Relx PLC · LSE:REL
Relx — FY2018 Earnings Presentation
25 slides from Relx's earnings presentation, February 2019
Slide 1: 2018 Results
2018 Results Erik Engstrom, CEO Nick Luff, CFO This slide is intentionally left blank 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 risks and uncer
Slide 3: Erik Engstrom, CEO
Erik Engstrom, CEO 5 This slide is intentionally left blank 6 3
Slide 4: RELX 2018 progress; 2018 financial highlights
RELX 2018 progress • Positive financial performance • Further strategic and operational progress • Simplification of corporate structure 7 2018 financial highlights • Underlying revenue growth +4% • Underlying adjusted operating profit growth +6% • Adjusted EPS growth at constant currencies +7% 8 4
Slide 5: Financial performance; underlying revenue and adjusted operating profit
Financial performance Revenue Adjusted operating profit Adjusted earnings per share Underlying growth Underlying growth Constant currency growth +10% +8% +8% +7% +7% +5% +5% +6% +6% +6% +3% +3% +4% +4% +4% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Return on invested
Slide 6: Scientific, Technical & Medical; Risk & Business Analytics
Scientific, Technical & Medical Underlying growth • Underlying revenue growth in line with prior year; Revenue underlying cost growth marginally below revenue growth • Good growth in electronic revenues partially offset by +2% +2% print declines • Primary research customer value enhancement: content
Slide 7: Legal; Exhibitions
Legal Underlying growth Revenue • Underlying revenue growth in line with prior year • Operating profit margin increase reflects ongoing process improvement, system decommissioning, +2% +2% partially offset by portfolio effects • Continued growth in electronic revenues partially offset 2017 2018 by p
Slide 8: RELX strategic direction: unchanged; Portfolio reshaping
RELX 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 resources acr
Slide 9: RELX revenue by category; evolution of revenue by type
RELX revenue by category 2018 Format Geography Type Print Advertising Rest of 10% 1% world 21% Face- to-face 16% Europe North Electronic America Transactional Subscription 24% 74% 55% 47% 52% 17 Evolution of RELX revenue by type 1% 4% Advertising, marketing & screening 18% 16% Print books 11% 9% Tra
Slide 10: Nick Luff, CFO: 2018 financial highlights
Nick Luff, CFO 19 2018 financial highlights Income statement highlights • Underlying revenue growth +4% • Underlying adjusted operating profit growth ahead of revenue growth +6% • Adjusted operating profit margin 20 basis points higher 31.3% • Adjusted EPS growth at constant currencies +7% Cash flow
Slide 11: Income statement; Revenue
Income statement change 2017 2018 constant change Year to 31 December £m £m change currency underlying Revenue 7,341 7,492 +2% +4% +4% Adjusted operating profit 2,284 2,346 +3% +4% +6% Adjusted operating margin 31.1% 31.3% Adjusted net interest expense (183) (201) Effective interest rate 3.2% 3.2% A
Slide 12: Adjusted operating profit; adjusted operating margin
Adjusted operating profit Underlying growth in all business areas change 2017 2018 constant change Year to 31 December £m £m change currency underlying Scientific, Technical & Medical 914 942 +3% +2% +2% Risk & Business Analytics 760 776 +2% +6% +8% Legal 328 320 -2% 0% +10% Exhibitions 287 313 +9%
Slide 13: Currency profile; Return on invested capital
Currency profile Revenue by geographic market 2018 • Revenue by currency broadly matches geographic split Rest of world 21% • Hedging smoothes volatility in sterling reported results UK North 7% America • At current exchange rates impact on FY 55% Rest of 2019 sterling adjusted EPS growth Europe sli
Slide 14: Free cash flow; Uses of free cash flow
Free cash flow 2017 2018 Year to 31 December £m £m Adjusted operating profit 2,284 2,346 Depreciation* 343 364 Capital expenditure (354) (362) Repayment of lease principal (net) (76) (81) Working capital and other items - (24) Adjusted cash flow 2,197 2,243 Cash flow conversion rate 96% 96% Cash int
Slide 15: Uses of cash - priorities
Uses of cash - priorities 2014 2015 2016 2017 2018 1. Organic development Average: 333 354 362 5% of sales Capex (£m) 270 307 1 2 3 4 5 978 2. Portfolio reshaping Average: Acquisition consideration (£m) 385 338 c£400m 171 123 1 2 3 4 5 762 796 3. Dividends 583 683 Average dividend cover*: 565 Total
Slide 16: Erik Engstrom, CEO: Summary and 2019 outlook
Erik Engstrom, CEO 31 Summary 2018 • Positive financial performance • Further strategic and operational progress • Simplification of corporate structure 2019 Outlook Key business trends in the early part of 2019 are consistent with 2018, and we are confident that, by continuing to execute on our str
Slide 17: Appendices; RELX revenue by segment
Appendices 34 RELX revenue by segment 35-38 Revenue split by business area 39 Reconciliation of operating profit 40 Balance sheet 41 STM: growth and currency analysis 42 R&BA: underlying revenue growth 43 Exhibitions: cycling impact 44 Exchange rates and shares outstanding 45 Capex by business area
Slide 18: Scientific, Technical & Medical; Risk & Business Analytics
Scientific, Technical & Medical 2018 revenue £2,538m Format Geography Type Advertising Print 2% Rest of world North Transactional 17% 32% America 24% 44% Face-to-face 0% Electronic Europe Subscription 83% 24% 74% 35 Risk & Business Analytics 2018 revenue £2,117m Format Geography Type Print Rest of w
Slide 19: Legal; Exhibitions
Legal 2018 revenue £1,618m Format Geography Type Rest of world Advertising Print 0% 12% Transactional 17% 23% Face-to-face 0% Europe 21% Electronic Subscription North America 83% 77% 67% 37 Exhibitions 2018 revenue £1,219m Format Geography Source Electronic Admissions 4% Rest of world North America
Slide 20: Reconciliation of operating profit; Balance sheet
Reconciliation of operating profit Adjusted to reported 2017 2018 Year to 31 December £m £m change Adjusted operating profit 2,284 2,346 +3% Adjustments: Amortisation of acquired intangible assets (314) (288) Acquisition related costs (56) (84) Reclassification of tax in joint ventures (10) (11) Rec
Slide 21: STM growth and currency analysis; R&BA underlying revenue growth
Scientific, Technical & Medical Growth and currency analysis Period Portfolio Constant change in Other Total Underlying changes currency hedge rates currency currency Total 2018 Revenue +2% +2% +4% +1% -2% -1% +3% Adjusted operating profit +2% 0% +2% +3% -2% +1% +3% Adjusted operating margin 0.0% -0
Slide 22: Exhibitions: cycling impact; exchange rates and shares outstanding
Exhibitions: cycling impact Revenue growth 2014 2015 2016 2017 2018 Total at constant currencies +11% +1% +9% +1% +12% Impact of portfolio changes +2% +1% +1% +1% +1% Underlying with cycling +9% 0% +8% +0% +11% Impact of cycling shows +2% -5% +3% -6% +5% Underlying +7% +5% +5% +6% +6% 43 Exchange ra
Slide 23: Capital expenditure and depreciation by business area
Capital expenditure by business area 2017 2018 % of % of Year to 31 December £m revenues £m revenues Scientific, Technical & Medical 96 4% 100 4% Risk & Business Analytics 83 4% 87 4% Legal 152 9% 145 9% Exhibitions 23 2% 30 2% Total capital expenditure 354 4.8% 362 4.8% 45 Depreciation by business
Slide 24: Restatement due to changes to accounting standards
Restatement due to changes to accounting standards FY 2017 2017 Impact of 2017 as reported 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 7,355 (14) 7,341 Adjust
Slide 25: Restatement due to changes to accounting standards: balance sheet
Restatement due to changes to accounting standards Balance sheet 2017 as Impact 2017 as reported of IFRS 9/ restated IFRS 15/ IFRS 16/ Net debt (£m) (4,732) (310) (5,042) Net debt / EBITDA ─ Excluding leases and pensions 1.9x - 1.9x ─ Including leases and pensions 2.2x - 2.2x Return on invested capi