Anglo-Dutch publisher Reed Elsevier delivered relatively robust performance for 2009, but remains cautious on 2010 outlook. Newly installed chief executive Erik Engstrom warned that customer markets were likely to remain under pressure in the near term, but assured that prospects were "encouraging" in the longer term.
The group's core professional information business, Elsevier, remained resilient with revenues from the division rising 4 per cent at constant currencies to £1.99bn. Sales from science and technology titles were particularly robust, thanks to strong subscription renewals of ScienceDirect.
But there was far weaker performance in legal resource LexisNexis, RBI and the exhibitions division. Sales from LexisNexis rose 32 per cent to £2.6bn, but this was largely due to the $4.1bn (£2.6bn) acquisition of ChoicePoint. On an underlying basis, sales in LexisNexis contracted 4 per cent. Moreover, poor advertising markets weighed on revenues at RBI, which garners 46 per cent of its revenues from advertising. So revenues from the unit fell 18 per cent to £891m and, with advertising remaining poor and subscriptions also under pressure, further revenue declines are expected this year.
Underlying revenues from the exhibitions business plunged 22 per cent to £638m. And, while 2010 revenues are expected to benefit from biennial shows, the group warns that exhibitors are still committing later than usual. In addition, revenues are still expected to be lower from annual shows.
The results were further hampered by another £182m of restructuring costs, £177m in goodwill impairments and other intangible assets in the exhibitions business and in RBI, and £48m in costs relating to the integration of ChoicePoint into LexisNexis.
REED ELSEVIER (REL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 487p | MARKET VALUE: | £5.9bn | |
| TOUCH: | 487-487.2p | 12-MONTH HIGH: | 547.5p | LOW: 403.75p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 28 | |
| NET ASSET VALUE: | 143p | NET DEBT: | 222% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 5.17 | 701 | 18.6 | 14.4 |
| 2006 | 5.40 | 721 | 25.6 | 15.9 |
| 2007 | 4.58 | 812 | 49.7 | 18.1 |
| 2008 | 5.33 | 617 | 22.1 | 20.3 |
| 2009 | 6.07 | 435 | 17.2 | 20.4 |
| % change | +14 | - | - | - |
Ex-div: 28 Apr Payment: 21 May *Includes intangible assets of £7.97bn, or 659p a share **Turnover and pre-tax profits are for combined entity, while earnings and dividends a share are for PLC | ||||
On a positive note, underlying costs have so far been reduced by £277m, and last July's placing, which raised £829m, has helped bring down debts from £5.7bn to £3.9bn. So the proportion of debt to earnings has reduced to 2.2 times, from 2.9 times.
Analyst Alex DeGroote of Panmure Gordon has kept his 2010 adjusted EPS estimate in the range of 40p to 42p (43.6p in 2009).
