Annual Reports and Financial Statements 2015 Annual Reports and Financial Statements 2015 RELX Group is a world-leading 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 percent of RELX Group. RELX NV is an Amsterdam listed holding company which owns 47.1 percent of RELX Group. Forward-looking statements The Reports and Financial Statements 2015 contain 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 “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 the Group operates; demand for the Group’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 the Group’s intellectual property rights and other risks referenced from time to time in the filings of the Group with the US Securities and Exchange Commission. Overview RELX Group 1 Overview* Overview Contents 2 2015 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 64 Board Directors 66 RELX Group Business Leaders 68 Chairman's introduction to Corporate Governance 69 Corporate Governance 76 Report of the Nominations Committee 77 Directors' Remuneration Report Financial review 91 Report of the Audit Committees Financial statements and other information 94 Consolidated Financial Statements 147 RELX PLC Annual Report and Financial Statements 157 RELX NV Annual Report and Financial Statements 168 Summary financial information in euros 169 Summary financial information Governance in US dollars 171 Shareholder information 175 2016 financial calendar 176 Principal operating locations * 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 2015 2015 Financial highlights § Underlying revenue up 3% § Underlying adjusted operating profit up 5% § Adjusted EPS up 7% to 60.5p (56.3p); up 20% to €0.835 (€0.698); up 8% constant currency § Reported EPS 46.4p (43.0p) for RELX PLC; €0.682 (€0.568) for RELX NV § Full-year dividend up 14% to 29.7p for RELX PLC and up 5% to €0.403 for RELX NV § Strong financial position and cash conversion; leverage 2.2x EBITDA, pensions and lease adjusted (1.8x unadjusted) RELX Group REVENUE ADJUSTED OPERATING PROFIT £m €m £m €m Underlying growth +3% Underlying growth +5% 8,240 2,514 7,159 2,156 5,773 5,971 1,739 1,822 2014 2015 2014 2015 2014 2015 2014 2015 Parent companies RELX PLC RELX NV Adjusted EPS Dividend Adjusted EPS Dividend pence pence € € Growth +7% Growth +14% Growth +20% Growth +5% 60.5 56.3 0.835 0.698 26.0 29.7 0.383 0.403 2014 2015 2014 2015 2014 2015 2014 2015 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 68. 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, 102 and 116. 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 2014 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 Adjusted cash flow conversion was 94%, down from 96% in 2014, with capital expenditure at 5.1% of revenues. Share buybacks During the year, we bought back shares worth £500m. In 2016, 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. Corporate structure and corporate entity names Business review Following approval at the Annual General Meetings of the parent companies in April, we simplified the corporate structure and changed the names of the companies. On 1 July, Reed Elsevier PLC and Reed Elsevier NV changed their names to RELX PLC and RELX NV respectively. At the same time, the Reed Elsevier R shares, through which Reed Elsevier PLC held a 5.8% indirect interest in Reed Elsevier NV, were cancelled. Anthony Habgood RELX PLC and RELX NV now have 52.9% and 47.1% direct equity Chairman interests in RELX Group plc respectively. The equalisation ratio between RELX PLC and RELX NV shares RELX Group continued to execute was adjusted such that one ordinary share of RELX PLC now confers equivalent economic interests to one ordinary share of Financial review well on its financial and strategic RELX NV. Both ADRs were adjusted as well such that one ADR priorities in 2015. During the year, represents one ordinary share in the respective parent company. These measures simplified our structure, clarified the economic we simplified our corporate interest of parent company shareholders, and increased transparency to shareholders. They also allow us to produce structure, increased transparency consolidated accounts for the first time. The shorter, more modern name reflects the transformation of the company to to shareholders and changed a technology, content and analytics driven business while maintaining the link with its proud heritage. our name. Board alignment and succession After simplifying our corporate structure, we aligned membership Growth of underlying revenues was +3%. Underlying adjusted of the Boards by appointing Marike van Lier Lels as a Non-Executive operating profits grew +5%, with the improvement in profitability Director of RELX PLC and RELX Group plc. Marike has served as a Governance reflecting a combination of underlying revenue growth, process Non-Executive Director of RELX NV since 2010. innovation and portfolio development. Adjusted operating profits increased +5% to £1,822m expressed in sterling, and increased We continue the process of progressively refreshing the Boards. +17% to €2,514m expressed in euros. Lisa Hook and Robert Polet will retire as Non-Executive Directors after 10 and 9 years of service respectively following the AGMs Adjusted earnings per share grew +7% to 60.5p for RELX PLC, in April 2016. After a search by external consultants, Carol Mills and +20% to €0.835 for RELX NV. Reported earnings per share and Robert MacLeod will join the Boards in April 2016, subject to increased +8% to 46.4p for RELX PLC, and +20% to €0.682 for shareholder approval. Carol has nearly 30 years' experience in RELX NV. technology companies including extensive US Board experience. Dividends Robert is Chief Executive Officer of Johnson Matthey, the FTSE 100 The Boards are recommending final dividends of 22.3p for RELX PLC speciality chemicals company and global leader in sustainable technologies. I would like to thank Lisa and Robert for their and €0.288 for RELX NV, up respectively 17% and 1% against the advice and help over many years and welcome Carol and Robert prior year. This brings the total dividends for the year to 29.7p for to RELX Group. information other statementsFinancial and RELX PLC, up 14% and €0.403 for RELX NV, up 5%. The differing growth rates for the two parent companies reflect movements in Corporate responsibility the sterling-euro exchange rate between dividend announcement Good governance is critical to our business. As the foundation for dates and, for the final dividends, the abolition of the tax credit all we do, it is central to our corporate responsibility and future applicable to UK dividends as announced by the UK government and success. Accordingly, we set and meet relevant objectives, effective from April 2016. As a result, future dividends will be the including in 2015, new communication campaigns to ensure that same value for each RELX PLC and RELX NV share, removing the employees at RELX Group understand our compliance policies one remaining difference between the economics of the two shares.