Relx PLC · LSE:REL
Relx — FY2020 Earnings Presentation
40 slides from Relx's earnings presentation, Feb 11, 2021
Slide 1: Results 2020
Results 2020 Erik Engstrom, CEO, and Nick Luff, CFO 11 February 2021
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 @RELX
Slide 4: RELX 2020 progress
RELX 2020 progress • Financial performance – Three largest business areas (95% of 2020 revenue) delivered another year of underlying revenue and adjusted operating profit growth – Exhibitions (5% of 2020 revenue) impacted significantly by Covid-19 • Operational and strategic progress – Continued inv
Slide 5: RELX 2020 performance
RELX 2020 performance 2019 2020 Year to 31 December £m £m change Three largest business areas: Revenue 6,605 6,748 +2% Adjusted operating profit 2,165 2,245 +4% Margin 32.8% 33.3% Exhibitions: Revenue 1,269 362 -71% Adjusted operating profit 331 (164) -150% Margin 26.1% nm nm – not meaningful 5
Slide 6: RELX revenue by format
RELX revenue by format 2000-2020: 2020: 11% 10% 9% 8% • Print: -12% underlying decline 15% 13% 25% 22% 21% 19% 18% 5% – Print to electronic structural shift 27% 37% 33% 15% 16% 16% accelerated 15% 51% 15% – Covid-19 related disruption 52% 15% 16% 58% 56% 15% 60% 15% 64% 64% 14% 14% • Face-to-face: -
Slide 7: Revenue by business area
Revenue by business area Revenue 2020: £7,110m Underlying growth -69% +1% Exhibitions +1% Legal Scientific, Technical & Medical Risk +3% 7
Slide 8: Scientific, Technical & Medical
Scientific, Technical & Medical £m Revenue +1% • Electronic underlying revenue growth +3%; print decline double rate of recent 3,000 +2% years 2,000 1,000 • Primary research: 115 new journals launched of which 100+ dedicated author 0 pays open access; article submissions up over 25% overall, doubled
Slide 9: Risk
Risk £m Revenue • Strong fundamentals driving good underlying growth 3,000 +7% +3% 2,000 • Transactional revenue growth improvement after March/April slowdown. Subscription revenue resilient; some delays to new business closes and 1,000 customer implementation 0 2019 2020 • Business Services: online
Slide 10: Legal
Legal £m Revenue • Electronic underlying revenue growth +3%, driven by legal analytics; 3,000 print declines steeper than recent years 2,000 +2% +1% • Underlying profit growth ahead of revenue growth, reflecting continued 1,000 efficiency gains; partially offset by portfolio changes 0 2019 2020 • Re
Slide 11: Exhibitions
Exhibitions £m Revenue 3,000 • Significantly impacted by Covid-19; no large face-to-face events outside Asia 2,000 +6% since March 1,000 -69% 0 • Accelerated digital innovation and experimentation; all physical events include 2019 2020 digital components; 70 fully virtual events hosted across range
Slide 12: Strategic direction: Portfolio reshaping
Strategic direction: Portfolio reshaping Selective acquisitions: Targeted assets that support our organic growth strategies • In 2020 completed 11 acquisitions; total consideration £878m; including Emailage and ID Analytics in Risk, SciBite and Shadow Health in STM Selective disposals of non-strateg
Slide 13: Nick Luff, CFO
Nick Luff, CFO @RELX 13
Slide 14: 2020 financial highlights
2020 financial highlights Income statement highlights • Underlying revenue growth -9% • Underlying adjusted operating profit growth at constant currency -18% • Adjusted operating profit margin 29.2% • Adjusted EPS change at constant currencies -15% Cash flow and balance sheet highlights • Adjusted c
Slide 15: Revenue
Revenue change 2019 2020 constant change Year to 31 December £m £m change currency underlying Scientific, Technical & Medical 2,637 2,692 +2% +1% +1% Risk 2,316 2,417 +4% +5% +3% Legal 1,652 1,639 -1% 0% +1% Exhibitions 1,269 362 -71% -72% -69% RELX 7,874 7,110 -10% -10% -9% 15
Slide 16: Adjusted operating profit
Adjusted operating profit change 2019 2020 constant change Year to 31 December £m £m change currency underlying Scientific, Technical & Medical 982 1,021 +4% 0% +1% Risk 853 894 +5% +5% +4% Legal 330 330 0% +1% +7% Exhibitions 331 (164) -150% -150% -149% Unallocated items (5) (5) RELX 2,491 2,076 -1
Slide 17: Adjusted operating margin
Adjusted operating margin Year to 31 December 2019 2020 Scientific, Technical & Medical 37.2% 37.9% Risk 36.8% 37.0% Legal 20.0% 20.1% Exhibitions 26.1% nm RELX 31.6% 29.2% nm – not meaningful 17
Slide 18: Adjusted income statement
Adjusted income statement change 2019 2020 constant change Year to 31 December £m £m change currency underlying Revenue 7,874 7,110 -10% -10% -9% Operating profit 2,491 2,076 -17% -18% -18% Operating margin 31.6% 29.2% Net interest expense (291) (160) Effective interest rate 4.5%* 2.1% Profit before
Slide 19: Reported profit
Reported profit Reconciliation of adjusted to reported profit before tax 2019 2020 Year to 31 December £m £m change Adjusted profit before tax 2,200 1,916 -13% Adjustments: Amortisation of acquired intangible assets (295) (376) Exhibitions exceptional costs - (183) Acquisition-related items (84) 12
Slide 20: Free cash flow
Free cash flow 2019 2020 Year to 31 December £m £m Adjusted operating profit 2,491 2,076 Depreciation 389 429 Capital expenditure (380) (362) Repayment of lease principal (net) (85) (87) Working capital and other items (13) (47) Adjusted cash flow 2,402 2,009 Cash flow conversion rate 96% 97% Cash i
Slide 21: Uses of free cash flow
Uses of free cash flow 2019 2020 Year to 31 December £m £m Free cash flow 1,704 1,223 Disposals: total consideration 63 15 Acquisitions: total consideration (416) (878) Dividends (842) (880) Share buybacks (600) (150) Other* (194) (3) Currency translation 271 (34) Movement in net debt (14) (707) Net
Slide 22: Uses of cash - priorities
Uses of cash - priorities 2016 2017 2018 2019 2020 1. Organic development Average: 333 354 362 380 362 Capex (£m) 5% of sales 1 2 3 4 5 978 878 2. Portfolio reshaping 416 Average: 338 c£500m Acquisition consideration (£m) 123 1 2 3 4 5 762 796 842 880 683 3. Dividends Average dividend cover: Total p
Slide 23: Exhibitions 2020 revenue and cost
Exhibitions 2020 revenue and cost Year to 31 December 2019 2020* £m £m Revenue 1,269 362 Cost (986) (540) Wholly owned profit contribution 283 (178) JV contribution 48 14 Adjusted operating profit 331 (164) In a typical year costs are split approximately 60/40 between direct and indirect * excluding
Slide 24: Exhibitions revenue phasing
Exhibitions revenue phasing 2020 Revenue 2020: • Q1: trading largely as normal across geographies until early-March • Q2: only China open (in June) • Q3: events held in China and Japan • Q4: events in China, Japan and some other countries in Asia 2021 current schedule: • Q1: events in Japan (with so
Slide 25: Corporate responsibility performance
Corporate responsibility performance People Socially responsible suppliers (SRS) External recognition Percentage of female managers Percentage signing supplier code of conduct 91% 91% 42% 43% • MSCI: AAA • Sustainalytics ESG reports: 2nd in industry sector 21st out of 13,000 companies 2019 2020 2019
Slide 26: Erik Engstrom, CEO
Erik Engstrom, CEO @RELX 26
Slide 27: Summary
Summary 2020 • Three largest business areas (95% of 2020 revenue) delivered another year of underlying revenue and adjusted operating profit growth • Continued investment behind strategic priorities 2021 outlook • We expect each of our three largest business areas, STM, Risk and Legal, to deliver an
Slide 28: Appendices
Appendices 29 RELX revenue by segment 30 STM: revenue split 31 Risk: revenue split 32 Legal: revenue split 33 Exhibitions: revenue split 34 Balance sheet 35 Return on invested capital 36 Currency profile 37 Exchange rates and shares outstanding 38 STM: growth and currency analysis 39 Risk: underlyin
Slide 29: RELX revenue by segment
RELX revenue by segment Exhibitions Scientific, Technical & Medical News & business Exhibitions Primary research: Legal print Electronic reference & decision tools: − Academic subscription − International − Corporate & transactional Legal − N America Databases & tools and Government electronic refer
Slide 30: Scientific, Technical & Medical
Scientific, Technical & Medical 2020 revenue £2,692m Format Geography Type Print Advertising 14% 1% Rest of world Transactional 31% North 23% America 46% Electronic Europe Subscription 86% 23% 76% 30
Slide 31: Risk
Risk 2020 revenue £2,417m Format Geography Type Face-to-face Rest of world 1% 7% Europe Subscription 14% 39% Electronic North America Transactional 99% 79% 61% 31
Slide 32: Legal
Legal 2020 revenue £1,639m Format Geography Type Print Rest of world 13% 11% Transactional 21% Europe 21% Electronic Subscription North America 87% 79% 68% 32
Slide 33: Exhibitions
Exhibitions 2020 revenue £362m Format Geography Source Electronic North America Admission fees 12% 12% and other 32% Europe 23% Rest of world Face-to-face 65% 88% Exhibitor fees 68% 33
Slide 34: Balance sheet
Balance sheet 31 Dec 31 Dec 2019 2020 £m £m Goodwill & acquired intangible assets 9,012 9,405 Internally developed intangible assets 1,264 1,244 Property, plant & equipment and investments 431 524 Right-of-use assets 264 216 Net pension obligations (520) (624) Working capital (1,214) (1,229) Net cap
Slide 35: Return on invested capital
Return on invested capital 2019 2020 Year to 31 December £m £m Adjusted operating profit 2,491 2,076 Tax at effective rate (438) (405) Effective tax rate 17.6% 19.5% Adjusted operating profit after tax 2,053 1,671 Average invested capital (at average FX rates) 15,050 15,435 Return on invested capita
Slide 36: Currency profile
Currency profile Revenue by geographic market 2020 Rest of world 20% UK 6% North Rest of America Europe 61% 13% • Revenue by currency broadly matches geographic split 36
Slide 37: Exchange rates and shares outstanding
Exchange rates and shares outstanding At 31 Dec 2019 At 31 Dec 2020 Average 2019 Average 2020 Exchange rates £:$ 1.33 1.37 1.28 1.28 £:€ 1.18 1.12 1.14 1.12 Shares outstanding Total: 1,932m 1,926m 1,944m 1,926m 37
Slide 38: Scientific, Technical & Medical: Growth and currency analysis
Scientific, Technical & Medical Growth and currency analysis Period Portfolio Constant change in Other Underlying changes currency hedge rates currency Total currency Total FY 2020 Revenue +1% 0% +1% +1% 0% +1% +2% Adjusted operating profit +1% -1% 0% +2% +2% +4% +4% Adjusted operating margin 0.0% -
Slide 39: Risk underlying revenue growth
Risk underlying revenue growth +9% +8% +8% +7% +7% +6% +6% Base market growth +5% contribution* +3% +3% Contribution from recent product introductions** 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 * Products more than 5 years old ** Products less than 5 years old 39
Slide 40: Legal revenue, profit and margin progression
Legal revenue, profit and margin progression Revenue growth Adjusted operating profit growth Margin Constant Constant Underlying currency Reported Underlying currency Reported 2020 +1% 0% -1% +7% +1% 0% 20.1% 2019 +2% -1% +2% +8% +1% +3% 20.0% 2018 +2% -1% -4% +10% 0% -2% 19.8% 2017 +2% -1% +4% +11%