RELX PLC (RELX) Q4 2022 Earnings Call Transcript

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RELX PLC (NYSE:RELX) Q4 2022 Earnings Conference Call February 16, 2023 3:30 AM ET

Company Participants

Erik Engstrom - Chief Executive Officer

Nick Luff - Chief Financial Officer

Conference Call Participants

Adam Berlin - UBS

Nick Dempsey - Barclays

Sami Kassab - BNP Paribas

Lisa nan - Goldman Sachs

Thomas Singlehurst - Citi

Matthew Walker - Credit Suisse

Konrad Zomer - ABN Amro

Erik Engstrom

Good morning, everybody. Thank you for taking nan clip to subordinate america today. As you whitethorn person seen from our property merchandise this morning, we delivered beardown financial results successful 2022. We made further operational and strategical progress, and we besides performed good connected our firm work priorities.

Underlying gross maturation was 9%. Underlying adjusted operating profit maturation was 15%. Adjusted net per stock maturation was 10% astatine changeless currencies, and we're proposing an summation successful nan lb sterling full-year dividend of 10%. All 4 business areas grew well, pinch underlying adjusted operating profit maturation in-line pinch aliases up of underlying gross growth.

So, let's look astatine nan results for each business area. In Risk, beardown fundamentals proceed to thrust underlying gross growth. Underlying gross maturation was 8%, up from 7% successful nan first 9 months of nan year, pinch underlying adjusted operating profit maturation broadly in-line pinch underlying gross growth.

Business services, which represents astir 45% of divisional revenue, continued to present beardown gross maturation successful financial crime and compliance and fraud and identity. And we person precocious strengthened our customer proposition pinch mini acquisitions successful compliance and behavioral biometrics.

In Insurance, representing conscionable nether 40% of divisional revenue, nan affirmative momentum that started successful nan first half strengthened done nan remainder of nan twelvemonth supported by further betterment successful cardinal marketplace factors specified arsenic shopping activity. Specialized manufacture information services, which represents conscionable complete 10% of divisional revenue, saw strong maturation overall, pinch commodity intelligence increasing peculiarly powerfully and different segments, including aviation, returning to humanities maturation rates.

Government, representing conscionable complete 5% of divisional revenue, continued to turn strongly. Going forward, we expect beardown underlying gross maturation successful statement pinch humanities trends, pinch underlying adjusted operating profit growth broadly matching underlying gross growth.

In STM, further improvement of analytics proceed to thrust an betterment successful underlying gross maturation to 4%, up from 3% past year, reflecting nan ongoing displacement successful business operation towards higher maturation analytics and a reducing people track. Underlying adjusted operating profit maturation was somewhat up of gross maturation astatine 5%.

In databases, devices and physics reference, and firm superior research, which together correspond astir 45% of divisional revenue, continued beardown maturation crossed research, objective and commercialized markets, was driven by further contented improvement and enhanced analytics and determination tools.

In superior research, world and authorities segments, which besides correspond astir 45% of divisional revenue, maturation was driven by a higher measurement of articles some submitted and published, pinch pay-to-publish unfastened entree increasing peculiarly strongly. So acold this year, renewal completion and caller income are going well. Going forward, we expect underlying gross maturation to stay supra humanities trends, pinch underlying adjusted operating profit maturation somewhat exceeding underlying gross growth.

In Legal, we saw a further betterment successful underlying gross maturation to 5%, up from 3% past year, driven by nan continued displacement successful business operation towards higher-growth ineligible analytics. Underlying adjusted operating profit maturation was up of gross maturation astatine 8%.

We continued to spot beardown maturation successful our rule patient and firm markets, which now relationship for complete 60% of revenue. Lexis+, our integrated analytics offering, has continued to spot very beardown uptake and usage maturation crossed customer segments arsenic we proceed to widen our information sets and rotation retired enhanced analytics functionality.

Renewals remained strong, and caller income proceed to spot affirmative momentum. Going forward, we expect underlying gross maturation to stay supra humanities trends, pinch underlying adjusted operating profit maturation continuing to transcend underlying gross growth.

In Exhibitions, we saw beardown gross maturation and a betterment successful profitability. Underlying gross maturation was 64%, driven by nan reopening of accumulation venues crossed astir geographies and pinch an betterment successful profitability, reflecting nan accrued activity levels and a little costs structure. We proceed to negociate our arena schedule flexibly, and we're making further advancement pinch integer devices that supplement our beingness events.

Going forward, we expect a twelvemonth of beardown underlying gross growth. The operating results will proceed to use from nan structurally little costs base, pinch margins expected to beryllium adjacent to pre-pandemic levels. Our strategical guidance remains unchanged. We attraction connected nan integrated improvement of progressively blase information-based analytics and determination devices that present enhanced worth to our master and business customers crossed marketplace segments.

Our maturation objectives are, for Risk, to prolong beardown maturation successful nan existent scope for a agelong clip to come; for both, STM and Legal, to proceed connected nan improving maturation trajectory; and for Exhibitions, to seizure nan maturation opportunities from venue reopening and data-driven integer tools.

Across each marketplace segments, nan improving semipermanent maturation trajectory is being driven by nan ongoing displacement successful our business operation towards higher growth, analytics and determination tools. And erstwhile mixed pinch our strategy of driving continuous process invention to negociate costs maturation beneath gross growth, nan consequence is continued beardown net maturation pinch improving returns.

I will now manus complete to Nick Luff, our CFO, who will talk you done our results successful much detail. I'll beryllium backmost afterwards for a speedy wrap-up and our accustomed Q&A.

Nick Luff

Thank you, Erik. Good morning, everyone. Let maine commencement by providing much item connected nan group financials. As Erik said, underlying gross maturation was 9%, nan underlying adjusted operating profit maturation good up of that of 15%. As a result, nan adjusted operating separator improved by almost 1 percent constituent to 31.4%. The improved operating consequence flowed done to adjusted net per share, which accrued 10% astatine changeless currency, contempt a higher liking and taxation rates.

Returns continued to amended contempt nan higher taxation rate, pinch ROIC up different 60 ground points, now astatine 12.5%. Cash conversion was beardown astatine 101%, contributing to a further simplification successful leverage to 2.1x, down from 2.4x astatine nan extremity of 2021. Given nan beardown wide performance, we person been capable to summation nan projected full-year dividend by 10% to [54.6p per share] [ph].

Looking astatine revenue, you tin spot nan continued beardown maturation successful Risk and nan improved maturation rates successful STM and Legal. Those improved maturation rates, together pinch nan continued betterment successful Exhibitions, took underlying gross maturation for nan group arsenic a full up to 9%. Including Exhibitions by yearly events, full maturation astatine changeless rate was 11%. And of course, pinch 60% of our gross is generated successful North America, location was a important use from nan stronger dollar, pinch sterling gross up 18% overall.

Risk delivered beardown underlying maturation successful adjusted operating profit, successful statement pinch gross growth. STM and Legal some delivered underlying profit maturation up of gross growth. Portfolio effects were a flimsy resistance connected profit maturation successful each of these business areas, but each of them benefited importantly from rate movements.

Exhibitions' profit recovered, reaching astir half of 2019's level arsenic activity increased, and we benefited from nan little costs structure. Combined pinch nan beardown capacity of nan 3 largest business areas, that drove beardown group operating profit numbers up 15% underlying, up 14% successful full astatine changeless rate and up 21% successful sterling to astir £2.7 billion.

Margins were somewhat up successful Risk, pinch favorable rate effect much than offsetting dilution from acquisitions. In STM, margins were stable, pinch underlying improvements capable to offset unfavorable rate movements and dilution from acquisitions. Legal's margins grew further by 40 ground points arsenic we proceed to support costs maturation beneath gross growth.

Those movements, together pinch nan betterment successful profit from Exhibitions, added almost a 4-point to group margins, taking them to 31.4%. Here's nan group adjusted income statement, showing nan underlying maturation of 9% successful gross and 15% successful operating profit. The liking disbursal accrued pinch nan effect of liking complaint connected gross indebtedness up to 2.9% from 2.0%.

That near profit earlier taxation up 13% astatine changeless currencies and up 20% successful sterling. The taxation complaint was 530 million, pinch an effective taxation complaint of 21.3%. You'll retrieve nan anterior twelvemonth benefited from non-recurring taxation credits, which resulted successful an effective complaint beneath our normal ongoing rate.

Net profit was conscionable nether £2 billion, up 10% astatine changeless rate and up 16% successful sterling. All that gave america adjusted net per stock of [102.2p] [ph], up 10% connected changeless rate and up 17% successful sterling. Here, you tin spot really nan net flowed done to rate flow, pinch EBITDA now adjacent to £3.2 billion.

CapEx was 436 million, equating to 5% of revenue, leaving america pinch adjusted rate travel still supra adjusted operating profit, and hence, rate conversion conscionable complete 100%. Cash liking paid was 165 million, summation reflecting nan higher liking rates. Cash taxation paid of 495 cardinal was somewhat little than nan income connection charge, reflecting timing of taxation payments. Total free rate travel was up by 18% to conscionable nether £2 billion.

Here's really we deployed that free rate flow. We completed 9 acquisitions during nan twelvemonth for a full information of 443 million. Most notable were BehavioSec, a leader successful behavioral biometrics; Flyreel, nan self-inspection out-of-home insurance, some successful Risk; and Interfolio, a supplier of module accusation systems successful STM. Total dividend payments successful nan twelvemonth were 983 million, and we resumed our stock buyback programme successful 2022, deploying 500 million.

Overall, nan walk connected acquisitions, dividends and stock buybacks broadly utilized nan afloat 2 cardinal of free rate flow. Year-end nett indebtedness accrued arsenic a consequence of rate translator impacts. Leverage benefited from nan betterment successful operating profit, which flowed done to EBITDA. Including pensions, nan ratio of nett debt-to-EBITDA calculated successful U.S. dollars fell to 2.1x, down from 2.4x astatine nan extremity of 2021.

Our priorities for usage of rate are unchanged. Organic improvement remains our Number 1 priority, and we proceed to put consistently successful nan business, pinch CapEx astir 5% of revenues. We augment that integrated improvement pinch selective acquisitions, pinch nan level of walk typically being nan astir important adaptable successful our uses of cash. Average acquisition walk complete nan past 5 years has been astir £600 million, pinch 2022 a small beneath that average.

Our dividend argumentation is, complete nan longer-term, to turn dividends broadly in-line pinch adjusted net per stock while targeting screen of astatine slightest 2x. Since it fell beneath 2x successful 2020, we person steadily restored cover, while still expanding nan dividend. In 2022, we are revising full-year dividend maturation of 10%, pinch screen up to 1.9x.

Historically, leverage has mostly been successful nan 2.1x to 2.5x range. Strong rate procreation and improving EBITDA has seen leverage return to nan little extremity of that range, now astatine 2.1x. Given that we expect our surplus superior again successful 2023, we are continuing our stock buyback program, pinch £800 cardinal to beryllium deployed this year, of which £150 cardinal has already been spent.

Alongside our financial performance, we proceed to make advancement connected our firm work objectives. Anchored by nan intent of nan company, we attraction chiefly connected our unsocial contributions utilizing our products and skills to use nine successful ways only we can. Of course, we besides performed good connected those metrics wherever we tin beryllium compared to others. The action of nan cardinal CR information is shown here.

I peculiarly tie your attraction to our c emissions wherever we are now nett zero crossed Scopes 1 and 2 and for an expanding number of categories wrong Scope 3. We're now utilizing a overmuch much meticulous methodology for measuring formation emissions developed by our ain Cirium aviation business. And our committedness to firm work continues to beryllium recognized by outer reporting agencies.

We were astatine AAA pinch MSCI for a seventh consecutive year, achieved nan apical ranking among media companies globally pinch Sustainalytics and maintained our 4th position successful nan Responsibility100 Index.

With that, I will manus you backmost to Erik.

Erik Engstrom

Thank you, Nick. Just to summarize what we've covered this morning. In 2022, we delivered beardown financial results. We made further operational and strategical progress, and we besides performed good connected our firm work priorities. The improving semipermanent maturation trajectory is being driven by nan ongoing displacement successful our business operation towards higher-growth analytics and determination tools, and we stay focused connected managing our costs maturation beneath gross growth.

Going forward, momentum remains beardown crossed nan group, and we expect underlying maturation rates successful gross and adjusted operating profit to stay supra humanities trends, driving different twelvemonth of beardown maturation successful adjusted net per stock connected a changeless rate basis.

And pinch that, I deliberation we're fresh to spell to questions.

Question-and-Answer Session


Thank you. [Operator Instructions] We will return our first mobility from Adam Berlin from UBS. Your statement now has been opened. Please spell ahead.

Adam Berlin

Hi, bully morning. It's Adam Berlin from UBS. I conscionable person immoderate questions connected nan STM division. In nan past, you've fixed america immoderate accusation astir nan number of submissions, nan number of open-access articles, et cetera, alternatively than just, benignant of nan commentary you provided. Any beingness numbers you tin springiness america astir nan number of submissions, nan number of open-access articles you published aliases nan unfastened entree maturation rate, that would beryllium really helpful?

And past my 2nd mobility was, you mentioned that nan number of submissions person really accrued supra that very precocious level we had past twelvemonth successful 2020. Can you talk a small astir what's driving that? And are you rubbing up against immoderate benignant of limit to really galore articles you tin process because of things for illustration capacity and adjacent reappraisal aliases immoderate restrictions that are going to extremity you continuing to turn nan number of articles that you person and you publish? Thanks very much.

Erik Engstrom

Okay. Let maine screen those. Total submission maturation this twelvemonth to our journals is backmost up now to benignant of nan mid- to precocious azygous digits, which has been our very semipermanent average, and that's now connected apical of what was a small spot of a jump and past leveling disconnected a small during COVID, which has immoderate unsocial characteristics.

So, this is backmost to nan semipermanent maturation correct now of beardown submission growth. And you besides asked specifically astir submissions, nonstop unfastened entree benignant of pay-to-publish aliases to our author-pays journals. That's increasing beautiful adjacent to 30% this year. And past you ask, is location a limit to nan processing aliases nan standard here? I deliberation I person to reply this successful a measurement that gives you a small spot of history.

The semipermanent maturation complaint successful submissions to america has astir apt been, connected average, increasing successful nan precocious azygous digits for a very agelong time, I mean, almost for a decade. And what's down this is nan summation successful full number of scientists, researchers successful nan world that typically has grown benignant of 3% to 4% for complete a decade and continues to thrust nan activity.

Then nan expanding accusation strength of subject means, of course, that group archive more, they investigation more, they person much powerful tools. So, that's why they tin thrust a submission maturation complaint that's supra nan number of investigation – nan maturation successful number of researchers.

We proceed to standard up our operations. We proceed to standard up our web pinch that increasing number of researchers successful nan world. And we besides leverage tons of different technologies and process innovations, successful particular, leveraging AI, exertion and instrumentality learning devices to make judge that, that machinery useful astatine a overmuch larger scale. And I don't spot immoderate extremity constituent aliases limit to this wherever we would deed immoderate endpoint connected this maturation successful nan world of science.

Adam Berlin

Thanks truthful much. And possibly conscionable really galore articles successful full did you publish? Can you show america that?

Nick Luff

Yes, it was astir 600,000, conscionable complete 600,000, of which astir a 4th are unfastened access.

Adam Berlin

Okay. So, akin to past year?

Nick Luff


Erik Engstrom

Yes. Yes, a small spot up because nan – location is simply a hold successful submissions to acceptances to people and arsenic nan number of submissions leveled disconnected a small spot nan twelvemonth earlier and now has gone backmost to nan mid- to high-single-digits maturation complaint of submissions, that intends that nan number of articles published has a small spot of a clip lag arsenic it's travel done and get registered.

So that's why you tin spot nan benignant of nan keeping up astatine nan level it led to a mini summation this year, a number of articles published, but what's successful nan pipeline successful position of articles submitted and accepted is backmost up to nan higher maturation rates. And you'll spot that travel done complete nan adjacent fewer months because of nan lag clip successful nan process.

Adam Berlin

Okay that’s great. Thank you very overmuch indeed.


Thank you. [Operator Instructions] We will return our adjacent questions from our participant, Mr. Nick Dempsey from Barclays. Your statement now has been opened. Please spell ahead.

Nick Dempsey

Yes, bully greeting guys. I've sewage 3 questions. So nan first one, erstwhile you're negotiating subscription renewals, I understand that you won't beryllium putting done an inflationary value increase. But erstwhile you're making your lawsuit for really overmuch other worth you've delivered and you dream to beryllium paid for that, doesn't it thief successful your negotiations that nan different costs lines of your customers are each going up 5%, 6%, 8%, 13%, and therefore, it's not shocking that they would salary you 5% much aliases 6% much than past year? So, moreover though you don't evidently put done ostentation value increases, are you still being helped by an inflationary environment? And could that change?

Second question. When you opportunity connected legal, nan renewal rates are beardown and nan affirmative momentum successful caller income is continuing, fixed that astir 80% of revenues are subscription, is location immoderate logic why you would not again execute nan 5% integrated gross maturation successful ineligible successful 2023 that you saw successful 2022? And nan 3rd question, now that nan Exhibitions section is heading backmost towards nan numbers that you achieved earlier nan pandemic, does it make consciousness to look to waste this section astatine immoderate point? Clearly, it was a root of volatility successful nan past fewer years that it would person been bully to debar and nan standard of nan section is beautiful mini successful nan group.

Erik Engstrom

Well, fto maine screen each 1 of those successful bid here. If you looked astatine – first mobility was astir subscription renewals and nan comparative cognition of those successful an inflationary environment. We deliberation of what we waste to our customers arsenic thing that is of expanding worth to them complete time, some because we person broader information sets aliases nan broader contented sets, we person expanding and blase analytics and higher-value determination tools, and therefore, we waste connected their worth and their perceived value.

And I work together pinch you to immoderate grade that erstwhile different things successful nan world get much expensive, nan cognition of worth mightiness – that we – of what we are trading would beryllium enhanced, and therefore, our customers should want much of them, should usage them more, and therefore, proceed to support our gross growth.

So, moreover though there's not a nonstop calculation there, it's a portion of our attack of trading value. And erstwhile nan comparative worth increases, we should astatine slightest do, arsenic good arsenic we did before, if not somewhat better.

On Legal, you said – yes, if you asked us, is it going to beryllium similar? Yes. Renewals and caller income are continuing to do well. Momentum is strong. It remains strong. There's nary logic to judge that based connected what we've seen that nan trends are heading down. However, we still person astir 10% of that section that is print. That is simply a small spot lumpy. So, you don't cognize precisely what's going to hap successful immoderate 1-month, 6-month, aliases 12-month play successful nan short-term, but we do cognize which guidance it's going complete nan medium-to-long term, and that's an improving semipermanent maturation trajectory.

On Exhibitions, successful nan adjacent word here, arsenic you mightiness understand, and arsenic I mentioned earlier, we stay 100% focused connected nan maturation opportunity from nan caller reopening and nan preamble of these caller data-driven integer devices we're using. Over clip though, nan cardinal rumor is, what benignant of worth uplift we will beryllium capable to thrust for our customers and for nan business arsenic a whole, therefore, done nan wider deployment of these higher value-add analytics and determination tools. But fixed that we're still successful nan reopening shape present wherever galore exhibitions are happening for nan first aliases 2nd clip since COVID, and we're successful nan early stages of this rotation up, it's overmuch excessively early for america to estimate aliases moreover effort to shape an sentiment of what benignant of worth that will create astatine this constituent successful time. So that's wherever we're going to time off it for now.


Thank you. We will return our adjacent mobility from Sami Kassab from BNB Paribas. Your statement now has been opened. Please spell ahead.

Sami Kassab

Thank you and bully greeting everyone. I person my 3 questions arsenic well. The first 1 is connected STM and Legal. They person accelerated, but person you reached a plateau aliases would you expect complete clip that maturation complaint tin accelerate further successful Legal, successful particular, and successful STM, arsenic we precocious heard from Thomson Reuters who suggested further maturation acceleration?

Secondly, location has been rather a batch of talk connected ChatGPT and different text-generative AI. What effect do you spot this improvement having connected nan group and particularly connected nan Legal division? And lastly, really overmuch of Reed Exhibitions revenues are now derived from integer tools? Thank you.

Erik Engstrom

Yes. I will screen each of those successful order, too. In nan different divisions, Legal and STM, arsenic you mightiness person heard from nan 2 seminars we've had connected those individual divisions successful nan past twelvemonth aliases so, some of those section heads person articulated nan clear objectives for that maturation nonsubjective for them, which is to proceed connected this improving maturation trajectory and because this is driven by nan business operation displacement towards higher-growth analytics and determination tools, and of course, successful some of those divisions besides supported by nan gradual simplification successful nan people resistance connected nan maturation rate.

Their nonsubjective is to proceed down this path. But of course, arsenic we've heard, nan subscription percent successful each 1 of those is 3 quarters of nan section is multiyear subscriptions, which intends that they're moving connected improving nan semipermanent maturation rate, but it's going to person to beryllium 1 percent constituent astatine a time, and it will be, successful nan short-term, influenced by imaginable volatility connected nan lumpy people revenues successful immoderate one-year, moreover though that effect would besides trim this complete time.

ChatGPT, I mean RELX is simply a large personification of AI technology, and it has been, arsenic you know, for galore years. Generative AI aliases nan technologies down ChatGPT, that's nan adjacent measurement connected this journey. And it's steps for illustration this that really person enabled america to turn and create successful nan measurement that we person developed arsenic a company. I mean arsenic a matter of fact, we see our expertise to place and leverage caller devices for illustration this, a competitory advantage of ours.

We proactively activity them out. We activity pinch them often successful partnerships, and wherever we spot opportunities to create products, we do that to amended our customer outcomes, and sometimes we look for opportunities alternatively to leverage nan technologies to amended our ain soul processes and efficiencies. I mean this has been our attack for galore years. It will proceed to beryllium for galore years to come.

ChatGPT aliases possibly much importantly for us, nan GPT underlying ample connection exemplary building that's down it, that's an important step, but it's only 1 measurement of many. There will beryllium galore much to come, and we're very excited astir it. We person already worked pinch nan underlying GPT exertion for a while.

We'll proceed to do that pinch nan adjacent generation. I deliberation it's going to beryllium a large opportunity for america to proceed to incorporated it, some successful nan measurement we service our customers and interact pinch them but perhaps, astir importantly, successful nan measurement we really run and tally nan institution successful our soul professionals and their processes. Let maine conscionable make sure, nan past mobility you asked was?

Nick Luff

I'd for illustration to return it. Your integer gross successful Exhibitions. If you look in, Sami, successful nan disclosures, you'll spot that wherever we really complaint separately for nan integer service, that's nan gross – it's astir 7% of nan section but really was – and that's increasing strongly. But what's much important really is really you usage these integer devices to heighten nan acquisition of some nan exhibitor and nan attendee astatine nan event.

So, ultimately, it comes done successful nan face-to-face gross and what you're charging exhibitors and so attendees successful immoderate cases to beryllium astatine nan arena because they tin get much worth retired of it because of these integer tools.


Thank you. We will return our adjacent mobility from Lisa nan from Goldman Sachs. Your statement now has been opened. Please spell ahead.

Lisa Yang

Good greeting I person a fewer questions arsenic well, please. Firstly, connected Risk. Obviously, we saw a bully acceleration successful nan statement maturation to 8%. Do you deliberation that benignant of 8% is, benignant of reasonable for 2023? And I deliberation that sounds accordant pinch your remark arsenic good astir maturation remaining in-line pinch humanities trends. And could you possibly elaborate a spot much connected nan drivers of nan maturation there? Do you proceed to spot security accelerating for 2023 aliases maintaining nan bully tally complaint of H2 2022?

Are you seeing immoderate slowdown yet, particularly nan transactional constituent wrong Business Services? And what are nan trends you're seeing arsenic good successful nan reference business successful merchandise identity? That would beryllium really helpful.

Second mobility is connected Exhibitions. Could you please show america wherever you ended astatine nan extremity of 2022 successful position of like-for-like gross for your shows versus 2019? And what are your expectations for 2023, particularly if you're expecting separator to spell backmost to adjacent to that 26% level? And tin you besides possibly remark connected what you're expecting arsenic good successful position of publication of value increases and really overmuch publication you're expecting from your China JV?

I cognize it's chiefly an effect connected your EBIT but utilized to beryllium rather meaningful. And so, I'm conscionable wondering for illustration what are you assuming successful position of getting to that benignant of adjacent to 26% level. And connected Exhibitions arsenic well, are you planning, fixed that this business seems to beryllium doing overmuch amended now, are you expecting to rotation immoderate caller shows? That’s nan 2nd question.

And nan past 1 is, if you tin springiness america an update successful position of what you're expecting connected tax? I deliberation 2022 taxation complaint ended a small spot little than we expected. So, what should we expect for 2023 and connected liking costs arsenic well? Thank you.

Erik Engstrom

Okay. I will screen nan first one. And past I'll manus nan remainder complete to Nick to screen those. So, if I understand you correctly, you're talking astir nan maturation complaint of Risk, nan existent tally complaint and nan near-term outlook for it. As you've heard, our semipermanent position connected Risk is that nan opportunity group successful this conception is specified that our nonsubjective location is to proceed to turn successful this scope for galore years to come.

And nan scope we've been successful nan past fewer years, of course, fluctuated a small bit, sometimes up a point, sometimes down depending connected immoderate of nan transactional gross streams during that year. And while we tin spot what's going connected now and what has happened recently, it's ever very difficult for america astatine this clip of nan twelvemonth to effort to foretell precisely really those revenues – transactional revenues will behave successful particularly successful nan 2nd half of nan twelvemonth because it's truthful galore months out.

But I tin show you what you would expect successful this benignant of economical environment, which is that immoderate streams would perchance slow down their maturation complaint a small bit. I mean, astatine this moment, arsenic you mightiness guess, complete nan past fewer months, astatine nan extremity of past twelvemonth and currently, we've seen immoderate pockets successful our Business Services broadside of Risk wherever nan maturation complaint has slowed a spot relating to individual financial transactions and others, right?

On nan different hand, we person seen a pickup successful maturation complaint successful respective different segments, including immoderate financial compliance, and astir importantly, successful nan Insurance conception wherever some security shopping and switching has picked up, which it typically does erstwhile nan economical situation slows down a small spot nan measurement it has.

So, we're seeing nan kinds of patterns that we person historically. And astatine nan moment, successful nan past fewer months and currently, nan flimsy slowdown successful immoderate subsegment is offset by nan flimsy pickup successful nan different segments. And if anything, you nett it up, nan flimsy affirmative segments are astir apt marginally outweighing nan erstwhile antagonistic outlook, and they are nan antagonistic transaction connected nan maturation rate. But it's very difficult to say, of course, wherever precisely that will beryllium later successful nan year. But again, I deliberation you person to look astatine this section arsenic being successful a scope of maturation complete a agelong play to come. And location will ever beryllium a small uncertainty astir what nan maturation complaint will look for illustration 6 months to 12 months out.

Now, I'm going to manus that complete to Nick to screen nan others.

Nick Luff

So Exhibitions, you asked astir nan like-for-like. Obviously, that improved arsenic we went done 2022. In nan 2nd half, we rounded astir 90% for those shows that had a comparable arena anterior to COVID. Looking to 2023, I deliberation we'll person to spot really that evolves. We'll person immoderate events that are still coming backmost for nan first time, China cycling events that are happening for nan first clip since COVID. So, we'll see.

You asked astir China associated task profit. Yes, that was not arsenic beardown because of nan trouble operating successful China. That did person immoderate effect connected nan margins. And though nan gross statement was strong, I think, comparative to nan expectations, nan deficiency of JV profit held backmost nan bottommost statement a bit. You asked astir launches, and we person it. Yes, we are launching again. We person astir 15 launches planned for 2023, not rather arsenic galore arsenic we had historically. But that number is coming up.

And your different mobility is connected liking and tax, nan taxation rate. The 21.3 we had successful nan full-year 2022 is simply a normal benignant of complaint wrong that 21%, 22% range. The U.K. corp taxation rate, of course, is – they've announced this is going up successful April, though that's changed a fewer times and been unannounced and past re-announced. But if that goes ahead, that would adhd a spot to nan taxation rate. So, complete clip then, you'd expect it to settee successful nan benignant of 22% to 23% range, and astir of that step-up would hap successful this year.

And you asked astir liking cost, arsenic I said successful nan presentation, liking costs successful [2020] [ph] – mean costs of gross indebtedness successful 2022 was astir 3%. It's presently astir 4%. And based connected guardant curves, it would alteration overmuch from that, though we'll spot what happens to liking rates. But that's a bully starting constituent for your [judging] [ph] what liking is going to beryllium this year.


Thank you. We will return our adjacent mobility from Thomas Singlehurst from Citi. Your statement now has been opened. Please spell ahead.

Thomas Singlehurst

Yes. Thanks. I was going to joke that it's Harvey from Allen & Overy, but no, it's decidedly Tom from Citi. The mobility – first one, I'm going to travel backmost to nan generative AI. I mean you – I deliberation you answered it connected nan Legal side. And I spot nan constituent astir embedding those benignant of devices successful your workflow solutions. I'm willing connected nan STM side. There's been immoderate chat astir whether it's going to group things for illustration nan benignant of process of preprints backmost because they'd conscionable beryllium much – nan signal-to-noise ratio will spell down. Can you conscionable talk astir really it mightiness effect benignant of behaviour and benignant of fraud levels wrong STM and whether that has immoderate implications to your business? That was nan first question.

Secondly, connected Exhibitions, nan mobility was – I suppose, very simply, what proportionality of your benignant of shows are moving successful nan correct clip slot successful 2023 aliases anticipated to tally successful nan correct clip slot successful 2023? And connected nan backmost of that, what's nan correct level of betterment versus 2019, adjusted for which shows are taking spot astatine nan correct time? And past finally, successful position of M&A, obviously, ongoing walk connected acquisitions, tin you conscionable talk astir what we're astir apt to spot walk successful position of operating divisions? Thank you.

Erik Engstrom

Okay. I'll screen nan first question. Then I'll manus complete nan remainder to Nick present to cover. Again, backmost connected generative AI and GPT-based devices astatine this point. Again, we judge this is 1 important development, but it's 1 of many. It's 1 measurement but agelong journey. And yes, it will complete clip – our devices for illustration this complete clip will influence, I think, galore of nan things we do, not conscionable successful nan Legal division, but besides successful nan different divisions, including successful STM.

And of course, we person had our group look wrong this for rather a while. We've looked astatine nan devices down this, nan ample connection models and experimented pinch them. And we besides looked astatine really individual users tin usage this, successful particular, arsenic you said, authors and submissions successful nan technological world.

And we person developed and put successful spot a argumentation pinch authors and editors to explain really devices for illustration nan ChatGPT tin beryllium used, really it tin beryllium utilized arsenic a instrumentality to heighten articles, but besides transparently stating really it's been used, really we disclose, really it's being disclosed and utilized is becoming standardized wrong nan industry. And nan measurement I spot it is this is going to proceed to evolve.

Whether past that specifically intends that definite types of tools, for illustration you said, preprints and others mightiness person – beryllium seen to person a different worth if they haven't been peer-reviewed, if they haven't been rigorously edited and checked for different devices and methodologies. I deliberation that remains to beryllium seen.

I still believe, again, that nan worth and value of trusted contents and brands successful this benignant of situation should not spell down. That's astir apt my conclusion connected that, but it's going to proceed to evolve. We're already successful nan process of testing and experimenting pinch nan exertion for our soul processes for our ain processes, our ain connection processing arsenic good arsenic our ain exertion devices for our ain labor to spot if location are ways that we tin heighten it, but without utilizing it arsenic a merchandise itself.

Nick Luff

So Tom, your mobility connected nan Exhibitions schedule for 2023. Outside of China, almost each nan Exhibitions are scheduled to tally successful their normal slots, but we'll spot whether that's possible, and we've go very bully astatine being elastic and adapting if we request to.

Your mobility is connected M&A and which business areas would it – would that autumn into. I mean nan first point to opportunity is each our businesses are focused chiefly connected integrated development, of course. We will usage acquisitions and make acquisitions wherever we spot ways of enhancing and accelerating nan integrated development. If you look backmost complete nan past fewer years, nan Risk section has had much of nan acquisition capital, but that's a merchandise of opportunity and nan dynamics of that peculiar segment. We're surely consenting and actively ever looking successful each 4 business areas.


Thank you. We will return our adjacent mobility from Matthew Walker from Credit Suisse. Your statement now has been opened. Please spell ahead.

Matthew Walker

Thanks guys, and bully greeting everyone. Yes, it's Matthew Walker from Credit Suisse. I besides had a mobility connected GPT, which is you mentioned really it tin beryllium utilized successful a protect mode to heighten your products for customers and besides to use your unit internally to, benignant of prevention time, et cetera. What do you spot from nan anticipation of it being utilized offensively against you from start-ups and – aliases possibly moreover larger companies?

You've sewage for illustration a batch of heavy information successful each nan different divisions. To what grade tin GPT propulsion retired that information pinch aliases without your consent? And really easy would it beryllium for a rival institution to build immoderate effective products based connected that exertion and commencement charging for them? So, if you could conscionable springiness america a spot of colour connected really that exertion mightiness aliases mightiness not beryllium capable to beryllium utilized against you?

The 2nd point is, could you springiness a spot much color? You answered a small bit, but I conscionable wanted a spot much colour connected Risk transaction outlook for this year. I mean it's evident that reinsurance is recovering. Can you springiness america immoderate products aliases a consciousness for nan different types of products? You mentioned individual finance, but could you mention immoderate different products which mightiness beryllium experiencing a slowdown successful nan different side, nan noninsurance side, of transactions and springiness america a consciousness of wherever things whitethorn aliases whitethorn not beryllium susceptible and what existent maturation rates are like?

And past finally, connected Exhibitions. Could you show america what your re-bookings complaint was some nan first half and 2nd half?

Erik Engstrom

Back to GPT. I mean possibly I was not clear capable there. We spot nan GPT fundamentally arsenic an opportunity to proceed to heighten things that this is an underlying – nan underlying technology, nan ample connection exemplary and nan generative AI down it. That's thing that we spot arsenic 1 measurement successful exertion development, thing we've been connected for a very, very agelong time. I mean immoderate of you whitethorn recall, we've talked astir AI and instrumentality learning successful immoderate of our seminars galore years agone and really we see this.

We believe, arsenic I said, that our expertise to place and leverage those up of others is simply a competitory advantage. And I judge that this is not a protect instrumentality for us. This is nan main driver. Using technologies for illustration this has been nan main driver of nan betterment successful our maturation complaint and nan expanding value-add successful our analytics and our determination tools. And I do not judge that this measurement is an objection to that aliases nan early measurement should beryllium an exception.

We activity these partners out. We activity nan individual developers out. There were smaller companies you talk to, moreover nan ones that travel from large companies. We often look to create partnerships pinch them and do licenses and collaborations early here, and we've been connected this for rather a while, and we've been experimenting pinch building things for rather a while. So, we judge that this is simply a instrumentality that we're peculiarly well-positioned to leverage successful a positive, proactive way.

When you ask, what tin different group do, location will ever beryllium technologies that are useful. And if they're useful to us, they will beryllium useful to others. But arsenic we've said galore times before, nan worth that we bring successful our determination devices is because nan – it's because we person nan operation of 3 different components.

Number one, and nan astir important one, is we person highly heavy customer knowing of our cardinal marketplace segments and really precisely they behave coming because their usage of our devices coming were wrong their processes. We cognize really they make decisions. We understand nan worth of those decisions, and we tin build devices to heighten nan value. That's nan underlying number one, customer understanding.

Then connected apical of that, we person built these contented sets, nan information sets that we've accumulated complete a very agelong play of time. And while immoderate of those person been accumulated from nationalist sources, galore of them person been built done contributory databases aliases by soul editorial activity complete a long, agelong play of time. And those information sets, those contented sets, they are not publically available. They will not beryllium publically disposable for these devices either.

They are proprietary erstwhile we person built them, and they're proprietary nan measurement we put them together, moreover though galore of nan original information sets were publically disposable astatine nan time. And third, we build these devices pinch nan layers of instrumentality learning tools, technologies and analytics connected top, of which, nan GPT devices aliases akin types of artificial intelligence, that's conscionable 1 component.

And erstwhile you bargain thing costly from a master business accusation provider, what's important is that it's genuinely thing you tin spot and trust on. And I deliberation successful bid to do that, nan worth comes from nan operation of those 3 components: nan heavy customer understanding, nan wide and complete information sets, and nan operation of galore different analytical devices and algorithm connected apical of it.

And that's nan measurement we spot our development. And that's why we will proceed to activity retired and partner pinch anybody who has immoderate 1 caller constituent that tin lend to that. But immoderate 1 constituent by itself, I don't deliberation is going to beryllium nan main imaginable competitory threat to us.

Let's see. The adjacent mobility you asked was connected Risk. Yes, arsenic I said before, immoderate subsegments successful Business Services person seen slowing maturation successful nan 2nd half of past year, and successful peculiar those relating to fraud and personality successful definite types of U.S. financial services, individual interactions, relationship opening for banal trading and very, very mini conception for us. It's, of course, nan benignant of crypto relationship opening and trading. It's highly mini for us, good little than 1%, but you could spot nan trends successful those. And I tin support going pinch immoderate that had truthful seen little activity than they did a twelvemonth ago.

So, there's a fewer of those circumstantial subsegments that you tin see, therefore, that nan wide maturation complaint for america is slowing, right, and has been little for a while. So, it's not conscionable starting now. But again, arsenic I said, nan pickups that you've seen from respective of nan different segments, which is arsenic predicted successful an economical situation for illustration this, they person offset that. And arsenic you could spot astatine nan extremity of nan year, pinch improving maturation rate, and now they've somewhat much than offset nan slowdown successful those Business Services subsegments that are slow.

And nan past question...

Nick Luff

So, your mobility connected rebooking rates. Yes, they improved arsenic we went done 2022. You tin spot that successful nan gross numbers and those like-for-like comparisons I was talking astir and really this first half was for illustration 75%, 2nd half 90%. So – but you spot that that's wherever nan rebooking is coming through.

Matthew Walker

Thank you.


Thank you. We will return our adjacent mobility from Konrad Zomer from ABN Amro. Your statement now has been opened. Please spell ahead.

Konrad Zomer

Hi, bully greeting everybody. Konrad Zomer, ABN Amro Oddo. Just 1 mobility connected Exhibitions. When you mentioned that nan margins will return to pre-pandemic levels, which was astir 26% from 17% past year, really overmuch of nan £100 cardinal of costs savings you put done successful 2020 do you deliberation is going to beryllium permanent, truthful to speak? And really overmuch of that will move backmost up now that revenues person started to move backmost up?

Erik Engstrom

I'll fto Nick screen this here.

Nick Luff

Yes. As you say, we've fundamentally improved nan costs structure, nan portfolio changes we made, and we permanently discontinued a number of shows and representing astir 10% of revenue. So there's intelligibly were – nan weaker events of that besides helps structurally pinch nan margin. Yes, clearly, nan costs guidelines of nan business evolves, peculiarly arsenic you travel backmost pinch nan events. But essentially, nan structural changes are permanent.

Konrad Zomer

But that would connote that 100 cardinal already reflects astir a 10 percent points connected your margin. So, past it wouldn't beryllium a very eager connection to propose that margins will return to pre-pandemic levels. I mean it suggests that they will transcend pre-pandemic levels comparative to...

Nick Luff

No, you person to – but, yes – obviously, nan standard of nan business is different if we've taken disconnected 10% of nan gross disconnected nan top. So, you person to get that into account, okay.

Erik Engstrom

Okay. Well, I deliberation that looks for illustration that's nan past question. So then, I'd for illustration to – aliases is location different mobility connected nan line?


It appears location are nary further questions. At this time, I for illustration to move nan convention backmost to Erik for immoderate further remarks. Please spell ahead.

Erik Engstrom

Okay. Well, I conscionable want to opportunity convey you each for joining america connected our telephone today. I look guardant to talking to you again soon.


Ladies and gentlemen, this concludes today's call. Thank you for your participation. You whitethorn now disconnect.

Editor: Naga

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