Relx PLC · LSE:REL
Relx — Investor Presentation (August 2017)
62 slides from Relx's investor presentation, August 2017
Slide 1: The global professional information and analytics company
The global professional information and analytics company August 2017
Slide 2: RELX Group's Investor Relations contacts
RELX Group’s Investor Relations contacts Colin Tennant – Head of Investor Relations James Statham – Director, Investor Relations colin.tennant@relx.com james.statham@relx.com +44 (0)20 7166 5751 +44 (0)20 7166 5688 Kate Whitaker – Investor Relations Lucie Kirkpatrick – Investor Relations Manager kat
Slide 3: Forward-looking statements
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 risks and uncertainties
Slide 4: RELX Group
G_RELX Group
Slide 5: RELX Group
RELX Group We help scientists make new discoveries, lawyers win cases, doctors save lives, and insurance companies offer lower prices. We save taxpayers and consumers money by preventing fraud and help executives forge commercial relationships with their clients. 5
Slide 6: RELX Group
RELX Group A global provider of information & analytics for professional and business customers across industries • 2016 revenues of £6.9bn • 2016 adjusted operating profit of £2.1bn • Strong cash flow and balance sheet: net debt / EBITDA**: 2.2x (1.8x unadjusted) • 30,000 employees worldwide • List
Slide 7: 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 8: Business profile: higher growth
Business profile: higher growth • Print to electronic largely 15% 13% 22% 21% 19% 18% complete 27% 25% 33% 37% 15% 15% • Face-to-face continuing to grow 52% 51% 15% 16% 56% 60% 58% 15% 15% • Primary focus: 64% 64% 14% 14% 15% 17% Transition from electronic reference to electronic decision tools to d
Slide 9: Organic development
Organic development 2016 underlying revenue growth trends Format Geography Type 0% -8% +5% Print Rest of Advertising World 2% Face- 13% To-Face 20% 15% North Transactional Subscription Electronic Europe America 46% 52% 72% 25% 55% +5% +3% +6% +4% +4% +4% • Format trends continuing • Growth rates con
Slide 10: Financial performance
Financial performance Revenue Adjusted operating profit Earnings per share Underlying growth* Underlying growth Constant currency growth +10% +8% +8% +8% +6% +6% +7% +5% +5% +5% +4% +3% +3% +3% +3% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 * excluding exhibition cycl
Slide 11: Uses of cash - priorities
Uses of cash - priorities 2012 2013 2014 2015 2016 1. Organic development 333 307 333 Average: 308 270 Capex (£m) c5% of sales 1 2 3 4 5 2. Portfolio reshaping 385 338 Average: 313 Acquisition consideration (£m) 230 171 c£300m 1 2 3 4 5 683 521 549 565 583 3. Dividends Average growth*: Total payout
Slide 12: H1 2017 financial highlights
H1 2017 financial highlights • Underlying revenue growth +4% • Underlying adjusted operating profit growth +5% • Adjusted EPS growth at constant currencies +8% • Cash flow conversion 90% • Net debt / EBITDA 2.4x* • Interim dividend PLC +14%; NV +8% • Share buyback £500m in H1 2017; £200m for FY 2017
Slide 13: 2017 Outlook
2017 Outlook • “As we enter the second half of 2017, key business trends are unchanged, and we are confident that, by continuing to execute on our strategy, we will deliver another year of underlying revenue, profit, and earnings growth in 2017.” 13
Slide 14: Business areas
Business areas G_RELX Group 14
Slide 15: FY 2016: Underlying revenue & adjusted operating profit
FY 2016: Underlying revenue & adjusted operating profit Underlying revenue growth Underlying adjusted operating profit growth 2016 2016 +5% +7% Exhibitions +2% Exhibitions Scientific, +12% +2% Technical & Scientific, +3% Legal Medical Technical & Legal Medical Risk & Risk & Business Analytics Busine
Slide 16: Scientific, Technical & Medical
Scientific, Technical & Medical • Provides information and analytics that help institutions and professionals progress science, advance healthcare and improve performance 2016 revenue £2,320m Format Geography Type Advertising Print 3% 20% Rest of Transactional World 27% North Face-to-face 32% Americ
Slide 17: Scientific, Technical & Medical
Scientific, Technical & Medical Underlying growth Revenue • Key business trends remained positive • Primary research value enhancement: content sets; analytics; technology platforms +2% +2% • Good growth in databases & tools; electronic reference products H1 2016 H1 2017 • Print book declines in lin
Slide 18: Risk & Business Analytics
Risk & Business Analytics • Provides customers with solutions and decision tools that combine public and industry- specific content with advanced technology and analytics to assist them in evaluating and predicting risk and enhancing operational efficiency 2016 revenue £1,906m Format Geography Type
Slide 19: Risk & Business Analytics
Risk & Business Analytics Underlying growth Revenue • Underlying revenue growth strong across all key segments +8% +8% • Insurance growth driven by analytics, extension of datasets, and expansion in adjacent verticals. International initiatives progressing well H1 2016 H1 2017 • Growth in Business S
Slide 20: Legal
Legal • A leading global provider of legal, regulatory and business information and analytics that help professional customers make more informed decisions, increase productivity and serve their clients better 2016 revenue £1,622m Format Geography Type Print Rest of World 18% 12% Transactional 20% F
Slide 21: Legal
Legal Underlying growth Revenue • Underlying revenue growth in line with prior year • Continued growth in electronic revenues partially offset by print declines +2% +2% • Roll out of new platform releases continued; broader datasets and expansion of early stage legal analytics H1 2016 H1 2017 Adjust
Slide 22: Exhibitions
Exhibitions • The world’s leading events business, enhancing the power of face-to-face through data and digital tools at over 500 events, in more than 30 countries, attracting more than 7m participants 2016 revenue £1,047m Format Geography Type Electronic North 3% America Transactional Rest of World
Slide 23: Exhibitions
Exhibitions Underlying growth Revenue • Strong underlying revenue growth in line with H1 of prior year +6% +6% • Good growth in Europe; moderate in the US • Strong growth in Japan and China; Brazil remained H1 2016 H1 2017 weak; most other markets grew strongly Adjusted operating profit • Launched 2
Slide 24: RELX Group
G_RELX Group 24
Slide 25: Other information
Other information G_RELX Group 25
Slide 26: RELX Group Corporate structure
RELX Group Corporate structure RELX PLC RELX NV 52.9% 47.1% RELX Group plc 26
Slide 27: Corporate Responsibility: aligned with strategy
Corporate Responsibility: aligned with strategy Unique contributions Other material areas • Advance of science and health • Governance • Promotion of the Rule of Law and • People access to justice • Customers • Protection of society • Community • Universal, sustainable access to • Supply chain infor
Slide 28: FY 2016: Income statement
FY 2016: Income statement change 2015 2016 constant change Year to 31 December £m £m change currency underlying Revenue 5,971 6,895 +15% +4% +4% Adjusted operating profit 1,822 2,114 +16% +4% +6% Adjusted operating margin 30.5% 30.7% Adjusted net interest expense (153) (180) Adjusted profit before t
Slide 29: FY 2016: Revenue
FY 2016: Revenue Underlying growth in all business areas change 2015 2016 constant change Year to 31 December £m £m change currency underlying Scientific, Technical & Medical 2,070 2,320 +12% +2% +2% Risk & Business Analytics 1,601 1,906 +19% +8% +9% Legal 1,443 1,622 +12% +2% +2% Exhibitions 857 1,
Slide 30: FY 2016: Adjusted operating profit
FY 2016: Adjusted operating profit Underlying growth in all business areas change 2015 2016 constant change Year to 31 December £m £m change currency underlying Scientific, Technical & Medical 760 853 +12% +2% +3% Risk & Business Analytics 575 686 +19% +8% +9% Legal 274 311 +14% +2% +12% Exhibitions
Slide 31: FY 2016: Adjusted operating margin
FY 2016: Adjusted operating margin 2015 2016 Year to 31 December % % Scientific, Technical & Medical 36.7% 36.8% Risk & Business Analytics 35.9% 36.0% Legal 19.0% 19.2% Exhibitions 25.3% 25.7% RELX Group 30.5% 30.7% 31
Slide 32: FY 2016: Earnings per share
FY 2016: Earnings per share Year to 31 December 2015 2016 Growth Adjusted net profit (£m) 1,275 1,488 +17% Average shares outstanding (m) 2,109 2,062 Adjusted earnings per share Sterling 60.5p 72.2p +19% Euros €0.835 €0.880 +5% Constant currency +8% Reported net profit (£m) 1,008 1,161 Average share
Slide 33: FY 2016: Dividends per share
FY 2016: Dividends per share Exchange PLC rate NV Interim dividend 2016 10.25p x€1.19 €0.122 Growth +39% +6% Final dividend 2016 25.70p x€1.17 €0.301 Growth +15% +5% Total dividend 2016 35.95p €0.423 Growth +21% +5% Dividend cover 2.0x 2.1x • Dividend policy unchanged. Continue to grow dividends bro
Slide 34: H1 2017 Income statement
H1 2017 Income statement change 2016 2017 constant change 6 months to 30 June £m £m change currency underlying Revenue 3,257 3,718 +14% +3% +4% Adjusted operating profit 1,003 1,154 +15% +4% +5% Adjusted operating margin 30.8% 31.0% Adjusted net interest expense (83) (87) Adjusted profit before tax
Slide 35: H1 2017 Earnings per share
H1 2017 Earnings per share 6 months to 30 June 2016 2017 Growth Adjusted net profit (£m) 705 823 +17% Average shares outstanding (m) 2,076 2,030 Adjusted earnings per share Sterling 34.0p 40.5p +19% Euros €0.435 €0.470 +8% Constant currency +8% Reported net profit (£m) 558 691 Average shares outstan
Slide 36: H1 2017 Dividends per share
H1 2017 Dividends per share Exchange PLC rate NV Interim dividend 2017 11.70p x €1.13/£ €0.132 Growth +14% +8% • Full year dividend policy unchanged. Continue to grow dividends broadly in line with adjusted earnings per share, subject to exchange rate considerations, while maintaining cover of at le
Slide 37: Currency profile
Currency profile Revenue by geographic market H1 2017 • Revenue by currency broadly matches Rest of geographic split World 21% • Hedging smooths volatility in sterling and euro reported results North Rest of America Europe 56% • At current exchange rates impact on FY 16% 2017 adjusted EPS growth pos
Slide 38: Debt profile
Debt profile Debt as at 30 June 2017: Gross debt: $6.7bn (£5.2bn); Net debt: $6.5bn (£5.0bn) Maturity Currency <1 Other year 1-3 US >5 years Dollar Euro years 3-5 years Sterling • HY 2017 interest rate on gross debt of 3.4% (FY 2016: 3.8%) 38
Slide 39: Exchange rates and shares outstanding
Exchange rates and shares outstanding At 31 Dec At 30 June Average Average Average 2016 2017 H1 2016 2016 H1 2017 Exchange rates £:$ 1.23 1.30 1.43 1.36 1.26 £:€ 1.17 1.14 1.28 1.22 1.16 Shares outstanding Total: 2,043m 2,015m 2,076m 2,062m 2,030m 39
Slide 40: Extract from Elsevier Research seminar May 20, 2015
Extract from Elsevier Research seminar May 20, 2015 40
Slide 41: Elsevier revenue breakdown
| 41 Elsevier revenue breakdown 2014 Revenue: £2,048m Pharma promotion & other advertising Print books Electronic reference Primary Research & solutions 41
Slide 42: Research is an attractive long term growth market
| 42 Research is an attractive long term growth market • Growth in GDP* • Growth in researchers Global GDP Number of researchers (millions) $ Trillions Global number of researchers: 7.4 million in 2013 80 8 60 6 40 4 Annual growth: 3% (real) Annual growth: +3-4% 20 2 0 0 2000 2002 2004 2006 2008 201
Slide 43: Consistent article volume growth
| 43 Consistent article volume growth Elsevier Published Articles (‘000) 380 +5% CAGR 365 336 321 284 295 297 267 258 2006 2007 2008 2009 2010 2011 2012 2013 2014 Subscription Author pays 43
Slide 44: Extract from Technology teach-in November 19, 2015
Extract from Technology teach-in November 19, 2015 44
Slide 45: Electronic reference to electronic decision tools
Electronic reference to electronic decision tools Improved outcomes, demonstrable and measurable customer value Electronic reference Electronic decision tools Reference: search and Decision support tools: analysis of Embedded machine to retrieve critical content, datasets, facts and machine decision
Slide 46: Our four key capabilities to deliver electronic decision tools
Our four key capabilities to deliver electronic decision tools 1. Deep customer understanding 2. Leading content and data sets 3. Sophisticated analytics 4. Powerful technology in global platforms 46
Slide 47: 1. Deep customer understanding
1. Deep customer understanding Scientists and Risk professionals Lawyers Exhibitors doctors • c10m researchers • 100% of US P&C • Top 250 Global Law • >500 events • 1.8m authors insurers firms • >7m event • 17,000 editors • Top 50 banks • AmLaw 200 participants • 700,000 reviewers • Transactions per
Slide 48: 2. Leading content and data sets
2. Leading content and data sets >1m article 16% of global >4bn US motor >1bn miles of UK vehicle registrations submissions per year research driving behaviour >9bn unique US >13m articles on personal identifiers c2,500 journals >100m US Science Direct bankruptcy records US drugs database Risk & >45
Slide 49: 3. Sophisticated analytics
| 49 3. Sophisticated analytics • Entity resolution, linking and clustering • Scoring models and attributes • Descriptive, diagnostic, predictive and prescriptive analytics • Visualisation to represent clusters, links and insights 49
Slide 50: 4. Our technology capabilities
4. Our technology capabilities • Several technology hubs across North America, Europe and Asia • c50% software engineers $1.3bn technology spend $500m average annual capex c20% of operating cost base >95% spent on technology 50
Slide 51: Risk & Business Information revenue by segment
Risk & Business Information revenue by segment Proforma 2015 continuing businesses Other magazines Our customers and services • c100% of US P&C insurance carriers Major Data Services • All top 100 global banks Insurance Solutions • c90% of Fortune 500 Government & Health Care • All 50 US states Busi
Slide 52: Risk & Business Information underlying revenue growth contribution
| 52 Risk & Business Information underlying revenue growth contribution 7% 6% 6% Base market 5% growth contribution 3% Contribution from recent product introductions* 2011 2012 2013 2014 H1 2015 Adjusted operating 29% 32% 35% 35% 35% margin * Less than 5 years old 52
Slide 53: Insurance Solutions growth driven by innovation
| 53 Insurance Solutions growth has been driven by innovation c$900m Telematics Claims Compass Claims Medical Hist. Citizen Reporting Workers Comp Policy Data UK No Claims Database Wind/Hail Peril Models Life Persistency Models Claims Datafill Claims Datafill UK Public UK Public Records Records Driv
Slide 54: Extract from Legal seminar November 10, 2016
| 54 Extract from Legal seminar November 10, 2016 54 54
Slide 55: Strong global footprint
Strong global footprint North America: • US (#2) • Canada (#1 legal online) Europe: • United Kingdom (#1 legal online) • France (#1 legal online) Rest of World: • Australia (#1 legal online) • South Africa (#1) • New Zealand (#1) • China and Hong Kong (#1 legal online) • India (#1) • Malaysia (#1) •
Slide 56: Global legal information market ~$18.5bn in 2015
Global legal information market ~$18.5bn in 2015 Latin Middle East America & Africa Asia Pacific 3% 12% 1% North 29% 55% America Europe Total spend on legal information solutions 2-3% of global legal services industry Source: LexisNexis analysis 56
Slide 57: Progressively introduce analytics and decision tools
Progressively introduce analytics and decision tools Electronic reference Electronic decision tools Pre-2012 2012-2015 2016 • Search and retrieve • Analyse content, datasets, • Advanced predictive critical information facts and patterns to analytics on content support decisions • Early predictive an
Slide 58: New Lexis: How the technology platform works
New Lexis: How the technology platform works Primary research Public Entity resolution records Authored content News Link analysis articles Company information Knowledge Graph Big Clustering analysis Data Court dockets Linking Expert witness profiles Enrichment Complex analysis Source Content Big Da
Slide 59: Decision tools and analytics driving electronic revenue growth
Decision tools and analytics driving electronic revenue growth Global revenue and recent growth profile by solution type 2011 revenue 2016 revenue Low-single digit growth Single Mid to high-single digit decline digit decline Print Information Electronic reference & decision tools Print Electronic re
Slide 60: Gradually improving margins
Gradually improving margins • Reduced an average of 4 layers across organization over a 5 year period Cost efficiency focus • Rationalised HR, Finance and Legal functions • Optimising geographic staffing footprint to meet 24/7 customer needs • Leveraging RELX services: data centres, procurement, rea
Slide 61: Delivering consistent and improving financial performance
Delivering consistent and improving financial performance* Underlying revenue growth Underlying adjusted operating profit growth +12% +7% +6% +5% +4% +2% +1% +1% +1% +1% +1% -2% 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Capital expenditure as a % of revenue Adjusted operating margi
Slide 62: Lexis Advance migration
Lexis Advance migration Percentage of US customer organisations with access to different products 100% 6% Lexis.com only 90% 19% Lexis Advance plus 80% Lexis.com 70% 60% 50% 40% 75% Lexis Advance only 30% 20% 10% 0% Jan Jan Jan Jan Sep 2013 2014 2015 2016 2016 62