Anglo-Dutch publishing group Reed Elsevier defied the cynics to post underlying revenue growth in the first half to 30 June. At first glance, the figures look pretty dire, with sales only one per cent higher on an underlying basis, while adjusted pre-tax profits declined 3 per cent to £624m. And partly reflecting the increase in shares in issue after last year's £829m cash call, adjusted EPS fell 13 per cent to 21.3p. Yet these figures were better than most analysts had forecast and a more stable advertising environment is welcome news.
Reed's Health and Science & Technology division did reasonably well, increasing underlying operating profits 5 per cent to £319m and improving operating margins 1.1 percentage points to 33.4 per cent driven by the continuing shift to online tools. However, Reed exhibitions was the real surprise, producing 8 per cent higher revenues of £383m and operating profits of £123m, up 3 per cent up. It's worth noting, though, that space bookings are currently running below last year's levels and annual revenues are likely to be lower.
Reed's Lexis Nexis legal and risk management business suffered with operating margins down 3.5 percentage points to 21.9 per cent which reflected modestly lower revenues of £1.28bn and rising spend on new products. As a result operating profits here fell 15 per cent to £280m.
Numis Securities is expecting full year adjusted pre-tax profits of £1.2bn and EPS of 40.6p (2009: £1279m/45.9p).
REED ELSEVIER (REL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 556p | MARKET VALUE: | £ 6.7bn | |
| TOUCH: | 556-557p | 12-MONTH HIGH: | 562p | 404p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 131p* | NET DEBT: | 237% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2009 | 3.06 | 188 | 7.1 | 5.4 |
| 2010 | 2.99 | 412 | 13.2 | 5.4 |
| % change | -2 | +119 | +86 | - |
Ex-div:04 Aug Payment:27 Aug *Includes intangible assets of £8.26bn, or 680p per share **Turnover and pre-tax profits are for combined entity whilst earnings and dividends per share are for PLC. | ||||
