Relx Plc · LSE:REL
Relx — FY2017 Earnings Presentation
35 slides from Relx's earnings presentation, February 2018
Slide 1: RELX Group results 2017
RELX Group results 2017 Erik Engstrom, CEO Nick Luff, CFO 2 1
Slide 2: Disclaimer regarding forward-looking statements
DISCLAIMER REGARDING 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 amended. These statements are subject to a number of ris
Slide 3: Erik Engstrom, CEO
Erik Engstrom, CEO G.RELX Group G.RELX Group
Slide 4: RELX Group 2017 progress and financial highlights
RELX Group 2017 progress • Positive financial performance – Underlying revenue growth across all four business areas – Underlying profit growth ahead of underlying revenue growth • Further strategic and operational progress – Improvement in business profile – Organic development of analytics & decis
Slide 5: Financial performance: underlying revenue and adjusted operating profit
Financial performance Underlying revenue growth* Underlying adjusted operating profit growth +6% +6% +5% +5% +5% +4% +4% +3% +3% +3% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 * excluding exhibition cycling effects Adjusted earnings per share growth Return on invested capital Constant currenc
Slide 6: Scientific, Technical & Medical; Risk & Business Analytics
Scientific, Technical & Medical Underlying growth Revenue • Key business trends remained positive • Continued growth in electronic revenues partially offset by further print declines +2% +2% • Primary research value enhancement: content sets; analytics; technology platforms 2016 2017 • Growth in dat
Slide 7: Legal and Exhibitions
Legal Underlying growth Revenue • Underlying revenue growth in line with prior year • Operating profit margin growth reflects ongoing process improvement, system decommissioning, and portfolio +2% +2% effects • Continued growth in electronic revenues partially offset 2016 2017 by print declines Adju
Slide 8: RELX Group strategic direction: unchanged
RELX Group strategic direction: unchanged 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 resourc
Slide 9: Further corporate structure simplification
RELX Group further corporate structure simplification Current Proposed RELX PLC RELX NV RELX PLC 52.9% 47.1% 100% RELX Group plc RELX Group plc 17 Corporate Structure Simplification • Corporate structure reviewed periodically and evolved over time • Further simplification now possible without changi
Slide 10: Nick Luff, CFO: 2017 financial highlights
Nick Luff, CFO 19 2017 financial highlights Income statement highlights • Underlying revenue growth +4% • Underlying adjusted operating profit growth ahead of revenue growth +6% • Adjusted operating profit margin 40 basis points higher 31.1% • Adjusted EPS growth at constant currencies +7% Cash flow
Slide 11: Income statement; Earnings per share
Income statement change 2016 2017 constant change Year to 31 December £m £m change currency underlying Revenue 6,895 7,355 +7% +2% +4% Adjusted operating profit 2,114 2,284 +8% +3% +6% Adjusted operating margin 30.7% 31.1% Adjusted net interest expense (180) (166) Adjusted profit before tax 1,934 2,
Slide 12: Revenue; Adjusted operating profit
Revenue Underlying growth in all business areas change 2016 2017 constant change Year to 31 December £m £m change currency underlying Scientific, Technical & Medical 2,320 2,478 +7% +2% +2% Risk & Business Analytics 1,906 2,076 +9% +4% +8% Legal 1,622 1,692 +4% -1% +2% Exhibitions 1,047 1,109 +6% +1
Slide 13: Adjusted operating margin; Currency profile
Adjusted operating margin Year to 31 December 2016 2017 Scientific, Technical & Medical 36.8% 36.8% Risk & Business Analytics 36.0% 36.6% Legal 19.2% 19.6% Exhibitions 25.7% 25.7% RELX Group 30.7% 31.1% 25 Currency profile Revenue by geographic market 2017 • Revenue by currency broadly matches geogr
Slide 14: Return on invested capital; Free cash flow
Return on invested capital 2016 2017 Year to 31 December £m £m Adjusted operating profit 2,114 2,284 Tax at effective rate (480) (514) Effective tax rate 22.7% 22.5% Adjusted operating profit after tax 1,634 1,770 Average invested capital (at average FX rates) 12,538 13,501 Return on invested capita
Slide 15: Uses of free cash flow; Uses of cash priorities
Uses of free cash flow 2016 2017 Year to 31 December £m £m Free cash flow 1,414 1,544 Disposals: total consideration 16 87 Acquisitions: total consideration (338) (123) Dividends (683) (762) Share buybacks (700) (700) Other* (118) (110) Currency translation (509) 32 Movement in net debt (918) (32) N
Slide 16: Changes to accounting standards; Corporate structure simplification
Changes to accounting standards IFRS 15 – Revenue from contracts with customers • Single point of reference for revenue recognition of contracts and licensing arrangements • RELX will adopt on a fully retrospective basis for 2018 • No material impact on full year financials; some impact on H1 / H2 s
Slide 17: Further simplification of corporate structure: shareholder implications
Further simplification of corporate structure Implications for RELX shareholders • No change for PLC shareholders • Continuity for NV shareholders Current Proposed PLC NV PLC Listing • London • Amsterdam • London • New York (ADR) • New York (ADR) • Amsterdam • New York (ADR) Depository • CREST • Eur
Slide 18: Summary and 2018 outlook
Erik Engstrom, CEO 35 Summary 2017 • Continued positive financial performance • Further strategic and operational progress 2018 Outlook Key business trends in the early part of 2018 are consistent with 2017, and we are confident that, by continuing to execute on our strategy, we will deliver another
Slide 19: Appendices contents
Appendices 37 Contents Further information Financial information in euros 39 Reconciliation of operating profit 60 Income statement 40 STM: growth and currency analysis 61 Revenue 41 Exhibitions: cycling impact 62 Adjusted operating profit 42 RELX group revenue splits 63 Free cash flow 44-47 Busines
Slide 20: Reconciliation of operating profit; STM growth and currency analysis
Reconciliation of operating profit Adjusted to reported 2016 2017 Year to 31 December £m £m change Adjusted operating profit 2,114 2,284 +8% Adjustments: Amortisation of acquired intangible assets (346) (314) Acquisition related costs (51) (56) Reclassification of tax in joint ventures (10) (10) Rec
Slide 21: Exhibitions cycling impact; RELX Group revenue splits
Exhibitions: cycling impact Revenue growth 2013 2014 2015 2016 2017 Total at constant currencies +2% +11% +1% +9% +1% Impact of portfolio changes 0% +2% +1% +1% +1% Underlying with cycling +2% +9% 0% +8% +0% Impact of cycling shows -5% +2% -5% +3% -6% Underlying +7% +7% +5% +5% +6% 41 RELX Group 201
Slide 22: STM and Risk & Business Analytics revenue splits
Scientific, Technical & Medical 2017 revenue £2,478m Format Geography Type Advertising Print* 2% Rest of World North Transactional 19% 33% America 26% 42% Face-to-face 0% Electronic Europe Subscription 81% 25% 72% * Print book revenue 10% 43 Risk & Business Analytics 2017 revenue £2,076m Format Geog
Slide 23: Legal and Exhibitions revenue splits
Legal 2017 revenue £1,692m Format Geography Type Print Rest of World 12% Transactional 17% 23% Face-to-face 0% Europe 20% Electronic Subscription North America 83% 77% 68% 45 Exhibitions 2017 revenue £1,109m Format Geography Type Electronic 4% Rest of World North America 40% 21% Face-to-face Europe
Slide 24: Revenue by segment or source; Debt profile
Revenue by segment or source* Scientific, Technical & Medical Risk & Business Analytics Print pharma promotion Print Print books Data services Primary research Insurance Government & (subscription and Healthcare Databases & tools transactional) and electronic reference Business Services Legal Exhibi
Slide 25: Dividends per share; Exchange rates and shares outstanding
Dividends per share Exchange PLC rate NV Interim dividend 2017 11.7p x€1.13 €0.132 Growth +14% +8% Final dividend 2017 27.7p x€1.14 €0.316 Growth +8% +5% Total dividend 2017 39.4p €0.448 Growth +10% +6% Dividend cover 2.1x 2.1x • Dividend policy unchanged. Continue to grow dividends broadly in line
Slide 26: Capital expenditure and depreciation by business area
Capital expenditure by business area 2016 2017 % of % of Year to 31 December £m revenues £m revenues Scientific, Technical & Medical 85 4% 96 4% Risk & Business Analytics 67 4% 83 4% Legal 155 10% 152 9% Exhibitions 26 3% 23 2% Total capital expenditure 333 4.8% 354 4.8% 51 Depreciation by business
Slide 27: Balance sheet; Term debt maturities
Balance sheet 31 Dec 2016 31 Dec 2017 £m £m Goodwill & acquired intangible assets 8,911 8,023 Internally developed intangible assets 1,085 1,136 Property, plant & equipment and investments 481 452 Net assets held for sale 1 0 Net pension obligations (636) (328) Working capital (1,358) (1,267) Net ca
Slide 28: Restatement due to changes to accounting standards
Restatement due to changes to accounting standards FY 2017 2017 Expected impact 2017 as reported of IFRS 15/ as restated £m IFRS 16 £m Revenue Scientific, Technical & Medical 2,478 (5) 2,473 Risk & Business Analytics 2,076 (3) 2,073 Legal 1,692 (6) 1,686 Exhibitions 1,109 - 1,109 RELX Group 7,355 (1
Slide 29: Restatement: earnings per share and balance sheet
Restatement due to changes to accounting standards Earnings per share 2017 as 2017 as reported Expected impact of restated Income statement £m IFRS 9 IFRS 15 IFRS 16 Total £m Adjusted net interest (166) (2) - (15) (17) (183) expense Adjusted net profit 1,635 (2) (9) (4) (15) 1,620 Adjusted EPS (p) 8
Slide 30: Financial information in euros: income statement
Financial information in euros 59 Income statement change 2016 2017 constant change Year to 31 December €m €m change currency underlying Revenue 8,412 8,385 0% +2% +4% Adjusted operating profit 2,579 2,604 +1% +3% +6% Adjusted operating margin 30.7% 31.1% Adjusted net interest expense (220) (189) Ad
Slide 31: Revenue; Adjusted operating profit (euros)
Revenue Underlying growth in all business areas change 2016 2017 constant change Year to 31 December €m €m change currency underlying Scientific, Technical & Medical 2,831 2,825 0% +2% +2% Risk & Business Analytics 2,325 2,367 +2% +4% +8% Legal 1,979 1,929 -3% -1% +2% Exhibitions 1,277 1,264 -1% +1%
Slide 32: Free cash flow; Uses of free cash flow (euros)
Free cash flow 2016 2017 Year to 31 December €m €m Adjusted operating profit 2,579 2,604 Capital expenditure (406) (403) Depreciation 314 310 Working capital and other items (27) (12) Adjusted cash flow 2,460 2,499 Cash flow conversion rate 95% 96% Cash interest paid (185) (169) Cash tax paid (516)
Slide 33: Reconciliation of operating profit (euros)
Reconciliation of operating profit Adjusted to reported 2016 2017 Year to 31 December €m €m change Adjusted operating profit 2,579 2,604 +1% Adjustments: Amortisation of acquired intangible assets (422) (358) Acquisition related costs (62) (64) Reclassification of tax in joint ventures (12) (11) Rec
Slide 34: Balance sheet; Capital expenditure by business area (euros)
Balance sheet 31 Dec 2016 31 Dec 2017 €m €m Goodwill & acquired intangible assets 10,426 8,986 Internally developed intangible assets 1,269 1,275 Property, plant & equipment and investments 563 506 Net assets held for sale 1 0 Net pension obligations (744) (367) Working capital (1,589) (1,422) Net c
Slide 35: Depreciation by business area; Cautionary note
Depreciation by business area 2016 2017 % of % of Year to 31 December €m revenues €m revenues Scientific, Technical & Medical 100 4% 92 3% Risk & Business Analytics 55 2% 59 3% Legal 138 7% 138 7% Exhibitions 21 2% 21 2% Total depreciation 314 3.7% 310 3.7% 69 CAUTIONARY NOTE This Announcement does