Relx cash conversion remains strong with gradual improvement in underlying revenue growth rates

Relx plc (LON:REL), the global provider of information-based analytics and decision tools, has commented on trading in the first nine months of 2020 and the outlook for the full year.

Highlights

• Our three largest business areas, STM, Risk and Legal, which together accounted for 84% of revenue and 87% of adjusted operating profit in 2019, have continued to see a gradual improvement in underlying revenue growth rates since the end of the first half.
• Exhibitions, which accounted for 16% of revenue and 13% of adjusted operating profit in 2019, has seen a reopening of event activity in a limited number of countries.
• Our operating cash conversion remains strong, and in the first nine months we acquired ten assets for a total consideration of £821m.

Full year outlook

• The full year outlook for our three largest business areas, STM, Risk and Legal, remains unchanged, and we now have greater visibility on the impact of COVID-19 on Exhibitions in 2020.

Scientific, Technical & Medical

• Underlying revenue growth YTD +2%.
• Electronic revenues, which represent around 85% of the divisional total, continued to grow well, driven by expansion of analytical products supporting research, evaluation of science, medical education and clinical decision making.
• In primary research we have continued to see strong growth in the number of article submissions for both our subscription and open access journals, and growth in author-pays open access revenue remains very strong.
• Print book revenues, which represent just under 10% of the divisional total, have seen their rate of decline moderate, but remain higher than historical averages for the year to date as we enter the important fourth quarter.
• Full year outlook: We expect another year of modest underlying revenue growth.

Risk & Business Analytics

• Underlying revenue growth YTD +3%.
• Transactional revenues, which represent around 60% of the divisional total, have continued to see improved growth rates in both Insurance and Business Services since the end of the first half.
• Subscription revenues, which represent around 40% of the divisional total, remained resilient overall, albeit with some delays in customer product implementations, and with end customer markets showing varying dynamics.
• Recent acquisitions in the fraud prevention and digital identity segments, including ThreatMetrix and Emailage, have continued to grow very strongly, with the launch of products combining new data sets progressing as planned.
• Full year outlook: The current underlying revenue growth run rate is slightly over half the rate seen in recent years, with the full year outcome dependent on the rate of improvement in business activity in the remainder of the year.

Legal

• Underlying revenue growth YTD +1%.
• Good growth in electronic revenues, which represent around 85% of the divisional total, continued, driven by further development and roll-out of legal analytics solutions and new integrated functionality including the recent Lexis+ launch.
• The rate of print revenue decline has moderated following the disruption earlier in the year, but year to date remains higher than historical rates.
• Full year outlook: We expect another year of modest underlying revenue growth.

Exhibitions

• Total revenue decline YTD -70%.
• The business has been significantly impacted by COVID-19 since March, with government restrictions preventing most events from taking place in Europe and the Americas before the end of the year.
• Exhibitions are now running in China, Japan and a few other countries. Although revenue from most events is lower than from prior editions, satisfaction measures for both exhibitors and visitors are generally higher.
• We have continued to develop and launch a range of new digital initiatives in support of our customers and event brands, and have made good progress on both hybrid and digital-only events.
• Full year outlook: Relx now expects full year revenue of £330m-£360m. After a range of cost initiatives, total costs for the year are expected to be £530m-£540m excluding one-off costs related to restructuring and cancellations.

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. Given the extent of event postponements and cancellations, underlying measures are not meaningful for Exhibitions in the current period, and hence not for the group as a whole. The growth rate for Exhibitions is calculated at constant currencies