Reed Elsevier's (REL) 2012 results detail strong headline growth figures and an extension of its share buy-back programme, but, above all, they reveal that the Anglo-Dutch publisher is successfully transitioning its business model.
The group reported a 5 per cent rise in adjusted operating profits to £1.71bn, including a noteworthy contribution from the exhibitions division, which recorded a 26 per cent surge in operating profits to £210m, although improvements were posted across the board. Free cash flow ticked up by 3 per cent to £1.1bn, while net debt fell by 9 per cent from the end of 2011 to £3.1bn.
Reed has been offloading businesses that were primarily reliant on advertising and print revenues. The commercial focus is squarely on developing the online subscription and conference/exhibitions businesses - such as LexisNexis - which now account for 80 per cent of revenues and posted sales growth rates of between 5 and 7 per cent last year. The transition has been rapid. In 2005, Reed's print businesses generated half of group revenues; that figure now stands at about one-fifth. The cash from the divestment programme has been used to partially fund £350m in buybacks since the start of 2012, and Reed confirmed that shareholders are in line for another £300m windfall during 2013.
JPMorgan Cazenove expects 2013 EPS of 52.3p (from 46p in 2012).
| REED ELSEVIER (REL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 717p | MARKET VALUE: | £8.6bn | |
| TOUCH: | 716-717p | 12-MONTH HIGH: | 725p | LOW: 466p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 191p* | NET DEBT: | 135% | |
| Year to 31 Dec | Turnover (£bn) † | Pre-tax profit (£bn) † | Earnings per share (p) † | Dividend per share (p) † |
|---|---|---|---|---|
| 2008 | 5.33 | 0.62 | 22.1 | 20.3 |
| 2009 | 6.07 | 0.44 | 17.2 | 20.4 |
| 2010 | 6.06 | 0.77 | 27.3 | 20.4 |
| 2011 | 6.00 | 0.95 | 32.4 | 21.6 |
| 2012 | 6.12 | 1.19 | 46.0 | 23.0 |
| % change | +2 | +25 | +42 | +7 |
Ex-div: 1 May Payment: 23 May *Includes intangible assets of £7.8bn, or 655p a share †Turnover and pre-tax profits are for the combined entity, while earnings and dividends per share are for Reed Elsevier plc | ||||
