RELX NV
Issued on behalf of Reed Elsevier PLC and Reed Elsevier NV
24 July 2014
INTERIM RESULTS FOR SIX MONTHS TO 30 JUNE 2014
Reed Elsevier, the global professional information company, reports continued underlying growth in revenue, operating profit and earnings in the first half of 2014.
Financial highlights Ø Underlying revenue growth +4% (+3% excluding exhibition cycling); H1 total £2,847m/€3,473m Ø Underlying adjusted operating profit growth +5%; H1 total £860 m /€1,049m Ø Adjusted EPS growth at constant currencies +11% Ø Adjusted EPS for Reed Elsevier PLC 2 7.8p (26.5p) ; for Reed Elsevier NV €0.52 (€0.48) Ø Reported EPS for Reed Elsevier PLC 20.0p (22.0p); for Reed Elsevier NV €0.39 (€0.42) Ø Interim dividend growth for Reed Elsevier PLC +5% to 7.00p; for Reed Elsevier NV +14% to € 0.151 Ø Leverage 2.3x EBITDA pensions and lease adjusted ( 1.8 x unadjusted), in line with prior years |
Operational and strategic highlights Ø Underlying revenue and profit growth across all major business areas Ø Improvement in profitability driven by process innovation and portfolio reshaping Ø Improvement in business profile; electronic & face-to-face 84% of H1 revenue, underlying growth +5-7% Ø Strong financial position and cash conversion Ø £400m of share buybacks completed in H1 2014; further £200m to be deployed in remainder of 2014 |
Commenting on the results, Anthony Habgood, Chairman, said:
"Reed Elsevier grew underlying revenue, operating profit and earnings in the first half of 2014, and continues to execute on its strategic and financial priorities. We are recommending a 5% increase in the interim dividend for Reed Elsevier PLC and a 14% increase for Reed Elsevier NV, which, in combination, are broadly in line with adjusted earnings per share growth at constant currencies."
Chief Executive Officer, Erik Engstrom, commented:
"In the first half we continued the transformation of our business, adding datasets and analytics and building out our leading global platforms, primarily through organic development."
"Our financial position and cash flow profile remain strong, and in the first half we have deployed £400m on share buybacks, leaving a further £200m to be completed in the remainder of the year."
"Underlying trends in our business continue to be positive as we enter the second half, and we remain confident that we will deliver another year of underlying revenue, profit, and earnings growth in 2014."
REED ELSEVIER FINANCIAL AND OPERATIONAL HIGHLIGHTS
Reed Elsevier continued to make good progress against its strategic and financial priorities in the first half of 2014.
Revenue of £2,847m/€3,473m; underlying growth +4% (+3% excluding biennial exhibition cycling): The overall underlying growth rate reflects continued growth of +5-7% in electronic and face-to-face revenues, which accounted for 84% of the first half total, partially offset by continuing print revenue declines.
Adjusted operating profit of £860m/€1,049m; underlying growth +5%: The improvement in profitability reflects a combination of underlying revenue growth, process innovation and portfolio development. Reported operating profit, after amortisation of acquired intangible assets, was up +2% to £697m/+5% to €850m.
Interest and tax: Adjusted net interest expense was £23m/€25m lower at £69m/€84m reflecting the benefits of term debt refinancings and other initiatives over the last 18 months. The adjusted effective tax rate was unchanged at 23.5%.
Adjusted EPS: Growth at constant currencies +11%; first half EPS benefited from timing of term debt refinancing and share buybacks. Reed Elsevier PLC 27.8p (26.5p); Reed Elsevier NV €0.52 (€0.48).
Reported EPS: Reed Elsevier PLC 20.0p (22.0p), Reed Elsevier NV €0.39 (€0.42), reflecting the absence in the first half of 2014 of a non-recurring deferred tax credit recognised in the first half of 2013.
Equalised interim dividend growth for Reed Elsevier PLC +5% to 7.00p; for Reed Elsevier NV +14% to €0.151: The difference in interim dividend growth rates reflects exchange rate movements since July 2013.
Net debt/EBITDA 2.3x on a pensions and lease adjusted basis (unadjusted 1.8x): Net debt was £3.3bn/€4.1bn at 30 June 2014. The adjusted operating cash flow conversion rate was 89% (85%). For the full year we continue to expect a cash conversion rate of over 90%, in line with prior years.
Organic development: In the first half of 2014 we continued to develop our global technology platforms across the business, launch new products and services in both existing and adjacent market segments, and extend our reach in high growth markets and geographies. Capital expenditure as a percentage of revenues was slightly lower at 4.3% (5.0%) due to phasing.
Acquisitions & disposals: We completed 10 small acquisitions of content, data assets and exhibitions in the first half of 2014 for a total consideration of £95m. We also completed the disposal of 6 assets for a total consideration of £26m.
Share buybacks: We previously announced our intention to deploy a total of £600m on share buybacks in 2014 as part of our pragmatic approach to ensuring that the value compounding within the business translates into shareholder value. So far we have completed £400m of this total, leaving a further £200m to be deployed by the end of the year.
FULL YEAR 2014 OUTLOOK
The full year outlook is unchanged. Underlying trends in our business continue to be positive as we enter the second half, and we remain confident that, by continuing to execute on our strategy of delivering improved outcomes to our professional customers, primarily through organic investment, we will deliver another year of underlying revenue, profit, and earnings growth in 2014.
Reed Elsevier FINANCIAL SUMMARY
£ | € | ||||||||
Six months ended 30 June | Six months ended 30 June | ||||||||
2014 | 2013 £m | Change |
2014 | 2013 €m | Change |
Underlying | |||
Revenue | 2,847 | 3,025 | -6% | 3,473 | 3,570 | -3% | +4%/+3%* | ||
Adjusted operating profit | 860 | 870 | -1% | 1,049 | 1,027 | +2% | +5% | ||
Adjusted operating margin | 30.2% | 28.8% | 30.2% | 28.8% | |||||
Reported operating profit | 697 | 684 | +2% | 850 | 807 | +5% | |||
Adjusted net interest expense | (69) | (92) | (84) | (109) | |||||
Adjusted profit before tax | 791 | 778 | +2% | 965 | 918 | +5% | |||
Adjusted tax | (186) | (183) | (227) | (217) | |||||
Non-controlling interests | (2) | (3) | (2) | (3) | |||||
Adjusted net profit | 603 | 592 | +2% | 736 | 698 | +5% | |||
Reported net profit | 454 | 509 | 554 | 601 | |||||
Reported net margin | 15.9% | 16.8% | 15.9% | 16.8% | |||||
Net borrowings | 3,278 | 3,339 | 4,097 | 3,906 | |||||
* Excluding biennial exhibition cycling
PARENT COMPANIES
Reed Elsevier PLC | Reed Elsevier NV | ||||||||
Six months ended 30 June | Six months ended 30 June | ||||||||
2014 | 2013 | Change | 2014 | 2013 | Change | Change at constant currencies | |||
Adjusted earnings per share | 27.8p | 26.5p | +5% | €0.52 | €0.48 | +8% | +11% | ||
Reported earnings per share | 20.0p | 22.0p | -9% | €0.39 | €0.42 | -7% | -2% | ||
Ordinary dividend per share | 7.00p | 6.65p | +5% | €0.151 | €0.132 | +14% | |||
Adjusted and underlying figures are additional performance measures used by management. Reconciliations between the reported and adjusted figures are set out in note 4 to the combined financial information on page 26. The reported operating profit figures are set out in note 2 on page 23. 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 assets held for sale. Constant currency growth rates are based on 2013 full year average and hedge exchange rates.
ENQUIRIES: | Colin Tennant (Investors) +44 (0)20 7166 5751 | Paul Abrahams (Media) +44 (0)20 7166 5724 |
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, competitive factors in the industries in which Reed Elsevier operates; demand for Reed Elsevier's products and services; exchange rate fluctuations; general economic and business conditions; legislative, fiscal, tax and regulatory developments and political risks; the availability of third party content and data; breaches of our data security systems and interruptions in our information technology systems; changes in law and legal interpretations affecting Reed Elsevier's intellectual property rights and other risks referenced from time to time in the filings of Reed Elsevier with the US Securities and Exchange Commission.
Reed Elsevier Group plc is a world leading provider of professional information solutions. The group employs more than 28,000 people, including almost 14,000 in North America. Reed Elsevier Group plc is owned equally by two parent companies, Reed Elsevier PLC and Reed Elsevier NV; the combined market capitalisation of the two parent companies is approximately £19bn/€24bn. Their shares are traded on the London, Amsterdam and New York Stock Exchanges using the following ticker symbols: London: REL; Amsterdam: REN; New York: RUK and ENL.
Copies of the 2014 Interim Results Announcement are available to the public on the Reed Elsevier website and from the respective companies:
Reed Elsevier PLC | Reed Elsevier NV
1043 NX Amsterdam |
Click on, or paste the following link into your web browser, to view the associated PDF document:
http://www.rns-pdf.londonstockexchange.com/rns/1714N_-2014-7-23.pdf
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