, am I happy with the team? Yes. Do I think it's strong and we'll continue with it? Yes. Do I hope everybody will stay? Well, I hope that most of them will stay, but we have natural succession, natural turnover inside in the business on an ongoing basis.

Then you asked a question about the Legal investment; when I came in and looked at it and started to increase investment. Well, the way it actually looks is this; that they were working on the next generation legal content architecture and infrastructure already five years/six years ago, and they had full plans laid out with initial initiatives to demonstrate that they could go in this direction. And the Board blessed it and started down that path in 2008, led by the individual who's now currently leading it. So that was when they started to step-up the investment in 2008.

But the work on it, the outline, the planning, and the some of the architecting and some of the spend had started earlier, but the big ramp-up of spend that you're talking about really kicked in in 2008, and then started to go in 2009 and in 2010.

So if you're asking me what did I see to drive it, well, it was actually at that point -- we're a few CEOs back in in Reed Elsevier history -- and this initiative to step up and drive that increase, the ramp-up in investment to look for the next generation architecture, was blessed by -- I shouldn't say everybody in between jokingly -- but it started under Chris, been sustained under Ian, and continued under me.

So it's not like there was one triggering event recently where I changed the plan. We're continuing on the path that we laid out. And we actually promoted the person who was the architect of the plan.

And you see none of that in STM?

No, STM's a very, very different story, and you asked about STM margins. STM, we had a ramp-up. If you go back in history, we had a ramp-up in investment spend, CapEx, in probably 2003 to '06, '04 to '05, that range. I'm losing track of exactly when we had the big ramp-up of the shared infrastructure rebuild in -- for ScienceDirect and Scopus, the launch of Scopus. There's a ramp-up there. And since then, we've stayed at roughly those levels, broadly speaking.

We are currently going through an active period of product launches at Elsevier. We're continuing to do operating efficiencies, some of which requiring CapEx. But that's our ongoing pursuit of modular ongoing upgrade of our electronic tools, and also in the pursuit of ongoing operating efficiencies in our business.

It is very possible that you will see a year in the near future where you'll say, one year was it, oh, we stepped up a couple of more product launches in Elsevier that year at the same time as redefined a bigger more expensive system; and you see some fluctuation in CapEx at Elsevier that might be up or down certain years. But do I believe that the overall level is going to take a huge ramp-up like we've done in Legal? No, I don't think so.

Shall I just pick up on the working capital point? The point I was referring to was in going into 2010, given the financial crisis in 2009, customer budgets were under pressure, and the negotiations on renewals in many sectors, but particularly in the Science sector, took longer than normal. And clearly, the back end of the year, November/December, is an important renewals time. So you had the benefit of contracts that would in normal circumstances have renewed in November/December falling into 2010, so that benefits 2010.

With customers adjusting to the new environment and the discussions being able to start earlier in 2010, you won't see that same -- a lot of that timing was unwound during 2010 rather than continuing into 2011. So it's not a P&L item; it's purely the length of contract negotiations.

Thank you.

Thank you, gentlemen. I have three questions, if I may. The first one is on Science and on bundled journal contracts. Do you see them resisting better than single titles at this stage to budgetary pressure? And what type of price deflation do you see on bundled contracts?

And a couple of questions on Lexis. First, is it possible to have a little bit of visibility on the timing of the launch? And secondly, what type of transition are you planning for clients? Will it be a forced transition with price increases, or an optional transition?

Well, let me answer those separately. On the Science side, science research subscriptions, at this point, less than 10% of our business is now print title by title, so it's very single digits. And, therefore, the vast majority of what we do follow the pattern of we are looking for certain content blocks; we want certain different types of rights for different content blocks, and we want it for these institutions; want these tools for this period of time, and so on. So they are no longer a journal that's renewed at a price or cancelled at a price.

That basically is not our business any more. These are integrated contracts. They're negotiated over a long period of time; take a long time to work these through where you have the content blocks, the tools, and the coverage. So, therefore, we don't actually even think about it any more as price increases or prices coming [down]. We think of them as contract negotiations that are adjusted often to what the customers are trying to do at their institution; which areas they're growing, what they're shrinking, what they're modifying.

So we don't even think in those terms. We think in terms of total contract negotiation, total contract value, and what's the outcoming result -- what's the outcome, what's the result on the revenue growth for us. And that's what I've said; it's another year of relatively modest revenue growth.

Now you talked about timing and launch of Lexis, new feature sets from LexisNexis. I, unfortunately, am going to have to say what I said before that our approach of not pre-announcing timing of products, or which products come in which order, or which feature sets come in which order, or how it is we're going to price them or launch them or change them, I think is something we're going to continue with. So I'll let our product managers and marketing heads in the different businesses continue to do that, and I'm not going to give you any real indication of it.

Now I'm really sorry to say this, but I was told that we had to absolutely finish in here at 10.30; and I've seen some of you have already started leaving. And since we're now well past 10.30, I think I'm going to have to stop here, because I see people waving to me in the back.

So unfortunately, apologize, but thank you very much for coming. Thank you very much for listening.