Reed Elsevier NV — Investor Day (May 2012)
50 slides from Reed Elsevier NV's investor day presentation, May 10, 2012
Slide 1: Investor Seminar – 10 May 2012
Investor Seminar – 10 May 2012 Reed Business Information Reed Exhibitions 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 ame
Slide 2: RX and RBI position within Reed Elsevier
RX and RBI position within Reed Elsevier 2011 Revenue £6,002m 2011 Adjusted operating profit £1,626m Business Business Information Information 7% 12% Exhibitions 10% Exhibitions 12% 3 Agenda Introduction Erik Engstrom, CEO, Reed Elsevier RBI overview Mark Kelsey, CEO, Reed Business Information Fligh
Slide 3: Transforming RBI
Transforming RBI Mark Kelsey CEO 5 Reed Business Information agenda RBI overview Mark Kelsey, CEO, Reed Business Information Flightglobal case study Dominic Feltham, COO, RBI BankersAccuity case study Jim Muttram, Managing Director, Data Services, RBI Q&A Mark Kelsey 6 3
Slide 4: RBI recent history; Fundamental rethink of RBI
RBI recent history Before 2008 2009 2010 2008 • Managed by • RBI sale process • Worst recession • Fundamental geography (withdrawn) in media history rethink of business • Independent infrastructures • Print led • Some good progress online 7 Fundamental rethink of RBI • Refocused business by key as
Slide 5: Re-focus business by key asset group; Major data services
Re-focus business by key asset group Other business Major data services magazines and services 30% 25% 13% Leading brands 32% Online marketing solutions 2011 revenues £695m 9 Major data services Petrochemicals/energy price assessments Banking payments & compliance solutions HR compliance li & workfl
Slide 6: Online marketing solutions; Leading brands
Online marketing solutions Email & web based lead generation US online request for quotation lead generation UK online request for quotation lead generation Characteristics Priorities • Cyclical y • Organically g y developp multi channel • Mixed margins marketing approach • Improve customer marketin
Slide 7: Other business magazines & services; Portfolio reshaping
Other business magazines & services Characteristics Priorities • Revenue declines moderated • Portfolio improvement p • Mixed margins • Developing paid content • Range of business models • Improving online propositions • 2011: -5% underlying revenue decline • Cost efficiency and margin 13 Portfolio
Slide 8: Portfolio reshaping - divestments; Revenue by asset class
Portfolio reshaping - divestments • Systematic review of assets • 45% of 2008 revenue base • Over 150 magazines • Across 14 countries • In 26 transactions 15 Revenue by Asset Class: 2007 - 2012 2007 2012E pro forma* Major Data Services 12% Online Marketing Solutions Other Business 8% Magazines & Maj
Slide 9: Revenue by Type; Extensive cost actions & process innovation
Revenue by Type: 2007 - 2012 2007 2012E pro forma* Print Online User Advertising 15% 13% Print Online Advertising Advertising Online User 39% 12% 44% Offline User 30% Offline User 31% Online Advertising 16% 45% Paid content 75% 31% Online 56% £350m Print advertising <£100m *continuing operations pos
Slide 10: Financial performance
Financial performance Revenue and adjusted operating profit £m 987 906 891 718 695 121 126 89 89 110 2007 2008 2009 2010 2011 Revenue Adjusted operating profit 19 Financial performance Underlying revenue and adjusted operating profit growth 20% +15% Underlying profit growth +8% 10% +4% +3% +1% Under
Slide 11: Financial performance; Summary
Financial performance Adjusted operating profit margin 15.8% % 13.4% 12.8% 12.4% 10.0% 2007 2008 2009 2010 2011 21 Summary Where we are going • Transforming RBI into the type of business that delivers improved outcomes to professional customers by combining content with technology in global platform
Slide 12: Case studies
Case studies Other business magazines & services Major data services Leading brands Online marketing solutions 23 This slide is intentionally left blank 24 12
Slide 13: Flightglobal: transforming a print business
Reed Business Information case study Dominic Feltham Chief Operating Officer, RBI 25 Flightglobal: transforming a print business A small but typical illustration half way through its transformation • Consistent with RBI strategy for transforming leading brands • Transforming advertising led print in
Slide 14: Aviation: attractive sector for data services; Flightglobal: starting point
Aviation: attractive sector for data services • Large global market with 40,000+ aviation companies • Top 100 airlines $500bn annual revenues • Growing sector, traffic and world airliner fleet • High stakes decisions relying on high value data 27 Flightglobal: starting point • Two traditional print
Slide 15: Flightglobal: key milestones; multi-channel publishing today
Flightglobal: key milestones First web based Flightglobal Pro Data Key new web site news & data online data application launch service service launch 1997 2004 2006 2007 2010 2011 Acquisition Acquired aircraft fleets database Migrated newsletters online 29 Flightglobal multi-channel publishing today
Slide 16: Flightglobal audience development; Acquisition of Ascend
Flightglobal audience development Content & activity Propositions Editorial strategy g Blogs/video/news/ Users 1m+ 1 monthly thl unique i users images Features/reports Registrants Email newsletters Total 200,000 registrants Weekly magazine Subscribers Content archive Print & digital magazine: My fli
Slide 17: Comprehensive aviation data; approach to data services
Comprehensive aviation data B747F aircraft value by build year • World’s most comprehensive fleet and values database • Details of 200,000+ current and decommissioned aircraft & engines • Comprehensive commercial and technical aircraft & engine data • 500 individual database fields • Daily database
Slide 18: Flightglobal and Ascend combination; customer usage: bank
Powerful combination of Flightglobal and Ascend • Great fit between Flightglobal and Ascend • Multiple service offerings for all key customer groups • Combining powerful data assets • Global sales team and sophisticated marketing approach • Operational integration benefits 35 Example of customer usa
Slide 19: Customer usage: leasing company and airline
Example of customer usage: leasing company Situation: SVP at a US based leasing company: “Which aircraft should I purchase to maximise my return?” Key issues Flightglobal solutions • Which airlines are in the • Flightglobal Pro; news & market to lease a alerts specific aircraft type, eg B737 -800? •
Slide 20: Flightglobal: change in revenue mix
Flightglobal: change in revenue mix 1996 2007 2012E pro forma* Print advertising Offline user Online user 21% 30% 28% Print Online Print advertising advertising Online user advertising 52% Offline user 8% 56% Offline user 70% Online 13% 15% advertising 7% 30% Paid content 71% 0% Online data 56% *inc
Slide 21: BankersAccuity: fully transformed into high quality data service
Reed Business Information case study Jim Muttram Managing Director RBI Data Services 41 BankersAccuity: Fully transformed into high quality data service • Completed journey from print directory to data service • Delivering demonstrably improved outcomes • Through world-class banking information and
Slide 22: Bankers Almanac – the first 150 years; the last 16 years
Bankers Almanac – the first 150 years 1845 1995 First published Annual to bi-annual 5 volumes Print directory with 30% advertising revenue • Bank details, head office and branch information & financials • Payment routing codes, updated initially annually then bi-annually 43 Bankers Almanac: the last
Slide 23: Global payments market: large, complex, fast-growing
Global payments market: large, complex, fast-growing Global Electronic Payments 2009 CAGR 2009-2013 – 2013 19.1% Growing payments volume and complexity (bn transactions) 35 • 20bn transactions 2011 growing at 20% p.a. 30 • Bank margins under pressure driving banks to improve 25 STP (straight through
Slide 24: Accuity: a great fit; combination of data
Accuity: a great fit Similar history • Founded 1836 by Rand McNally • Book business - became division of Thomson 1990 • Sold to Investcorp in 2004; moved aggressively online • Acquired in 2011 Similar but complementary data sets • Payment efficiency – Routing data files, filters, directories and loo
Slide 25: Complementary geography; value for customers
Complementary geography BA heavily weighted towards Europe, Accuity heavily weighted towards the Americas; both identified big opportunity in rapidly growing Asia Accuity BA 80% 90% BA 10% Accuity 20% 49 Combination creates significant value for customers • Richest Richest, most comprehensive paymen
Slide 26: Customer case study: major bank; large corporate
Customer case study: major bank Situation: Senior Payments Manager, Bank Operations • Responsible for ensuring banks’ payment transactions complete successfully & comply with internal and external regulatory standards g with improving • Charged p g STP rate to reduce costs of manual repair p and val
Slide 27: Customer case study: medium bank; large bank
Customer case study: medium bank Situation: KYC Manager, European Bank • Responsible for verifying bank counterparties comply with AML regulations • Charged with reducing time taken to on-board and assess risk of bank counterparties • Ensure standard set of documentation maintained as evidence for r
Slide 28: Integration progressing well; Strong growth profile
Integration progressing well • Experience to date confirms high quality, well run business • Significant revenue synergies – Cross selling – Product improvements from combined information sets • Significant cost synergies through combining: – Data collection – Technology platforms – Office locations
Slide 29: Summary: a powerful global platform
Summary: a powerful global platform • Completed C l t d jjourney ffrom print i t directory di t to t ddata t service i • Delivering demonstrably improved outcomes • Through world-class banking information and workflow solutions • Strong organic development track record strengthened by Accuity acquis
Slide 30: Agenda
Investor Seminar – 10 May 2012 Reed Business Information Reed Exhibitions Agenda Introduction Erik Engstrom, CEO, Reed Elsevier RBI overview Mark Kelsey, CEO, Reed Business Information Flightglobal case study Dominic Feltham, COO, RBI BankersAccuity case study Jim Muttram, Managing Director, Data Se
Slide 31: The world's leading exhibition organiser
The world’s leading exhibition organiser Mike Rusbridge CEO Reed Exhibitions CEO, 61 We are the world’s leading exhibition organiser • 475 events in 40 countries serving 44 industries • Over 6 million participants annually • £707m revenue in 2011, with good growth and good margins • Broad geographic
Slide 32: We operate in a large, growing, global industry
We operate in a large, growing, global industry • Total market size c$25bn* • Growth across the economic cycle • Organising spend as a percentage of total GDP in emerging countries below that of developed markets and growing, with additional venue capacity coming on Exhibition organising markets as
Slide 33: We are the leader in a fragmented industry
We are the leader in a fragmented industry Industry revenues and market shares 2011 RX $m UBM 1,200 Messe Frankfurt 5% Messe Dusseldorf 1,000 Deutsche Messe 800 Messe Munich ITE 3% 600 GL Events 2% Informa 2% <1% 400 DMG 1% NBM 200 Emap C Comexposium i 0 Fiera Milano Other Source: AMR International
Slide 34: Broad sector coverage; Financial performance
We have a broad sector coverage Aerospace / Food / Business services, marine, 1% hospitality, 2% 3% Engineering, g g, 12% Other industry, 5% IT, 3% Travel, 8% Environment, 6% Recreation, 7% Health, 10% Design 7% Design, Entertainment,, 12% Homes, 11% Property, 7% Construction, 6% 2011 revenue analys
Slide 35: Financial performance: revenue growth profile
Financial performance: revenue growth profile Revenue growth % 2007 2008 2009 2010 2011 Total +13% +9% -21% +9% +1% Impact of acquisitions / divestments +1% -2% +1% +1% +1% Underlying +12% +11% -22% +8% 0% Impact of cycling shows 0% +7% -7% +11% -10% Underlying excluding cycling +12% +4% -15% -3% +1
Slide 36: Strategic priorities; Exhibitions – a complex many-to-many interaction
Strategic priorities • Drive organic growth through improving customer value, supported by increased customer insight, global technology platforms and sector groups • Prioritise faster growing geographies and sectors through launches and selective acquisitions 71 Exhibitions – a complex many-to-many
Slide 37: Customer insight; Leveraging technology to increase customer ROI
Customer insight: understanding our customers wants and needs • Survey exhibitors and visitors NEPCON China pre and post show • Customer feedback drives Insight: Networking is key driver for – Sales conversations Diamond (VIP) visitors – Show positioning – Improved customer segmentation High tea g
Slide 38: Leveraging global platforms to improve business performance
Leveraging global platforms to improve business performance Improved event websites and online products for Customer customers Sales & Marketing; Support sales effectiveness, marketing and data Event Operations management for exhibitors and visitors Business Standard global platform and processes fo
Slide 39: New launches: innovation reinforcing growth
New launches: innovation reinforcing growth • Launch strategy: – driven by customer / market need – faster growing sectors and geographies – build on existing expertise – refresh portfolio New launches per year Geography of 2011 launch revenues 43 37 36 North 35 America 21% 19 Europe ROW 8% 71% 2007
Slide 40: Launches in Japan; Acquisitions: building scale
Launches: building on existing expertise to exploit market opportunities Launching a cluster of alternative energy events in Japan 19.6 Revenue ($m) 16 9 16.9 12.9 9.4 8.0 3.9 4.2 2.4 2005 2006 2007 2008 2009 2010 2011 2012 1 event 1 event 1 event 2 events 2 events 3 events 5 events 5 events 79 Acqu
Slide 41: Example: building our business in China
Example: building our business in China 1980 2003 2010 2012 Local Ability to run Operational 56 shows Chinese own events hub to serve 400+ staff partnerships multiple 4 office partners locations Focus on achieving geographic leadership in selected sectors serving domestic Chinese market 2003 2005 20
Slide 42: Conclusion
Conclusion • Exhibitions is a large, large global, global growing industry • Reed Exhibitions is the clear leader, with an excellent portfolio across geographies and sectors • Very focused on insight and innovation to drive value to customers • Leveraging scale through global technology platforms an
Slide 43: Reed Exhibitions Brazil; Brazil: a large and attractive economy
Reed Exhibitions Brazil Leveraging strengths to build leading position Chet Burchett President Reed Exhibitions America President, 85 Brazil: A large and attractive economy • Solid macro economics: – 6th largest economy in the world: GDP US$ 2.5 trillion – Sustained per capita GDP growth – Growing m
Slide 44: Brazil: exhibitions market; Building Brazil's leading event organiser
Brazil: A large and attractive exhibitions market • Tradeshow culture well established within a free enterprise environment – Proven sales and marketing activity for exhibitors – Strong attendance patterns – Essential and increasingly accessible market for international customers • Clear opportuniti
Slide 45: Brazil: Now a substantial market for Reed Exhibitions
Brazil: Now a substantial market for Reed Exhibitions • Brazil now Reed Exhibition’s 4th largest country business • Producing 44 events during a two-year cycle in 10 cities, with 250 employees • Market leading events in key strategic market sectors Agriculture Agrishow Automotive & Salao du Automove
Slide 46: Leveraging Reed Exhibitions global strengths; Agrishow
Leveraging Reed Exhibitions global strengths • Customer value focus – Customer insight – RX Choice packages and pricing • Innovative products and services to drive customer ROI – EMG, e Business, Mobile, TAP, S&T • Leveraging global platforms to improve business performance – Web services, sales, ma
Slide 47: Salao do Automovel; Feicon Batimat
Salao du Automovel One of the Top 5 Auto shows in the world • Biennial event • 50,200 nsm 2012E • 500,000+ paid attendance • Essential market for global customers • Revenue 14% CAGR • Application of: – Sales disciplines – Additional products 93 Feicon Batimat Bringing Reed Exhibition brands to Brazi
Slide 48: Sales curve evolution; Locations in Brazil
Sales curve evolution: impact of sales disciplines Indexed RXAM Sales Evolution - 2008/2010/2012 180 160 140 120 100 80 60 40 20 0 2008 Sales 2010 Sales 2012 Sales 95 Locations in Brazil Flying time Sao Paulo to Recife is 3.5 hours 96 48
Slide 49: Northeast Brazil: Our New Frontier; Conclusions
Northeast Brazil: Our “New Frontier” • Brazil is a country of large regions (cf China) • Pernambuco State and Recife at the heart of the fast developing Northeast market fast-developing – Fiat building $4.4 billion Pernambuco facility – Suape developing as major shipping and logistics hub for Northe
Slide 50: Agenda
Agenda Introduction Erik Engstrom, CEO, Reed Elsevier RBI overview Mark Kelsey, CEO, Reed Business Information Flightglobal case study Dominic Feltham, COO, RBI BankersAccuity case study Jim Muttram, Managing Director, Data Services, RBI Q&A Mark Kelsey Break Reed Exhibitions overview Mike Rusbridge