Relx Plc · LSE:REL
Relx — Reed Elsevier — H1 2013 Earnings Presentation
29 slides from Relx's earnings presentation, 2013
Slide 1: Reed Elsevier Interim Results 2013
Reed Elsevier Interim Results 2013 Erik Engstrom, CEO Duncan Palmer, CFO FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amen
Slide 2: H1 2013 financial highlights
Duncan Palmer, CFO 3 H1 2013 financial highlights • Underlying revenue growth +2% (+3% excluding biennial exhibition cycling) • Underlying adjusted operating profit growth +6% • Adjusted EPS: +7% at constant currencies; PLC +9% to 26.5p; NV +4% to €0.48 • Reported EPS: PLC -6% to 22.0p; NV -9% to €0
Slide 3: Profit and loss; Reconciliation of net profit
Profit and loss 2013 2012 change 6 months to 30 June £m £m change underlying Revenue 3,025 3,053 -1% +2% / +3%* Adjusted operating profit 870 832 +5% +6% Adjusted operating margin 28.8% 27.3% Adjusted net finance costs (92) (107) Adjusted profit before tax 778 725 +7% Tax (183) (171) Tax rate % 23.5
Slide 4: Revenue; Adjusted operating profit
Revenue Underlying growth in all business areas change 2013 2012 constant change 6 months to 30 June £m £m currency underlying Scientific, Technical & Medical 1,008 978 0% +2% Risk Solutions 473 462 0% +8% Business Information 286 347 -19% +3% Legal 773 780 -3% +1% Exhibitions 485 486 +1% +1% / +7%*
Slide 5: Adjusted operating cash flow conversion; Free cash flow
Adjusted operating cash flow conversion 2013 2012 6 months to 30 June £m £m Adjusted operating profit 870 832 Capital expenditure (152) (150) Depreciation 127 113 Working capital and other items (106) (17) Adjusted operating cash flow 739 778 Cash flow conversion rate 85% 94% EBITDA 997 945 • Cash c
Slide 6: Uses of free cash flow; Debt management
Uses of free cash flow 2013 6 months to 30 June £m Free cash flow after dividends 76 Acquisitions (85) Net disposal proceeds 226 Share buybacks (300) Other* 51 Currency translation (180) Movement in net debt (212) * Includes net share option exercise proceeds 11 Debt management Maintaining ample acc
Slide 7: Debt maturities; Balance sheet
Debt maturities At 30 June 2013 $m 1,000 900 800 700 600 500 937 993 400 715 300 607 491 200 420 357 286 282 100 150 - - - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 >2023 Term debt translated at 30 June 2013 exchange rates, stated at par value 13 Balance sheet 30 June 2013 31 Dec 2012 £
Slide 8: Summary of other financial matters
Summary of other financial matters H1 2013 average At 30 June FX rates £:$ 1.54 1.52 £:€ 1.18 1.17 H1 2013 average At 30 June Shares outstanding Reed Elsevier PLC: 1,180m 1,174m Reed Elsevier NV: 721m 719m 15 This slide is intentionally left blank 16 8
Slide 9: Reed Elsevier H1 2013 progress
Erik Engstrom, CEO 17 Reed Elsevier H1 2013 progress • Positive operating momentum maintained – Good growth in underlying revenue across Reed Elsevier – Improved profitability through process innovation • Further improvement in business profile and earnings quality – Organic development of platforms
Slide 10: Underlying revenue growth; Underlying adjusted operating profit growth
Underlying revenue growth Excluding biennial exhibition cycling +3% +3% +3% +1% FY 2010 FY 2011 FY 2012 H1 2013 19 Underlying adjusted operating profit growth +6% +6% +5% -1% FY 2010 FY 2011 FY 2012 H1 2013 20 10
Slide 11: Earnings per share growth; Net debt / EBITDA
Earnings per share growth Constant currency +8% +7% +6% FY 2010 FY 2011 FY 2012 H1 2013 -6% 21 Gradual reduction in net debt / EBITDA 12 months trailing 2.5x 2.3x 2.2x 2.1x FY 2010 FY 2011 FY 2012 H1 2013 Pensions and lease adjusted; calculated in US dollars; H1 2013 unadjusted net debt / EBITDA 1.7
Slide 12: Underlying growth across business areas
Underlying revenue growth across business areas +1% /+7%* Exhibitions +2% Scientific, Technical & Medical +1% Legal Risk Business Solutions Information +8% +3% *excluding biennial exhibition cycling 23 Underlying adjusted operating profit growth across business areas +4% Exhibitions Scientific, +5%
Slide 13: Scientific, Technical & Medical; Risk Solutions
Scientific, Technical & Medical Underlying revenue growth • Strong growth in article submissions and usage • Solid subscription renewals and new sales, particularly in emerging markets • Good growth in databases & tools and electronic clinical solutions +2% +2% +2% +2% • Continued decline in print b
Slide 14: Business Information; Risk Solutions and Business Information
Business Information Underlying revenue growth • Strong growth in Major Data Services driven by BankersAccuity and ICIS • Stable Leading Brands and Other Business Magazines & Services • Print advertising markets remain weak +3% • Margin expansion of 1.1% points reflects +2% process efficiency and po
Slide 15: Legal; Exhibitions
Legal Underlying revenue growth • US and European markets subdued • Good growth in electronic revenues; continued print declines • Continued roll out of new platforms and products • Margin expansion of 0.6% points reflects process improvement, initial +1% +1% +1% decommissioning -2% FY 2010 FY 2011
Slide 16: Organic transformation
Reed Elsevier strategic direction Where we are going • Deliver improved outcomes to professional customers • Combine content & data with analytics & technology in global platforms • Build leading positions in long term global growth markets • Leverage institutional skills, assets and resources acros
Slide 17: Portfolio reshaping; Implications for use of cash
Portfolio reshaping H1 2013 Acquisitions: • 8 transactions; total consideration £109m • Including Verid, Mendeley, Expo Ferretara Disposals: • 11 transactions; total consideration £280m • Including Pre-employment Screening, RBI Australia, RBI France, Spanish exhibitions, some Elsevier Italian assets
Slide 18: Summary
Summary H1 2013 • Positive underlying growth trends maintained • Further improvement in business profile FY 2013 Outlook • “The outlook for the macro environment, and its impact on our customer markets, remains mixed, and 2013 is a cycling out year for our exhibitions business. However, the operatin
Slide 19: Appendices Contents
Appendices 37 Contents Further information Financial information in Euros 40 Revenue 50 Profit and loss 41 Adjusted operating profit 51 Reconciliation of net profit 42 Dividend equalisation 52 Revenue 43 Exhibitions: cycling impact 53 Adjusted operating profit 44 Currency profile 54 Adjusted operati
Slide 20: Further information: Revenue
Further information 39 Revenue Year over year change 6 months to 30 June £m % change €m % change 2012 Revenue 3,053 3,725 Underlying growth 67 +2% 82 +2% Acquisitions 31 +1% 38 +1% Disposals (177) -6% (218) -6% Currency effects 51 +2% (57) -1% 2013 Revenue 3,025 -1% 3,570 -4% 40 20
Slide 21: Adjusted operating profit; Dividend equalisation
Adjusted operating profit Year over year change 6 months to 30 June £m % change €m % change 2012 Adjusted operating profit 832 1,015 Underlying growth 48 +6% 59 +6% Acquisitions 5 +1% 6 +1% Disposals (35) -5% (43) -5% Currency effects 20 +3% (10) -1% 2013 Adjusted operating profit 870 +5% 1,027 +1%
Slide 22: Exhibitions: cycling impact; Currency profile
Exhibitions: cycling impact H1 Revenue growth % 2009 2010 2011 2012 2013 Total -21% +9% +1% +25% +1% Impact of acquisitions / divestments +1% +1% +1% +10% 0% Underlying -22% +8% 0% +15% +1% Impact of cycling shows -7% +11% -10% +8% -6% Underlying excluding cycling -15% -3% +10% +7% +7% 43 Currency p
Slide 23: Credit metrics; Cost of borrowings
Credit metrics LTM 30 June LTM 30 June 2013 2012 Net debt / EBITDA 2.1x* 2.3x* Free operating cash flow / net debt 28.2% 26.0% Retained cash flow / net debt 24.5% 21.7% Net interest cover 7.9x 7.0x Long term credit rating (S&P / Moody’s / Fitch) BBB+ / Baa1 / A- BBB+ / Baa1 / A- Pensions and lease a
Slide 24: H1 2013 Share buybacks; Impact of IAS19 (revised)
H1 2013 Share buybacks Total spend: £300m Shares acquired Shares Average price paid Reed Elsevier PLC 22.6m 724p Reed Elsevier NV 13.1m €12.25 Shares outstanding H1 Average At 30 June Reed Elsevier PLC 1,180m 1,174m Reed Elsevier NV 721m 719m 47 Impact of IAS19 (revised) – effective 1 January 2013 (
Slide 25: Financial information in Euros: Profit and loss
Financial information in Euros 49 Profit and loss 2013 2012 change 6 months to 30 June €m €m change underlying Revenue 3,570 3,725 -4% +2% / +3%* Adjusted operating profit 1,027 1,015 +1% +6% Adjusted operating margin 28.8% 27.3% Adjusted net finance costs (109) (131) Adjusted profit before tax 918
Slide 26: Reconciliation of net profit; Revenue (€)
Reconciliation of net profit Reported to adjusted 2013 2012 6 months to 30 June €m €m change Reported net profit 601 673 -11% Adjustments (after tax): Amortisation of acquired intangible assets 71 154 Net financing cost on pension schemes 7 5 Acquisition related costs 16 7 Disposals and other non op
Slide 27: Adjusted operating profit; Cash flow conversion (€)
Adjusted operating profit Underlying growth in all business areas change 2013 2012 constant change 6 months to 30 June €m €m currency underlying Scientific, Technical & Medical 439 430 +2% +3% Risk Solutions 250 233 +8% +11% Business Information 65 77 -13% +14% Legal 122 122 +2% +5% Exhibitions 178
Slide 28: Free cash flow; Uses of free cash flow (€)
Free cash flow 2013 2012 6 months to 30 June €m €m Adjusted operating cash flow 872 949 Cash interest paid (101) (122) Cash tax paid (201) (154) Acquisition integration / other* (14) (39) Free cash flow before dividends 556 634 Dividends (466) (460) Free cash flow after dividends 90 174 *Net of cash
Slide 29: Balance sheet; Impact of IAS19 (revised) (€)
Balance sheet 30 June 2013 31 Dec 2012 €m €m Goodwill & acquired intangible assets 8,825 8,823 Internally developed intangible assets 843 796 Property, plant & equipment and investments 540 545 Net assets held for sale 74 247 Net pension obligations (446) (573) Working capital (1,297) (1,401) Net ca