Annual Reports and Financial Statements 2016 RELX Group Is a Global Provider of Information and Analytics for Professional and Business Customers Across Industries
Total Page:16
File Type:pdf, Size:1020Kb
Annual Reports and Financial Statements 2016 RELX Group is a global provider of information and analytics for professional and business customers across industries. We help scientists make new discoveries, lawyers win cases, doctors save lives and insurance companies offer customers lower prices. We save taxpayers and consumers money by preventing fraud and help executives forge commercial relationships with their clients. In short, we enable our customers to make better decisions, get better results and be more productive. RELX PLC is a London listed holding company which owns 52.9% of RELX Group. RELX NV is an Amsterdam listed holding company which owns 47.1% of RELX Group. Forward-looking statements The Reports and Financial Statements 2016 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 Group’s intellectual property rights; regulatory and other changes regarding the collection, transfer of use of third party content and data; demand for the Group’s products and services; competitive factors in the industries in which the 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 NV with the US Securities and Exchange Commission. Overview RELX Group 1 Overview* Overview Contents 2 2016 Financial highlights 3 Chairman’s statement 4 Chief Executive Offi cer’s report Business review* 8 RELX Group business overview 14 Scientifi c, Technical & Medical 20 Risk & Business Analytics 28 Legal 34 Exhibitions 41 Corporate Responsibility Business review Financial review* 54 Chief Financial Offi cer’s report 60 Principal risks Governance 66 Board Directors 68 RELX Group Business Leaders 70 Chairman’s introduction to Corporate Governance 71 Corporate Governance 80 Report of the Nominations Committee 81 Directors’ Remuneration Report 105 Report of the Audit Committees reviewFinancial Financial statements and other information 108 Independent auditors’ report 119 Consolidated Financial Statements 169 RELX PLC Annual Report and Financial Statements 177 RELX NV Annual Report and Financial Statements 186 Summary fi nancial information in euros 187 Summary fi nancial information Governance in US dollars 188 Reconciliation of adjusted to GAAP measures 189 Shareholder information 193 2017 fi nancial calendar * Comprises the Strategic Report in accordance with The (UK) Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013. Financial statements and other information other statementsFinancial and Get more information online A pdf of the full Annual Report and further information about the Group and our businesses can be found online at our website: www.relx.com 2 RELX Group Annual reports and financial statements 2016 2016 Financial highlights § Underlying revenue up 4% § Underlying adjusted operating profit up 6% § Adjusted EPS up 19% to 72.2p (60.5p); up 5% to €0.880 (€0.835); up 8% constant currency § Reported EPS 56.3p (46.4p) for RELX PLC; €0.687 (€0.682) for RELX NV § Full-year dividend up 21% to 35.95p for RELX PLC and up 5% to €0.423 for RELX NV § Strong financial position and cash flow; leverage 2.2x EBITDA pensions and lease adjusted (1.8x unadjusted) RELX Group REVENUE ADJUSTED OPERATING PROFIT £m €m £m €m Underlying growth +4% Underlying growth +6% 8,240 8,412 2,514 2,579 6,895 2,114 5,971 1,822 2015 2016 2015 2016 2015 2016 2015 2016 Parent companies RELX PLC RELX NV Adjusted EPS Dividend Adjusted EPS Dividend pence pence € € Growth +19% Growth +21% Growth +5% Growth +5% 72.2 0.835 0.880 60.5 35.95 0.423 29.7 0.403 2015 2016 2015 2016 2015 2016 2015 2016 RELX Group encompasses RELX PLC, RELX NV, RELX Group plc and its subsidiaries, associates and joint ventures. The corporate structure is set out on page 71. RELX Group 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. Reconciliations between the reported and adjusted figures are set out on pages 56, 58, 127, 141 and 188. Underlying growth rates are calculated at constant currencies, and exclude the results of acquisitions and disposals made in both the year and prior year and of assets held for sale. Underlying revenue growth rates also exclude the effects of exhibition cycling. Constant currency growth rates are based on 2015 full-year average and hedge exchange rates. RELX NV comparative earnings and dividends per share have been adjusted retrospectively to reflect the bonus issue of shares declared on 30 June 2015. Overview Chairman’s statement 3 Chairman’s statement Overview Balance sheet With the majority of our debts dollar and euro denominated, net debt was £4.7bn/€5.5bn on 31 December 2016, compared with £3.8bn/€5.1bn last year. Net debt/EBITDA on a pensions and lease adjusted basis for 2016 was 2.2x, the same level as last year and on an unadjusted basis, it was 1.8x, also the same as last year. Adjusted cash flow conversion was 95%, up from 94% in 2015, with capital expenditure at 4.8% of revenues. Business review Share buybacks During the year, we bought back shares worth £700m. In 2017, we intend to deploy a total of £700m on share buybacks. By February, £100m of this year’s total had already been completed, leaving a further £600m to be deployed during the year. The Boards We continue to refresh the Boards. Lisa Hook and Robert Polet retired as Non-Executive Directors following the AGMs in April Anthony Habgood 2016. After a search by external consultants, Carol Mills and Chairman Robert MacLeod joined the Boards also in April. Carol has nearly 30 years’ experience in technology companies including extensive The gradual improvement in our US Board experience. Robert is Chief Executive Officer of Johnson Matthey, the FTSE 100 speciality chemicals company and global Financial reviewFinancial revenue growth rate reflects the leader in sustainable technologies. I would like to thank Lisa and Robert for their advice and help over many years and am delighted progress that has been made as that Carol and Robert have joined RELX Group. Corporate responsibility RELX Group has continued to Good governance is the foundation of our business. We prioritise training on our Code of Ethics and Business Conduct – the guide execute well on its strategic to our corporate and individual behaviour – and other key policies. Our compliance courses are clear and engaging to ensure priorities. employees understand how to act ethically in conducting our business; we achieve a 100% course completion rate within Our largest markets remained resilient during 2016 and we 90 days of issuance. We have a strong focus on data privacy and continued to execute against our strategic priorities aimed at security given its importance to our customers. In the year, we achieving more predictable revenues, a higher growth profile and developed a comprehensive plan for complying with EU General Governance improving returns. As a result, growth of underlying revenues Data Protection Regulations coming into force in 2018, and gradually improved to 4% and underlying adjusted operating reviewed and updated internal privacy policies. profits grew 6%, as we continued to grow revenues ahead of costs. The mid-year reduction in the value of the pound associated with We are guided in our understanding of the role companies must the UK’s decision to leave the European Union was the reason why play in furthering human rights by the UNGC, the UN Guiding sterling adjusted operating profit increased by 16% to £2,114m Principles on Business and Human Rights, and the OECD while euros adjusted operating profit increased by 3% to €2,579m. Guidelines for Multinational Enterprises. In 2016, we published our first Modern Slavery Act Statement, available on our Constant currency adjusted earnings per share (EPS) grew at 8%. homepage, to outline the steps we are taking internally, in our The devaluation of sterling was a major contributor to the growth supply chain and through research, partnerships and advocacy of adjusted EPS of 19% to 72.2p for RELX PLC while the growth in to avert slavery and human trafficking. euro EPS was 5% to €0.880 for RELX NV. Reported EPS increased 21% to 56.3p for RELX PLC and 1% to €0.687 for RELX NV. By focusing on excellence in governance and compliance, as in other areas, we perform to our highest ability. In doing so, we information other statementsFinancial and Dividends realise our aim to make unique contributions to society, including The other major impact of sterling’s downward movement was on universal, sustainable access to information, as described in the dividends where the Boards are recommending final dividends of Corporate responsibility section of this report. There we highlight 25.7p for RELX PLC and €0.301 for RELX NV. This brings the total our support of the ADAM programme which applies our expertise dividends for the year to 35.95p for RELX PLC, up 21% and to in the search for missing children and the Rule of Law Impact €0.423 for RELX NV, up 5%.