RELX, the global provider of information-based analytics and decision tools, reports interim results for the six months to 30 June 2020.
Our three largest business areas, STM, Risk & Business Analytics and Legal, which together accounted for 84% of revenue and 87% of adjusted operating profit in full year 2019, reported combined first half revenue of £3,300m (£3,204m) and adjusted operating profit of £1,056m (£1,009m). All three business areas continued to deliver underlying revenue and adjusted operating profit growth in the first half of 2020 and are currently holding up well. Electronic revenues, which accounted for 92% of the total for these three business areas, grew +3% to +4% underlying. The full year outlook for the impact of COVID-19 varies by customer market.
Exhibitions, which accounted for 16% of revenue and 13% of adjusted operating profit in full year 2019, has been impacted significantly by COVID-19, with first half revenue of £201m (£684m), and an adjusted operating loss of £117m (£231m profit). The outlook for the remainder of 2020 for this business area remains highly uncertain.
H1 2020 results
- Revenue £3,501m (£3,888m) -10%
- Adjusted operating profit £939m (£1,240m) -24%
- Adjusted EPS 37.0p (45.9p) -19%
- Reported operating profit £747m (£1,048m) -29%-? Reported EPS 28.4p (39.9p) -29%
- Interim dividend 13.6p (13.6p) unchanged
- Strong financial position, issued €2bn and $750m of long-term bonds
- Completed seven acquisitions for total consideration of £720m
Note: Due to the extent of event postponements and cancellations, underlying measures are not meaningful for Exhibitions in the first half, and hence for the group as a whole. Underlying measures for the three largest business areas are shown on page 4
Commenting on the results, Sir Anthony Habgood, Chair, said:
“Despite the challenging environment, RELX has continued to pursue its strategic priorities successfully. Although earnings per share progress has been impacted by COVID-19 related disruption to our exhibitions business, we have announced an unchanged interim dividend of 13.6p reflecting the resilience of our three largest business areas and our strong financial position and cash flow. We also continued to build on our strong ESG performance, with Elsevier in particular supporting the scientific and medical response to COVID-19 with free downloads from the Elsevier Novel Coronavirus Information Centre now exceeding 100 million.”
Chief Executive Officer, Erik Engstrom, commented:
“Our first priority during the COVID-19 pandemic remains the health and safety of our colleagues, our customers, and the wider community in which we operate, whilst continuing to provide services to our customers.”
“Our three largest business areas continued to perform well in the first half, delivering good growth in electronic revenues with product and service quality being maintained at high levels. Exhibitions has responded well to a challenging environment, and remains focused on serving its customers throughout the COVID-19 pandemic and beyond. At the peak of the pandemic nearly all of our offices were closed and 97% of our 33,000 employees in over 40 countries were working remotely. We have now opened nearly half of our offices, and around 50% of our employees have the option to come into the office on a regular basis.”
“Our longer term strategic priority is unchanged: the organic development of increasingly sophisticated information-based analytics and decision tools that deliver enhanced value to our customers, supplemented by selective acquisitions of targeted data, analytics and exhibition assets that support our organic growth strategies.”
Operating and financial review
Revenue £3,501m (£3,888m) -10%: Our three largest business areas, STM, Risk & Business Analytics and Legal, which together accounted for 84% of revenue and 87% of adjusted operating profit in full year 2019, reported combined first half revenue of £3,300m (£3,204m). All three business areas continued to deliver underlying revenue growth (see page 4). Electronic revenue, which accounted for 92% of the total in the first half for these three business areas, saw underlying growth of +3% to +4%. Print revenue, 8% of the total, saw steeper than historical underlying declines at -17% to -19% impacted by COVID-19 related distribution challenges.
The Exhibitions business, which accounted for 16% of revenue and 13% of adjusted operating profit in full year 2019, was significantly impacted by COVID-19 in the first half of 2020, with revenue of £201m (£684m). Given the extent of event postponements and cancellations, underlying measures are not meaningful for Exhibitions, and hence not for the group as a whole.
Adjusted operating profit £939m (£1,240m) -24%: Our three largest business areas reported combined first half adjusted operating profit of £1,056m (£1,009m) with all three delivering underlying growth. Exhibitions moved into a loss for the first half of £117m (£231m profit).
Reported operating profit £747m (£1,048m) -29%: Reported operating profit includes amortisation of acquired intangible assets of £164m (£147m) and acquisition-related costs of £26m (£38m).
Interest and tax: Adjusted net interest expense was £81m (£97m) with the reduction reflecting lower average interest rates on borrowings. The adjusted tax charge was £151m (£248m) giving an adjusted effective tax rate of 17.6% (21.7%) with the lower tax rate in the period due to some one-off and historical credits. Reported net interest expense was £87m (£103m), and the reported tax charge was £124m (£223m).
Adjusted EPS 37.0p (45.9p) -19%
Reported EPS 28.4p (39.9p) -29%: Reported EPS includes a credit for gains on disposals and other non-operating items of £6m (£57m).
Dividend: We have announced an interim dividend of 13.6p (13.6p), unchanged from the prior year.
Net debt/EBITDA 3.2x (2.6x) including leases and pensions: Net debt, including leases, was £7.5bn (£6.6bn) at 30 June 2020. Excluding leases and pensions, net debt/EBITDA was 2.8x (2.3x). The increase in leverage ratios primarily reflects the impact of COVID-19 on Exhibitions in the first half. The adjusted cash flow conversion rate was 103% (94%). Cash conversion rates in the three largest business areas were in line with recent years. In the first half we issued €2bn and $750m of long-term bonds.
Portfolio development: In the first half of 2020 we completed seven acquisitions of content, data analytics and exhibition assets for a total consideration of £720m, and disposed of a number of small assets for a total of £12m.
Share buybacks: As previously announced, the share buyback for 2020 was suspended in April after £150m had been spent. The Board does not intend to resume the programme this year.
Environmental, social and governance (ESG) recognition: RELX has maintained an AAA rating for ESG with MSCI for four consecutive years, and in April 2020 RELX improved its position in the Sustainalytics ESG rankings with first place in our industry sector, and 17th place in the total universe of over 12,000 companies ranked.
RELX FINANCIAL SUMMARY
Six months ended 30 June 2020 £m 2019 £m Change Change at constant currencies
Revenu 3,501 3,888 -10% -12%
Adjusted operating profit 939 1,240 -24% -27%
Adjusted operating margin 26.8% 31.9%
Reported operating profit 747 1,048 -29%
Adjusted net interest expense (81) (97)
Adjusted profit before taks 858 1,143 -25% -28%
Adjusted taks (151) (248)
Non-controlling interests 6 -
Adjusted net profit 713 895 -20% -24%
Reported net profit 548 779 -30%
Reported net margin 15.7% 20.0%
Adjusted earnings per share 37.0p 45.9p -19% -23%
Reported earnings per share 28.4p 39.9p -29%
Net borrowings 7,511 6,640
Ordinary dividend per share 13.6p 13.6p
RELX uses adjusted 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. Constant currency growth rates are based on 2019 full-year average and hedge exchange rates.
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