RELX PLC: Trading Statement

TIDMREL 
 

7.00am BST

8 April 2020

TRADING UPDATE

RELX, the global provider of information-based analytics and decision tools, comments on current trading and revises the full year outlook in the light of the evolving COVID-19 pandemic.

 
Highlights In our three largest business areas, Scientific, Technical & 
Medical, Risk & Business Analytics, and Legal, which together accounted for 
84% of revenue and 87% of adjusted operating profit in 2019, the rate of 
underlying revenue growth in the first quarter of 2020 was slightly higher 
than in the same period of the prior year. These business areas saw only a 
limited impact from COVID-19 in the first quarter, although the full year 
outcome may be affected by changes in the evolving economic environment and by 
activity levels in our customer markets. The Exhibitions business, which 
accounted for 16% of revenue and 13% of adjusted operating profit in 2019, is 
being impacted significantly by COVID-19, making the outlook for this business 
area highly uncertain. As a result, we are unable to provide full year 
guidance for the group as a whole.  We have a strong balance sheet position 
and our financing arrangements provide us with ample liquidity. 
 

Our priority during the COVID-19 pandemic remains the health and safety of our colleagues, our customers, and the wider community in which we operate, whilst continuing to operate our businesses and provide services to our customers. Given the electronic nature of our business, almost all our staff are able to work from home. In recent weeks, most of our 265 offices in 39 countries around the world have switched to remote working, whilst some have re-opened after a period of closure. With the exception of Exhibitions, and some minor challenges with physical delivery of print products, the business is operating with service delivery and product quality being maintained at high levels, and we remain focused on improving the services that we provide to our customers throughout and beyond the COVID-19 pandemic.

Scientific, Technical & Medical (34% of FY 2019 revenue)

   -- The year to date underlying revenue growth rate is slightly higher than 
      in the same period of the prior year. In primary research, subscription 
      renewal rates are in line with recent years, and growth in author-pays 
      open access revenue is very strong. Article submission growth rates, to 
      both subscription and author-pays open access journals, remain strong. 
      Databases & tools revenue is growing well, partly offset by declines in 
      print books. We have seen only a limited impact from COVID-19 so far. 
 
   -- Since January Elsevier has mobilised all of its research content, data 
      analytics know-how, and clinical insights to support the scientific and 
      medical response to the COVID-19 pandemic. The Novel Coronavirus 
      Information Centre, which provides researchers with free access to over 
      20,000 articles, has had almost three quarters of a million visitors to 
      date. Working with WHO, OSTP, NIH and the Wellcome Trust, Elsevier has 
      also made this significant body of knowledge available to global medical 
      research databases for full AI-enabled data mining. 
 
   -- Full year outlook: Positive revenue momentum continued through the first 
      quarter. As we go through the year, we could see some impact from the 
      COVID-19 pandemic in our customer markets, and prolonged restrictions on 
      movement could potentially impact our ability to conduct new sales in 
      person and distribute print products, but overall revenue stability is 
      supported by 75% being subscription based. 
 

Risk & Business Analytics (29% of FY 2019 revenue)

   -- The year started strongly and first quarter underlying revenue growth was 
      at a slightly higher rate than in the same period of the prior year. 
      Since the introduction of more extensive restrictions on movement in 
      parts of the US in the second half of March, transactional volumes have 
      softened and become more volatile in both Insurance and Business 
      Services. Subscription revenues, which represent almost 40% of the 
      divisional total, have continued to grow strongly across Insurance, 
      Business Services and Data Services. 
 
   -- Full year outlook: Notwithstanding the strong revenue performance across 
      the business in the early part of the year, the full year outcome will 
      depend on the extent and duration of the slowdown in business activity in 
      the US and on the level of transactional activity in our customer 
      markets. 
 

Legal (21% of FY 2019 revenue)

   -- The underlying revenue growth rate is currently slightly higher than in 
      the same period of the prior year, primarily driven by good growth in 
      legal analytics. We have seen only a limited impact from COVID-19 so far. 
 
   -- Full year outlook: Positive revenue momentum continued through the first 
      quarter. As we go through the year, we could see some impact if the 
      COVID-19 pandemic causes a prolonged slowdown in the legal services 
      industry, or from potential limitations on our ability to conduct new 
      sales in person and distribute print products, but overall revenue 
      stability is supported by nearly 80% being subscription based. 
 

Exhibitions (16% of FY 2019 revenue)

   -- In the first quarter around two thirds of the events that were originally 
      scheduled to take place went ahead as planned with revenues slightly 
      ahead of the same events in the prior year. In response to the COVID-19 
      pandemic, events representing around 5% of expected 2020 revenues have 
      been cancelled. Events representing around 30% of this year's expected 
      revenues, that were scheduled to take place in the first half, have been 
      postponed and are currently scheduled to take place later in the year, in 
      some cases in combination with other second half events. These events are 
      likely to experience some revenue attrition and extra costs associated 
      with the rescheduling. Following these actions, the majority of this 
      year's events are now scheduled to take place in the September-December 
      period. We are taking action to save costs across the business, whilst 
      continuing to serve our customers and maintain market presence to support 
      the long-term value of our brands. 
 
   -- Full year outlook: Depending on the impact and duration of the 
      restrictions resulting from the COVID-19 pandemic, further rescheduling 
      or cancellation of events may be necessary, making the full year outlook 
      highly uncertain. 
 

Balance sheet & liquidity

   -- We have a strong balance sheet position. This has been further 
      strengthened by the issuance of EUR2bn of long-term bonds in March 2020, 
      refinancing all of our term debt maturities for this year. After funding 
      our acquisition spend in the year to date, we had only around $250m of 
      net short term debt outstanding at the end of March. Our drawn debt 
      facilities do not contain any financial covenants. In addition, we have 
      approximately $3.5bn of undrawn, committed facilities which include a 
      covenant limiting the ratio of net debt to EBITDA to 3.75 times. For this 
      purpose, net debt includes leases but excludes pensions. At 31 December 
      2019 our net debt was GBP6.2bn and, measured on the basis used in the 
      covenant calculation, the ratio of net debt to EBITDA was below 2.2 
      times. On 22 April the current tranche of the share buyback programme 
      will be completed with GBP150m of the planned full year total of GBP400m 
      having been deployed. The Board of RELX has decided not to continue with 
      the next tranche of the share buyback programme at this time, and will 
      review this decision later in the year. 
 

Chair succession update

   -- As announced on 13 February 2020, a search process has commenced to 
      appoint a successor to Sir Anthony Habgood as Chair of the Company. This 
      process, which is being led by the Senior Independent Director and 
      overseen by the Nominations Committee, is continuing. However, in light 
      of the COVID-19 pandemic, and resulting practical issues including 
      personal movement, travel and other restrictions, it is possible that the 
      search process may take longer than originally anticipated, including 
      potentially extending into next year. Recognising these practical issues 
      and the importance of continuity of leadership during this time, Sir 
      Anthony remains willing to continue in his role until a successor has 
      been appointed. A further announcement will be made in due course once a 
      successor has been identified and the date of Sir Anthony's departure 
      from the role is known. 
 

-S-

 
ENQUIRIES:    Colin Tennant (Investors)    Paul Abrahams (Media) 
               [phone]          [phone] 
 

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, and timing effects.

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 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. We consider any statements that are not historical facts to be "forward-looking statements". 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, including the impact of epidemics or pandemics; 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. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this announcement. Except as may be required by law, we undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this announcement or to reflect the occurrence of unanticipated events.

Notes for Editors

About RELX

RELX is a global provider of information-based analytics and decision tools for professional and business customers. RELX serves customers in more than 180 countries and has offices in about 40 countries. It employs over 33,000 people, of whom almost half are in North America. The shares of RELX PLC, the parent company, are traded on the London, Amsterdam and New York stock exchanges using the following ticker symbols: London: REL; Amsterdam: REN; New York: RELX. The market capitalisation is approximately GBP33bn/EUR38bn/$41bn.

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April 08, 2020 02:00 ET (06:00 GMT)