Annual Reports and Financial Statements 2017 Annual Reports and Financial Statements Financial Reportsand Annual 2017 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 2017 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. Overview RELX Group 1 Overview* Overview Contents 2 2017 Financial highlights 3 Chairman’s statement 4 Chief Executive Officer’s report Business review* 8 RELX Group business overview 14 Scientific, Technical & Medical 20 Risk & Business Analytics 28 Legal 34 Exhibitions 41 Corporate Responsibility Business review Financial review* 54 Chief Financial Officer’s report 60 Principal risks Governance 66 Board Directors 68 REL X Group Business Leaders 70 Chairman’s introduction to Corporate Governance 71 Corporate Governance review 81 Report of the Nominations Committee 83 Directors’ Remuneration Report 103 Report of the Audit Committees Financial review Financial statements and other information 106 Independent auditors’ report 117 Consolidated Financial Statements 167 REL X PLC Annual Report and Financial Statements 175 REL X NV Annual Report and Financial Statements 184 Summary financial information in euros 185 Summary financial information in US dollars 186 Reconciliation of adjusted to GA AP measures 187 Shareholder information 191 2018 financial calendar Governance * Comprises the Strategic Report in accordance with The (UK) Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013. Financial Financial statements and other information 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 2017 2017 Financial highlights § Underlying revenue up 4% § Underlying adjusted operating profit up 6% § Adjusted EPS up 12% to 81.0p (72.2p); up 5% to €0.923 (€0.880); up 7% constant currency § Reported EPS 82.2p (56.3p) for RELX PLC; €0.936 (€0.687) for RELX NV § Full-year dividend up 10% to 39.4p for RELX PLC and up 6% to €0.448 for RELX NV § Strong financial position and cash flow; leverage 2.2x EBITDA pensions and lease adjusted (1.9x unadjusted) RELX Group REVENUE ADJUSTED OPERATING PROFIT £m €m £m €m Underlying growth +4% Underlying growth +6% 8,412 8,385 2,579 2,604 6,895 7,355 2,114 2,284 2016 2017 2016 2017 2016 2017 2016 2017 Parent companies RELX PLC RELX NV Adjusted EPS Dividend Adjusted EPS Dividend pence pence € € Growth +12% Growth +10% Growth +5% Growth +6% 81.0 0.923 72.2 0.880 35.95 39.4 0.423 0.448 2016 2017 2016 2017 2016 2017 2016 2017 REL X Group encompasses REL X PLC, REL X NV, REL X Group plc and its subsidiaries, associates and joint ventures. The corporate structure is set out on page 71. REL X 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. In 2017, we have excluded the exceptional tax credit arising as a result of the US Tax Cuts and Jobs Act. Reconciliations between the reported and adjusted figures are set out on page 186. 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 2016 full-year average and hedge exchange rates. Overview Chairman’s statement 3 Chairman’s statement Overview as last year, and, on an unadjusted basis was 1.9x, compared with 1.8x last year. Adjusted cash flow conversion was 96%, compared with 95% in 2016, with capital expenditure at 5% of revenues. Share buybacks In 2017, we deployed £700m on share buybacks. In 2018, we intend to deploy a total of £700m. By February, £100m of this year’s total had already been completed, leaving a further £600m to be deployed during the year. Business review The Boards We continue to refresh the Boards. In September 2017, we welcomed Suzanne Wood to the boards as a non-executive director. Suzanne is Group Finance Director at Ashtead Group plc and brings extensive board experience on both sides of the Atlantic. In 2018, Adrian Hennah will become Chairman of the Audit Committees, replacing Ben van der Veer, who will have been on the Boards for nine years in September 2018 and has been Chairman of the Audit Committees since 2010. Sir Anthony Habgood Chairman Parent company structure We are proposing a set of measures that will further simplify our corporate structure into a single parent company. We believe this We achieved good underlying is a natural next step for REL X Group, removing complexity and increasing transparency. The changes will be cost and profit neutral Financial review revenue growth in 2017, and on an ongoing basis and will not impact the economic interests of any shareholder. REL X NV shareholders will receive one new REL X PLC continued to generate underlying share in exchange for each REL X NV share held and will, following the additional listing of REL X PLC shares on Euronext Amsterdam, adjusted operating profit growth have the option of trading new REL X PLC shares on Euronext Amsterdam, priced in euros, and receive dividend payments in ahead of revenue growth. We are euros. REL X PLC will continue to have a premium listing on the London Stock Exchange and we will be applying for an additional proposing a set of measures that listing of REL X PLC on Euronext Amsterdam. REL X NV ADRs will be converted one-for-one to REL X PLC ADRs which will continue to be will further simplify our corporate listed on the New York Stock Exchange. There will be no changes to structure into a single parent the locations, activities or staffing levels of REL X Group or its four business areas. The simplification is subject to the approval of both Governance RELX PLC and RELX NV shareholders. We expect a circular to be company. sent to shareholders in Q2 2018, with implementation in Q3 2018. REL X Group continued to execute well on its strategic priorities Corporate responsibility aimed at achieving more predictable revenues, a higher growth We prioritise excellence in corporate governance across RELX profile and improving returns. As a result, growth of underlying Group. In 2017, we advanced a more structured approach to revenues was again +4%. Underlying adjusted operating profits compliance training for employees in higher-risk roles and grew +6%, as we continued to grow revenues ahead of costs. locations by creating a resource library with presentations on competition law, anti-bribery, anti-harassment, trade sanctions Adjusted earnings per share in constant currencies grew +7%. and fostering a culture of compliance. Over 2,400 colleagues Adjusted EPS expressed in sterling was 81.0p (+12%) or in euros received advanced in-person compliance training. €0.923 (+5%). Reported earnings per share expressed in sterling was 82.2p (56.3p) and expressed in euros was €0.936 (€0.687). Diversity and inclusion remain critical to our business to ensure we The difference in growth rates between the sterling and euro EPS reflect the diversity of our customers and communities. Over 44% reflects the movement in exchange rates. of non-executive directors on the Board are women. In the year, we Financial statements and other information expanded our women in technology mentor pilot to include mentees Dividends in the US and China as well as the UK, and developed a new mentor We are proposing a full year dividend increase of 10% to 39.4p programme for high potential women. for REL X PLC and 6% to €0.448 for REL X NV. The difference in growth rates between the two dividends reflects movement We focus on our unique contributions to society, such as fostering in the sterling/euro exchange rate since the payments a year communities, applying our expertise, and using our convening earlier.