Reed Elsevier, the global professional information company, reports revenue, profit and earnings growth in
the six months to 30 June 2012.
Financial highlights
Underlying revenue growth +5% (+3% excluding biennial exhibition cycling)
Underlying adjusted operating profit growth +7%; overall growth +8% at constant currencies
Adjusted EPS +11% to 24.7p for Reed Elsevier PLC; +18% to €0.47 for Reed Elsevier NV
Reported EPS growth +52% to 24.0p for Reed Elsevier PLC; +57% to €0.47 for Reed Elsevier NV
Interim dividend growth +6% to 6.00p for Reed Elsevier PLC; +18% to €0.130 for Reed Elsevier NV
Net debt of £3.3bn; 2.3 times adjusted 12 month trailing EBITDA (pensions and lease adjusted)
Operational highlights
Underlying revenue and operating profit growth in all five business areas
Growth driven by usage volume, new product development and expansion in high growth markets
Further improvement in format mix; good growth in online and face to face
Profitability gains driven by on‐going process efficiencies
Continued portfolio development improving revenue growth and profitability profile
Commenting on the results, Anthony Habgood, Chairman, said:
“We have delivered good first half results with underlying revenue and profit growth across all five business areas, and with high percentage cash conversion underpinning our strong balance sheet. The 6% and 18% increases in the interim dividend for Reed Elsevier PLC and Reed Elsevier NV respectively reflect the EPS growth and our confidence in the outlook for Reed Elsevier. ”
Chief Executive Officer, Erik Engstrom, commented:
“We have continued to transform our core businesses through organic development by investing in our digital platforms and developing and launching new online products and services. We have extended our position in
high growth markets through organic new launches supported by selective small acquisitions. We are disposing of businesses that no longer fit our strategy at an accelerated pace. We expect completed and planned disposals to be mildly dilutive to EPS in the short term. However, we intend to use divestment proceeds to buy back shares this year, mitigating this impact. The outlook for the macro economic environment remains uncertain, but based on our good first half results, and the continuing improvement t in the quality of our earnings, we expect to deliver underlying revenue and profit growth for the year in line with our expectations.”
REED ELSEVIER FINANCIAL AND OPERATIONAL HIGHLIGHTS
In H1 2012 Reed Elsevier made good progress against its strategic and financial priorities.
Underlying revenue growth across all five business areas: Underlying revenue growth +5% (+3% excluding
biennial event cycling) after adjusting for acquisitions and disposals and currency translation. Total reported
revenues grew +5% to £3,053m or +12% to €3,725m.
Underlying adjusted operating profit growth across all five business areas: Underlying adjusted operating
profit growth +7% after adjusting for acquisitions, disposals and currency translation. Total adjusted operating
profit grew +9% to £845m or +16% to €1,031m; +8% at constant currencies. Margins increased by 1.1
percentage points to 27.7%, driven by improvements in all five business areas.
Stable interest and tax: Interest charge slightly lower at £107m/€131m; adjusted effective tax rate increased
by 0.4 percentage points to 23.7%.
Strong adjusted EPS growth: Reed Elsevier PLC +11% to 24.7p; Reed Elsevier NV +18% to €0.47; +10% at
constant currencies. Reported EPS after amortisation of acquired intangible assets and acquisition related costs
+52% to 24.0p for Reed Elsevier PLC and +57% to €0.47 for Reed Elsevier NV including disposal gains.
Interim dividend increased: Reed Elsevier PLC +6% to 6.00p; Reed Elsevier NV +18% to €0.130. The difference
in dividend growth rates reflects movement in euro/sterling exchange rates since last year’s interim dividend
announcement date.
Balance sheet & cash flow: Net debt of £3.3bn/€4.1bn at 30 June 2012, 2.3 times adjusted 12 month trailing
EBITDA on a pension and lease adjusted basis (1.7 times on an unadjusted basis). Adjusted operating cash flow conversion rate of 92%. Capital expenditure represented 5% of revenue (6% expected for full year).
Organic investment in transforming core business: Continued investment in digital platforms and products across Reed Elsevier. Range of insurance data services extended along carrier workflow. Positive customer reaction to Lexis Advance releases. Launch of online clinical reference tool ClinicalKey, and roll out of Nova platform across exhibitions globally.
Organic build out of new products into adjacent markets and geographies: 15 new exhibitions launched, the majority in high growth markets; XpertHR launched in US market; insurance data services introduced in UK;
new legal practical guidance products released internationally.
Selective acquisitions: Buyout of leading Brazilian exhibitions joint venture completed; other acquisitions of small high growth exhibitions and paid content and data businesses.
Selective divestments: Process accelerated in H1. Disposals of Totaljobs, MarketCast, and other small publishing and services assets completed. Planned disposals of Variety and RBI Australia announced. We expect completed and planned disposals to be mildly dilutive to EPS in the short term. However, we intend to use gross divestment proceeds to buy back shares this year, mitigating this impact. In H1 gross cash proceeds from disposals were £158m/€193m.
FY 2012 OUTLOOK
The outlook for the macro economic environment and its impact on our customers’ markets remainsuncertain, but based on our good first half results, and the continuing improvement in the quality of our earnings, we expect to deliver underlying revenue and profit growth for the year in line with our expectations.
