RELX N : Group 2017 Results

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

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

'RELX Group continued to execute well on its strategic priorities in 2017. Adjusted earnings per share in constant currencies grew +7%, and +12% and +5% in sterling and euros respectively. We are recommending a full year dividend increase of +10% for RELX PLC and +6% for RELX NV. We are proposing a set of measures that will further simplify our corporate structure into a single parent company. We believe this is a natural next step for RELX, removing complexity and increasing transparency.'

Chief Executive Officer, Erik Engstrom, commented:

'We achieved good underlying revenue growth in 2017, and continued to generate underlying operating profit growth ahead of revenue growth. Key business trends in the early part of 2018 are consistent with 2017.'

'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.'

FINANCIAL RESULTS

Revenue of £7,355m/€8,385m; underlying growth +4%: The underlying growth rate reflects good growth in electronic and face-to-face revenues (89% of the total), and the further development of our analytics and decision tools, partially offset by continued print revenue declines.

Adjusted operating profit of £2,284m/€2,604m; underlying growth +6%: Including the effects of portfolio changes and cycling, growth expressed in sterling was +8%, and expressed in euros was +1%.

Reported operating profit: Reported operating profit, including amortisation of acquired intangible assets, was £1,905m (£1,708m) or €2,172m (€2,084m).

Interest and tax: Adjusted net interest expense was £166m (£180m) or €189m (€220m), with the reduction reflecting lower average interest rates. Adjusted tax was £475m (£438m) or €542m (€534m). The adjusted effective tax rate was 22.5%. Reported tax was £67m (£304m) or €76m (€371m) including an exceptional non-cash credit from a deferred tax balance sheet adjustment of £346m (€394m) arising from the US Tax Cuts and Jobs Act. Overall, we assess the impact of tax changes in the US and other relevant jurisdictions to be a small net positive for RELX Group going forward, although not significant to the adjusted effective tax rate or to cash taxes paid.

Adjusted EPS growth in constant currencies +7%: Adjusted EPS expressed in sterling was 81.0p (+12%), or €0.923 (+5%) expressed in euros. The difference in growth rates between the sterling and euro EPS reflects the movement in exchange rates.

Reported EPS: Reported EPS expressed in sterling was 82.2p (56.3p) and expressed in euros was €0.936 (€0.687), and includes the one-off non-cash deferred tax credit referenced above.

Dividend: We are proposing a full year dividend increase of +10% to 39.4p for RELX PLC and +6% to €0.448 for RELX NV. The difference in growth rates between the two dividends reflects movement in the £/€ exchange rate since the payments a year earlier. The long-term 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.

ROIC: Return on invested capital increased by 0.1 percentage points to 13.1%.

Net debt/EBITDA 2.2x on a pensions and lease adjusted basis (unadjusted 1.9x): Net debt was £4.7bn/€5.3bn at 31 December 2017, with the adjusted net debt/EBITDA ratio unchanged on the prior year. The adjusted cash flow conversion rate was 96% (95%), with capital expenditure as a percentage of revenues unchanged at 5%.

Portfolio development: We completed 8 acquisitions of small content, data analytics and exhibition assets for a total consideration of £123m, and disposed of 17 assets for a total of £87m. Since the year end we have entered into an agreement to acquire ThreatMetrix, a leader in the global risk-based authentication sector, for £580m.

Share buybacks: In 2017 we deployed £700m on share buybacks. In 2018 we intend to deploy a total of £700m, of which £100m has already been completed.

2018 OUTLOOK

Key business trends in the early part of 2018 are consistent with 2017, and we are confident that, by continuing to execute on our strategy, we will deliver another year of underlying growth in revenue and in adjusted operating profit, together with growth in adjusted earnings per share on a constant currency basis.

FURTHER SIMPLIFICATION OF CORPORATE STRUCTURE

We are proposing to implement a further simplification of our corporate structure, moving from the current dual parent holding company structure to a single parent company. This simplification follows the significant measures which were completed in 2015 and is a natural next step for RELX, removing complexity and increasing transparency.

There will be no changes to the locations, activities or staffing levels of RELX Group or its four business areas. Elsevier, the global Science, Technical & Medical business, will continue to be headquartered in Amsterdam. RELX Group headquarters will remain in London, with no changes to operations or staffing levels.

The simplification will be implemented through a cross-border merger between RELX PLC and RELX NV.

RELX NV shareholders will receive one new RELX PLC share in exchange for each RELX NV share held.

The changes do not impact the economic interests of any shareholder, and in particular, ownership, dividend and capital distribution rights are unaffected.

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.

The changes will be cost and profit neutral, before and after tax. The total number of shares outstanding will be unchanged, and all per share ratios will be unaffected.

RELX PLC will continue to be incorporated in the UK and will remain UK tax resident. Financial results for the group will continue to be presented in sterling, with supplemental financial information presented in euros and US dollars.

RELX PLC will continue to have a premium listing on the London Stock Exchange, and we will be applying for an additional listing of RELX PLC shares on Euronext Amsterdam. Existing RELX PLC ADRs will continue to be listed on the New York Stock Exchange. RELX NV ADRs will be exchanged for RELX PLC ADRs and we will be applying for a listing of the newly issued RELX PLC ADRs.

After the combination of the two parent companies the RELX PLC share count will broadly double, and we expect that RELX PLC shares will continue to be included in the FTSE 100 index. Following listing of RELX PLC shares on Euronext Amsterdam, we expect RELX PLC shares to be included in the AEX index. We also expect RELX PLC shares to continue to be included in the STOXX Europe 600 index and other relevant pan-European indices.

Dividends will be declared in sterling with an option for payment in euros. Our long-term dividend policy remains unchanged.

The simplification is subject to certain conditions, including the approval of both RELX PLC and RELX NV shareholders. We expect a circular and a prospectus to be made available to shareholders in Q2 2018, with implementation of the simplification expected in Q3 2018.

Details of the measures have been set out in an attachment (page 35) to this press release.

ENQUIRIES:

Colin Tennant (Investors)
+44 (0)20 7166 5751

Paul Abrahams (Media)
+44 (0)20 7166 5724

DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS

This 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 RELX Group intellectual property rights; regulatory and other changes regarding the collection, transfer or use of third party content and data; demand for the RELX Group products and services; competitive factors in the industries in which the RELX 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 N.V. with the US Securities and Exchange Commission.

CAUTIONARY NOTE

This Announcement does not constitute or form part of any offer to sell or subscribe for or any invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the simplification. It does not constitute a prospectus or prospectus equivalent document and investors should not make any investment decision in relation to any shares referred to in this Announcement. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended, and applicable European rules and regulations. A prospectus is expected to be made available to shareholders on RELX Group's website (www.relx.com) in due course.

The release, publication or distribution of this Announcement in jurisdictions other than the UK, the Netherlands and the US may be restricted by law and, therefore, any persons who are subject to the laws of any jurisdiction other than the UK, the Netherlands or the US should inform themselves about, and observe, any applicable requirements. Failure to comply with any such restrictions may constitute a violation of the securities laws or regulations of such jurisdiction. This Announcement has been prepared to comply with UK, Dutch and US law and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the UK, the Netherlands and the US.

This Announcement contains inside information for the purposes of Article 7 of EU regulation 596/2014.

IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC

In addition to the prospectus to be made available to shareholders, RELX PLC will file with the U.S. Securities and Exchange Commission (the 'SEC') a registration statement on Form F-4 that will include the prospectus. RELX PLC plans to mail the prospectus to the holders of American Depositary Shares of RELX N.V. and U.S. holders of ordinary shares of RELX N.V. (collectively, 'RELX NV U.S. Shareholders') in connection with the Simplification. RELX N.V. U.S. SHAREHOLDERS ARE URGED TO READ THE PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT RELX PLC, RELX N.V., THE SIMPLIFICATION AND RELATED MATTERS. RELX N.V. U.S. Shareholders will be able to obtain free copies of the prospectus and other documents filed with the SEC by RELX PLC and RELX N.V. through the website maintained by the SEC at www.sec.gov. In addition, RELX N.V. U.S. Shareholders will be able to obtain free copies of the prospectus and other documents filed by RELX PLC with the SEC by contacting RELX Investor Relations at 1-3 Strand, London WC2N 5JR or by calling +44 20 7166 5634.