Annual Report and Financial Statements 2019 Annual Report and Financial Statements 2019 RELX is a global provider of information-based analytics and decision tools for professional and business customers. We help scientists make new discoveries, doctors and nurses improve the lives of patients and lawyers win cases. We prevent online fraud and money laundering, and help insurance companies evaluate and predict risk. Our events enable customers to learn about markets, source products and complete transactions. In short, we enable our customers to make better decisions, get better results and be more productive. Forward-looking statements This Annual Report 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 risks and uncertainties that could cause actual results or outcomes of RELX PLC (together with its subsidiaries, “RELX”, “we” or “our”) to differ materially from those expressed in any forward-looking statement. The terms “outlook”, “estimate”, “project”, “plan”, “intend”, “expect”, “should”, “will”, “believe”, “trends” and similar expressions may indicate a forward-looking statement. Important factors that could cause actual results or outcomes to differ materially from estimates or forecasts contained in the forward-looking statements include, among others, current and future economic, political and market forces; changes in law and legal interpretations affecting RELX intellectual property rights and internet communications; regulatory and other changes regarding the collection, transfer or use of third-party content and data; demand for RELX products and services; competitive factors in the industries in which RELX operates; ability to realise the future anticipated benefits of acquisitions; significant failure or interruption of our systems; compromises of our data security systems or other unauthorised access to our databases; 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 with the US Securities and Exchange Commission. RELX Annual report and financial statements 2019 1 Overview* Overview Contents 2 2019 Financial highlights 3 Chair’s statement 4 Chief Executive Officer’s report 5 RELX business overview Market segments* 12 Scientific, Technical & Medical 18 Risk & Business Analytics 24 Legal 30 Exhibitions segmentsMarket Corporate Responsibility* 37 Corporate Responsibility overview Financial review* 52 Chief Financial Officer’s report 58 Principal and emerging risks Governance 64 Board Directors Corporate Responsibility 66 RELX Senior Executives 68 Chair’s introduction to corporate governance 70 Corporate governance review 85 Report of the Nominations Committee 88 Directors’ remuneration report 112 Report of the Audit Committee 115 Directors’ report Financial statements and other information Financial review 120 Independent auditor’s report 128 Consolidated financial statements 177 RELX PLC annual report and financial statements 182 Summary financial information in euros 183 Summary financial information in US dollars 184 Reconciliation of adjusted to GAAP measures 186 Shareholder information IBC 2020 financial calendar * Comprises the Strategic Report in accordance with The (UK) Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013. Governance other information other statementsFinancial and Get more information online A PDF of the full Annual Report and further information about our businesses can be found online at our website: www.relx.com 2 RELX Annual report and financial statements 2019 | Overview 2019 Financial highlights § Underlying revenue growth of 4% § Underlying adjusted operating profit growth of 5% § Reported operating profit £2,101m (£1,964m) § Adjusted EPS at constant currency up 7%; in sterling up 10% to 93.0p § Reported EPS 77.4p (71.9p) § Full-year dividend up 9% to 45.7p § Strong financial position and cash flow; cash flow conversion at 96% RELX financial summary REPORTED FIGURES Change at 2019 2018 constant Change For the year ended 31 December £m £m Change currencies underlying Revenue 7,874 7,492 +5% +2% +4% Operating profit 2,101 1,964 +7% Profit before tax 1,847 1,720 +7% Net profit attributable to RELX PLC shareholders 1,505 1,422 +6% Net margin 19.1% 19.0% Net borrowings 6,191 6,177 Reported earnings per share 77.4p 71.9p +8% Ordinary dividend per RELX PLC share 45.7p 42.1p +9% ADJUSTED FIGURES Change at 2019 2018 constant Change For the year ended 31 December £m £m Change currencies underlying Operating profit 2,491 2,346 +6% +3% +5% Operating margin 31.6% 31.3% Profit before tax 2,200 2,145 +3% 0% Net profit attributable to RELX PLC shareholders 1,808 1,674 +8% +5% Net margin 23.0% 22.3% Cash flow 2,402 2,243 +7% Cash flow conversion 96% 96% Return on invested capital 13.6% 13.2% Adjusted earnings per share 93.0p 84.7p +10% +7% The shares of RELX PLC are traded on the London, Amsterdam and New York stock exchanges. RELX PLC and its subsidiaries, joint ventures and associates are together known as ‘RELX’. RELX 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. In 2018, we excluded exceptional tax credits, see note 9 on page 145. Reconciliations between the reported and adjusted figures are set out on page 184. Underlying growth rates are calculated at constant currencies, excluding the results of acquisitions until twelve months after purchase, and excluding the results of disposals and assets held for sale. Underlying revenue growth rates also exclude exhibition cycling. Constant currency growth rates are based on 2018 full-year average and hedge exchange rates. RELX Annual report and financial statements 2019 3 Chair’s statement Overview made great progress over the past decade and is well positioned for future growth. As a result, I believe that this is the year both from my own perspective and from that of the company in which to make a change of Chair. At the 2019 Annual General Meeting, Ben van der Veer stood down from the Board after nine years’ service, Carol Mills, a segmentsMarket Non-Executive director since 2016 left the Board, and Andrew Sukawaty was appointed a Non-Executive Director. Andrew has had a 30-year career in the telecoms industry, he is Chairman of Inmarsat and was a Non-Executive Director of Sky between 2013 and 2018. In December Charlotte Hogg was appointed a Non-Executive Director. Ms Hogg is currently Executive Vice President and Chief Executive Officer for the European operations of Visa, a Board Director of Visa Europe and a member of Visa’s global executive committee. In 2020, Suzanne Wood will take over from Adrian Hennah as Chair of the Audit Committee. Adrian, Sir Anthony Habgood who has been on the Board since 2011, will be stepping down as a Corporate Responsibility Chair Non-Executive Director after the next Annual General Meeting. I would like to thank Ben, Adrian and Carol for their support and advice, We continued to execute well on and am delighted that Andrew and Charlotte have joined the Board. our strategic priorities in 2019. Stakeholder consultation We conducted our biennial survey to understand what matters This was reflected in strong to different stakeholders: we asked investors, customers, employees, suppliers, and representatives from government and earnings. We also continued to build non-governmental organisations among others, to rank the issues they believe have the biggest impact on RELX. The top two issues on our strong environmental, social were having the right people and data privacy and security. We also asked them to identify where we have the biggest impact on society Financial review and governance performance and the environment – our unique contributions as a business during the year, and this was again came first, followed by access to information. Corporate responsibility recognised in the high ratings given to Corporate responsibility (CR) has been a priority at RELX for many years. The Board of Directors regularly takes time to engage on the us by a number of external agencies. subject, overseeing our CR objectives and performance, ensuring we are operating at the highest commercial and ethical standards. RELX continued to execute well on its strategic priorities aimed at Our belief remains firmly that good governance and sustainability achieving more predictable revenues, a higher growth profile and are integral to good financial performance. improving returns. Underlying revenue growth was again 4%, with We believe that CR is a core strength of RELX and it is significant underlying adjusted operating profits up 5%, as we continued to Governance grow revenues ahead of costs. Adjusted earnings per share grew that Environmental, Social and Governance (ESG) performance 10% in sterling to 93.0p (84.7p), and 7% at constant currencies. is increasingly being recognised as an important indicator of a Reported earnings per share were 77.4p (71.9p). company’s overall health, the sustainability of its market positions, its attractiveness to key employees and its ability to generate Dividends growing long-term returns to shareholders. As a company with a We are proposing a full year dividend increase of 9% to 45.7p. long-standing record of leadership in this broad field, RELX is now The long-term dividend policy is unchanged. benefitting from the greater profile that is being given to ESG and Balance sheet the increasingly rigorous and objective ways in which it is being Net debt was £6.2bn at 31 December 2019, unchanged from last measured, monitored and indexed. In 2019 RELX was ranked year. Net debt/EBITDA including pensions and leases was 2.5x, second in the S&P Global 1200 for ESG performance by CSRHub, compared with 2.4x in 2018.