RELX GROUP 2017 INTERIM RESULTS

RNS Number : 2117M

RELX PLC

27 July 2017

 

Issued on behalf of RELX PLC and RELX NV

27 July 2017

INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2017

RELX Group, the global professional information and analytics company, reports continued underlying growth in revenue, operating profit and earnings in the first half of 2017.

Highlights Ø Underlying revenue growth +4%; H1 reported total £3,718m/€4,313m Ø Underlying adjusted operating profit growth +5%; H1 total £1,154m/€1,339m Ø Adjusted EPS growth constant currency +8%; in sterling +19% to 40.5p (34.0p); in euro +8% to €0.470 (€0.435) Ø Reported operating profit £949m (£823m); €1,101m (€1,053m) Ø Reported EPS 34.0p (26.9p); €0.395 (€0.344) Ø Interim dividend growth: +14% to 11.70p for RELX PLC; +8% to €0.132 for RELX NV Ø Strong financial position & cash flow; leverage 2.4x EBITDA, pensions & lease adjusted (2.0x unadjusted) Ø £500m of share buybacks completed in H1, further £200m to be deployed in H2

Commenting on the results, Anthony Habgood, Chairman, said:

"Adjusted earnings per share in constant currencies and in euros grew at +8% in the first half of 2017 as RELX Group continued to execute well on its strategic priorities. Sterling adjusted earnings per share grew at +19% as a result of currency fluctuations. We have announced an interim dividend increase of +8% for RELX NV and +14% for RELX PLC."

Chief Executive Officer, Erik Engstrom, commented:

"We achieved good underlying revenue growth in the first half of 2017, and continued to generate underlying operating profit growth ahead of revenue growth."

"Our strategy is unchanged: Our number one priority remains the organic development of increasingly sophisticated information-based analytics and decision tools that deliver enhanced value to our customers. We believe that the systematic evolution of our business has driven an improvement in our business profile and the quality of our earnings, with more predictable revenues, a higher growth profile, and improving returns."

"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."

FINANCIAL RESULTS

Revenue of £3,718m/€4,313m; underlying growth +4%: The underlying growth rate reflects good growth in electronic and face-to-face revenues (90% of the total), and the further development of our analytics and decision tools, partially offset by continued print revenue declines.

Adjusted operating profit of £1,154m/€1,339m; underlying growth +5%: Growth expressed in sterling was +15%, and expressed in euros was +4%.

Reported operating profit: Reported operating profit, including amortisation of acquired intangible assets, was £949m (£823m) or €1,101m (€1,053m).

Interest and tax: Adjusted net interest expense was broadly unchanged at £87m (£83m) or €101m (€106m). Adjusted tax was £242m (£213m) or €281m (€273m). The adjusted effective tax rate was 22.7%, in line with full year 2016.

Adjusted EPS growth in constant currencies +8%: Adjusted EPS expressed in sterling was 40.5p (+19%), or €0.470 (+8%) expressed in euros. The difference in growth rates between the sterling and euro EPS reflects the movement in average exchange rates compared to the first half of 2016.

Reported EPS: Reported EPS expressed in sterling was 34.0p (26.9p), and expressed in euros was €0.395 (€0.344).

Dividend: We have announced an interim dividend increase of +14% to 11.70p for RELX PLC and +8% to €0.132 for RELX NV. The difference in growth rates between the two dividends reflects movement in the £/Euro exchange rate since July 2016.

The total full year dividend policy is unchanged. We will continue to grow the dividend broadly in line with adjusted earnings per share, subject to exchange rate considerations, whilst maintaining cover of at least two times over the longer term.

Net debt/EBITDA 2.4x on a pensions and lease adjusted basis (unadjusted 2.0x): Net debt was £5.0bn/€5.7bn at 30 June 2017. The adjusted cash flow conversion rate was 90% (89%), with capital expenditure as a percentage of revenues unchanged at 5%. For the full year we expect the cash conversion rate to be over 90%, in line with prior years.

Portfolio development: In the first half we completed four acquisitions of small content, data analytics and exhibition assets for a total consideration of £15m, and disposed of assets for £21m.

Share buybacks: We deployed £500m on share buybacks in the first half of 2017, and we intend to deploy a further £200m in the second half, bringing the full year total to the previously announced £700m. Of the £200m second half total £40m has already been completed since 1 July 2017.

FULL YEAR 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.

ReLX GROUP FINANCIAL SUMMARY

		£				€
	Six months ended 30 June				Six months ended 30 June
	2017 £m	2016 £m	Change		2017 €m	2016 €m	Change		Underlying growth rates
Revenue	3,718	3,257	+14%		4,313	4,169	+3%		+4%
Adjusted operating profit	1,154	1,003	+15%		1,339	1,284	+4%		+5%
Adjusted operating margin	31.0%	30.8%			31.0%	30.8%
Reported operating profit	949	823	+15%		1,101	1,053	+5%
Adjusted net interest expense	(87)	(83)			(101)	(106)
Adjusted profit before tax	1,067	920	+16%		1,238	1,178	+5%
Adjusted tax	(242)	(213)			(281)	(273)
Non-controlling interests	(2)	(2)			(2)	(3)
Adjusted net profit	823	705	+17%		955	902	+6%
Reported net profit	691	558	+24%		802	714	+12%
Reported net margin	18.6%	17.1%			18.6%	17.1%
Adjusted earnings per share	40.5p	34.0p	+19%		€0.470	€0.435	+8%		+8%*
Reported earnings per share	34.0p	26.9p	+26%		€0.395	€0.344	+15%
Net borrowings	5,020	4,572			5,723	5,486
PARENT COMPANIES	RELX PLC				RELX NV
Ordinary dividend per share	11.70p	10.25p	+14%		€0.132	€0.122	+8%

*Change at constant currencies

RELX Group uses adjusted and underlying figures as additional performance measures. Adjusted figures primarily exclude the amortisation of acquired intangible assets and other items related to acquisitions and disposals, and the associated deferred tax movements. Reconciliations between the reported and adjusted figures are set out on page 29. Underlying growth rates are calculated at constant currencies, and exclude the results of all acquisitions and disposals made in both the year and prior year and of assets held for sale. Underlying revenue growth rates also exclude exhibition cycling, and timing effects. Constant currency growth rates are based on 2016 full year average and hedge exchange rates.

ENQUIRIES:

Colin Tennant (Investors) [phone]

Paul Abrahams (Media) [phone]

FORWARD-LOOKING STATEMENTS

This Results Announcement 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 that could cause actual results or outcomes to differ materially from those currently being anticipated. The terms "outlook", "estimate", "project", "plan", "intend", "expect", "should be", "will be", "believe", "trends" and similar  expressions identify forward-looking statements. Factors which may cause future outcomes to differ from those foreseen in forward-looking statements include, but are not limited to: current and future economic, political and market forces; changes in law and legal interpretations affecting the Group's intellectual property rights; regulatory and other changes regarding the collection, transfer or use of third party content and data; demand for the Group's products and services; competitive factors in the industries in which the Group operates; compromises of our data security systems and interruptions in our information technology systems; legislative, fiscal, tax and regulatory developments and political risks; exchange rate fluctuations; and other risks referenced from time to time in the filings of RELX PLC and RELX NV with the US Securities and Exchange Commission.

RELX Group is a global provider of information and analytics for professional and business customers across industries. The group serves customers in more than 180 countries and has offices in about 40 countries. It employs approximately 30,000 people of whom almost half are in North America. RELX PLC is a London listed holding company, which owns 52.9% of RELX Group. RELX NV is an Amsterdam listed holding company, which owns 47.1% of RELX Group. The shares are traded on the London, Amsterdam and New York Stock Exchanges using the following ticker symbols: London: REL; Amsterdam: REN; New York: RELX and RENX. The total market capitalisation is approximately £32bn/€36bn/$42bn.

For more information about RELX Group, visit www.relx.com.

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