Relx PLC · LSE:REL
Relx — FY2016 Earnings Presentation
31 slides from Relx's earnings presentation, February 2017
Slide 1: RELX Group Results 2016
RELX Group Results 2016 Erik Engstrom, CEO Nick Luff, CFO 2 1
Slide 2: 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 3: Erik Engstrom, CEO
Erik Engstrom, CEO G.RELX Group G.RELX Group
Slide 4: RELX Group 2016 progress; 2016 financial highlights
RELX Group 2016 progress • Positive financial performance – Slight increase in underlying revenue growth rate – Underlying revenue and operating profit growth across all four business areas • Further strategic and operational progress – Continued improvement in business profile – Organic development
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% +3% +3% +3% +3% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 * 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 • In primary research strong growth in usage and article submissions continued; 64 new journals launched +2% +2% • Good growth in databases & tools, and in electronic reference products 2015 2016 • Prin
Slide 7: Legal; Exhibitions
Legal Underlying growth Revenue • Underlying revenue growth improved slightly • Continued growth in electronic revenues partially offset by print declines +1% +2% • US and European markets stable but subdued; revenue from other international markets grew well 2015 2016 Adjusted operating profit • Ro
Slide 8: RELX Group strategic direction: unchanged; Organic development
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: Portfolio reshaping
Portfolio reshaping 2016: Strategy consistent Selective acquisitions: Focused on data sets, analytics and high growth markets • 17 acquisitions completed; total consideration £338m • Including Indicium Financial, Appriss Police Records, FlightStats, Diio, Intelligize Selective disposals of non strat
Slide 10: Nick Luff, CFO; 2016 financial highlights
Nick Luff, CFO 19 2016 financial highlights Income statement highlights • Improved underlying revenue growth +4% • Underlying adjusted operating profit growth ahead of revenue growth +6% • Adjusted operating profit margin 20 basis points higher 30.7% • Adjusted EPS growth at constant currencies +8%
Slide 11: Income statement; Earnings per share
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 tax 1,669
Slide 12: Dividends per share; Revenue
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 broadly in l
Slide 13: Adjusted operating profit; Adjusted operating margin
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 217 269
Slide 14: Currency profile; Balance sheet
Currency profile Revenue by geographic market 2016 • Revenue by currency broadly matches geographic split Rest of World 20% • Hedging smoothes volatility in sterling and euro reported results North Rest of America Europe 55% • At current exchange rates positive 18% impact on 2017 adjusted EPS growth
Slide 15: Return on invested capital; Free cash flow
Return on invested capital 2015 2016 Year to 31 December £m £m Adjusted operating profit 1,822 2,114 Tax at effective rate (424) (480) Effective tax rate 23.2% 22.7% Adjusted operating profit after tax 1,398 1,634 Average invested capital 10,995 12,538 Return on invested capital 12.7% 13.0% 29 Free
Slide 16: Uses of free cash flow; Uses of cash - priorities
Uses of free cash flow 2015 2016 Year to 31 December £m £m Free cash flow 1,186 1,414 Disposals: total consideration 73 16 Acquisitions: total consideration (171) (338) Dividends (583) (683) Share buybacks (500) (700) Other* (118) (118) Currency translation (119) (509) Movement in net debt (232) (91
Slide 17: Erik Engstrom, CEO: Summary
Erik Engstrom, CEO 33 Summary 2016 • Continued positive financial performance • Further strategic and operational progress 2017 Outlook “Key business trends in the early part of 2017 are consistent with the early part of 2016, and we are confident that, by continuing to execute on our strategy, we w
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This slide is intentionally left blank 35 This slide is intentionally left blank 36 18
Slide 19: Appendices Contents
Appendices 37 Contents Further information Financial information in euros 40 Reconciliation of operating profit 53 Income statement 41 STM growth and currency analysis 54 Revenue by business area 42 Exhibitions: cycling impact 55 Adjusted operating profit by business area 43 STM revenue analysis 56
Slide 20: Reconciliation of operating profit
Further information 39 Reconciliation of operating profit Adjusted to reported 2015 2016 Year to 31 December £m £m change Adjusted operating profit 1,822 2,114 +16% Adjustments: Amortisation of acquired intangible assets (296) (346) Acquisition related costs (35) (51) Reclassification of tax in join
Slide 21: STM growth and currency analysis; Exhibitions cycling impact
Scientific, Technical & Medical Growth and currency analysis £ Period Acquisitions/ Constant change in Other Total Underlying disposals currency hedge rates currency currency Total 2016 Revenue +2% 0% +2% -1% +11% +10% +12% Adjusted operating profit +3% -1% +2% -1% +11% +10% +12% Adjusted operating
Slide 22: STM and Risk & Business Analytics revenue analysis
Scientific, Technical & Medical 2016 revenue £2,320m Format Geography Type Advertising Print* 3% Rest of World North Transactional 20% 32% America 27% 42% Face-to-face 1% Electronic Europe Subscription 79% 26% 70% * Print book revenue 10% 43 Risk & Business Analytics 2016 revenue £1,906m Format Geog
Slide 23: Legal and Exhibitions revenue analysis
Legal 2016 revenue £1,622m Format Geography Type Print Rest of World 12% Transactional 18% 20% Face-to-face 0% Europe 20% Electronic Subscription North America 82% 80% 68% 45 Exhibitions 2016 revenue £1,047m Format Geography Type Electronic 3% Rest of World North America 37% 20% Face-to-face Europe
Slide 24: Debt profile; Exchange rates and shares outstanding
Debt profile Debt as at 31 December 2016: Gross debt: $6.0bn (£4.8bn); Net debt: $5.8bn (£4.7bn) Maturity Currency <1 Other year US >5 Euro Dollar years 1-3 3-5 years Sterling years • FY 2016 interest rate on gross debt of 3.8% (FY 2015: 3.8%) 47 Exchange rates and shares outstanding At 31 Dec At 31
Slide 25: Capital expenditure and depreciation by business area
Capital expenditure by business area 2015 2016 % of % of Year to 31 December £m revenues £m revenues Scientific, Technical & Medical 74 4% 85 4% Risk & Business Analytics 56 4% 67 4% Legal 150 10% 155 10% Exhibitions 27 3% 26 3% Total capital expenditure 307 5.1% 333 4.8% 49 Depreciation by business
Slide 26: Term debt maturities; Financial information in euros
Term debt maturities At 31 December 2016 $m 1,000 800 600 993 871 819 400 774 791 580 200 282 150 200 - 0 0 7 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 >2027 Term debt translated at 31 December 2016 exchange rates, stated at par value 51 Financial information in euros 52 26
Slide 27: Income statement; Revenue (euros)
Income statement change 2015 2016 constant change Year to 31 December €m €m change currency underlying Revenue 8,240 8,412 +2% +4% +4% Adjusted operating profit 2,514 2,579 +3% +4% +6% Adjusted operating margin 30.5% 30.7% Adjusted net interest expense (211) (220) Adjusted profit before tax 2,303 2,
Slide 28: Adjusted operating profit; Free cash flow (euros)
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 1,049 1,041 -1% +2% +3% Risk & Business Analytics 794 837 +5% +8% +9% Legal 378 379 0% +2% +12% Exhibitions 299 328
Slide 29: Uses of free cash flow; Reconciliation of operating profit (euros)
Uses of free cash flow 2015 2016 Year to 31 December €m €m Free cash flow 1,638 1,726 Disposals: total consideration 101 20 Acquisitions: total consideration (236) (412) Dividends (805) (833) Share buybacks (690) (854) Other* (164) (143) Currency translation (409) 141 Movement in net debt (565) (355
Slide 30: STM growth and currency analysis; Balance sheet (euros)
Scientific, Technical & Medical Growth and currency analysis € Period Acquisitions/ Constant change in Other Total Underlying disposals currency hedge rates currency currency Total FY 2016 Revenue +2% +0% +2% -1% -2% -3% -1% Adjusted operating profit +3% -1% +2% -1% -2% -3% -1% Adjusted operating ma
Slide 31: Capital expenditure and depreciation by business area (euros)
Capital expenditure by business area 2015 2016 % of % of Year to 31 December €m revenues €m revenues Scientific, Technical & Medical 102 4% 103 4% Risk & Business Analytics 78 4% 82 4% Legal 206 10% 189 10% Exhibitions 38 3% 32 3% Total capital expenditure 424 5.1% 406 4.8% 61 Depreciation by busine