Annual Reports and
Financial Statements
2016
RELX Group is a global provider of information and
analytics for professional and business customers
across industries.
We help scientists make new discoveries, lawyers
win cases, doctors save lives and insurance
companies offer customers lower prices. We save
taxpayers and consumers money by preventing fraud
and help executives forge commercial relationships
with their clients.
In short, we enable our customers to make better
decisions, get better results and be more productive.
RELX PLC is a London listed holding company which owns 52.9% of RELX Group.
RELX NV is an Amsterdam listed holding company which owns 47.1% of RELX Group.
Forward-looking statements
The Reports and Financial Statements 2016 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 a number of risks and uncertainties that could cause actual results or outcomes
to differ materially from those currently being anticipated. The terms “outlook”, “estimate”, “project”, “plan”, “intend”, “expect”, “should be”, “will be”, “believe”, “trends” and
similar expressions identify forward-looking statements. Factors which may cause future outcomes to differ from those foreseen in forward-looking statements include,
but are not limited to: current and future economic, political and market forces; changes in law and legal interpretations affecting the Group’s intellectual property rights;
regulatory and other changes regarding the collection, transfer of use of third party content and data; demand for the Group’s products and services; competitive factors
in the industries in which the Group operates; compromises of our data security systems and interruptions in our information technology systems; 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 and RELX NV with the US
Securities and Exchange Commission.
Overview RELX Group
1
Contents
Get more information online
A pdf of the full Annual Report and further
information about the Group and our
businesses can be found online at our
website: www.relx.com
Overview*
2
3 Chairman’s statement
4
2016 Financial highlights
Chief Executive Offi cer’s report
Business review*
8 RELX Group business overview
14 Scientifi c, Technical & Medical
20 Risk & Business Analytics
28 Legal
34 Exhibitions
41
Corporate Responsibility
Financial review*
54
60 Principal risks
Chief Financial Offi cer’s report
Governance
66 Board Directors
68 RELX Group Business Leaders
70
71 Corporate Governance
80
81 Directors’ Remuneration Report
105 Report of the Audit Committees
Report of the Nominations Committee
Chairman’s introduction to Corporate Governance
Financial statements
and other information
108 Independent auditors’ report
119 Consolidated Financial Statements
169 RELX PLC Annual Report
and Financial Statements
177 RELX NV Annual Report
and Financial Statements
186 Summary fi nancial
information in euros
187 Summary fi nancial information
in US dollars
188 Reconciliation of adjusted to GAAP measures
189 Shareholder information
193 2017 fi nancial calendar
* Comprises the Strategic Report in accordance with The (UK)
Companies Act 2006 (Strategic Report and Directors’ Report)
Regulations 2013.
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2
RELX Group Annual reports and financial statements 2016
2016 Financial highlights
§ Underlying revenue up 4%
§ Underlying adjusted operating profit up 6%
§ Adjusted EPS up 19% to 72.2p (60.5p); up 5% to €0.880 (€0.835); up 8% constant currency
§ Reported EPS 56.3p (46.4p) for RELX PLC; €0.687 (€0.682) for RELX NV
§ Full-year dividend up 21% to 35.95p for RELX PLC and up 5% to €0.423 for RELX NV
§ Strong financial position and cash flow; leverage 2.2x EBITDA pensions and lease adjusted
(1.8x unadjusted)
RELX Group
REVENUE
ADJUSTED OPERATING PROFIT
£m
€m
£m
€m
Underlying growth +4%
Underlying growth +6%
6,895
5,971
2,114
1,822
8,240
8,412
2,514
2,579
2015
2016
2015
2016
2015
2016
2015
2016
Parent companies
RELX PLC
Adjusted EPS
pence
Growth +19%
72.2
60.5
Dividend
pence
Growth +21%
29.7
35.95
RELX NV
Adjusted EPS
€
Growth +5%
0.835
0.880
Dividend
€
Growth +5%
0.403
0.423
2015
2016
2015
2016
2015
2016
2015
2016
RELX Group encompasses RELX PLC, RELX NV, RELX Group plc and its subsidiaries, associates and joint ventures. The corporate structure is set out on page 71.
RELX Group uses adjusted and underlying figures as additional performance measures. Adjusted figures primarily exclude the amortisation of acquired intangible assets and
other items related to acquisitions and disposals, and the associated deferred tax movements. Reconciliations between the reported and adjusted figures are set out on pages 56,
58, 127, 141 and 188. Underlying growth rates are calculated at constant currencies, and exclude the results of acquisitions and disposals made in both the year and prior year and of
assets held for sale. Underlying revenue growth rates also exclude the effects of exhibition cycling. Constant currency growth rates are based on 2015 full-year average and hedge
exchange rates. RELX NV comparative earnings and dividends per share have been adjusted retrospectively to reflect the bonus issue of shares declared on 30 June 2015.
Overview Chairman’s statement
3
Chairman’s statement
Balance sheet
With the majority of our debts dollar and euro denominated, net
debt was £4.7bn/€5.5bn on 31 December 2016, compared with
£3.8bn/€5.1bn last year. Net debt/EBITDA on a pensions and lease
adjusted basis for 2016 was 2.2x, the same level as last year and on
an unadjusted basis, it was 1.8x, also the same as last year.
Adjusted cash flow conversion was 95%, up from 94% in 2015, with
capital expenditure at 4.8% of revenues.
Share buybacks
During the year, we bought back shares worth £700m. In 2017, we
intend to deploy a total of £700m on share buybacks. By February,
£100m of this year’s total had already been completed, leaving a
further £600m to be deployed during the year.
The Boards
We continue to refresh the Boards. Lisa Hook and Robert Polet
retired as Non-Executive Directors following the AGMs in April
2016. After a search by external consultants, Carol Mills and
Robert MacLeod joined the Boards also in April. Carol has nearly
30 years’ experience in technology companies including extensive
US Board experience. Robert is Chief Executive Officer of Johnson
Matthey, the FTSE 100 speciality chemicals company and global
leader in sustainable technologies. I would like to thank Lisa and
Robert for their advice and help over many years and am delighted
that Carol and Robert have joined RELX Group.
Corporate responsibility
Good governance is the foundation of our business. We prioritise
training on our Code of Ethics and Business Conduct – the guide
to our corporate and individual behaviour – and other key policies.
Our compliance courses are clear and engaging to ensure
employees understand how to act ethically in conducting our
business; we achieve a 100% course completion rate within
90 days of issuance. We have a strong focus on data privacy and
security given its importance to our customers. In the year, we
developed a comprehensive plan for complying with EU General
Data Protection Regulations coming into force in 2018, and
reviewed and updated internal privacy policies.
We are guided in our understanding of the role companies must
play in furthering human rights by the UNGC, the UN Guiding
Principles on Business and Human Rights, and the OECD
Guidelines for Multinational Enterprises. In 2016, we published
our first Modern Slavery Act Statement, available on our
homepage, to outline the steps we are taking internally, in our
supply chain and through research, partnerships and advocacy
to avert slavery and human trafficking.
By focusing on excellence in governance and compliance, as in
other areas, we perform to our highest ability. In doing so, we
realise our aim to make unique contributions to society, including
universal, sustainable access to information, as described in the
Corporate responsibility section of this report. There we highlight
our support of the ADAM programme which applies our expertise
in the search for missing children and the Rule of Law Impact
Tracker, which we developed in 2016 to demonstrate the link
between the rule of law and development.
Anthony Habgood
Chairman
Anthony Habgood
Chairman
The gradual improvement in our
revenue growth rate reflects the
progress that has been made as
RELX Group has continued to
execute well on its strategic
priorities.
Our largest markets remained resilient during 2016 and we
continued to execute against our strategic priorities aimed at
achieving more predictable revenues, a higher growth profile and
improving returns. As a result, growth of underlying revenues
gradually improved to 4% and underlying adjusted operating
profits grew 6%, as we continued to grow revenues ahead of costs.
The mid-year reduction in the value of the pound associated with
the UK’s decision to leave the European Union was the reason why
sterling adjusted operating profit increased by 16% to £2,114m
while euros adjusted operating profit increased by 3% to €2,579m.
Constant currency adjusted earnings per share (EPS) grew at 8%.
The devaluation of sterling was a major contributor to the growth
of adjusted EPS of 19% to 72.2p for RELX PLC while the growth in
euro EPS was 5% to €0.880 for RELX NV. Reported EPS increased
21% to 56.3p for RELX PLC and 1% to €0.687 for RELX NV.
Dividends
The other major impact of sterling’s downward movement was on
dividends where the Boards are recommending final dividends of
25.7p for RELX PLC and €0.301 for RELX NV. This brings the total
dividends for the year to 35.95p for RELX PLC, up 21% and to
€0.423 for RELX NV, up 5%. Our long-term dividend policy
remains unchanged.
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4
RELX Group Annual reports and financial statements 2016
Chief Executive Officer’s report
Strategic direction
Our strategy remains consistent: to be a global professional
information solutions provider, a company that delivers improved
outcomes for professional and business customers across
industries. Our number one priority remains the organic
development of increasingly sophisticated information-based
analytics and decision tools that deliver enhanced value to our
customers.
Our goal is to help our customers make better decisions, get better
results and be more productive. We do this by leveraging a deep
understanding of our customers to create innovative solutions
which combine content and data with analytics and technology in
global platforms. These solutions often account for about 1% of
our customers’ total cost base but can have a significant and
positive impact on the economics of the remaining 99%.
We aim to build leading positions in long-term global growth
markets and leverage our skills, assets and resources across
RELX Group, both to build solutions for our customers and to
pursue cost efficiencies.
During the year we continued to make progress in this strategic
direction. We are systematically migrating all of our businesses
across RELX Group towards electronic decision tools, adding
broader datasets, embedding more sophisticated analytics and
leveraging more powerful technology, primarily through organic
development.
We are transforming our core business, building out new products
and expanding into higher growth adjacencies and geographies.
We are supplementing this organic development with selective
acquisitions of targeted data sets and analytics, and assets in
high-growth markets that support our organic growth strategies,
and are natural additions to our existing businesses.
By focusing on evolving the fundamentals of our business we
believe that, over time, we are improving our business profile and
the quality of our earnings. This is leading to more predictable
revenues through a better asset mix and geographic balance;
a higher growth profile by expanding in higher growth segments,
exiting from structurally challenged businesses and gradually
reducing the drag from print format declines; and improved
returns by focusing on organic development with strong cash
generation.
Erik Engstrom
Chief Executive Officer
We achieved good underlying
revenue growth in 2016 and
continued to generate underlying
operating profit growth ahead of
revenue growth, with underlying
revenue and adjusted operating
profit growth across all four
business areas.
UNDERLYING REVENUE GROWTH
UNDERLYING ADJUSTED OPERATING PROFIT GROWTH
+3%
+3%
+3%
+3%
+4%
+6%
+5%
+5%
+5%
+6%
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
Overview Chief Executive Officer’s report
5
2016 progress
In 2016 we made further strategic and operational progress, and
continued to evolve our business profile. Our preferred formats,
electronic and face-to-face, now generate 87% of our total
revenues, growing in mid-single digits.
We continued to focus our acquisitions on select, targeted data
sets and analytics, and assets in high-growth markets that
support our organic growth strategies. We completed 17
transactions of small content, data and exhibition assets for a total
consideration of £338m, and disposed of assets for £16m.
With a strong balance sheet and an inherently cash-generative
business, the strategic priority order for using our cash is
unchanged. First to invest in the organic development of our
businesses to drive underlying revenue growth; second to support
our organic growth strategy with targeted acquisitions; third to
grow dividends predictably, broadly in line with EPS growth; fourth
to maintain our leverage in a comfortable range; and finally use
any remaining cash to buy back shares. As part of this we bought
back shares for £700m in 2016, and announced £700m in buybacks
for 2017.
Financial performance
Our positive financial performance continued throughout 2016,
with underlying revenue and profit growth across all four business
areas. Underlying revenue growth was 4%. Underlying operating
profit growth was 6%, and adjusted earnings per share at constant
currencies grew 8%.
Key business trends in our Scientific, Technical & Medical
business remained positive, with underlying profit growth slightly
exceeding underlying revenue growth. In primary research,
strong growth in usage and article submissions continued. Good
growth continued in databases and tools, as well as in electronic
reference products.
Underlying revenue growth improved at Risk & Business
Analytics with strong growth across all key segments in both
subscription and transactional revenues. Underlying profit
growth broadly matched underlying revenue growth.
Underlying revenue growth in Legal improved slightly, with
continued efficiency gains driving strong underlying operating
profit growth. US and European markets remained stable but
subdued.
Exhibitions achieved strong underlying revenue growth, in line
with the previous year. Revenue growth was strong in the US
and moderate in Europe. Japan grew strongly and China saw
good growth.
EARNINGS PER SHARE GROWTH
Constant currency
RETURN ON INVESTED CAPITAL
+8%
+7%
+8%
+8%
+10%
11.7%*
12.1%
12.8%
12.7%
13.0%
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
*2012 ROIC restated for IAS19.
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6
RELX Group Annual reports and financial statements 2016
Corporate responsibility
Corporate responsibility is at the heart of our business. In
improving outcomes for our customers, we make an important
contribution to society. Our products and services advance
science and health, protect people, further the rule of law and
access to justice, and foster communities. These contributions
are aligned with the 17 United Nations Sustainable Development
Goals (SDGs) and we are dedicated to doing our part towards
their attainment.
We are focused on making continual improvements in the conduct
of our business. Among the ways we did that in 2016 was by
training more employees to respond to compliance concerns and
conducting a mental health at work campaign to destigmatise the
issue and raise awareness of support mechanisms. We created
more resources to help staff reference our CR focus in
discussions with customers. We charted the impact of our
charitable giving on beneficiaries and worked to ensure diverse
suppliers in the US had greater chances to work with us. We also
purchased more electricity from renewable sources.
With the help of our CR Forum and CR networks (like the Quality
First Working Group, Green Teams, RE Cares Champions and
Socially Responsible Supply Chain Network) we will progress an
ambitious agenda for 2017, which the Boards and other senior
leaders, will be monitoring.
Outlook
Key business trends in the early part of 2017 are consistent with
the early part of 2016 and we are confident that, by continuing to
execute on our strategy, we will deliver another year of underlying
revenue, profit and earnings growth in 2017.
Erik Engstrom
Chief Executive Officer
REVENUE BY FORMAT
REVENUE BY GEOGRAPHICAL MARKET
REVENUE BY TYPE
£6,895m
13%
15%
£6,895m
20%
Electronic
Face-to-face
Print/Other
£6,895m
2%
North America
Europe
Rest of world
46%
Subscriptions
Transactional
Advertising
72%
25%
55%
52%
Revenue by format
Electronic
Face-to-face
Print
27%
25%
33%
37%
22%
21%
19%
18%
15%
13%
15%
15%
64%
64%
60%
58%
56%
52%
51%
15%
15%
15%
16%
14%
14%
17%
15%
48%
50%
13%
12%
12%
12%
12%
30%
32%
28%
35%
37%
14%
14%
22%
22%
61%
59%
63%
64%
66%
66%
70%
72%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Business review
7
Business
review
In this section
8
RELX Group business overview
14 Scientific, Technical & Medical
20 Risk & Business Analytics
28 Legal
34 Exhibitions
41 Corporate Responsibility
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RELX Group Annual reports and financial statements 2016
RELX Group business overview
RELX Group is a global provider
of information and analytics
for professional and business
customers across industries.
The Group serves customers in more than 180 countries and
has offices in about 40 countries. It employs approximately
30,000 people of whom almost half are in North America.
RELX Group financial summary
REPORTED FIGURES
For the year ended 31 December
Revenue
Operating profit
Profit before tax
Net profit
Net margin
Net borrowings
ADJUSTED FIGURES
For the year ended 31 December
Operating profit
Operating margin
Profit before tax
Net profit
Net margin
Cash flow
Cash flow conversion
Return on invested capital
Parent companies
Adjusted earnings per share
Reported earnings per share
Ordinary dividend per share
2016
£m
6,895
1,708
1,473
1,161
16.8%
4,700
2016
£m
2,114
30.7%
1,934
1,488
21.6%
2,016
95%
13.0%
£
2015
£m
5,971
1,497
1,312
1,008
16.9%
3,782
£
2015
£m
1,822
30.5%
1,669
1,275
21.4%
1,712
94%
12.7%
Change
+15%
+14%
+12%
Change
+16%
+16%
+17%
+18%
2016
€m
8,412
2,084
1,797
1,416
16.8%
5,499
2016
€m
2,579
30.7%
2,359
1,815
21.6%
2,460
95%
13.0%
€
2015
€m
8,240
2,066
1,811
1,391
16.9%
5,144
€
2015
€m
2,514
30.5%
2,303
1,760
21.4%
2,363
94%
12.7%
Change at
constant
currencies
Change
underlying
+4%
+4%
Change
+2%
+1%
-1%
Change
underlying
+6%
Change at
constant
currencies
+4%
+4%
+5%
+5%
Change
+3%
+2%
+3%
+4%
RELX PLC
RELX NV
2016
72.2p
56.3p
35.95p
2015
Change
2016
2015
Change
60.5p
46.4p
29.7p
+19% €0.880
+21% €0.687
+21% €0.423
€0.835
€0.682
€0.403
+5%
+1%
+5%
Change at
constant
currencies
+8%
RELX PLC and RELX NV are separate, publicly held entities. RELX PLC’s ordinary shares are listed in London and New York, and RELX NV’s ordinary shares are listed in
Amsterdam and New York. In New York the listings are in the form of American Depositary Shares (ADSs), evidenced by American Depositary Receipts (ADRs). RELX PLC and
RELX NV jointly own RELX Group plc, which, with effect from February 2015, holds all the Group’s operating businesses and financing activities. With effect from 1 July 2015,
following a bonus issue of shares in RELX NV, one RELX PLC ordinary share confers an equivalent economic interest to one RELX NV ordinary share. RELX PLC, RELX NV,
RELX Group plc and its subsidiaries, joint ventures and associates are together known as “the Group”.
Business review RELX Group business overview
9
Market segments*
Scientific, Technical & Medical provides information and analytics that help institutions and
professionals progress science, advance healthcare and improve performance.
Segment position
Global #1
Risk & Business Analytics provides customers with solutions and decision tools that combine
public and industry-specific content with advanced technology and analytics to assist them in
evaluating and predicting risk and enhancing operational efficiency.
Key verticals #1
Legal is a leading global provider of legal, regulatory and business information and analytics that
help professional customers make more informed decisions, increase productivity and serve their
clients better.
US #2
Outside US #1 or 2
Exhibitions is the world’s leading events business, enhancing the power of face to face through data
and digital tools at over 500 events, in more than 30 countries, attracting more than 7m participants.
Global #1
* For additional information regarding revenue from our business activities and geographical markets, see market segments section starting on page 13.
Financial summary by market segment
Scientific, Technical & Medical
Risk & Business Analytics
Legal
Exhibitions
Unallocated items
Revenue
Adjusted operating profit
2016
£m
2,320
1,906
1,622
1,047
6,895
Change
underlying*
+2%
+9%
+2%
+5%
+4%
2016
£m
853
686
311
269
(5)
2,114
Change
underlying*
+3%
+9%
+12%
+7%
+6%
* RELX Group uses adjusted and underlying figures as additional performance measures. Adjusted figures primarily exclude the amortisation of acquired intangible assets and
other items related to acquisitions and disposals, and the associated deferred tax movements. Reconciliations between the reported and adjusted figures are set out on pages 56,
58, 127, 141 and 188. Underlying growth rates are calculated at constant currencies, and exclude the results of acquisitions and disposals made in both the year and prior year and
of assets held for sale. Underlying revenue growth rates also exclude the effects of exhibition cycling. Constant currency growth rates are based on 2015 full-year average and
hedge exchange rates.
REVENUE
£6,895m
15%
34%
23%
Scientific,
Technical
& Medical
Risk &
Business
Analytics
Legal
Exhibitions
ADJUSTED OPERATING PROFIT
£2,114m
13%
15%
40%
28%
32%
Scientific,
Technical
& Medical
Risk &
Business
Analytics
Legal
Exhibitions
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10
RELX Group Annual reports and financial statements 2016
Analysing big data
across RELX Group:
HPCC Systems
HPCC Systems (High Performance Computing Cluster) is RELX Group’s open
source big data technology. It is used to analyse structured and unstructured
data, giving our customers the information and insight they need. Each of our
market segments benefits from the technology, allowing our customers
around the world to make better decisions, get better results and be more
productive.
The State of Alabama and
LexisNexis Risk Solutions
Identity-based tax fraud is a huge problem in the US. The Treasury Inspector
General for Tax Administration estimated in 2012 that the Internal Revenue Service
could issue $21bn in potentially fraudulent tax refunds resulting from identity theft
over the following five years. The Alabama Department of Revenue is using the
LexisNexis Tax Refund Investigative Solution (TRIS) to help stop such fraudulent tax
refunds. Using HPCC Systems, TRIS combines proven identity authentication tools
with advanced linking and analytics capabilities. When a fraudulent return is
suspected, TRIS makes it possible to identify easily whether the identity being used
on the tax form is actually owned by the individual. Over the last four years
LexisNexis Risk Solutions has enabled 11 US states to save over $500m.
$500m
saved by 11 US states over four years
using LexisNexis TRIS
Julie P. Magee, Commissioner of the
Department of Revenue
States are looking for a cost effective
approach, something they can easily
integrate into their existing systems
and something fast. The TRIS solution
combines all of that and I don’t
think anybody has a better database
to compare information with than
LexisNexis.
Julie P. Magee
Commissioner of the Department of Revenue,
State of Alabama
To watch a video of Ms Magee talking about
TRIS, visit: www.relx.com/go/tris.
Business review RELX Group business overview
11
FlightGlobal
FlightGlobal is an industry-leading data provider with
one of the world’s most comprehensive data stores on
virtually every aspect of the global air transport
industry. That includes deep data on over 28,000
aircraft in the world airline fleet, the schedule plans
for 900 airlines and live tracking of 100,000 daily
flights. Linking these datasets is a data integration
challenge but generates significant value.
FlightGlobal is helping customers gain much deeper
insights through its Fleet Flight Matching models that
link individual aircraft to routes, as well as helping
predict what will be flown on the future schedule.
HPCC Systems is 14 times faster at running
the data used in the Fleet Flight Matching
model compared with traditional technologies.
These analytics give FlightGlobal customers
exceptional ability to monitor and predict capacity,
utilisation and on-board services of aircraft,
which has significant value for their businesses.
Christopher Flook
Managing Director, FlightGlobal
x14
14 times faster – the speed at which data
can be processed in HPCC compared
with traditional technologies
12
RELX Group Annual reports and financial statements 2016
Business review
13
Market
segments
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RELX Group Annual reports and financial statements 2016
Scientific, Technical & Medical
We help researchers make new discoveries, collaborate with
their colleagues and give them the knowledge they need to find
funding. We help governments and universities evaluate and
improve their research strategies. We help doctors save lives,
providing insight for physicians to find the right clinical
answers and we support nurses and other healthcare
professionals throughout their careers. Our goal is to expand
the boundaries of knowledge for the benefit of humanity.
§ We enhance the quality of research output by organising
the review, editing and dissemination of 16% of the world’s
scientific articles.
§ ScienceDirect, the world’s largest database of
peer-reviewed primary scientific and medical research,
has 14m monthly users.
§ Scopus is the most extensive abstract and citation
database of research literature in the world, with over 65m
information records from 5,000 publishers.
§ SciVal offers insights into the research performance of
7,500 research institutions.
§ ClinicalKey, the flagship clinical reference platform, is
accessed by more than 4,200 institutions.
§ Elsevier journals have at some point featured articles by
163 of 164 science and economics Nobel prize winners
since 2000.
Business overview
Scientific, Technical & Medical provides information and analytics
that help institutions and professionals progress science, advance
healthcare and improve performance.
Elsevier is a global business with principal operations in
Amsterdam, Beijing, Boston, Chennai, Delhi, London, Madrid,
Munich, New York, Oxford, Paris, Frankfurt, Philadelphia, Rio de
Janeiro, St. Louis, San Diego, Singapore and Tokyo. It has 7,500
employees and serves customers in over 180 countries.
Revenues for the year ended 31 December 2016 were £2,320m,
compared with £2,070m in 2015 and £2,048m in 2014. In 2016, 42%
of revenue by geographical market was derived from North
America, 26% from Europe and the remaining 32% from the rest of
the world. Subscription sales generated 70% of revenue,
transactional sales 27% and advertising 3%.
Elsevier serves the needs of scientific, technical and medical
markets by organising the review, editing and disseminating of
primary research, reference and professional education content,
as well as by providing a range of database and decision tools.
Elsevier’s customers are scientists, academic institutions,
research leaders and administrators, medical researchers,
doctors, nurses, allied health professionals and students, as well
as hospitals, research institutions, health insurers, managed
healthcare organisations, research-intensive corporations and
governments. All these customers rely on Elsevier to provide
high-quality content and critical information for making scientific
and medical decisions; review, edit, disseminate and preserve
research findings; and create innovative tools to help focus
research strategies, increase research effectiveness, improve
medical outcomes, and enhance the efficiency of healthcare and
healthcare education.
In the primary research market during 2016, over 1.5m research
papers were submitted to Elsevier. More than 20,000 editors
managed the peer review and selection of these papers, resulting
in the publication of 420,000 articles in about 2,500 journals, many
of which are the foremost publications in their field and a primary
point of reference for new research. This content was accessed by
around 14m people, with over 900m full-text article downloads
last year. Elsevier’s journals are primarily produced and delivered
through the ScienceDirect platform, the world’s largest database
of scientific and medical research, hosting over 14m pieces of
content and 35,000 e-books. Flagship journals include Cell and
The Lancet families of titles.
Business review Scientifi c, Technical & Medical
15
engineers that helps them to select the right materials, a
mission-critical use case in product development across
chemicals, oil & gas and other engineering-focused industries.
Elsevier serves academic and government research administrators
through its Research Intelligence suite of products. Leveraging
bibliometric data from Scopus and other data types such as patent
citations and usage data, SciVal is a decision tool that helps
institutions to establish, execute and evaluate research strategies.
Pure is a comprehensive research information management
system which enables evidence-based research management
decisions, promotes collaboration, simplifi es administration and
optimises impact. Our Analytical Services team provides accurate,
unbiased analysis on research performance by combining
high-quality data sources with technical and research metrics
expertise. Expert LookUp helps funding bodies fi nd the best peer
reviewers for evaluating grant applications.
For healthcare professionals, Elsevier develops products to
deliver patient-specifi c solutions at the point of care to improve
patient outcomes. Its clinical solutions include Interactive Patient
Education, which provides patient education and discharge
information, and Care Planning, which provides a data-driven
framework to support nurses in undertaking procedures.
In 2016, Elsevier launched 64 new subscription and author-pays
journals, including Chem from Cell Press and The Lancet
Gastroenterology & Hepatology and The Lancet Public Health
from The Lancet. Elsevier is also a global leader in scientifi c,
technical and medical reference markets, providing authoritative
and current professional reference content. Elsevier has been a
leader in driving the shift from print to electronic. Flagship titles
include works such as Gray’s Anatomy, Nelson’s Pediatrics and
Netter’s Atlas of Human Anatomy.
Elsevier’s fl agship clinical reference platform, ClinicalKey,
provides physicians with access to leading Elsevier and
third-party reference and evidence-based medical content in
a single, fully integrated site. ClinicalKey is growing strongly,
and is currently accessed by more than 4,200 institutions.
In medical education, Elsevier serves students of medicine,
nursing and allied health professions in a number of formats
including electronic books and electronic solutions. For example,
HESI, an online testing and remediation solution designed to help
students of nursing and allied health professions, conducted
over 775,000 tests in 2016.
Elsevier’s products provide a range of tools and solutions for
professionals in the scientifi c, technical and medical fi elds.
Customers include academic and corporate researchers,
research administrators and healthcare professionals.
For academic and corporate researchers, signifi cant products
include Scopus, Reaxys and Knovel. Scopus, the largest abstract
and citation database of peer-reviewed literature with over 65m
records from more than 21,800 journals and 5,000 international
publishers, allows researchers to track, analyse and visualise the
world’s research output. Reaxys supports the early stages of drug
development in the pharmaceutical industry, exploratory chemistry
research in academia, and product development in industries such
as chemicals and oil & gas. Knovel is a decision support tool for
The world’s largest abstract and citation
database of peer-reviewed literature
features tools to track, analyse and
visualise scholarly research
The leading suite of preparation, testing and
remediation resources that generate
actionable data to prepare nursing and health
profession students for success in pursuing
degrees, passing exams and starting their
careers
The world’s largest database of scientifi c
and medical research articles
Premier life sciences journal with the
highest impact factor in biochemistry
and molecular biology
One of the world’s leading medical journals
since 1823
Ready-to-use tools to analyse the world of
research, and establish, execute and evaluate
the best strategies for research organisations
Combines leading reference and
evidence-based medical content into its
fully integrated clinical insight engine
An innovative research management and
social collaboration platform
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RELX Group Annual reports and financial statements 2016
Market opportunities
Scientific, technical and medical information markets have good
long-term growth characteristics. The importance of research
and development to economic performance and competitive
positioning is well understood by governments, academic
institutions and corporations. This is reflected in the long-term
growth in research and development spending and in the number
of researchers worldwide. Growth in health markets is driven
by ageing populations in developed markets, rising prosperity
in developing markets and the increasing focus on improving
medical outcomes and efficiency. Given that a significant
proportion of scientific research and healthcare is funded
directly or indirectly by governments, spending is influenced
by governmental budgetary considerations. The commitment
to research and health provision does, however, remain high,
even in more difficult budgetary environments.
Strategic priorities
Elsevier’s strategic goal is to lead the way in providing information
solutions that advance science, technology and health. To achieve
this, Elsevier creates solutions that reflect deep insight into the
way its users work and the outcomes they are seeking to achieve;
strives for excellence in content, service and execution; constantly
adapts and revitalises its products, business models and
technology; and leverages its institutional skills, assets and
resources to promote innovation and efficiency.
Elsevier’s strategic priorities are to: continue to increase content
volume and quality; expand content coverage, building out
integrated solutions and decision tools combining Elsevier,
third-party and customer data; increase content utility, using
“Smart Content” to enable new e-solutions; combine content
with analytics and technology, focused on measurably improving
productivity and outcomes for customers; and continue to drive
operational efficiency and effectiveness.
In the primary research market, Elsevier aims to grow volume
through new journal launches, expansion of author-pays journals
and growth from emerging markets; enhance quality by building
on our premium brands; and add value to core platforms by
implementing new capabilities such as advanced
recommendations on ScienceDirect and social collaboration
through Mendeley.
In clinical reference markets, priorities are to expand content
coverage and ensure consistent and seamless linking of content
assets across products.
Business model, distribution channels and competition
Science and medical research is principally disseminated on
a paid subscription basis to the research facilities of academic
institutions, governments and corporations, and, in the case of
medical and healthcare journals, to individual practitioners and
medical society members. For the past decade content has been
provided free or at very low cost in over 100 countries and
territories in the developing world through Research4Life, a
United Nations partnership initiative. For a number of journals,
advertising and promotional income represents a small
proportion of revenues, predominantly from pharmaceutical
companies in healthcare titles.
Over the past 15 years, alternative payment models for the
dissemination of research such as author-pays or author’s-
funder-pays have emerged. While it is expected that paid
subscription will remain the primary distribution model, Elsevier
has long invested in alternative business models to address the
needs of customers and researchers. Over 1,850 of Elsevier’s
journals now offer the option of funding publication and
distribution via a sponsored article fee. In addition, Elsevier now
produces around 170 stand-alone author-pays open access
journals. In 2016 we published over 24,000 author-pays and
sponsored open access articles, up over 22% on the previous year,
making us one of the top three open access publishers in the world.
Electronic products, such as ScienceDirect, Scopus and ClinicalKey,
are generally sold direct to customers through a dedicated sales
force that has offices around the world. Subscription agents
sometimes facilitate the sales and administrative process for
remaining print sales. Reference and educational content is sold
directly to institutions and individuals and accessed on Elsevier
platforms. Sometimes it is still sold in printed book form through
retailers, wholesalers or directly to end users.
Competition within science and medical reference content is
generally on a title-by-title and product-by-product basis.
Competition in research and reference products is typically with
learned societies and professional information providers, such as
Springer Nature, Thomson Reuters and Wolters Kluwer. Decision
tools face similar competition, as well as from software
companies and internal solutions developed by customers.
REVENUE BY FORMAT
REVENUE BY GEOGRAPHICAL MARKET
REVENUE BY TYPE
£2,320m
Print*
20%
Face-
to-face
1%
£2,320m
Rest of
world
32%
Advertising
3%
£2,320m
Transactional
27%
North
America
42%
*Print book revenue 10%
Electronic
79%
Europe 26%
Subscription
70%
Business review Scientific, Technical & Medical
17
2016 financial performance
Revenue
Adjusted operating profit
2016
£m
2,320
853
2015
£m
2,070
760
Underlying
growth
+2%
+3%
Acquisitions/
disposals
0%
-1%
Currency
effects
+10%
+10%
Total
growth
+12%
+12%
Key business trends remained positive in 2016, with underlying
profit growth slightly exceeding underlying revenue growth.
Underlying revenue growth was +2%. The difference between the
reported and underlying growth rates primarily reflects the
impact of exchange rate movements.
Underlying adjusted operating profit growth of +3% was slightly
ahead of revenue growth, resulting in a small underlying margin
improvement which was partly offset by exchange rate
movements.
In primary research, strong growth in usage and article
submissions continued. In 2016 we launched 64 new journals.
Good growth continued in databases & tools, as well as in
electronic reference products.
Print books, which now represent around 10% of divisional
revenues, saw steeper second half declines than in recent years,
reflecting market conditions. Print pharma promotion revenues
were stable.
2017 outlook
Our customer environment remains largely unchanged. Overall
we expect another year of modest underlying revenue growth,
with underlying operating profit growth continuing to exceed
underlying revenue growth.
REVENUE
£m
Underlying growth +2%
2,070
2,320
ADJUSTED OPERATING PROFIT
£m
Underlying growth +3%
760
853
2015
2016
2015
2016
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RELX Group Annual reports and financial statements 2016
The keyword search means I can find
researchers anywhere. If I’m looking for
international collaborators, for example, it’s
usually not too difficult to find experts among the
people already working with us. But identifying
experts among people not already working with
us would be impossible without SciVal. That is
invaluable.
Michelle Hutnik
Director of Research Analytics and Communications,
Penn State
21,000+
Penn State research
authors are listed in
SciVal
SciVal:
helping Penn State analyse
and showcase its research
Penn State is a research-intensive public university with 24 campuses
throughout Pennsylvania, 20,000 faculty and staff, and 99,000 students.
The university started using SciVal in 2015, initially to benchmark its
own scholarly output relative to its peers and subsequently for many
other projects.
Since the university is so large and spread out, it was extremely
challenging for staff to track what research was being carried out
on each campus and by each college or department. Using SciVal,
staff can now carry out complex analysis, such as evaluating
interdisciplinary artificial intelligence expertise in language
processing, which crosses a large number of different campuses,
colleges and departments, in a matter of minutes. SciVal is also
used to find and evaluate potential international research
partners. Part of the university’s strategic plan is to increase its
international research efforts. SciVal enables researchers to find
out quickly and easily what other institutions are doing in
particular research fields and where there may be overlapping
areas of strength.
Michelle Hutnik of Penn State
About SciVal
SciVal offers quick, easy access to the
research performance of 7,500 research
institutions and 220 countries worldwide.
This easy-to-use research and analysis
solution has unparalleled power and
flexibility. It enables customers to visualise
research performance, benchmark
relative to peers, develop collaborative
partnerships and analyse research trends.
Using advanced data analytics
super-computer technology, SciVal allows
users to instantly process an enormous
amount of data to generate powerful data
visualisations in seconds. The SciVal
database covers 38m publication records
from 21,915 journals of 5,000 publishers
worldwide. It is powered by RELX Group’s
HPCC (High Performance Computing
Cluster) big data technology.
20
RELX Group Annual reports and financial statements 2016
Risk & Business Analytics
We help US auto insurance companies with better risk
assessment so they can offer their customers lower prices
and enable healthcare providers to keep down medical costs.
We make the world a safer place from criminals, rescue
missing children and help save the lives of police officers.
We prevent fraudsters from exploiting stolen identities and
give banks the data and tools to help combat money laundering.
We enable millions of disadvantaged people to obtain credit,
often for the first time. We help farmers with their efforts in
precision agriculture and airlines to improve their operations
and services for passengers.
§ 70% of car owners in the US have lower premiums thanks
to Risk Solutions products.
§ Accuity delivers accurate payments data on over 819,000
bank branches worldwide, especially in emerging markets.
§ Our Tax Refund Investigative Solution (TRIS) has saved
11 US states a total of more than $500m over four years.
§ LexisNexis eCrash cuts the average time it takes to file a
traffic accident report from 60 minutes to 19, reducing the
threat to life for police officers at the scene.
Business overview
Risk & Business Analytics provides customers with solutions and
decision tools that combine public and industry-specific content
with advanced technology and analytics to assist them in
evaluating and predicting risk and enhancing operational
efficiency.
The business has principal operations in Georgia, Florida, Illinois
and Ohio in the US and London, Amsterdam and Shanghai. It has
8,200 employees and serves customers in more than 170
countries.
Revenues for the year ended 31 December 2016 were £1,906m,
compared with £1,601m in 2015 and £1,439m in 2014. In 2016, 79%
of revenue came from North America, 17% from Europe and the
remaining 4% from the rest of the world. Subscription sales
generated 36% of revenues, transactional sales 61% and
advertising 3%.
The business is organised around market-facing industry/sector
groups: Insurance Solutions, Business Services, Government
Solutions, Health Care Solutions, as well as Major Data Services
(including banking, energy and chemicals, and human resources).
Insurance Solutions, the largest segment, provides
comprehensive data, analytics and decision tools for personal,
commercial and life insurance carriers in the US to improve
critical aspects of their business. Information solutions, including
the most comprehensive US personal loss history database,
C.L.U.E., help insurers assess risks and provide important inputs
to pricing and underwriting insurance policies. Additional key
products include LexisNexis Data Prefill, which provides
information on customers directly into the insurance workstream
and LexisNexis Current Carrier, which identifies insurance
coverage details and any lapses in coverage.
In the US, we remain focused on delivering innovative decision
tools through a single point of access within an insurer’s
infrastructure. LexisNexis Active Insights, our solution for active
risk management, connects proprietary linking algorithms with
vast amounts of data to proactively inform insurers of key events
impacting their policyholders. We are advancing our strategy to
drive more consistency and efficiency in claims through our
solution suite, Claims Compass. Our Risk Classifier solution,
which uses public and motor vehicle records and predictive
modelling, is used by more than 25 life insurers to better
understand risk and improve underwriting efficiency.
We continue to make progress outside the US. In the UK, the
contributory No Claims Discount module, which automates
verification of claims history, is now available for insurers at the
point of quote. In China, the Genilex joint venture is delivering key
vehicle data to auto insurers and is looking to add more analytics
solutions. In India, we launched our Intelligence Exchange
contributory platform and Risk Insights solution for life insurers
to predict, better assess and manage risk within the underwriting
and claims management processes.
In 2016, Risk and Business Analytics acquired the Crash and
Project business of Appriss. This increased the number of US law
enforcement agency customers to more than 5,000, and improved
crash report dissemination. The acquisition of Insurance Initiatives
Limited (IIL) expanded offerings to UK insurers and improved the
delivery of information predominantly at the point of quote in the
UK’s property and casualty insurance industry.
Business review Risk & Business Analytics
21
Business Services provides organisations with risk management,
identity management, fraud detection and prevention, credit risk
decision-making and compliance solutions. These include Know
Your Customer (KYC) and Anti-Money Laundering (AML) products.
Collection solutions help debt recovery professionals in the
segmentation, management and collection of consumer and
business debt. We leverage the combination of our big data
technology (HPCC Systems), our vast repository of alternative
data and advanced analytics to provide better economic
information for consumers and businesses.
In 2016 we launched our new fraud and identity platform that
enables companies to customise their identity verifi cation and
authentication customer experience to the risk level of each
individual consumer. Our small business credit scores, credit
reports and risk attributes enable lenders to increase the number
of potential small business applicants by 60% so that more
start-ups and privately held companies can be included earlier in
the funding process. We enhanced our AML suite by combining
Bridger Insight XG, a Bank Secrecy Act and AML solution and our
WorldCompliance high-risk individuals database with an alert
remediation service to mitigate fi nancial crime risks and
accelerate growth in Europe, Asia and Latin America.
Government Solutions provides identity intelligence to US
federal, state and local law enforcement and government
agencies to help solve criminal cases and identify fraud, waste and
abuse in government programmes. In 2016, we launched
LexisNexis Accurint Virtual Crime Center, which combines data
from police departments with public records data to give agencies
visibility into cross-jurisdictional data in one interface. We
continued to grow our contributory database footprint in the
health, human services and public safety markets. We developed
a contributory solution linking an agency’s data with nationwide
LexisNexis business networks to identify businesses not
complying with the law.
Health Care Solutions utilises socioeconomic, consumer,
provider and medical claims data to deliver leading identity,
fraud, compliance and health risk analytics solutions across key
stages of healthcare to enable intelligent decision-making for
payers, providers, life sciences organisations and pharmacies.
Key developments in 2016 included successfully validating the
use of the LexisNexis Socioeconomic Health Score as a predictor
of health risk without the use of medical or claims data, and
launching LexisNexis VerifyHCP, a provider directory accuracy
solution that helps payers and providers to meet key federal and
state requirements by ensuring the accuracy of data published
to consumers through directories.
Major Data Services include: Accuity, a provider of services and
solutions to the banking and corporate sectors focused on
payment effi ciency, KYC, AML and compliance; ICIS, an
information and data service in chemicals, energy and fertilisers;
XpertHR, an online service providing regulatory guidance, best
practices and tools for HR professionals; Nextens, a provider of
tools and services for tax professionals; FlightGlobal, a leading
provider of data and analytics for the global commercial aviation
and travel industry; Proagrica, a provider of software, connectivity
solutions, data, analytics and media streams for the global
agriculture sector; and Estates Gazette, which delivers a mix of
high-quality data, decision tools and high-value news and
information to the UK’s commercial real estate market. During the
year FlightGlobal acquired Diio and FlightStats, two leading
aviation data and analytics companies based in the US. Accuity
also completed the acquisition of Fire Solutions, a provider of
compliance and training solutions to US regulated investment
advisers and broker dealers.
Data and analytics for the global commercial
aviation and travel industry
Global provider of news, price benchmarks,
data, analytics and research to the energy,
chemical and fertiliser industries
LexisNexis Active Insights
An active risk management solution that
provides timely alerts of recent changes
occurring in the household to help insurers
enhance customer relationships with
better service
VerifyHCP
The VerifyHCP solution provides a proven
approach to help payers keep their provider
directories current and improve compliance
with US state and federal regulations
LexisNexis RiskView
An innovative tool using public records and
non-traditional data to accurately assess the
creditworthiness of more than 40m
individuals with little or no traditional credit
history
Claims Compass
Data analytics suite with C.L.U.E., Police
Records, LexisNexis Claims Datafi ll,
LexisNexis Claims Medical Discovery and
LexisNexis Claims Analyzer that improves
the claims process from fi rst notice of
loss, triage, investigation and resolution
through recovery
Innovative solutions for payments
and compliance professionals, from
comprehensive data and software to manage
risk and compliance, to fl exible tools to
optimise payments pathways
Accurint® Virtual Crime Center
Policing platform used for analytics, crime
analysis and investigations linking public
records to national law enforcement data for
a complete picture across jurisdictions
The Small Business Credit Score
A breakthrough tool that increases a lender’s
number of decisionable small-business
applicants by up to 60% by blending our robust
business, owner and authorised
representative data with fi nancial payment
performance histories
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RELX Group Annual reports and financial statements 2016
The risk and identity management solutions described above
utilise a comprehensive database of public records and
proprietary information with more than six petabytes of unique
data, which makes it the largest database of its kind in the US
market today. Our market-leading HPCC Systems technology
enables Risk & Business Analytics to provide its customers with
highly relevant decision-making insights and to create new,
low-cost solutions quickly and efficiently.
In 2016, we continued to reshape our portfolio, exiting areas not
core to our strategy. A number of magazine titles and brands in the
Netherlands were divested, including Elsevier Weekblad,
Beleggers Belangen, P&O Actueel and PBNA.
Market opportunities
We operate in markets with strong long-term growth in demand for
high-quality advanced analytics based on industry information and
insight including: insurance underwriting transactions; insurance
acquisition, retention and claims handling; healthcare, tax and
entitlement fraud; credit defaults, identity solutions and financial
crime compliance; due diligence requirements surrounding
customer enrolment; security and privacy considerations; and data
and advanced analytics for the banking, energy and chemicals,
human resources and aviation sectors.
In the insurance segment, growth is supported by increasing
transactional activity in the auto, property and life insurance markets
and the increasing adoption by insurance carriers of more
sophisticated data and analytics in the prospecting, underwriting and
claims evaluation processes, to assess underwriting risk, increase
competitiveness and improve operating cost efficiency. Transactional
activity is driven by growth in insurance quoting and policy switching,
as consumers seek better policy terms.
This activity is stimulated by competition among insurance
companies, high levels of carrier advertising and rising levels
of internet quoting and policy binding.
A number of factors support growth in banking and financial
services markets, including cross-border payments and trade
finance levels. New credit originations, continued high fraud losses,
stringent regulatory compliance requirements, escalating
anti-money laundering fines and high-profile anti-bribery and
corruption cases impact growth opportunities for us with all
entities, including financial institutions, e-commerce,
communications, mobile and media companies. In collections,
demand is driven mainly by levels of consumer debt and the
prospect of recovering that debt, which is impacted by employment
conditions in the US.
Growth in government markets is driven by the increasing use of
data and analytics to combat criminal activity, fraud and tax evasion,
and to address security issues. The level and timing of demand
in this market are influenced by government funding and revenue
considerations. In healthcare, there are numerous growth drivers
for identity, fraud and clinical analytics solutions including the
expansion of compliance requirements driven by new regulations.
Growth in the global energy and chemicals markets is driven by
increasing trade and demand for more sophisticated information
solutions. Aviation information markets are being driven by
increases in air traffic and in the number of aircraft transactions.
Growth in agriculture markets is being driven by adoption of
technology and data solutions plus increasing supply chain
connectivity.
REVENUE BY FORMAT
REVENUE BY GEOGRAPHICAL MARKET
REVENUE BY TYPE
£1,906m
Face-to-face
2%
Print 6%
£1,906m
Europe
17%
Rest of world
4%
£1,906m
Advertising
3%
Subscription
36%
Electronic
92%
North
America
79%
Transactional
61%
Business review Risk & Business Analytics
23
Strategic priorities
Our strategic goal is to help businesses and governments achieve
better outcomes with information and decision support in their
individual markets through better understanding of the risks and
opportunities associated with individuals, other businesses,
transactions and regulations. By providing the highest quality
industry data and decision tools, we assist customers in
understanding their markets and managing risks efficiently and
cost-effectively. To achieve this, we are focused on: delivering
innovative new products; expanding the range of risk management
solutions across adjacent markets; addressing international
opportunities in selected markets to meet local needs; further
growing our data services businesses and continuing to strengthen
our content, technology and analytical capabilities.
Business model, distribution channels and competition
Our products are for the most part sold directly, typically on a
subscription or transactional basis. Pricing is predominantly on
a transactional basis for insurance carriers and corporations,
and primarily on a subscription basis for government entities.
In the insurance sector, our competitor Verisk sells data and analytics
solutions to insurance carriers but largely addresses different
activities to ours. Principal competitors in Business Services and
government segments include Thomson Reuters and major credit
bureaus, which in many cases address different activities in these
segments as well.
Major Data Services competes with a number of information
providers on a service and title-by-title basis including: Platts,
Thomson Reuters and IHS as well as many niche and privately
owned competitors.
Transactional and subscription revenues now account for
97% of the total business with the remaining 3% derived from
advertising.
2016 financial performance
Revenue
Adjusted operating profit
2016
£m
1,906
686
2015
£m
1,601
575
Underlying
growth
Acquisitions/
disposals
+9%
+9%
-1%
-1%
Currency
effects
+11%
+11%
Total
growth
+19%
+19%
Underlying revenue growth improved in 2016, with strong
growth across all key segments in both subscription and
transactional revenues. Underlying profit growth broadly
matched underlying revenue growth.
Underlying revenue growth was +9%. The difference between the
reported and underlying growth rates reflects the impact of
exchange rate movements and a minor effect from portfolio
changes. Underlying adjusted operating profit growth broadly
matched underlying revenue growth as we continued to develop
new products and services.
The insurance segment continued to see strong growth, driven by
volume growth and strong take up of new products and services
across the insurance workflow, and by expansion in adjacent
verticals including life and home insurance. The international
initiatives continued to progress well, with strong growth in the
UK, and early stage developments in China and India.
In Business Services, growth was driven by demand for identity
authentication and fraud detection solutions across the financial
services and corporate sectors.
The government and healthcare segments continued to develop
strongly. Major Data Services saw strong underlying revenue
growth, and other brands & services remained stable.
2017 outlook
The fundamental growth drivers of Risk & Business Analytics
remain strong, and we expect underlying operating profit growth
to broadly match underlying revenue growth.
REVENUE
£m
Underlying growth +9%
1,601
1,906
ADJUSTED OPERATING PROFIT
£m
Underlying growth +9%
686
575
2015
2016
2015
2016
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Accuity:
improving mBank’s
delivery to customers
Headquartered in Warsaw, mBank is one of the strongest and fastest
growing financial brands in Poland, providing innovative banking
solutions to its retail and corporate customers.
mBank was finding challenges in booking payments properly and
efficiently. Staff were using a manual process to search for
payments routing information and this method cost valuable time
and resources. On a mission to improve operational efficiency and
grow its payments capacity, mBank looked to Accuity’s Global
Payment File-Plus (GPF-Plus) product to automate international
payments and significantly reduce the team’s manual workload.
The implementation of GPF-Plus took less than six months and
formed part of a wider project to optimise and automate mBank’s
internal systems and processes. It gave the bank a fully functional
solution within a very short timeframe as well as immediate
benefits. mBank now processes 99% of payments automatically,
saves 2-3 minutes of employee time per transaction, saves
$300,000 annually on operational costs, fully returning its
investment in one year, reduces human error through automation
and has experienced a 10% rise in transaction volume.
About Accuity
Accuity offers a suite of innovative
solutions for payments and compliance
professionals, from comprehensive
data and software that manage risk and
compliance, to flexible tools that optimise
payments pathways. With deep expertise
and industry-leading data-enabled
solutions from the Fircosoft, Bankers
Almanac and NRS brands, the Accuity
portfolio delivers protection for individual
and organisational reputations. GPF-Plus is
a data file containing global payment routing
information from multiple sources.
Business review Review & Business Analytics
25
Accuity’s Global Payment File-Plus is the ideal
solution for any innovative financial institution
aiming to automate high volumes of cross-border
transactions by properly defining its payments
routing. As well as presenting some immediate
benefits, the solution gave us a full return on
our investment within one year, taking into
consideration the cost of the product, as well
as the associated project to integrate it into our
operational banking system. In reducing our
operational costs and increasing the volume of
payments we can process, Global Payment File-
Plus has made mBank much more competitive
in the Polish market.
Piotr Sikorski
Transactional Banking Products Division,
mBank, Poland
99%
of payments processed
automatically
26
RELX Group Annual reports and financial statements 2016
Individualised interventions make Tandem
such an effective tool. We want to focus those
interventions as precisely as possible, so our
members see the most benefit. The LexisNexis
Socioeconomic Health Score helps us see risk
ahead that traditional analytics tools just
couldn’t. That means we can offer customised
ways to help our members early, when
intervention is most effective.
Russell Benaroya
Co-Founder and CEO, EveryMove
250
clinically validated
attributes in LexisNexis
Socioeconomic Health
Score
LexisNexis Risk Solutions:
enabling EveryMove
to assess health risk
EveryMove, a Seattle, Washington State-based company founded in 2011,
has a mission to help 10m people improve their health in 10 years, by
enabling them to be more effective in managing their health. It has
developed a product called Tandem, which gives health plans and
employers the ability to more effectively communicate and motivate
individuals to take the right actions for their health. More individuals taking
the right action means improved management of overall healthcare costs
and plan quality for the payer. More than 500,000 individuals and hundreds
of companies already use EveryMove’s products.
To further enhance its product, EveryMove turned to LexisNexis
Risk Solutions. It provided LexisNexis Risk Solutions’ data
scientists with information on 5,000 Tandem participants enrolled
in a major health plan. The goal was to see whether on its own,
without any claims data, LexisNexis Socioeconomic Health Score
could predict and prioritise the risk of participants with
pre-selected health conditions or in pre-selected categories.
LexisNexis Health Care ran the numbers through a socioeconomic
risk model and generated a socioeconomic index and rank for each
member. The trial was a success and EveryMove now uses the
LexisNexis Socioeconomic Health Score and additional data sets
for the models to power Tandem.
Russell Benaroya of EveryMove
About LexisNexis Socioeconomic
Health Score
The LexisNexis Socioeconomic Health
Score leverages over 250 clinically validated
socioeconomic attributes found within
public records data that correlate with
health outcomes to provide healthcare
entities with a picture of future risk. Once
a health plan’s member file has been
run against the socioeconomic model,
a socioeconomic health score is delivered
at the individual member level, which is
indicative of the health risk they pose
over the next 12 months. These scores
can be easily integrated with existing
work platforms.
28
RELX Group Annual reports and financial statements 2016
Legal
We help lawyers win cases for their clients, manage their work
more efficiently, and grow their practices. We assist
corporations to better understand their markets and prevent
bribery and corruption within their supply chains. We aid
universities in their efforts to help students become
successful legal professionals, and we support governments
and courts by making laws accessible and strengthening legal
infrastructures. We help collect evidence against war
criminals and provide tools to combat human trafficking. We
endeavour to advance the rule of law across the world.
§ More than 10m docket entries are included in Lex Machina,
which provides legal analytics to companies and law firms,
enabling them to craft successful strategies, win cases,
and close business by mining litigation data. This data
reveals insights never before available about judges,
lawyers, parties and the subjects of the cases themselves,
sourced from millions of pages of litigation information.
§ More than 27m SEC filings are held in Intelligize, helping
securities and M&A professionals find standard language
for corporate agreements and identify critical areas for
SEC examiners when preparing filings for submission.
Intelligize offers powerful filtering tools to hone in on
relevant SEC staff opinions ensuring professionals have a
higher degree of relevance in their filings.
§ Almost 4bn people live outside the protection of the rule of
law. LexisNexis publishes many of the world’s primary
laws. We continue our collaboration with the United
Nations to develop the Global Rule of Law Business
Principles.
§ More than 20bn connections within the LexisNexis
database are continually explored and updated to deliver
the latest legal information via computer, tablet or
smartphone.
§ 2.4 petabytes of data are held in the LexisNexis Legal &
Professional database.
Business overview
Legal is a leading global provider of legal, regulatory and business
information and analytics that help professional customers make
more informed decisions, increase productivity and serve their
clients better.
LexisNexis Legal & Professional is headquartered in New York
and has principal operations in the New York area, Ohio and North
Carolina in the US, Toronto in Canada, London and Paris in Europe,
and cities in several other countries in Africa and Asia Pacific.
It has 10,700 employees worldwide and serves customers in more
than 130 countries.
Revenues for the year ended 31 December 2016 were £1,622m,
compared with £1,443m in 2015 and £1,396m in 2014. By
geographical market, 68% of revenue in 2016 was derived from
North America, 20% from Europe and the remaining 12% from
the rest of the world. In 2016, 80% of the revenue came from
subscription sales and 20% from transactional sales.
LexisNexis Legal & Professional is organised in market-facing
groups. These are supported by global shared services
organisations providing platform and product development,
operational and distribution services, and other support functions.
In North America, electronic reference and decision tools from
Research Solutions help legal and business professionals make
better informed decisions in the practice of law and in managing
their businesses. Flagship products for legal research are
Lexis.com and Lexis Advance, which provide federal and state
statutes and case law, together with analysis and expert
commentaries from sources such as Matthew Bender and Michie
and the leading citation service Shepard’s, which advises on the
continuing relevance of case law precedents. Research solutions
also include news and business information, ranging from daily
news to company filings, as well as public records information and
analytics. LexisNexis also partners with law schools to provide
services to students as part of their training.
In 2016, LexisNexis continued to release new versions of Lexis
Advance, an innovative web application designed to transform how
legal professionals conduct research. Built on the New Lexis
advanced technology platform, Lexis Advance allows primary
researchers within legal and professional organisations to find
relevant information more easily and efficiently, helping to drive
better outcomes. Future releases will continue to expand content
and outreach and add new innovative tools. LexisNexis employs
lawyers and trained editors with professional legal backgrounds
who review, annotate and update its legal content to help ensure
each document in the collection is current and comprehensive. This
domain expertise combined with the application of the Group’s big
data HPCC Systems technology means LexisNexis is able to update
its entire legal collection faster and more efficiently than before,
while also identifying and linking content, enabling customers to
identify previously undiscovered relationships between documents.
Business review Legal
29
New analytical tools and content sets are regularly introduced on
Lexis Advance. For example, in 2016 LexisNexis released Search
Term Maps, enabling a graphical visualisation of term hits within
results and documents. In 2016 LexisNexis continued to make
enhancements to Lexis Practice Advisor to improve the homepage
and build out new modules and content. Additional product
releases, tailored to improving attorney productivity, include
Get a Document forms, which enable users to retrieve a single
document by citation, title or number and a redesigned Shepard’s
Brief Check for Lexis Advance.
In Canada, LexisNexis released new versions of Lexis Advance
Quicklaw with signifi cant content enhancements in areas like
Securities or Labour & Employment, and new functionalities such
as the launch of a French interface.
LexisNexis Business & Litigation Software Solutions provides law
fi rms with practice management solutions, including time and
billing systems, case management, cost recovery and document
management services. Its litigation software provides lawyers
with a suite of tools covering case preparation to processing and
review to trial preparation.
In international markets outside North America, LexisNexis
serves legal, corporate, government, accounting and academic
markets in Europe, Africa and Asia Pacifi c with local
and international legal, regulatory and business information.
The most signifi cant businesses are in the UK, France, Australia,
Canada and South Africa.
LexisNexis focuses on providing customers with leading
collections of content and innovative online solutions to help
legal and business professionals make better decisions more
effi ciently. Adoption of online information services has grown
strongly and electronic solutions now account for over 70% of
revenue outside the US.
In the UK, LexisNexis is a leading legal information provider
offering an unrivalled collection of primary and secondary
legislation, case law, expert commentary, current awareness,
forms and precedents.
Its extensive portfolio includes a number of leading brands:
Halsbury’s, Tolleys Butterworths, Mlex and Jordan Publishing.
Jordan Publishing business and its market-leading content offering
includes fl agship titles such as Family Court Practice, Family Law
Reports and Gore-Browne on Companies. In 2016, MLex launched a
subscription service on Brexit, recognising the need for insights on
the UK’s decision to leave the EU. MLex Brexit coverage continues to
break news and has become a regularly cited source for
mainstream news outlets. The content is delivered through multiple
formats – including online, mobile apps and embedded
in customers’ work practices.
In 2016, LexisNexis continued to build on its UK LexisPSL product
suite with new Property Litigation and Planning modules and
signifi cantly upgraded search performance through the
introduction of a new search engine. Additionally, LexisNexis
launched a new International Comparator Tool on LexisPSL to allow
users to compare multi-jurisdictional practical content more easily.
In France, LexisNexis is a leading online provider of information
to lawyers, notaries and courts. JurisClasseur and other leading
authoritative content is provided through multiple formats. These
content sources are, as in the UK, being combined with new
content and innovative decision tools to develop practical guidance
and practice management solutions. LexisNexis France’s main
offering is Lexis 360, the fi rst online semantic search tool
combining legal information, practical content and results from
the web by providing tailored solutions for the public sector and
the accounting markets.
In 2016, LexisNexis France launched major improvements to
Lexis 360 Practical Guidance with new value-added services
(indemnity calculator visualisation, online codes commentaries,
document version comparison), features and back-offi ce
improvements to enhance mobile services.
LexisNexisUK legal practical
guidance service
Provides Legal Analytics to companies and
law firms, enabling them to craft successful
strategies, win cases and close business
New resource that offers guidance to help
attorneys handle transactional matters
more efficiently and effectively
Leading legal news provider covering
the entire spectrum of practice areas
every single business day
Critical analysis, checklists, forms and
practice guides authored by industry experts
covering over 50 major practice areas
New online legal research tool that
transforms the way legal professionals
conduct research
Premier citations service
A media organisation providing exclusive
market insight, analysis and commentary
on regulatory risk
LexisNexisUK flagship legal online product
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RELX Group Annual reports and financial statements 2016
In the Asia Pacific region LexisNexis released Advanced Search
Forms on Lexis Advance Pacific and launched the Lexis Advance
research application in New Zealand. LexisNexis launched Lexis
Red 3.0, extending this award-winning digital product beyond
Australia and New Zealand into Hong Kong, Singapore and
Malaysia. LexisNexis also launched Practical Guidance in
Singapore and India, with four modules available in each country
and another five to be delivered by the end of the year. Australia
and Japan both launched regulatory compliance solutions – new
multi-platform databases of regulatory content with plain
language commentary, checklists, registers, alerts and audit
tools that serve the corporate non-legal markets.
Market opportunities
Longer-term growth in legal and regulatory markets worldwide
is driven by increasing levels of legislation, regulation, regulatory
complexity and litigation, and an increasing number of lawyers.
Additional market opportunities are presented by the increasing
demand for online information solutions, legal analytics and other
solutions as well as practice management tools that improve the
quality and productivity of research, deliver better legal outcomes
and improve business performance. Notwithstanding this, legal
activity and legal information markets are also influenced by
economic conditions and corporate activity, as has been seen with
the subdued environment in North America and Europe in the
aftermath of the global recession.
Strategic priorities
LexisNexis Legal & Professional’s strategic goal is to enable
better legal outcomes and be the leading provider of productivity-
enhancing information, analytics and information-based decision
tools in its market. To achieve this, LexisNexis is focused on
introducing next-generation products and solutions on the global
New Lexis platform and infrastructure; leveraging New Lexis
globally to continue to drive print-to-electronic migration and
long-term international growth; and upgrading operational
infrastructure, improving process efficiency and gradually
improving margins.
In the US, LexisNexis’ focus is on the continuing development of
next-generation legal research and practice solutions. It is also
conducting a major upgrade in operations infrastructure and
customer service and support platforms. This will provide
customers with an integrated and superior experience across
multiple products and solutions. Over the next few years,
progressive product introductions, often based on the New Lexis
platform, leveraging big data HPCC Systems technology, will
combine advanced technology with enriched content,
sophisticated analytics and applications to enable LexisNexis’
customers to make better legal decisions and drive better
outcomes for their organisations and clients.
Outside the US, LexisNexis is focused on growing online services
and developing further high-quality actionable content and
decision tools, including the continuous development of practical
guidance and practice management applications. In 2017,
LexisNexis will continue to expand the New Lexis platform
globally. Additionally, LexisNexis is focusing on the expansion
of its activities in emerging markets.
Business model, distribution channels and competition
LexisNexis Legal & Professional products and services
are generally sold directly to law firms and to corporate,
government, accounting and academic customers on a paid
subscription basis, with subscriptions with law firms often
under multi-year contracts.
Principal competitors for LexisNexis in US legal markets
are Westlaw (Thomson Reuters), CCH (Wolters Kluwer)
and Bloomberg. In news and business information they are
Bloomberg and Factiva (News Corporation). Competitors
in litigation solutions also include software companies.
Significant international competitors include Thomson
Reuters, Wolters Kluwer and Factiva.
REVENUE BY FORMAT
REVENUE BY GEOGRAPHICAL MARKET
REVENUE BY TYPE
£1,622m
Print
18%
Face-
to-face
0%
£1,622m
Rest of world
12%
Europe
20%
£1,622m
Transactional
20%
Electronic
82%
North
America
68%
Subscription
80%
Business review Legal
31
2016 financial performance
Revenue
Adjusted operating profit
2016
£m
1,622
311
2015
£m
1,443
274
Underlying
growth
Acquisitions/
disposals
+2%
+12%
0%
-10%
Currency
effects
+10%
+12%
Total
growth
+12%
+14%
Underlying revenue growth improved slightly in 2016, with
continued efficiency gains driving strong underlying operating
profit growth.
Underlying revenue growth was +2%. The difference between the
reported and underlying growth rates reflects the impact of
exchange rate movements and minor portfolio changes.
Underlying adjusted operating profit growth was +12%. The
margin increase reflects organic process improvement and the
ongoing decommissioning of systems, largely offset by lower
profits from joint ventures and other portfolio effects.
Electronic revenues saw continued growth, partially offset by
print declines.
US and European markets remained stable but subdued. Revenue
from other international markets continued to grow well.
The roll out of new platform releases in the US and international
markets continued, and adoption and usage rates progressed
well.
2017 outlook
Trends in our major customer markets are unchanged, continuing
to limit the scope for underlying revenue growth. We expect
underlying profit growth to remain strong.
REVENUE
£m
Underlying growth +2%
1,443
1,622
ADJUSTED OPERATING PROFIT
£m
Underlying growth +12%
274
311
2015
2016
2015
2016
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RELX Group Annual reports and financial statements 2016
Lexis Advance is innovative, easy to use
and navigate, and saves us a lot of time. It’s
invaluable when I need to check something
especially when I’m working out of the office.
The customer service is also exceptional.
Natalie Ledlin
Practice Director and Lawyer,
Ledlin Lawyers
50,000
sources of news,
business, public records
and legal information
Lexis Advance:
providing a reliable
legal research partner
Ledlin Lawyers is a dynamic Australian commercial law firm set up by Terry
Ledlin and his daughter Natalie in the Sydney Central Business District.
The firm has been using Lexis Advance as its legal research platform
for the past year and views it as its own personal research partner.
Being a boutique firm, Ledlin Lawyers doesn’t always have
a colleague available to carry out the detailed research
each of their clients may require. Lexis Advance fills that
role for it and at the same time speeds up research times
significantly. Using the Lexis Advance precedent and
previous pleadings research, for example, can shave as
much as eight hours off the time needed to prepare for a
case. The snapshot tool highlights relevant results and the
history feature enables partners to go back at a later date
and review research already completed. Increasingly,
clients want to know why they are given certain advice and
the firm uses the pictorial research map to show the
process by which conclusions and recommendations
were reached.
Terry and Natalie Ledlin of Ledlin Lawyers
About Lexis Advance
Lexis Advance is an online legal research
platform that enables clients to access
more than 50,000 sources of news,
business, public records and legal
information, including premium sources
that cannot be found elsewhere. It provides
content for more than 40 areas of legal
practice and can be accessed wherever the
client happens to be, whether in the office,
travelling or in court. Lexis Advance
facilitates high-quality legal research,
enabling clear connections among
disparate sources and types of information,
and helping to drive better legal outcomes.
Cutting-edge technology and an innovative,
user-friendly interface ensure customers
never miss a critical source.
34
RELX Group Annual reports and financial statements 2016
Exhibitions
We help match customers with the right solution. Our events
enable customers to learn about a market, source products
and complete transactions, generating billions of dollars of
revenues for the economic development of local markets and
national economies around the world.
§ More than 500 events are in the Reed Exhibitions portfolio.
§ 43 industry sectors are served across the globe.
§ Our digital products increase the value of our events to
participants, enabling them to make new contacts and
meet face-to-face to do business – over 80 events offered
matchmaking in 2016.
Business overview
Exhibitions is the world’s leading events business, enhancing the
power of face to face through data and digital tools at over 500
events, in more than 30 countries, attracting more than 7m
participants.
Reed Exhibitions is a global business headquartered in London
and has principal offices in Paris, Vienna, Norwalk (Connecticut),
São Paulo, Mexico City, Abu Dhabi, Moscow, Beijing, Tokyo and
Sydney. Reed Exhibitions has 4,000 employees worldwide, and its
portfolio of events serves 43 industry sectors in more than 30
countries.
Revenues for the year ended 31 December 2016 were £1,047m
compared with £857m in 2015 and £890m in 2014. In 2016, 20% of
Reed Exhibitions’ revenue came from North America, 43% from
Europe and the remaining 37% from the rest of the world on an
event location basis.
Reed Exhibitions organises market-leading events which are
relevant to industry needs, where participants from around the
world meet face-to-face to do business, to network and to learn.
Its events encompass a wide range of sectors. They include
construction, cosmetics, electronics, energy and alternative
energy, engineering, entertainment, gifts and jewellery,
healthcare, hospitality, interior design, logistics, manufacturing,
pharmaceuticals, real estate, recreation, security and safety,
transport and travel.
Market opportunities
Growth in the exhibitions market is influenced both by
business-to-business marketing spend and by business
investment. Historically, these have been driven by levels of
corporate profitability, which in turn has followed overall growth
in gross domestic product. Emerging markets and higher growth
sectors provide additional opportunities. Reed Exhibitions’ broad
geographical footprint allows it to effectively and efficiently
capture growth opportunities globally as they emerge.
As some events are held other than annually, growth in any one
year is affected by the cycle of non-annual exhibitions.
Business review Exhibitions
35
Strategic priorities
Reed Exhibitions’ strategic goal is to understand and to respond
to its customers’ evolving needs and objectives better than its
competition through deep knowledge of its customers and the
markets they serve.
In 2016 Reed Exhibitions launched 32 new events. These included
many events which delivered on the strategy of taking sector
expertise, customer relationships and leading brands from one
market and extending them into new geographies using local
operational capability.
Reed Exhibitions delivers a platform for industry communities
to conduct business, to network and to learn through a range of
market-leading events in all major geographic markets and
higher growth sectors, enabling exhibitors to target and reach
new customers quickly and cost-effectively.
Reed Exhibitions Japan continued its successful launch
programme, the highlights being the cloning of Manufacturing
World, taking it to its third location of Nagoya and its first show
covering international building and urban development, which
takes place in Tokyo.
Organic growth will be achieved by continuing to generate greater
customer value through the intelligent application of customer
knowledge and data, by developing new events, and by building
out technology platforms to ensure the rapid deployment of
innovation and best practices across the organisation. Reed
Exhibitions is also shaping its portfolio through a combination of
strategic partnerships and acquisitions in high-growth sectors
and geographies, as well as by withdrawing from markets and
industries with lower growth prospects over the longer term.
Reed Exhibitions is committed to improving customer solutions
and experience continuously by developing global technology
platforms based on industry databases, digital tools and analytics.
By providing a variety of services, including its integrated web
platform, the company continues to drive up customer satisfaction
by proactively putting the right buyers and sellers together on the
event floor. Increasingly, digital and multichannel services such
as active matchmaking are becoming part of the customer
expectation and product offering, enhancing the value delivered
through attendance at the event. Using customer insights, Reed
Exhibitions has developed an innovative product offering that
underpins the value proposition for exhibitors by broadening their
options in terms of the type and location of stand they take and the
channels through which they can address potential buyers.
After a successful launch of in-cosmetics Korea in 2015, the team
continued to branch out and followed up with an event in New York.
Following the 2015 acquisition of Jewelers International Showcase
in the US, the US team launched JIS Exchange, which took place
alongside JCK Las Vegas, one of Reed Exhibitions’ best-known
brands.
The fashion portfolio Agenda added to its number of events by
working with the fashion, pop culture, music and sports magazine
Complex to launch the event ComplexCon.
A number of small acquisitions and investments were completed
during 2016. These included REX in Russia (commercial real
estate industry), Franchise Seoul in Korea, K Fairs in Korea
(electronics manufacturing and home decoration) and Reed
Exhibitions increased its interest and acquired control of Thebe
Reed Exhibitions in South Africa.
MIPIM: The world’s property market
Equip’hotel : The hospitality and
restaurant event
PAX: Focused on the culture and
community that is gaming
World Travel Market: Premier global event
for the travel industry
JCK : The North American jewellery
industry’s premier event
Metalex: ASEAN’s international machine
tool & metalworking technology exhibition
Arabian Travel Market: The global meeting
place for the travel trade
Agriworld: Japan’s largest agricultural
technology trade show
Aluminium: International trade fair for
the aluminium industry
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RELX Group Annual reports and financial statements 2016
Business model, distribution channels and competition
Over 70% of Reed Exhibitions’ revenue is derived from exhibitor
fees, with the balance primarily consisting of admission charges,
conference fees, sponsorship fees and online and offline
advertising. Exhibition space is sold directly or through local
agents where applicable. Reed Exhibitions often works in
collaboration with trade associations, which use the events to
promote access for members to domestic and export markets,
and with governments, for which events can provide important
support to stimulate foreign investment and promote regional and
national enterprise. Increasingly, Reed Exhibitions is offering
visitors and exhibitors the opportunity to interact before and after
the show through the use of digital tools such as online directories
and matchmaking and mobile apps.
Reed Exhibitions is the global market leader in a fragmented
industry, holding less than a 10% global market share. Other
international exhibition organisers include UBM, Informa IIR and
some of the larger German Messen, including Messe Frankfurt,
Messe Düsseldorf and Messe Munich. Competition also comes
from industry trade associations and convention centre and
exhibition hall owners.
REVENUE BY FORMAT
REVENUE BY GEOGRAPHICAL MARKET
EVENTS REVENUES BY SOURCE
£1,047m
Electronic
3%
£1,047m
Rest of
world
37%
North
America
20%
£1,047m
Other 26%
Face-to-face
97%
Europe
43%
Exhibition
fees 74%
Business review Exhibitions
37
2016 financial performance
Revenue
Adjusted operating profit
2016
£m
1,047
269
2015
£m
857
217
Underlying
growth
Acquisitions/
disposals
+5%
+7%
+1%
+1%
Currency
effects
+13%
+16%
Total
growth
+22%
+24%
Exhibitions achieved strong underlying revenue growth in 2016,
in line with prior year.
We continued to pursue growth opportunities, launching 32 new
events and completing seven small acquisitions.
2017 outlook
We expect underlying revenue growth trends to continue. In 2017
we expect cycling out effects to decrease the reported revenue
growth rate by four to five percentage points.
Underlying revenue growth was +5%. After portfolio changes and
three percentage points of cycling effects, constant currency
revenue growth was +9%. The difference between the reported
and constant currency growth rates reflects the impact of
exchange rate movements.
Underlying adjusted operating profit growth was +7%. The 40
basis point improvement in reported margin largely reflects
exchange rate movements.
Revenue growth was strong in the US and moderate in Europe.
Japan grew strongly, and China saw good growth. Revenues in
Brazil continued to reflect the general weakness of the wider
economy. Most other markets continued to grow strongly.
REVENUE
£m
Underlying growth +5%
1,047
857
ADJUSTED OPERATING PROFIT
£m
Underlying growth +7%
269
217
2015
2016
2015
2016
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FIBO:
powering ahead
in the international
fitness market
Headquartered in Peterborough, UK, Escape Fitness is a market leader in
functional training solutions, delivering fitness equipment, education and
facility design to fitness clubs and distributors in more than 80 countries.
The company has strong partnerships in international markets, many
forged at FIBO, the global fitness event, which has played a key role in the
company’s growth over the past nine years.
Escape Fitness first exhibited at FIBO in 2008 to enter the German
market and its presence has grown every year with the event.
Today, the company uses FIBO to support its international
distributor base and engage new customers through live brand
experiences. In 2016, the company had a major presence in FIBO’s
Functional Training Hall, where buyers, trainers and fitness
enthusiasts were treated to fast-paced demos and fun workouts
featuring Escape’s most innovative new fitness equipment and
training concepts. The company generated 592 significant sales
leads, and achieved its ROI targets within six months of the show.
About FIBO
FIBO is the world’s leading fitness event.
Held each year in Cologne, it has achieved
its number one position by targeting
customers across the entire value chain
– from equipment manufacturers, gym
operators and professional trainers, to the
rapidly expanding population of fitness
enthusiasts who are driving demand. FIBO’s
success in generating new business is
reflected in its growing attendance figures,
which have doubled to over 153,000 during
the past four years. Revenues have also
more than doubled over the same period.
Business review Exhibitions
39
As a global leader in functional training, we’re
represented at many trade fairs around the
world. But FIBO is the ‘crown jewel’ – the
most important trade fair in strategic terms.
It offers a fantastic setting for us to present our
innovations to the world, close deals and make
lots of new contacts.
Matthew Januszek
CEO,
Escape Fitness
153,000
attendees in 2016
Business review
41
Corporate
Responsibility
The Corporate Responsibility Report is
an integral part of our Annual Reports
and Financial Statements. This section
highlights progress on our 2016 corporate
responsibility objectives. You can read the
full 2016 Corporate Responsibility Report
at www.relx.com/go/CRReport
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RELX Group Annual reports and financial statements 2016
Corporate responsibility
Corporate responsibility (CR)
ensures good management of
risks and opportunities, helps us
attract and retain the best people
and strengthens our corporate
reputation. It means performing
to the highest commercial and
ethical standards and channelling
our knowledge and strengths, as
global leaders in our industries,
to make a difference to society.
Consistent engagement with stakeholders, including
shareholders, employees, governments and communities where
we operate, helps us identify our material corporate responsibility
issues. Stakeholder feedback ensures alignment with our
non-financial objectives. The Board of Directors, senior
management and the Corporate Responsibility Forum oversee
CR objectives and monitor performance against them.
We concentrate on the contributions we make as a business
and on good management of the material areas that affect
all companies:
1. Our unique contributions
2. Governance
3. People
4. Customers
5. Community
6. Supply chain
7. Environment
1. Our unique contributions
We make a positive impact on society through our knowledge,
resources and skills, including:
§ universal sustainable access to information
§ advance of science and health
§ protection of society
§ promotion of the rule of law and justice
§ fostering communities
Scientific, Technical & Medical
Elsevier, the world’s leading provider of scientific, technical and
medical information, plays an important role in advancing human
welfare and economic progress through its science and health
information, which spurs innovation and enables critical
decision- making. To broaden access to its content, Elsevier
supports programmes where resources are often scarce. Among
them is Research4Life, a partnership with UN agencies and
approximately 200 publishers; we provide core and cutting-edge
scientific information to researchers in more than 100 developing
countries. As a founding partner and the leading contributor,
Elsevier provides over a quarter of the material available in
Research4Life, encompassing approximately 3,000 Elsevier
journals and 20,000 e-books. In 2016, there were more than 4m
Research4Life article downloads from ScienceDirect. The
Elsevier Foundation continued to support scientific publishing in
developing countries including the African Journal Partnership
Project to further expand our Publishers Without Borders
programme, which pairs our colleagues’ expertise in research
with the needs of the African health science community.
In the year, Christiana Figueres, former head of the UN Framework
Convention on Climate Change, spoke at the launch of Lancet
Countdown , an initiative of the Lancet’s Planetary Health
Commission, tracking progress on health and climate change.
Risk & Business Analytics
Over the last four years, LexisNexis Risk Solutions’ Tax Refund
Investigative Solution has saved 11 US states more than $500m
by averting false tax refunds. In addition, by 2016 LexisNexis Risk
Solutions enabled five US states to identify more than $4.4m in
fraudulent supplemental nutrition (Food Stamp) payments since
2012; this will result in an estimated annual savings of $5.6m by
stopping programme participants from receiving multiple
benefits within and in more than one state.
Accuity provides comprehensive data and software to control
financial processing risk and compliance. Its tools like Global
WatchList help in the fight against anti-money laundering (AML).
In 2016, it produced the report, the Challenges of AML for Law
Firms 2016, to highlight sector feedback on due diligence and
opportunities to improve compliance processes.
In 2016, Proagrica, dedicated to feeding the world sustainably
through its content and solutions, launched Agility Crops to
provide real-time data to improve productivity. Covering over
750,000 hectares of cropping across the UK, it allows in-season
soil and other analytics for the first time, replacing retrospective
studies which can only be used historically.
During 2016, RBI became a founding member of the Tech Talent
Charter, committed to increasing the ratio of women and
under-represented groups working in technology. Together with
other peers, RBI is working to encourage education and best
practice in tech recruitment and retention of diverse tech talent.
Legal
LexisNexis Legal & Professional promotes the rule of law and
access to justice through its products and services. During 2016,
colleagues continued their efforts to support the transition to
democracy in Myanmar. They have been building support for
a pilot programme in a rural village in Myanmar, Wellgyi, to
establish a land registry database.
The difficulties farmers face include being arrested and jailed for
farming what they believe to be their land. Helping them measure
and document land boundaries is the first step and we are
collaborating with other companies such as Google and Edulink
in this effort.
Business review Corporate Responsibility
43
ADAM: helping bring
home more missing
children with an enhanced
technology platform
For over 16 years LexisNexis Risk
Solutions has worked with the National
Center for Missing & Exploited Children
providing the technology behind ADAM
(Automated Delivery of Alerts on
Missing Children).
The programme was named in memory of Adam Walsh, a six-year
old child kidnapped and murdered in 1981, and distributes alerts
on missing children in minutes across the US. Since launching in
2000, the programme has located 163 children, including eight in
2016. When a child is reported missing, the ADAM system can send
out on average 1,500 posters each hour to businesses and other
community organisations in the specifi c area where the child was
last seen. There are around 1.8m community recipients registered
in the ADAM database and new organisations can sign up easily
on the LexisNexis Risk Solutions website. In 2016, 2.1m posters
were distributed.
In 2016, a team of LexisNexis Risk Solutions colleagues
redesigned the platform to provide new capabilities, including
an improved user interface, new mapping technologies and an
email function, which increase the productivity and effi ciency
of the National Center for Missing & Exploited Children team,
helping bring even more missing children home.
163
Missing children
found since 2000
DISTRIBUTION
AREA ONE
DISTRIBUTION
AREA TWO
DISTRIBUTION
AREA THREE
2.1m missing child alerts distributed in 2016
We had a dream team of LexisNexis Risk Solutions
colleagues who volunteered their time and expertise
to deliver the new ADAM application.
Trish McCall
Director Program Management at LexisNexis
Risk Solutions
44
RELX Group Annual reports and financial statements 2016
Exhibitions
Reed Exhibitions’ events help strengthen communities and support
our corporate responsibility focus areas. New York Comic Con,
which attracted over 185,000 attendees in 2016, supports the Comic
Book Legal Defense Fund, a non-profit organisation protecting the
rights of comics artists, publishers, retailers, librarians and fans.
The show featured sessions on fighting censorship.
Each year, World Travel Market (WTM), Reed Exhibitions’ flagship
show for the travel and tourism industry, holds World Responsible
Tourism Day. In 2016, the focus was on benchmarking progress
in responsible tourism. In the year, BBC World News journalist
Aaron Heslehurst held a roundtable on what more can be done
20 years on from the post-Apartheid government in South Africa’s
adoption of the Principles of Responsible Tourism in their national
tourism policy, which helped launch the responsible tourism
movement.
He asked panel members, including Justin Francis co-founder of
Responsible Travel, about successes and failures. There is now a
World Responsible Tourism Day at all WTM shows including South
Africa, Dubai and Brazil.
Across RELX Group
The 17 Sustainable Development Goals (SDGs) set out the United
Nations agenda for people, planet and prosperity over the next 15
years. They were adopted by heads of state at the UN in 2015. The 17
goals aim to address critical needs for humanity and the
environment. In 2016, we engaged stakeholders and mapped an
SDG Resource Centre which will showcase RELX content, tools and
events from across the Group that can help drive forward the SDGs.
The free SDG Resource Centre will support the UN, governments,
researchers, companies, non governmental organisations (NGOs)
and individuals in their efforts to advance this vital global agenda.
Our 2016 CR Forum Stakeholder Session focused on the SDGs and
involved internal experts, peers, government and NGOs on
business – and RELX Group –and the SDGs.
During the UN General Assembly in September 2016, we contributed
to the launch of the Global Alliance for Reporting Progress on
Peaceful, Just and Inclusive Societies (SDG 16), providing the only
private sector statement on the positive role business can play by
exercising their unique contributions to society.
To replace ad hoc responses, in the year, we convened a
cross-business working group to establish a strategy for
responding to disasters and emergencies; we have strengthened
our ties with primary relief partner the International Federation of
Red Cross and Red Crescent Societies, and will focus on providing
relevant in-kind contributions that can address short- and
long-term needs in the wake of disasters and emergencies.
2016 marked the sixth year of the RELX Group Environmental
Challenge, focused on providing improved and sustainable access
to water and sanitation where it is presently at risk. The $50,000
first prize winner, UK-based Loowatt Ltd., has developed a
proprietary waterless and energy-generating toilet system that
is clean and odourless, creating social and environmental benefits
that include water savings, carbon emissions reduction, improved
human health and job creation. Award-winning Loowatt’s
patented core technology can fit into toilets of any shape or size
and seals human waste into biodegradable polymer film. Waste is
then emptied into an anaerobic digester where it is converted into
natural gas or fertiliser – creating local jobs and revenue streams.
With support from the Environmental Challenge, Loowatt will
address low access to quality sanitation in Madagascar’s capital
city, Antananarivo, through investment in local manufacturing
capacity for toilet refills.
Missing People is a UK charity focused on bringing missing
children and adults back together with their families. The
organisation uses Risk & Business Analytics tools, including
Tracesmart, to help in the search. In the year, we took part in the
UK National Crime Agency’s Child Rescue Alert Development
Board – supported by partners such as Missing People and Amber
Alert Europe, which works across 16 European countries to
protect endangered missing children – to help spread awareness
of the Child Rescue Alert service which notifies police forces and
members of the public when a child goes missing in a certain
location. We have been exploring with Missing People and Amber
Alert Europe how our big data expertise can further their work.
2016 OBJECTIVES
Achievement
Advance of science
and health: Launch
of Innovations in
Health Information
programme
Protection of society:
New tools and support
in the search for missing
children with key partners
National Center for
Missing and Exploited
Children (NCMEC),
Missing People and Amber
Alert Europe
Promotion of the rule of
law and access to justice:
Assist United Nations
Global Compact (UNGC) in
promoting awareness and
support for Business for
the Rule of Law
Fostering communities:
Expand reach of World
Travel Market’s World
Responsible Tourism Day
Universal, sustainable
access to information:
Establish process to
ensure relief and other
agencies gain access
to relevant information
during disasters and
emergencies
§ Partnership between Elsevier
Foundation and Amref Health
established to support
continuing education for nurses
in East Africa through a scalable
m-learning solution
§ Working with Médecins Sans
Frontières (MSF) to support
research capacity building at
their Niger research and training
centre; in-kind access to
ScienceDirect, Scopus, Embase
and Clinical Key
§ NCMEC (US) now using new
ADAM programme platform;
use of new platform under
consideration by Missing People
(UK); developing missing
persons police training model
with Amber Alert Europe
§ Hosted rule of law roundtable
with UN Global Compact UK,
continuing in 2017; highlighted
throughout the year including
at high- level panel, Peaceful,
Just, and Inclusive Societies for
Sustainable Development:
Delivering on the 2030 Agenda,
at the 2016 UN General Assembly
§ WTM 2016: focus on responsible
tourism in India and South Africa
with community representatives
invited to showcase their
sustainable tourism offerings
and impact
§ Disaster relief priorities mapped
with core business strengths and
draft of RELX Group disaster
relief strategy
§ New internal disasters and
emergencies working group
launched
Business review Corporate Responsibility
45
2017 OBJECTIVES
§ Advance of science and health: expand “Research Without
Borders”, which pairs African health and medical journals
with our leading US/UK biomedical journals to build
editorial skills through journal mentoring and training
§ Protection of society: help broaden reach of ADAM
programme; new training programme on missing people
for UK law enforcement
§ Promotion of the rule of law and access to justice: assist
UNGC in embedding Business for the Rule of Law and work
with UN Development Program and Member States to
support reporting progress on SDGs
§ Fostering communities: World Travel Market (WTM) to
convene travel industry roundtable for collaboration on
responsible tourism key challenges, including anti-
trafficking initiatives
§ Universal, sustainable access to information: launch free
access SDG Resource Centre
OUR 2020 VISION
Use our products and expertise to advance the Sustainable
Development Goals (SDGs), among them:
§ SDG3: Good health and well-being
§ SDG4: Quality education
§ SDG10: Reduced inequalities
§ SDG13: Climate action
§ SDG16: Peace, justice and strong institutions
Including by creating an SDG Resource Centre
2. Governance
Our Code of Ethics and Business Conduct (the Code) is
disseminated to every employee and sets the standards for our
corporate and individual conduct. Among other topics, the Code
continues to address fair competition, anti-bribery, conflicts of
interest, employment practices, data protection and appropriate
use of company property and information. It also encourages
reporting of violations – with an anonymous reporting option – and
prohibits retaliation against anyone who makes a report. The Code
incorporates the principles of the UNGC and stresses our
commitment to human rights. In accordance with the UN’s Guiding
Principles on Business and Human Rights, we have considered
where and how we operate and have concluded that there is low
human rights risk in our direct employment activities (for more
information on human rights see “Supply chain” on page 49). In
2016, we released our Modern Slavery Act Statement which
highlights how we are working internally, through our supply chain
and externally with partners to address the risk of slavery and
human trafficking.
All employees are given required training on the 2016 Code. This
training is part of the compliance curriculum for new hires and is
reissued at regular intervals to ensure full understanding and
acknowledgement of the Code and associated policies. Mandatory
periodic training covers specific code topics, such as anti-bribery,
competition laws and protecting data and preventing workplace
harassment, supplemented by in-person training for higher-risk
roles. In 2016, we broadened our workplace harassment training
and issued a new Respectful Workplace Training Course for all
employees.
Key elements of the Code and policies are reinforced throughout the
year in general employee materials and messages targeted to
special audiences such as those in higher-risk roles or locations.
With a dedicated Compliance Communication Director, weekly
emails and regular articles have increased readership of
compliance and governance materials in 2016 including a third
series of popular information security awareness videos,
Restricted Intelligence, compliance videos and compliance
challenge contests.
Reports of violations of the Code or related policies are promptly
investigated, with careful tracking and monitoring of violations and
related mitigation and remediation efforts by Compliance teams
across the business. We broadened training of investigators in 2016,
covering areas like employee relations, data security and financial
misconduct.
In 2016, we remained diligent in our ongoing efforts to ensure
compliance with applicable bribery and sanctions laws, including
monitoring and auditing implementation of our anti-bribery
requirements.
As a signatory to the UNGC and its principles, encompassing
labour, environment, anti-corruption and human rights, we
demonstrated leadership in 2016 by serving on the UNGC Advisory
Group for the UK, the UNGC Supply Chain Advisory Group and the
Caring for Climate Steering Group. We played a leadership role in
the UNGC’s launch of Business for the Rule of Law, the Guide for
General Counsel on Corporate Sustainability and the Advisory
Group on Supply Chain Sustainability. UNGC peers judged our
Communication on Progress, required of signatories annually, to
have attained Advanced Level. We were also active in the Dutch
UNGC network.
In 2016, the RELX Group global business paid £402m in corporate
taxes. We are a responsible corporate taxpayer and conduct our
tax affairs to ensure compliance with all laws and relevant
regulations in the countries in which we operate. Tax is an
important issue for our direct stakeholders and society at large. In
2016, RELX Group provided additional clarity on its approach to
taxation by making its Tax Principles available to all on its website.
In addition, the RELX Tax team continued to engage with
policymakers and special interest groups on all sides of the debate
to provide practical experience on how companies interact with
tax laws and to suggest ways such laws can advance governments’
policy objectives.
The Statement of Investment Principles for the UK pension
scheme indicates that the extent to which social, environmental or
ethical issues may have a financial impact on the portfolio or may
have a detrimental effect on the strength of the employer
covenant, is taken into account when making investment
decisions. CR issues are relevant to other investment decisions
we make. Among our sustainable investments is Agworld, a
collaborative farming solution that allows farmers and
agronomists to work together as one. Agworld provides data
capture and communication tools and maps to increase
production efficiency.
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RELX Group Annual reports and financial statements 2016
2016 OBJECTIVES
Achievement
Develop compliance plan
for impending EU
General Data Protection
Regulations (GDPR)
Implement enhanced
email retention
policy for improved
consistency and
efficiency
§ Planning underway for GDPR
implementation in May 2018
§ RELX-wide contact point
designated
§ Policy for two year automatic
email deletion approved, with
implementation in planning
stages
§ Communication and training
Expand network of
global compliance
investigators
planned to ensure understanding
of policy and how to save email
required for longer
§ Training of internal investigators
has continued
§ Relationships strengthened with
auditing and law firms with a
global presence to ensure external
investigation resources as needed
§ Continuing investigations training
for HR representatives; solidified
relationship with external
investigator for Asia Pacific region
2017 OBJECTIVES
§ Expand fraud prevention and cyber security awareness
efforts and continue to tighten related controls
§ More structured approach to compliance training for
employees in higher risk roles and locations across the
Group
§ Broaden awareness of RELX Tax Principles in external
communications, with internal training for relevant staff
OUR 2020 VISION
Undertake consistent actions that reinforce excellence in
corporate governance and compliance with all applicable
legislation and our principles and policies
3. People
Our approximately 31,000 people are our strength. Our workforce
is 52% female and 48% male, with an average length of service
of eight years. There were 43% female and 57% male managers,
and 28% female and 72% male senior operational managers.
Board of Directors
Senior operational
managers*
Female
3
30%
7
Male
70%
120
28%
313
72%
All employees**
16,224
52%
14,976
48%
* Senior operational managers are defined as those managers up to and including
three reporting lines from the CEO
** Full-time equivalent
At year-end 2016, women made up 30% of the members of the
RELX Boards. The two Executive Directors on the Boards are
male. The Nominations Committee considers the knowledge,
experience and background of individual Board directors.
The Group’s Diversity and Inclusion (D&I) Statement articulates
our commitment to a diverse workforce and environment that
respects individuals and their contributions, regardless of gender,
race or other characteristics. Our D&I Strategy is focused on
translating the Statement into practical action. Among its
commitments is maintaining a D&I Advisory Group composed of a
senior business and HR leader from each business unit,
supported by a broader D&I Working Group. We encourage
Employee Resource Groups (ERGs), such as women’s forums and
pride groups, which facilitate support, mentoring and community
involvement. We tracked the number of ERGs in 2016 and added
new networks, including an African American network in New York
and a pride group in the Philippines.
During 2016, we introduced “Women in Technology”, a mentoring
programme for mid-career women in technology across our four
business units. 100% of mentees are female, as are 60% of mentors,
pairings are between colleagues in different business units. We are
providing external resources and a webinar series to showcase the
tech career journeys of senior women, including members of the
RELX Board.
RELX is a signatory to the Women’s Empowerment Principles
(WEPs), a UNGC and UN Women initiative designed to help
companies empower women and promote gender equality.
We are helping to develop a benchmarking tool for the WEPs to
help companies understand where there are gaps between the
principles and their performance. In 2016, Elsevier attained the
first level of the EDGE gender equality certification, which has
involved employee surveys across eight countries, an external
review of policies and procedures and gender pay benchmarking.
In 2016, we conducted pulse surveys across the business to gain
feedback from employees on how we are doing to make RELX
Group a great place to work.
Our employees have the right to a healthy and safe workplace
as outlined in our Global Health and Safety Policy. We concentrate
on areas of greatest risk – for example, warehouses, events and
exhibitions. However, as a primarily office-based company, our
key impact areas are manual handling, slips, trips and falls. To
reduce our severity rate (lost days per 200,000 hours worked), we
conduct risk assessments and work with a third party in the US to
assign a nurse case manager to each complex or severe claim.
There were 22 lost time reportable cases in the year.
In the US, where we have the largest concentration of employees,
the CareConnect and REACH programmes promote workplace
well-being through health screenings, online assessments,
stress awareness training and smoking cessation courses, with
financial incentives for participation.
Our annual Fit2Win global wellbeing competition encourages
employees to establish fitness teams to compete for cash prizes
for charities of their choice. Across the Group, 108 teams took
part and ran, walked, cycled and swam a total of 112,309 miles
(180,744 km), a 14% increase in participation over 2015.
We organised a global campaign on mental health awareness,
featuring webinars, posters and special events. More than 145
offices, covering 21,000 employees offered a mental health
provision including support or counselling. We also created a new
network of more than 90 Wellness Champions.
Business review Corporate Responsibility
47
WHO Mental Health Day
2016 OBJECTIVES
2016 OBJECTIVES
Achievement
Expand diversity and
inclusion Employee
Resource Groups
(ERGs)
Develop pilot
mentoring
programme
Increase awareness
of mental health
at work
§ 8 new networks launched in the US,
Europe and Asia Pacific; more than
30 ERGs tracked overall
§ Communications campaign for D&I
section of global intranet including
a feature news story in Friday
Update to all employees
§ UK pilot focused on mid-career
female technologists with
participation from all business units
§ Mentees matched with a senior
female (60%) or male technologist
mentor in a business unit different
from their own
§ Awareness campaign aligned with
§ Launch of new well-being pages
on the Wire and new wellness
champions network established
2017 OBJECTIVES
§ Scale women in technology mentoring programme;
mentor pilot for high-potential women
§ Enhance flexible working policies
§ Introduce a workplace well-being award scheme
OUR 2020 VISION
Focus on talent development, diversity and inclusion and well-
being, to ensure a high-performing and satisfied workforce
4. Customers
In 2016, we surveyed more than 162,000 customers through
Net Promoter Score (measuring customer advocacy) and
business dashboard programmes. This allows us to deepen
our understanding of customer needs and drives improvements.
Results are reviewed by the CEO and senior operational managers
and communicated to staff. To aid colleagues, during the year our
CR as a Sales Tool Working Group produced short videos on the
competitive advantage of our CR focus, with advice on how to
engage customers on CR issues, helping build deeper
relationships through discussion of shared values.
Our cross-business Editorial Policy Working Group pursued
opportunities to highlight the Editorial Policy in action in the year,
including in a video webinar by Richard Horton, Editor of The
Lancet who spoke on the importance of editorial independence in
the face of challenges. In 2016, we recorded training on the
Editorial Policy for our Socially Responsible Supplier Academy.
We advanced our Quality First Principles (QFPs) in the year,
completing 28 QFP self-assessments. We recorded new video
offerings on the QFPs for teams across the Group and updated the
Principles to take account of new areas such as customer support
and supplier management, in addition to content and data.
Our operations in the Philippines are working toward submitting
a bid for a Philippines Quality Award in 2017 which involves
demonstrating excellence in managing and delivering quality
throughout the business.
We are committed to improving access to our products and services
for all users, regardless of physical ability. Our Accessibility Policy
aims to lead the industry in providing accessibility solutions to
customers with products that are operable, understandable and
robust. In 2016, members of the Accessibility Working Group logged
over 150 accessibility projects and Elsevier’s Global Books Digital
Archive fulfilled more than 4,300 disability requests, 15% of them
through AccessText.org, a service it helped establish. In 2016, we
pursued our tiered model for accessibility, with the support of Chief
Technology Officers across the business. In the year, we won the
Accessible Books Consortium Accessibility Award at London Book
Fair’s International Excellence Awards 2016.
Expand Quality First
Principles (QFPs)
beyond content and data
to other areas such as
customer support
Achievement
§ Expansion to customer support,
supplier management and other
areas
§ Launched series of short,
shareable videos – 3 Minutes
on Quality – on global intranet
New CR as a Sales Tool
offerings, including
video content
§ New brief videos for customer -
facing staff introduced as well as
longer town hall by CR Director
Hold 15 accessibility
feedback sessions to
engage people with
disabilities
§ Outreach to key customer groups
including law school students and
firms
§ 15 accessibility feedback
sessions held, e.g. Elsevier
Scopus/SciVal accessible chart
function tests with blind users;
results presented at CSUN
2016 International Conference
on Accessibility
§ Audio descriptions for blind
users of Elsevier Animation
Collection which provide 3D
visualisations of body systems
§ Over 140 individual
accessibility projects logged
across the company
2017 OBJECTIVES
§ Pursue Philippine Quality Award as a demonstration of
drive for quality excellence
§ Create role plays for sales staff showing CR as a Sales Tool
in action
§ Improve reporting on compliance with customer
accessibility requests
OUR 2020 VISION
Increase our customer base across our four business units
through active listening and engagement, and a focus on
editorial and quality standards, and accessibility
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RELX Group Annual reports and financial statements 2016
The Rule of Law Tracker:
making the link between
the rule of law and
sustainable development
The rule of law is the foundation for the development of peaceful, equitable and
prosperous societies. However, according to the United Nations, approximately
4bn people still live outside of its protection.
In 2016, LexisNexis Legal & Professional launched the Rule of Law Impact
Tracker to quantify the relationship between the rule of law and social and
economic development.
Using data from the World Bank, Transparency International and the
World Justice Project, the Tracker provides evidence that stronger rule
of law typically means higher GDP per capita, higher life expectancy
and lower child mortality, homicide and corruption. For example,
a 5% increase in the rule of law score adds one additional year to life
expectancy. Denmark had the highest rule of law ranking on the Tracker,
scoring 87%; Venezuela scored lowest, with a score of 32%.
Quantifying the relationship between the rule
of law and sustainable development.
Our Rule of Law Impact Tracker quantifies the
transformational impact that the rule of law
can have on social and economic development.
It shows what’s possible if we work together
to effect change.
Mike Walsh
CEO of LexisNexis Legal & Professional at LexisNexis
Risk Solutions
102
Countries scored against
44 rule of law indicators
across eight categories
Business review Corporate Responsibility
49
5. Community
6. Supply chain
We require our suppliers to meet the high standards we set for
ourselves. Our Supplier Code of Conduct stipulates adherence to
all laws and best practice in areas such as human rights, labour
and the environment. Through our Socially Responsible Supplier
(SRS) database, in 2016 we tracked 383 key suppliers and those
located in a high-risk country as designated by our Supplier Risk
Tool which incorporates eight indicators, including human
trafficking information from the US State Department and
Environmental Performance Index results produced by Yale and
Columbia universities. The tracking list changes year-on-year
based on the number of suppliers we do business with who meet
the required criteria. We started 2016 with 88% of suppliers on the
SRS tracking list as signatories to the Supplier Code and reached
89% by year end, including 96% considered core (18% of the total
are suppliers who have provided internal codes in lieu, which we
believe to be as effective as our own). We have embedded signing
the Supplier Code into our e-sourcing tool as a criterion for doing
business with us, and have an additional 2,500 suppliers who have
signed the Supplier Code.
Specialist supply chain auditors, Intertek, undertook 89 external
audits of suppliers located in high-risk countries as part of their
comprehensive Workplace Conditions Assessment and Corrective
and Preventative Actions programme. Any incidence of
non-compliance identified in the audit process triggers a corrective
action plan agreed with the supplier, with remediation required on
all issues.
The roll-out of our US Supplier Diversity programme continued
in 2016 with efforts to increase the number of diverse suppliers
invited to bid on relevant sourcing projects. The process has
resulted in an increased spend to $317m with diverse suppliers.
Feedback is provided to diverse suppliers after the competitive
bidding process to improve their opportunities for development.
2016 OBJECTIVES
Achievement
Increase core suppliers
as signatories to the
Supplier Code
§ 96% core (minimum
goal 95%)
§ 89% total tracking list (goal
85%)
Use Corrective and
Preventative Actions tool
to ensure continuous
improvement in audit results
§ 89 Workplace Conditions
Assessment (WCA) and
(CAPA) audits completed
(goal 80)
Continue to advance
US Supplier Diversity
programme
§ Increased diverse spend to
$317m
§ 12.7% diversity spend (US
rolling 4 quarters at Q3 2016)
RE Cares, our global community programme, supports employee
volunteering and giving that makes a positive impact on society.
In addition to local initiatives of importance to employees, the
programme’s core focus is on education for disadvantaged young
people that advances one or more of our unique contributions as
a business. Staff have up to two days’ paid leave per year for their
own community work. We donated £3.4m in cash (including
through matching gifts) and the equivalent of £16.5m in products,
services and staff time in 2016. 39% of employees were engaged
in volunteering through RE Cares and we reached more than
45,000 disadvantaged young people through time, in-kind and
cash donations. In 2016, we deployed an impact measurement tool
adapted from LBG, a community investment network we have
been a member of for more than ten years, to record and assess the
impact on beneficiaries and employees of our central initiatives.
A network of approximately 210 RE Cares Champions ensures the
vibrancy of our community engagement around the world. Each
September, we hold RE Cares Month to celebrate our community
focus. In 2016, a focus was on raising funds toward our $100,000
minimum commitment to help global fundraising partner, SOS
Children’s Villages with a project to help girls in Yamoussoukro,
Ivory Coast return to education after working in dangerous
conditions as baggage carriers in local markets. During RE Cares
Month, we held our annual global book drive, yielding over 3,900
books for local and developing world readers, and announced
the winners of the sixth Recognising Those Who Care Awards
to highlight the exceptional contributions to RE Cares of
ten individuals and four RE Cares teams. Individual winners
from across the business travelled to Chennai, India, working with
two charities, the Hope Foundation and the Udhavum Ullangal
Public Charitable Trust. The trip was led for the sixth time by
senior leader Youngsuk “YS” Chi, Director of Corporate Affairs.
2016 OBJECTIVES
Achievement
60% of RE Cares
Champions supporting
new global fundraising
partnership
Deploy project
assessment template
to gain feedback on key
central initiatives
§ RE Cares Champions
cross-divisional Steering Group
created to support Objective and
other RE Cares priorities
§ 65% of Champions supported
global fundraising partnership
with SOS Children’s Villages
§ Project assessment template
launched following extensive
consultation; 91% of beneficiary
organisations reported “a lot” or
“some” improvement in their
ability to improve existing or
provide new services
2017 OBJECTIVES
§ Ensure at least 60% of offices have an RE Cares Champion
§ Increase skills-based volunteering
OUR 2020 VISION
Use our unique contributions to advance education for
disadvantaged young people; track the impact of community
investment activities
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RELX Group Annual reports and financial statements 2016
6. Supply chain (continued)
2017 OBJECTIVES
§ Increase number of suppliers as Code signatories
§ Continue using Corrective and Preventative Actions tool to
ensure continuous improvement in audit results
§ Continue to advance US Supplier Diversity and Inclusion
programme
OUR 2020 YEAR VISION
Reduce risk by ensuring adherence to our Supplier Code
of Conduct through training, auditing and remediation;
strengthening supplier relationships through partnerships
7. Environment
Our environmental targets reflect our performance and focus
areas and can be found, along with full details, in the 2016
Corporate Responsibility Report at www.relx.com/go/CRReport.
They are science-based, and include a commitment to certify 50%
of the business against the ISO 14001 environmental management
system standard by 2020. Throughout the year we presented our
targets to key stakeholders including colleagues in our Global
Real Estate Group who are part of our Environmental
Champions network.
In 2016, we purchased 62% of our electricity from renewable
energy and Renewable Energy Certificates. We attained the
highest level, A, in CDP’s Climate Change programme.
Our Environmental Champions network, employee-led Green
Teams and engagement through networks such as the Publishers’
database for Responsible Environmental Paper Sourcing inform
how we address our environmental impacts. Our Environmental
Standards programme sets benchmark performance levels and
inspires green competition between offices. In 2016, 34 sites
(33% of key locations) achieved five or more standards and
attained green status. The Chief Financial Officer wrote to all staff
recognising their achievements on World Environment Day and
also identified Green Heroes across the Group, nominated by their
peers for their environmental efforts. Green Teams submitted
environmental project ideas to engage staff and winners received
funding to carry out their plans.
We have a positive environmental impact through our
environmental products and services, which spread good
practice, encourage debate and aid researchers and decision
makers. The most recent results from the independent Market
Analysis System show that our share of citations in environmental
science represented 33% of the total market, and 64% in energy
and fuels. The winner of Elsevier’s 2016 Green and Sustainable
Chemistry Challenge was Dr. Yunsang Kim who won the first prize
of €50,000 for his proposal ‘Sustainable Textile Dyeing Using
Nanocellulosic Fibers' which aims to reduce dye process
wastewaster and the release of harmful chemicals.
Building on our report, the Climate Change Challenge, we
released Waterscape, a supplement providing insights into water
research, during the 2016 World Water Week in Stockholm.
2016 OBJECTIVES
Achievement
Embed new environmental
targets with key
stakeholders
§ New targets presented to
key internal and external
stakeholders
Purchase renewable
electricity equal to 60% of
global consumption
§ Achieved through purchase of
European green tariff and US
Green-e certified Renewable
Energy Certificates
25% of locations to achieve
five or more new Group
Environmental Standards
§ 33% locations achieved five
or more Group
Environmental Standards
2017 OBJECTIVES
§ 35% of locations to achieve five or more new Group
Environmental Standards
§ Purchase renewable electricity equal to 70% of Global
consumption
§ Achieve ISO14001 Environmental Management System
certification at three additional locations
OUR 2020 VISION
Meet our five-year environmental targets that will contribute
to keeping global average climate warming to below two
degrees Celsius; help others do so through our environmental
content and services
2016 ENVIRONMENTAL PERFORMANCE
Absolute performance
Intensity ratio
(Absolute/revenue £m)
2016 variance†
2015
2016 variance†
2015
7,966
7% 7,446
1.16
-7% 1.25
91,913
-4% 95,947
13.33
-17% 16.07
32,153
–
–
4.66
–
–
195,556
-6% 207,093 28.36
-18% 34.68
Scope 1 (direct
emissions) tCO2e
Scope 2
(location-based
emissions) tCO2e*
Scope 2
(market-based
emissions) tCO2e*
Total energy
(MWh)
Water (m3)
337,889
0% 337,645
49.00
-13% 56.55
Waste sent to
landfill (%)**
Production
paper (t)
24% -1%pts
25% 0.25
-23% 0.32
46,128
-10% 51,285
6.69
-22% 8.59
* This is the first time market-based emissions have been reported in
compliance with the updated GHG Protocol guidance. See our reporting
guideline and methodology for more details.
* * Intensity metric shows tons of waste sent to landfill / £m revenue.
† Approximately 11% of the improvement in the intensity ratios is due to
currency movements.
Business review Corporate Responsibility
51
ENVIRONMENTAL TARGETS
Focus area
Climate change
Targets 2020
Reduce Scope 1 and 2 location based carbon emissions by 40% against a 2010 baseline
Energy
Reduce energy and fuel consumption by 30% against a 2010 baseline
Purchase renewable electricity equivalent to 100% of RELX Group's global electricity consumption
Waste
Decrease total waste generated at reporting locations by 40% against a 2010 baseline
90% of waste from reporting locations to be diverted from landfill
Production paper* 100% of RELX Group production papers, graded in PREPS, to be rated as ‘known and
responsible sources’
Achieve ISO14001 certification for 50% of the business by 2020
Environmental
Management
System
2016
performance
-37%
–29%
62%
–44%
88%
100%
15%
* All paper we graded in 2016 – 92% of total production stock – was graded 3 or 5 stars (known and responsible sources) with the exception of 0.02% of the total which
achieved a grading of 1 star.
We have reported on all emission sources required under the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations
2013. We have included emissions from all operating companies within the Group.
We have used the GHG Protocol Corporate Accounting and Reporting Standard (revised edition) and the data has been assured by an
independent third party, EY. Details on methodology and the assurance statement can be viewed in the 2016 Corporate Responsibility
Report at www.relx.com/go/CRReport.
2016 investor and other recognition
Ethibel Sustainability Index
– included for
Excellence Europe and
Excellence Global
Dow Jones Sustainability
Indices
– included
CDP
– Climate A List company
– Climate programme score: A
– Forest programme score: A
Green Power Leader,
US EPA
FTSE4Good Index
– included
Carbon Clear FTSE 100
rankings
– top 10
National Business
Awards
– Sustainability Award
fi nalist
Four Euronext Vigeo indices
– Benelux 20
– UK 20
– Europe 120
– Eurozone 120
ISO14001
– certifi ed
STOXX Global ESG
Leaders Indices
– included
THE FULL 2016 CORPORATE RESPONSIBILITY REPORT IS AVAILABLE AT WWW.RELX.COM/GO/CRREPORT
RE100
– member
ECPI Indices
– included
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Financial review
53
Financial
review
In this section
54 Chief Financial Officer’s report
60 Principal risks
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RELX Group Annual reports and financial statements 2016
Chief Financial Officer’s report
Revenue
Underlying growth of revenue was 4%, with all four market
segments contributing to underlying growth. The underlying
growth rate reflects good growth in electronic and face-to-face
revenues, partially offset by continued print revenue declines.
Reported revenue, including the effects of exhibition cycling,
portfolio changes and currency movements, was £6,895m (2015:
£5,971m), up 15%.
Exhibition cycling effects had an impact of less than 1% on the
Group's revenue growth. Acquisitions contributed 1% to revenue
growth, which was offset by disposals which reduced revenue
growth by 1%. The impact of currency movements was to increase
revenue by 11%, principally due to the strengthening of the US
dollar and euro against sterling during 2016.
Nick Luff
Chief Financial Officer
Profit
The capital structure of the Group
continues to be managed to
support the objective of
maximising long-term
shareholder value while
maintaining appropriate leverage.
Capital discipline and financial
stewardship are important to the
Group for the benefit of
shareholders. Our balance sheet
remains strong, with Return on
Invested Capital of 13.0%.
Underlying adjusted operating profit grew ahead of revenue
at 6%, reflecting the benefit of tight cost control across the Group.
Total adjusted operating profit, including the impact of
acquisitions and disposals and currency effects, was £2,114m
(2015: £1,822m), up 16%.
Acquisitions had minimal impact and the impact of disposals
decreased adjusted operating profit by 2%. Currency effects
increased adjusted operating profit by 12%, slightly ahead of the
impact on revenue.
Underlying operating costs were up 4%, reflecting investment in
global technology platforms and the launch of new products and
services, partly offset by continued process innovation. Actions
were taken across our businesses to improve cost-efficiency.
Total operating costs, including the impact of acquisitions,
disposals and currency effects increased by 15%.
The overall adjusted operating margin of 30.7% was 0.2
percentage points higher than in the prior year. On an underlying
basis, the margin improved by 0.4 percentage points, currency
effects increased margin by 0.3 percentage points and portfolio
effects had reduced the margin by 0.5 percentage points.
Interest expense, excluding the net pension financing charge and
including finance income in joint ventures, was £180m (2015:
£153m). The increase primarily reflects higher net borrowings
and currency translation effects.
Adjusted profit before tax was £1,934m (2015: £1,669m), up 16%.
REVENUE
£m
ADJUSTED OPERATING PROFIT
£m
6,116
6,035
5,773
5,971
6,895
1,688*
1,749
1,739
1,822
2,114
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
*2012 restated for IAS19.
Financial review Chief Financial Officer’s report
55
Profit continued
Adjusted figures
Revenue
Operating profit
Operating margin
Profit before tax
Net profit attributable to parent companies’ shareholders
Net margin
Cash flow
Cash flow conversion
Return on invested capital
Adjusted earnings per share
Adjusted earnings per share (euro)
2016
£m
2015
£m
Change
Change
at constant
currencies
Change
underlying
+4%
+6%
6,895
2,114
30.7%
1,934
1,488
21.6%
2,016
95%
13.0%
72.2p
€0.880
5,971
1,822
30.5%
1,669
1,275
21.4%
1,712
94%
12.7%
60.5p
€0.835
+15%
+16%
+16%
+17%
+18%
+19%
+5%
+4%
+4%
+4%
+5%
+5%
+8%
+8%
RELX Group uses adjusted and underlying figures as additional performance measures. Adjusted figures primarily exclude the amortisation of acquired intangible assets and
other items related to acquisitions and disposals, and the associated deferred tax movements. Reconciliations between the reported and adjusted figures are set out on pages
56, 58, 127, 141 and 188. Underlying growth rates are calculated at constant currencies, and exclude the results of acquisitions and disposals made in both the year and prior
year and of assets held for sale. Underlying revenue growth rates also exclude the effects of exhibition cycling. Constant currency growth rates are based on 2015 full-year
average and hedge exchange rates.
The adjusted effective tax rate on adjusted profit before tax was
22.7%, 0.5 percentage points lower than the prior year rate of
23.2%. The adjusted effective tax rate excludes movements in
deferred taxation assets and liabilities related to goodwill and
acquired intangible assets, but includes the benefit of tax
amortisation where available on those items. The adjusted
effective tax rate has been relatively stable over the past five years
and is expected to remain around the 2016 rate. Adjusted
operating profits and taxation are grossed up for the equity share
of taxes in joint ventures. The application of tax law and practice is
subject to some uncertainty and amounts are provided in respect
of this. Discussions with tax authorities relating to cross-border
transactions and other matters are ongoing. Although the
outcome of open items cannot be predicted, no significant impact
on profitability is expected.
The adjusted net profit attributable to shareholders of £1,488m
(2015: £1,275m) was up 17%. Adjusted earnings per share were up
19% at 72.2p (2015: 60.5p) when expressed in sterling and 5% at
€0.880 (2015: €0.835) when expressed in euros. At constant rates
of exchange, adjusted earnings per share increased by 8%.
Cash flows
Adjusted cash flow was £2,016m (2015: £1,712m), up 18%
compared with the prior year and up 5% at constant currencies.
The rate of conversion of adjusted operating profit to adjusted
cash flow was 95% (2015: 94%).
CONVERSION OF ADJUSTED OPERATING PROFIT INTO CASH
YEAR TO 31 DECEMBER
Adjusted operating profit
Capital expenditure
Depreciation and amortisation of internally
developed intangible assets
Working capital and other items
Adjusted cash flow
Cash flow conversion
2016
£m
2,114
(333)
257
(22)
2,016
95%
2015
£m
1,822
(307)
228
(31)
1,712
94%
ADJUSTED OPERATING PROFIT MARGIN
ADJUSTED CASH FLOW CONVERSION
27.6%*
29.0%
30.1%
30.5%
30.7%
95%*
97%
96%
94%
95%
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
*2012 restated for IAS19.
*2012 restated for IAS19.
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RELX Group Annual reports and financial statements 2016
Capital expenditure was £333m (2015: £307m), including
£282m (2015: £242m) in respect of capitalised development costs.
This reflects sustained investment in new products and related
infrastructure, particularly in Legal and in Scientific, Technical
& Medical. Depreciation and the amortisation of internally
developed intangible assets was £257m (2015: £228m). Capital
expenditure was 4.8% of revenue (2015: 5.1%). Depreciation and
amortisation was 3.7% of revenue (2015: 3.8%).
Tax paid, excluding tax relief on acquisition-related costs and on
disposals, of £423m (2015: £364m) increased, driven by the
movements in exchange rates. Interest paid was £152m (2015:
£132m).
Total consideration for the disposal of non-strategic assets in 2016
was £16m (2015: £73m), including £2m (2015: £1m) in respect of
freehold properties. Net cash outflow after timing differences and
separation and transaction costs was £13m (2015: £34m received).
Net tax recovered in respect of disposals was £8m (2015: £6m).
Share repurchases by the parent companies in 2016 were £700m
(2015: £500m), with a further £100m repurchased in 2017 as at
23 February. In addition, the Employee Benefit Trust purchased
shares of the parent companies to meet future obligations in
respect of share based remuneration totalling £29m (2015: £23m).
Proceeds from the exercise of share options were £23m
(2015: £24m).
RECONCILIATION OF NET DEBT YEAR-ON-YEAR
Payments made in respect of acquisition-related costs amounted
to £40m (2015: £45m).
Free cash flow before dividends was £1,414m (2015: £1,186m).
Ordinary dividends paid to shareholders in the year, being the 2015
final and 2016 interim dividends, amounted to £683m (2015:
£583m). Free cash flow after dividends was £731m (2015: £603m).
RECONCILIATION OF CASH GENERATED FROM OPERATIONS
TO ADJUSTED CASH FLOW
YEAR TO 31 DECEMBER
Net debt at 1 January
Free cash flow post dividends
Net disposal (payments)/proceeds
Acquisition cash spend
Share repurchases
Purchase of shares by the Employee
2016
£m
(3,782)
731
(13)
(367)
(700)
(29)
(31)
(509)
(918)
2015
£m
(3,550)
603
34
(207)
(500)
(23)
(20)
(119)
(232)
2016
£m
2,236
44
2015
£m
1,882
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Benefit Trust
Other*
Currency translation
Movement in net debt
(51)
(65)
Net debt at 31 December
(4,700)
(3,782)
(282)
(242)
* Cash tax relief on disposals, distributions to non-controlling interests, pension
deficit payments, finance leases, and share option exercise proceeds.
YEAR TO 31 DECEMBER
Cash generated from operations
Dividends received from joint ventures
Purchases of property, plant and
equipment
Expenditure on internally developed
intangible assets
Payments in relation to acquisition-
related costs/other
Proceeds from disposals of property, plant
and equipment
Adjusted cash flow
FREE CASH FLOW
YEAR TO 31 DECEMBER
Adjusted cash flow
Interest paid
Tax paid
Acquisition-related costs*
Free cash flow before dividends
Ordinary dividends
Free cash flow post dividends
* Including cash tax relief.
68
1
79
1
2,016
1,712
2016
£m
2,016
(152)
(423)
(27)
1,414
(683)
731
2015
£m
1,712
(132)
(364)
(30)
1,186
(583)
603
Total consideration on acquisitions completed in the year was
£338m (2015: £171m). Cash spent on acquisitions was £367m
(2015: £207m), including deferred consideration of £24m (2015:
£25m) on past acquisitions and spend on venture capital
investments of £6m (2015: £16m) .
Funding
Debt
Net borrowings at 31 December 2016 were £4,700m, an increase
of £918m since 31 December 2015. The majority of borrowings are
denominated in US dollars and euros and the weakening of sterling
during 2016 resulted in higher net borrowings when translated into
sterling. Excluding currency translation effects, net borrowings
increased by £409m. Expressed in US dollars, net borrowings at
31 December 2016 were $5,803m, an increase of $230m.
Gross borrowings at 31 December 2016 amounted to £4,843m
(2015: £3,902m). The fair value of related derivative liabilities
was £19m (2015: £2m). Cash and cash equivalents totalled £162m
(2015: £122m). In aggregate, these give the net borrowings figure
of £4,700m (2015: £3,782m).
The effective interest rate on gross borrowings was 3.8% in 2016,
unchanged from 3.8% in the prior year. As at 31 December 2016,
gross borrowings had a weighted average life remaining of 4.7
years and a total of 46% of them were at fixed rates, after taking into
account interest rate derivatives.
The ratio of net debt to 12-month trailing EBITDA (adjusted
earnings before interest, tax, depreciation and amortisation) was
1.8x (2015: 1.8x). Incorporating the capitalisation of operating
leases and the net pension deficit, in line with the approach taken
by the credit rating agencies, the ratio was 2.2x (2015: 2.2x).
Financial review Chief Financial Officer’s report
57
Liquidity
The Group has a $2.0bn committed bank facility, maturing in
July 2020, which provides security of funding for short-term debt.
At 31 December 2016, this facility was undrawn. In March 2016,
€750m of euro denominated fixed rate term debt with a coupon
of 1.375% and a maturity of ten years was issued. The Group has
ample liquidity and access to debt capital markets, providing the
ability to repay or refinance borrowings as they mature and to fund
ongoing requirements.
Net pension obligations, i.e. pension obligations less pension
assets, increased to £636m (2015: £384m). There was a deficit
of £393m (2015: £189m) in respect of funded schemes, which
were on average 92% funded at the end of the year on an IFRS
basis. The higher deficit reflects reduced discount rates in the UK
and currency effects in relation to the US scheme.
The post-tax return on average invested capital in the year was
13.0% (2015: 12.7%).
Invested capital and returns
Net capital employed was £8,484m at 31 December 2016 (2015:
£7,236m), an increase of £1,248m. The carrying value of goodwill
and acquired intangible assets increased by £1,402m, reflecting
the strengthening of the dollar against sterling and acquisitions
in 2016, partly offset by the annual amortisation charge and
divestments. An amount of £189m was capitalised in the year in
respect of acquired intangible assets and £222m was recorded
as goodwill.
SUMMARY BALANCE SHEET
AS AT 31 DECEMBER
Goodwill and acquired intangible assets*
Internally developed intangible assets*
Property, plant and equipment* and
investments
Net assets held for sale
Net pension obligations
Working capital
Net capital employed
2016
£m
8,911
1,085
481
1
(636)
(1,358)
2015
£m
7,509
878
471
6
(384)
(1,244)
8,484
7,236
* Net of accumulated depreciation and amortisation.
Development costs of £280m (2015: £242m) were capitalised within
internally developed intangible assets, most notably investment in
new products and related infrastructure in the Legal and Scientific,
Technical & Medical businesses.
RETURN ON INVESTED CAPITAL
AS AT 31 DECEMBER
Adjusted operating profit
Tax at effective rate
Effective tax rate
Adjusted operating profit after tax
Average invested capital*
Return on invested capital
2016
£m
2,114
(480)
22.7%
1,634
12,538
13.0%
2015
£m
1,822
(424)
23.2%
1,398
10,995
12.7%
* Average of invested capital at the beginning and the end of the year, retranslated at
2016 average exchange rates. Invested capital is calculated as net capital employed,
adjusted to add back accumulated amortisation, impairment of acquired intangible
assets and goodwill and to exclude the gross up to goodwill in respect of deferred tax.
Reported figures
Reported figures
Revenue
Operating profit
Profit before tax
Net profit (1)
Net margin
Net borrowings
2016
£m
2015
£m
Change
6,895
1,708
1,473
1,161
16.8%
4,700
5,971
1,497
1,312
1,008
16.9%
3,782
+15%
+14%
+12%
+15%
(1) Attributable to parent companies’ shareholders
Reported operating profit, after amortisation of acquired
intangible assets and acquisition-related costs, was £1,708m
(2015: £1,497m).
RELX GROUP TERM DEBT MATURITIES AT 31 DECEMBER 2016
RETURN ON INVESTED CAPITAL
$m
774
871
580
282
993
819
791
11.7%*
12.1%
12.8%
12.7%
13.0%
0
150
0
200
7
2017 2018 2019 2020 2021 2022 2023 2024
2025
2026 2027 >2027
2012
2013
2014
2015
2016
*2012 restated for IAS19
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RELX Group Annual reports and financial statements 2016
The amortisation charge in respect of acquired intangible assets,
including the share of amortisation in joint ventures, increased
to £346m (2015: £296m), primarily reflecting currency effects and
acquisitions, partially offset by certain assets becoming fully
amortised. Acquisition-related costs were £51m (2015: £35m).
Reported net finance costs of £195m (2015: £174m) include a
charge of £14m (2015: £21m) in respect of the defined benefit
pension schemes and exclude £1m of finance income in joint
ventures (2015: nil). Net pre-tax disposal losses were £40m (2015:
£11m) arising largely from the sale of certain Risk & Business
Analytics businesses and revaluation of investments held. These
losses are offset by an associated tax credit of £34m (2015: £13m).
The reported profit before tax was £1,473m (2015: £1,312m).
RECONCILIATION OF ADJUSTED AND REPORTED PROFIT
BEFORE TAX
YEAR TO 31 DECEMBER
Adjusted profit before tax
Amortisation of acquired intangible assets
Acquisition-related costs
Reclassification of tax in joint ventures
Net pension financing charge
Disposals and other non-operating items
Reported profit before tax
2016
£m
1,934
(346)
(51)
(10)
(14)
(40)
1,473
2015
£m
1,669
(296)
(35)
6
(21)
(11)
1,312
The reported tax charge was £304m (2015: £298m). The reported
net profit attributable to the parent companies’ shareholders was
£1,161m (2015: £1,008m).
RECONCILIATION OF ADJUSTED AND REPORTED TAX CHARGE
YEAR TO 31 DECEMBER
Adjusted tax charge
Tax on disposals and other non-operating items
Deferred tax credits from intangible assets
Other items
Reported tax charge
2016
£m
(438)
34
73
27
(304)
2015
£m
(388)
13
70
7
(298)
Reported earnings per share and dividends
RELX PLC
Reported earnings per share
Ordinary dividend per share
2016
£m
56.3p
35.95p
2015
£m
46.4p
29.7p
Change
+21%
+21%
RELX NV
€m
€m
Reported earnings per share
Ordinary dividend per share
€0.687
€0.423
€0.682
€0.403
+1%
+5%
The reported earnings per share for RELX PLC was up 21% at
56.3p (2015: 46.4p) and for RELX NV was up +1% at €0.687 (2015:
€0.682). In sterling terms RELX NV reported EPS increased by
14%. The differential reflects the impact of the tax credit abolition
as explained below.
The final dividends proposed by the respective Boards are 25.7p
per share for RELX PLC and €0.301 per share for RELX NV,
15% and 5% higher respectively compared with the prior year
final dividends. This gives total dividends for the year of 35.95p
(2015: 29.7p) and €0.423 (2015: €0.403). The difference in growth
rates in the final dividends reflects changes in the euro:sterling
exchange rate since the respective prior year dividend
announcement dates. Additionally, the earlier interim dividends
reflected the removal of the tax credit.
Until the end of 2015 the equalisation of dividends between
RELX PLC and RELX NV took into account the prevailing tax credit
that was available to certain UK taxpayers at that time. The tax
credit was also taken into account in the determination of reported
earnings per share. The UK dividend tax credits were abolished
with effect from 6 April 2016, impacting dividends paid after this
date. As a result of the abolition of this tax credit, from 2016
reported earnings per share have the same value for each RELX
PLC and RELX NV share.
Dividend cover, based on adjusted earnings per share and the total
interim and proposed final dividends for the year, is 2.0 times
(2015: 2.0x) for RELX PLC and 2.1 times (2015: 2.1x) for RELX NV.
The dividend policy of the parent companies is, subject to currency
considerations, to grow dividends broadly in line with adjusted
earnings per share while maintaining dividend cover (being the
number of times the annual dividend is covered by the adjusted
earnings per share) of at least two times over the longer-term.
During 2016, a total of 55.3m RELX PLC and RELX NV shares were
repurchased. Total consideration for these repurchases was
£700m. A further 1.2m RELX PLC shares and 1.1m RELX NV
shares were purchased by the Employee Benefit Trust. During
2016, 33.7m RELX PLC and 30m RELX NV shares held in treasury
were cancelled. As at 31 December 2016, total shares in issue for
RELX Group, net of shares held in treasury and shares held by the
Employee Benefit Trust, amounted to 2,043m; represented by
1,081m RELX PLC shares and 962m RELX NV shares. A further
3.7m RELX PLC shares and 3.3m RELX NV shares have been
repurchased in 2017 as at 22 February.
Distributable reserves
As at 31 December 2016, the parent companies RELX PLC and
RELX NV each had distributable reserves of over £1.4bn (€1.6bn).
In line with respective legislation in the UK and the Netherlands,
distributable reserves are derived from the non-consolidated
parent company balance sheets. The consolidated Group reserves
reflect adjustments such as the amortisation of acquired
intangible assets that are not taken into account when calculating
distributable reserves.
Further information on the distributable reserves of RELX
PLC and RELX NV can be found in the parent company financial
statements on pages 175 and 182 respectively.
Financial review Chief Financial Officer’s report
59
Alternative performance measures
The Group uses adjusted figures, which are not defined by
generally accepted accounting principles (“GAAP”) such as IFRS.
Adjusted figures and underlying growth rates are presented as
additional performance measures used by management, as they
provide relevant information in assessing the Group’s
performance, position and cash flows. We believe that these
measures enable investors to more clearly track the core
operational performance of the Group, by separating out items of
income or expenditure relating to acquisitions, disposals and
capital items, while providing our investors with a clear basis for
assessing our ability to raise debt and invest in new business
opportunities. Our management uses these financial measures,
along with IFRS financial measures, in evaluating the operating
performance of the Group as a whole and the individual business
segments. Adjusted financial measures should not be considered
in isolation from, or as a substitute for, financial information
presented in compliance with IFRS. The measures may not be
directly comparable to similarly reported measures by other
companies. Please see page 188 for reconciliation of adjusted
measures.
Accounting policies
The consolidated financial statements are prepared in accordance
with International Financial Reporting Standards as adopted by
the European Union and as issued by the International Accounting
Standards Board following the accounting policies shown in the
notes to the financial statements on pages 124 to 167. The
accounting policies and estimates which require the most
significant judgement relate to the valuation of goodwill and
intangible assets, the capitalisation of development costs,
taxation and accounting for defined benefit pension schemes.
Further detail is provided in the accounting policies on pages 124
to 125 and in the relevant notes to the accounts.
Please see page 125 for disclosures in relation to new standards.
For IFRS 15, based on management’s assessment of the standard
and current contracts in place, the adoption of IFRS 15 is not
expected to have a material impact on the full year revenue or
revenue growth rates. On the basis of the initial assessment
performed by management in relation to IFRS 16, assets and
liabilities will increase, with the expected impact on reported
liabilities on adoption to be broadly in-line with the adjustments
currently made for operating lease obligations when calculating
adjusted leverage. There is not expected to be a material impact
on net assets or profit before tax.
Tax principles
Taxation is an important issue for us and our stakeholders,
including our shareholders, governments, customers, suppliers,
employees and the broader, global communities in which
we operate. For this reason, we operate in accordance with our
Tax Principles, which can be found on our website at
www.relx.com/go/taxprinciples.
In summary, we maintain an open dialogue with tax authorities,
and are vigilant in ensuring that we comply with current tax
legislation. We have clear and consistent tax policies and tax
matters are dealt with by a professional tax function, supported
by external advisers. We proactively seek to agree arms-length
pricing with tax authorities to mitigate tax risks of significant
cross-border operations where this is available. We actively
engage with policy makers, tax administrators, industry bodies
and international institutions to provide informed input on
proposed tax measures, so that we and they can understand how
those proposals would affect our businesses. In addition, we
participate in consultations with the Organisation for Economic
Co-operation and Development ("OECD"), European bodies and
the United Nations.
Treasury policies
The Boards of RELX PLC, RELX NV and RELX Group plc agree
policies for managing treasury risks. The key policies address
security of funding requirements, the target fixed/floating interest
rate exposure for debt, foreign currency hedging and place limits
on counterparty exposures. A more extensive summary of these
policies is provided in note 19 to the financial statements on pages
150 to 154. Financial instruments are used to finance the RELX
Group businesses and to hedge transactions. The Group’s
businesses do not enter into speculative transactions.
Capital and liquidity management
The capital structure is managed to support the Group’s objective
of maximising long-term shareholder value through appropriate
security of funding, ready access to debt and capital markets,
cost-effective borrowing and flexibility to fund business and
acquisition opportunities while maintaining appropriate leverage
to ensure an efficient capital structure.
Over the long-term, the Group seeks to maintain cash flow
conversion of 90% or higher and credit metrics that are consistent
with a solid investment grade credit rating. The typical credit
metrics are net debt to EBITDA, on a pensions and lease adjusted
and on an unadjusted basis, and free cash flow as percentage of
net debt.
The Group’s uses of free cash flow over the longer-term balance
the dividend policy, selective acquisitions and share repurchases,
while retaining the balance sheet strength to maintain access to
cost-effective sources of borrowing. Further detail on the Group’s
capital and liquidity management is provided on page 150.
Corporate responsibility
We attach equal importance to assessing our non-financial
performance as we do to other aspects of our business. The social
and environmental metrics that appear in this report, and in the
companion 2016 Corporate Responsibility Report, have been
calculated using robust methodologies aligned with best practice.
Environmental and health and safety data has been assured by EY.
In the year, to strengthen adherence to our Supplier Code of
Conduct, we embedded it into standard terms and conditions,
including 30,000 purchase orders valued at nearly $600m. We
undertook 82 independent external audits of suppliers in high risk
countries and made progress on embedding our new
environmental targets.
Nick Luff
Chief Financial Officer
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60
RELX Group Annual reports and financial statements 2016
Principal risks
The Group has established risk management practices that are
embedded into the operations of the businesses, based on the
Internal Control-Integrated Framework (2013) by the Committee
of Sponsoring Organisations of the Treadway Commission (COSO).
The principal risks facing the business, which have been assessed
by the Audit Committees and Boards, are described below. The
Directors confirm this process is robust and includes consideration
of risks, including consideration of the United Kingdom’s vote to
leave the European Union, that could threaten the Group’s business
models, future performance, solvency or liquidity. It is not possible
to identify every risk that could affect our businesses, and the
actions taken to mitigate the risks described below cannot provide
absolute assurance that a risk will not materialise and/or adversely
affect our business or financial performance. Our risk management
and internal control processes are described in the Corporate
Governance section. A description of the business and a discussion
of factors affecting performance is set out in the Chief Executive
Officer’s report and the Business Review. Treasury risks are further
discussed in the Chief Financial Officer’s report and in note 19 to the
consolidated financial statements. Our approach to managing
environmental and other non-financial risks is set out in the
Business Review and the separate Corporate Responsibility Report.
EXTERNAL RISKS
Risk
Economy
and market
conditions
Intellectual
property rights
Data resources
Paid
subscriptions
Description and impact
Mitigation
Demand for our products and services may be adversely
impacted by factors beyond our control, such as the economic
environment in the United States, Europe and other major
economies, political uncertainties, acts of terrorism and civil
unrest as well as levels of government and private funding
provided to academic and research institutions.
Our products and services include and utilise intellectual
property content. We rely on trademark, copyright, patent and
other intellectual property laws to establish and protect our
proprietary rights in this intellectual property. There is a risk
that our proprietary rights could be challenged, limited,
invalidated or circumvented, which may impact demand for and
pricing of our products and services. Copyright laws are subject
to legislative initiatives and increased judicial scrutiny in several
jurisdictions in which we operate. This creates additional
challenges for us in protecting our proprietary rights in content
delivered through the internet and electronic platforms.
A number of our businesses rely extensively upon content
and data from external sources. Data is obtained from public
records, governmental authorities, customers and other
information companies, including competitors. Legal
regulations relating to internet communications, privacy and
data protection, e-commerce, information governance and
use of public records are becoming more prevalent worldwide.
The disruption or loss of data sources, either because of
changes in the law or because data suppliers decide not to
supply them, may impose limits on our collection and use of
certain kinds of information about individuals and our ability to
communicate such information effectively with our customers .
Our Scientific, Technical and Medical (STM) primary research
content, like that of most of our competitors, is sold largely
on a paid subscription basis. There is continued debate in
government, academic and library communities, which are
the principal customers for our STM content, regarding to what
extent such content should be funded instead through fees
charged to authors or authors’ funders and/or made freely
available in some form after a period following publication.
Some of these methods, if widely adopted, could adversely
affect our revenue from paid subscriptions.
Our businesses are focused on professional markets
which have generally been more resilient in periods of
economic downturn. We deliver information solutions,
many on a subscription basis, which are important to
our customers’ effectiveness and efficiency. We have
extended our position in long-term global growth
markets through organic new launches supported
by the selective acquisition of small content and data
sets. We continue to dispose of businesses that no
longer fit our strategy.
We actively engage in developing and promoting
the legal protection of intellectual property rights.
Our subscription contracts with customers contain
provisions regarding the use of proprietary content.
We are vigilant as to the use of our content and, as
appropriate, take legal action to challenge illegal
distribution sources.
We seek as far as possible to have proprietary
content. Where content is supplied to us by third
parties, we aim to have contracts which provide
mutual commercial benefit. We also maintain an
active dialogue with regulatory authorities on privacy
and other data related issues, and promote, with
others, the responsible use of data.
We engage extensively with stakeholders in the STM
community to better understand their needs and
deliver value to them. We are open to serving the
STM community under any payment model that can
sustainably provide researchers with the critical
information tools that they need. We focus on the
integrity and quality of research through the editorial
and peer review process; we invest in efficient editorial
and distribution platforms and in innovation in
platforms and tools to make content and data more
accessible and actionable; and we ensure vigilance
on plagiarism and the long-term preservation of
research findings.
Financial review Principal risks
61
STRATEGIC RISKS
Risk
Customer
acceptance
of products
Competition
Acquisitions
OPERATIONAL RISKS
Risk
Technology
failure
Cyber security
Description and impact
Mitigation
Our businesses are dependent on the continued acceptance by
our customers of our products and services and the value placed
on them. Failure to meet evolving customer needs could impact
demand for our products and consequently adversely affect our
revenue or the long-term returns from our investment in
electronic product and platform initiatives.
We are focused on the needs and economics of our
customers and leverage user centred design
and development methods and customer analytics
to provide content and innovative solutions that help
them achieve better outcomes and enhance
productivity.
Our businesses operate in highly competitive markets, and the
means of delivering our products and services, and the products
and services themselves, continue to change in response to rapid
technological innovations, legislative and regulatory changes,
the entrance of new competitors and other factors. Failure to
anticipate and quickly adapt to these changes could impact the
competitiveness of our products and services and consequently
adversely affect our revenue.
We supplement our organic development with selected
acquisitions. If we are unable to generate the anticipated
benefits such as revenue growth and/or cost savings associated
with these acquisitions this could adversely affect return on
invested capital and financial condition, or lead to an impairment
of goodwill.
We gain insights into our markets, evolving customers’
needs, the potential application of new technologies
and business models, and the actions of competitors.
These insights inform our market strategies and
operational priorities. We continuously invest
significant resources in our products and services,
and the infrastructure to support them.
Acquisitions are made within the framework of
our overall strategy, which emphasises organic
development. We have a well formulated process
for reviewing and executing acquisitions and for
managing the post-acquisition integration. This
process is underpinned with clear strategic, financial
and ethical criteria. We closely monitor the integration
and performance of acquisitions.
Description and impact
Mitigation
Our businesses are dependent on electronic platforms and
networks, primarily the internet, for delivery of our products
and services. These could be adversely affected if our electronic
delivery platforms or networks experience a significant failure,
interruption or security breach.
We have established procedures for the protection of
our technology assets. These include the development of
business continuity plans, including IT disaster recovery
plans and back-up delivery systems, to reduce business
disruption in the event of a major technology failure.
Our businesses maintain online databases and information,
including public records and other personal information. As part
of maintaining this information and delivering our products and
services we rely on, and provide data to, third party service
providers. These databases and information are susceptible to
cyber attacks where external parties seek unauthorised access
to our, or our users’, data.
Our cyber security measures, and the measures used by our third
party service providers, may not detect or prevent all attempts to
compromise our systems, which may jeopardise the security of
the data we maintain or may disrupt our systems. Failures of our
cyber security measures could result in unauthorised access to
our systems, misappropriation of our or our users’ data, deletion
or modification of stored information or other interruption to our
business operations. As techniques used to obtain unauthorised
access to or to sabotage systems change frequently, and may not
be known until launched against us or our third party service
providers, we may be unable to anticipate, or implement adequate
measures to protect against these attacks. Compromises of our or
our third party service providers’ systems, or failure to comply with
applicable legislation or regulatory or contractual requirements
could adversely affect our financial performance, damage our
reputation and expose us to risk of loss, litigation and increased
regulation.
We have established data privacy and security
programmes with the aim of ensuring that data is
protected and that we comply with relevant legislative,
regulatory and contractual requirements.
We have governance mechanisms in place to design
and monitor common policies and standards across
our businesses.
We invest in appropriate administrative, technical,
and physical controls which are applied across the
enterprise in a risk based security programme which
operates at the infrastructure, application and user
levels. These controls include, but are not limited to,
infrastructure vulnerability management, application
scanning and penetration testing, network
segmentation, and logging and monitoring. Our
administrative controls include training and
communication initiatives to establish awareness of
risks at all levels of our businesses, and appropriate
incident response plans to respond to threats and
attacks. We run programmes monitoring the
application of our data privacy and security policies by
third party service providers. We use independent
internal and third party auditors to test, evaluate, and
help enhance our procedures and controls.
We have established procedures for incorporating
the requirements of relevant laws and regulations into
our overall security programme, including into our
policies and procedures. Our compliance with these is
also regularly reviewed and tested.
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RELX Group Annual reports and financial statements 2016
OPERATIONAL
RISKS
Risk
Description and impact
Mitigation
Supply chain
dependencies
Our organisational and operational structures are dependent
on outsourced and offshored functions. Poor performance or
failure of third parties to whom we have outsourced activities
could adversely affect our business performance, reputation
and financial condition.
The implementation and execution of our strategies and
business plans depend on our ability to recruit, motivate and
retain skilled employees and management. We compete
globally and across business sectors for talented management
and skilled individuals, particularly those with technology and
data analytics capabilities. An inability to recruit, motivate or
retain such people could adversely affect our business
performance.
We select our vendors with care and establish
contractual service levels that we closely monitor,
including through key performance indicators and
targeted supplier audits. We have developed business
continuity plans to reduce disruption in the event of
a major failure by a vendor.
We have well established management development
and talent review programmes. We monitor capability
needs and remuneration schemes are tailored to
attract and motivate the best talent available at an
appropriate level of cost. We actively seek feedback
from employees, which feeds into plans to
enhance employee engagement and motivation.
Description and impact
Mitigation
We operate a number of pension schemes around the world,
including local versions of the defined benefit type in the UK and
the United States. The assets and obligations associated with
those pension schemes are sensitive to changes in the market
values of the scheme’s investments and the market-related
assumptions used to value scheme liabilities. Adverse changes
to asset values, discount rates, longevity assumptions or inflation
could increase future pension costs and funding requirements.
We have professional management of our pension
schemes and we focus on maintaining appropriate asset
allocation and plan designs. We review our funding
requirements on a regular basis with the assistance of
independent actuaries and ensure that the funding plans
are appropriate. We seek to manage pension liabilities
by reviewing pension benefits provided to staff as well as
the structure of scheme arrangements.
We maintain an open dialogue with tax authorities,
and are vigilant in ensuring that we comply with
current tax legislation. We have clear and consistent
tax policies and tax matters are dealt with by a
professional tax function, supported by external
advisers. As outlined in the Chief Financial Officer’s
report on page 59 we engage with tax authorities and
international organisations. The principles we adopt
in our approach to tax matters can be found on our
website at www.relx.com/go/taxprinciples.
Our approach to capital structure and funding are
described in the Chief Financial Officer’s Report on
pages 54 to 59. The approach to the management
of treasury risks is described in note 19 to the
consolidated financial statements.
Our businesses operate globally and our profits are subject
to taxation in many differing jurisdictions and at differing tax
rates. In October 2015, the Organisation for Economic
Co-operation and Development (OECD) issued its reports on Base
Erosion and Profit Shifting, which suggest a range of new
approaches that national governments might adopt when taxing
the activities of multinational enterprises. As a result of the OECD
project and other international initiatives, tax laws that currently
apply to our businesses may be amended by the relevant
authorities or interpreted differently by them, and these changes
could adversely affect our reported results.
The RELX Group consolidated financial statements are expressed
in sterling and are subject to movements in exchange rates on the
translation of the financial information of businesses whose
operational currencies are other than sterling. The United States
is our most important market and, accordingly, significant
fluctuations in the US dollar exchange rate could significantly
affect our reported results. We also earn revenues and incur
costs in a range of other currencies, including the euro and the yen
and significant fluctuations in these exchange rates could also
significantly impact our reported results.
Macroeconomic, political and market conditions may adversely
affect the availability and terms of short and long-term funding,
volatility of interest rates, the credit quality of our counterparties,
currency exchange rates and inflation. The majority of our
outstanding debt instruments are, and any of our future debt
instruments may be, publicly rated by independent rating
agencies. Our borrowing costs and access to capital may be
adversely affected if the credit ratings assigned to our debt are
downgraded.
Talent
FINANCIAL RISKS
Risk
Pensions
Tax
Treasury
Financial review Principal risks
63
REPUTATIONAL
RISKS
Risk
Ethics
Environmental
Description and impact
Mitigation
As a world-leading provider of professional information
solutions to the STM, risk & business analytics, legal, and
exhibitions markets we, our employees and major suppliers are
expected to adhere to high standards of independence and
ethical conduct, including those related to anti-bribery and
principled business conduct. A breach of generally accepted
ethical business standards or applicable statutes concerning
bribery could adversely affect our business performance,
reputation and financial condition.
Our businesses have an impact on the environment, principally
through the use of energy and water, waste generation and, in
our supply chain, through paper use and print and production
technologies. Failure to manage our environmental impact
could adversely affect our reputation.
Our Code of Ethics and Business Conduct is provided
to every employee and is supported by training.
It encompasses such topics as fair competition,
anti-bribery and human rights and encourages open
and principled behaviour. We have well-established
processes for reporting and investigating instances
of unethical conduct. Our major suppliers are required
to adopt our Supplier Code of Conduct.
We are committed to reducing these environmental
impacts by limiting resource use and efficiently
employing sustainable materials and technologies.
We require our major suppliers and contractors
to meet the same objectives. We seek to ensure
that all our businesses are compliant with relevant
environmental regulation.
The Strategic Report, as set out on pages 2 to 63, has been approved by the Board of RELX PLC.
By order of the Board
Henry Udow
Company Secretary
22 February 2017
Registered Office
1–3 Strand
London
WC2N 5JR
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Governance
65
Governance
In this section
66 Board Directors
68 RELX Group Business Leaders
70 Chairman’s introduction to
Corporate Governance
71 Corporate Governance
80 Report of the Nominations Committee
81 Directors’ Remuneration Report
105 Report of the Audit Committees
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RELX Group Annual reports and financial statements 2016
Board Directors
Executive Directors
Non-Executive Directors
Erik Engstrom (53)
Chief Executive Officer
Anthony Habgood (70)
Chairman
R N C
Appointed: Chief Executive Officer of RELX
Group since November 2009. Joined the Group
as Chief Executive Officer of Elsevier in 2004.
Other appointments: Non-Executive Director
of Smith & Nephew plc.
Past appointments: Prior to joining the Group
was a partner at General Atlantic Partners.
Before that was President and Chief Operating
Officer of Random House Inc and President
and Chief Executive Officer of Bantam
Doubleday Dell, North America. Began his
career as a consultant with McKinsey. Served
as a Non-Executive Director of Eniro AB and
Svenska Cellulosa Aktiebolaget SCA.
Education: Holds a BSc from Stockholm
School of Economics, an MSc from the Royal
Institute of Technology in Stockholm, and
gained an MBA from Harvard Business
School as a Fulbright Scholar.
Nationality: Swedish
Appointed: June 2009
Other appointments: Chairman of: Court of the
Bank of England and Preqin Holding Limited.
Past appointments: Previously was Chairman
of Whitbread plc, Bunzl plc and Mölnlycke
Health Care Limited and served as Chief
Executive of Bunzl plc, Chief Executive of Tootal
Group plc and a Director of The Boston
Consulting Group. Formerly Non-Executive
Director of Geest plc, Marks and Spencer plc,
National Westminster Bank plc, Powergen plc,
SVG Capital plc, and Norfolk and Norwich
University Hospitals Trust. Chairman of Norwich
Research Partners LLP until March 2016 and
a member of its board until September 2016.
Education: Holds an MA in Economics from
Cambridge University and an MS in Industrial
Administration from Carnegie Mellon University.
He is a visiting Fellow at Oxford University.
Nationality: British
Wolfhart Hauser (67)
Non-Executive Director
Senior Independent Director
Chairman of the Remuneration Committee
R N C
Appointed: April 2013
Other appointments: Chairman of FirstGroup
plc and a Non-Executive Director of
Associated British Foods plc.
Past appointments: Chief Executive Officer of
Intertek Group plc from 2005 until 2015. Prior
to that he was Chief Executive Officer of TÜV
Sud AG between 1998 and 2002 and Chief
Executive Officer of TÜV Product Service
GmbH for 10 years. Formerly a Non-Executive
Director of Logica plc.
Education: Holds a master's degree in
Medicine from Ludwig-Maximilian-University
Munich and a Medical Doctorate from
Technical University Munich.
Nationality: German
Nick Luff (49)
Chief Financial Officer
Robert MacLeod (52)
Non-Executive Director
R C
Carol Mills (63)
Non-Executive Director
A R C
Appointed: September 2014
Other appointments: Non-Executive Director
of Lloyds Banking Group plc.
Past appointments: Prior to joining the Group
was Group Finance Director of Centrica plc
from 2007. Before that was Chief Financial
Officer at The Peninsular & Oriental Steam
Navigation Company (P&O) and its affiliated
companies, having previously held a number
of senior finance roles at P&O. Began his
career as an accountant with KPMG.
Formerly a Non-Executive Director of QinetiQ
Group plc.
Education: Has a degree in Mathematics from
Oxford University and is a qualified
UK Chartered Accountant.
Nationality: British
Appointed: April 2016
Other appointments: Chief Executive
of Johnson Matthey Plc.
Past appointments: Prior to joining Johnson
Matthey, spent five years as Group Finance
Director of WS Atkins plc, having joined as
Group Financial Controller in 2003. From
1993 to 2002, held a variety of senior finance
and M&A roles with Enterprise Oil plc in the
UK and US. Formerly a Non-Executive
Director of Aggreko plc.
Nationality: British
Appointed: April 2016
Other appointments: Chair of the Board
of Directors of Xactly Corporation and an
Independent Director of Zynga Inc .
Past appointments: A member of the Boards
of Adobe Systems, Alaska Communications,
Tekelec Corporation, Blue Coat Systems,
WhiteHat Security and Ingram Micro until
December 2016. From 2004 to 2006, was
Executive Vice President and General
Manager of the Infrastructure Products
Group at Juniper Networks. From 1998 to
2002 was Chief Executive Officer of Acta
Technology, and before Acta, spent 16 years
at Hewlett-Packard in a number of executive
roles.
Nationality: American
Governance Board Directors
67
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Adrian Hennah (59)
Non-Executive Director
A C
Marike van Lier Lels (57)
Non-Executive Director
A C
Appointed: April 2011
Other appointments: Chief Financial Officer
of Reckitt Benckiser Group plc.
Past appointments: Chief Financial Officer of
Smith & Nephew plc from 2006 to 2012.
Before that was Chief Financial Officer of
Invensys plc, having previously held various
senior finance and management positions
with GlaxoSmithKline for 18 years. Formerly,
a Non-Executive Director of Indivior PLC.
Nationality: British
Appointed: RELX NV, January 2010.
RELX PLC and RELX Group plc,July 2015.
Other appointments: Member of the
Supervisory Boards of TKH Group NV, Eneco
Holding NV and NS (Dutch Railways), and
a member of the Executive Committee of
Aegon Association.
Past appointments: Member of the
Supervisory Boards of Royal Imtech NV,
Maersk BV, KPN NV and USG People NV, and
Executive Vice President and Chief Operating
Officer of the Schiphol Group. Prior to joining
Schiphol Group, was a member of the
Executive Board of Deutsche Post Euro
Express and held various senior positions
with Nedlloyd. Member of various Dutch
governmental advisory boards.
Nationality: Dutch
Linda Sanford (64)
Non-Executive Director
A C
Ben van der Veer (65)
Non-Executive Director
Chairman of the Audit Committees
A N C
Appointed: December 2012
Other appointments: An independent
Director of Consolidated Edison, Inc,
Pitney Bowes, Inc and ION Trading UK Limited,
and a consultant to The Carlyle Group. Serves
on the board of trustees of the New York Hall
of Science.
Past appointments: Senior Vice President,
Enterprise Transformation, IBM Corporation
until 2014, having joined the company in 1975.
Formerly a Non-Executive Director of ITT
Corporation, served on the boards of
directors of The Business Council of New York
State and the Partnership for New York City,
and on the boards of trustees of the State
University of New York, St John’s University
and Rensselaer Polytechnic Institute.
Nationality: American
Appointed: September 2009
Other appointments: Member of the
Supervisory Boards of Aegon NV, TomTom NV
and Koninklijke FrieslandCampina NV.
Past appointments: Chairman of the
Executive Board of KPMG in the Netherlands
and a member of the Management Committee
of the KPMG International board until his
retirement in 2008, having joined KPMG in
1976. Formerly a member of the Supervisory
Boards of Royal Imtech NV and Siemens
Nederland NV.
Nationality: Dutch
Board Committee membership key
A Audit Committees
R Remuneration Committee
N Nominations Committee
C Corporate Governance Committee
Committee Chairman
All of the Directors are directors of RELX Group plc,
RELX PLC and RELX NV.
68
RELX Group Annual reports and financial statements 2016
RELX Group Business Leaders
Senior Business Executives
Mark Kelsey
Chief Executive Officer
Risk & Business Analytics
Chet Burchett
Chief Executive Officer
Exhibitions
Mike Walsh
Chief Executive Officer
Legal
Ron Mobed
Chief Executive Officer
Scientific, Technical
& Medical
Joined in 1989. Appointed CEO
Business Information in 2010 and
CEO Risk Solutions in 2012.
Has held a number of senior
positions across the Group over the
past 30 years. Studied at Liverpool
University and received
his MBA from Bradford University.
Joined in 2004. Appointed to current
position in 2015.
Joined in 2003. Appointed
to current position in 2011.
Joined in 2011. Appointed
to current position in 2012.
Previously President of
the Americas for Reed Exhibitions.
Prior to that was President and
Chief Executive Officer, USA,
for Burson-Marsteller,
a leading global public relations
agency. Holds a degree from Baylor
University.
Previously CEO of LexisNexis US
Legal Markets and Director
of Strategic Business Development
Home Depot. Prior to that was a
practising attorney at Weil, Gotshal
and Manges in Washington DC and
served as a consultant with
The Boston Consulting Group. Holds
a Juris Doctor degree from Harvard
Law School and is a graduate
of Yale University.
Previously President of Cengage
Learning’s Academic & Professional
Group and Co-President and
Co-Chief Operating Officer with
information services company IHS.
Holds a degree from Trinity College,
Cambridge, and a master’s degree
from Imperial College, London.
Governance RELX Group Business Leaders
69
Corporate Executives
Ian Fraser
Human Resources
Director
Joined in 2005. Appointed to
current position at that time.
Previously Global HR
Director at BHP Billiton
(1998 to 2005). Holds an MBA
in Finance and International
Business from London’s City
University and an MA from
Edinburgh University. Ian is
also a Chartered
Psychologist.
Kumsal Bayazit
Chairwoman, RELX
Technology Forum
and President,
Exhibitions Europe
Joined in 2004. Appointed to
current position in 2016.
Previously Chief Strategy
Officer, RELX Group, and
Executive Vice President of
Global Strategy and
Business Development for
LexisNexis Legal &
Professional. Prior to that
worked with Bain &
Company in New York, Los
Angeles, Johannesburg and
Sydney. Holds an MBA from
Harvard Business School
and is a Graduate of the
University of California at
Berkeley.
Youngsuk “YS” Chi
Director of RELX
Corporate Affairs and
Chairman Elsevier
Joined in 2005. Appointed to
current position in 2011.
Previously was President
and Chief Operating Officer
of Random House, founding
Chairman of Random House
Asia and Chief Operating
Officer for Ingram
Book Group. Holds an MBA
from Columbia University
and is a graduate of
Princeton University.
Henry Udow
Chief Legal Officer and
Company Secretary
Andrew Matuch
Chief Strategy Officer
Joined in 2011. Appointed to
current position at that time.
Previously Chief Legal
Officer and Company
Secretary of Cadbury plc
having spent 23 years
working with the company.
Prior to that worked at
Shearman & Sterling in New
York and London. Holds a
Juris Doctor degree from
the University of Michigan
Law School and a bachelor’s
degree from the University
of Rochester.
Joined in 2012. Appointed
to current position in 2016.
Previously was Executive
Vice President Global
Strategy and Business
Development for LexisNexis
Legal and Professional.
Prior to that was a partner at
OC&C Strategy Consultants.
Holds an MBA from Harvard
Business School and a
bachelor’s degree from
Williams College.
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70
RELX Group Annual reports and financial statements 2016
Chairman’s introduction to Corporate Governance
Board Evaluation and Effectiveness
In accordance with the UK and Dutch corporate governance codes,
in 2016/17, evaluations of the effectiveness and performance of
the Boards, their Committees and individual Directors were
overseen by the Corporate Governance Committee. These
evaluations were facilitated internally. The outcome confirmed
that the Boards and their Committees continued to function
effectively, and each Director continues to be effective and
demonstrate commitment to their roles. Further details on the
process undertaken and the findings of the reviews can be found
on page 75.
Looking ahead, in accordance with the requirements of the UK
Corporate Governance Code, an externally facilitated evaluation
will be conducted in 2017/18.
As Chairman, I am responsible for ensuring that the composition
of the Boards is appropriate in order to be effective in discharging
their duties to shareholders. Following the changes made to the
Boards during the year, and taking into account the outcome of the
evaluations, I believe that the Boards and their Committees
operate effectively, and have an appropriate balance of skills,
experience, independence, knowledge of the Group and diversity
to ensure that they continue to do so. I also remain satisfied that
the Non-Executive Directors have sufficient time to undertake
their roles.
Therefore, on the recommendation of the Nomination Committee,
all Directors will stand for re-election at the Annual General
Meetings in 2017.
Directors’ Remuneration Policy
Our current Directors’ remuneration policy was approved at the
RELX PLC Annual General Meeting in April 2014 for three years.
As a result, an updated remuneration policy is being proposed to
shareholders for approval at the RELX NV and RELX PLC Annual
General Meetings in 2017.
The new policy is proposed to apply for three years from the
conclusion of the 2017 Annual General Meetings. Full details of the
proposed new policy are set out in the Directors’ Remuneration
Policy Report on pages 81 to 90.
Anthony Habgood
Chairman
22 February 2017
The Boards are committed to
high standards of corporate
governance, which underpin RELX
Group’s ability to deliver long-term,
sustainable shareholder value.
Our Governance Framework
The Boards of RELX PLC, RELX NV and RELX Group plc are
committed to high standards of corporate governance and believe
that such standards are integral to the success of the Group, and
underpin its ability to deliver long-term, sustainable shareholder
value. The Boards have established appropriate and
comprehensive systems of corporate governance, which include
policies and procedures that promote corporate responsibility,
transparency and accountability. Central to these policies is the
Group’s Code of Ethics and Business Conduct, which sets the
standard expected for corporate and individual behaviour. The
Code of Ethics and Business Conduct applies to all Directors and
employees of the Group, and is available on our website at
www.relx.com. More information on its application can be found
in the Corporate Responsibility section on page 45.
The Group is listed in the UK, US and the Netherlands and
therefore is subject to the corporate governance requirements of
those jurisdictions. These requirements, which are continually
evolving, are reviewed and monitored by the Corporate
Governance Committee. The Boards delegate a number of other
responsibilities to their Committees, to enable them to carry out
their functions effectively. The Boards’ Committee structure is set
out on page 76.
This Corporate Governance Report aims to provide shareholders
with a clear view of the Group’s corporate governance
arrangements, how the Group has complied with the applicable
corporate governance codes, and the work of the Boards and their
Committees during the year.
Board Changes and Succession
The Boards of RELX PLC, RELX NV and RELX Group plc are fully
aligned, comprising the same Directors. The biographical details
of each of the Directors are set out on pages 66 and 67.
There were a number of changes to the Boards during the year
under review. In my introduction to Corporate Governance last
year, I reported that Carol Mills and Robert MacLeod would be
appointed as independent Non-Executive Directors, subject to
shareholder approvals. I am pleased to report that shareholders
duly approved their appointments, and Carol and Robert joined
the Boards in April 2016. Lisa Hook and Robert Polet, who served
on the Boards for ten and nine years respectively, retired from the
Boards in April 2016. As a consequence of these changes to the
Boards, the membership of the Board Committees was reviewed
by the Nominations Committee and a number of changes made to
their composition. The Nominations Committee will continue to
monitor Board and Committee composition and review
succession planning arrangements on an ongoing basis.
The membership of the Boards’ Committees as at 31 December
2016 can be found on page 76.
Governance Corporate Governance
71
Corporate Governance
Corporate Governance
Corporate governance compliance and statements
Corporate structure
RELX PLC is a publicly-listed holding company with its shares
traded on the London and New York stock exchanges. Its principal
asset is the shares that it owns in RELX Group plc, which
represent 52.9% of the outstanding shares of RELX Group plc.
RELX NV is a publicly-listed holding company with its shares
traded on the Euronext Amsterdam and New York stock
exchanges. Its principal asset is the shares that it owns in
RELX Group plc, which represent 47.1% of the outstanding shares
of RELX Group plc.
RELX PLC, which has its primary listing on the main market of
the London Stock Exchange, has complied with the provisions
of the UK Code during the year ended 31 December 2016.
RELX NV, which has its primary listing on the Euronext
Amsterdam Stock Exchange, has also complied throughout
the year with the UK Code.
A description of how both RELX PLC and RELX NV have applied
the main principles of the UK Code is set out on pages 72 to 79.
A copy of the UK Code can be found on the FRC website at
www.frc.org.uk
RELX Group plc holds all of the operating businesses, subsidiaries
and financing activities of the Group. The Group’s corporate
structure is shown below:
For information on the application of the Dutch Code by RELX
NV, please see the Corporate Governance Statement of RELX
NV which is available on our website, www.relx.com
The Directors of RELX PLC and RELX NV are required by the UK
Code to make certain statements in relation to provisions
contained in the UK Code. The locations of those statements are
set out as follows:
§ Page 78 for confirmation that the Annual Report and Accounts is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy
§ Page 78 for the statement on the status of the Group as a going
concern
§ Pages 2 to 63 for the Strategic Report explaining the Group’s
business model and the strategy for delivering the objectives of
the Group
§ Page 60 for confirmation that the Directors have carried out a
robust assessment of the principal risks facing the Group,
including those that would threaten its business model, future
performance, solvency or liquidity
§ Page 79 for an explanation of how the Directors have assessed
the prospects of the Group, taking into account the Group’s
current position and its principal risks.
RELX PLC
RELX NV
52.9%
47.1%
RELX Group plc
RELX PLC and RELX NV each have equal voting rights in
RELX Group plc.
RELX PLC, RELX NV and RELX Group plc (and its subsidiaries,
associates and joint ventures) are together known as RELX Group.
Approach to corporate governance
The Boards of RELX PLC and RELX NV have implemented
standards of corporate governance and disclosure policies
applicable to companies listed on the London, Amsterdam and
New York stock exchanges. The effect of this is that a standard
applying to one will, where not in conflict, also be observed by
the other.
The Boards of RELX PLC and RELX NV support the principles and
provisions of corporate governance contained in the UK Corporate
Governance Code 2014 (the UK Code) and the Dutch Corporate
Governance Code 2008 (the Dutch Code). The UK Financial
Reporting Council (FRC) published a revised UK Corporate
Governance Code in April 2016 (the 2016 UK Code), which applies
to RELX Group for the accounting period beginning on
1 January 2017. The Boards expect to comply in full with the 2016
UK Code during the 2017 reporting period. The Dutch Monitoring
Committee published a revised Dutch Corporate Governance
Code in December 2016, which applies to accounting periods
beginning on or after 1 January 2017, and will be reported on
in 2018.
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RELX Group Annual reports and financial statements 2016
The Boards
Board composition
The Boards of RELX PLC, RELX NV and RELX Group plc (the Boards)
are unitary boards and are comprised of the same Directors. The
names of each Director, their role on the Boards and their
biographical details as at the date of this report appear on pages 66
and 67. The Boards currently comprise the Chairman, two Executive
Directors and seven independent Non-Executive Directors, who
bring a wide range of skills and experience to their roles. The charts
on page 73 illustrate in more detail the composition of the Boards.
A profile which identifies the skills and experience of each
Director is available on our website at www.relx.com
Role of the Boards and delegated authorities
The Boards’ role is to provide leadership of the Group within a
framework of appropriate and effective controls that enable risk
to be assessed, and then managed in a manner which safeguards
the interests of shareholders. The Boards have therefore put in
place a framework of responsibilities and delegated authorities.
There is a schedule of matters reserved for the Boards, which
includes the consideration and approval of material acquisitions,
major capital expenditure, Group strategy and budgets, the
Group’s financial statements and its dividend policy. The Boards
have established a number of Committees, to which certain
powers have been delegated, and these are set out in the Terms of
Reference for each Committee which can be found on our website
at www.relx.com
. The roles of the Committees are also
summarised on page 76. There are additionally a number of
approved delegated authorities in place from the Boards to the
Chief Executive Officer and other senior executives which relate
principally to the day-to-day management of the business.
Role of the Directors – division of responsibilities
There is a clear separation of the roles of the Chairman and the
Chief Executive Officer, which are set out in writing. The adjacent
table illustrates the key responsibilities of the Directors. This
division of responsibilities, in addition to the schedule of matters
reserved for the Boards and Terms of Reference for each
Committee, ensures that there are controls in place to prevent any
individual from having unfettered powers of decision.
Roles of the Directors
Chairman
§ Leads the Boards, ensuring they function efficiently
§ Promotes high standards of corporate governance
§ Sets the agenda and chairs meetings of the Boards
§ Chairs the Nominations and Corporate Governance
Committees
§ Facilitates effective contribution of all of the Directors
§ Ensures effective dialogue with shareholders
§ Ensures the performance of the Boards is assessed annually
§ Ensures effective induction and development of Directors
Chief Executive Officer
§ Day-to-day management of the Group
§ Develops the Group’s strategy and commercial objectives
§ Ensures that the strategy and decisions of the Boards are
implemented
§ Promotes high standards of corporate governance
§ Informs and advises the Chairman and Nominations
Committee on executive succession planning
§ Leads communication with shareholders
Chief Financial Officer
§ Day-to-day management of the Group's financial affairs
§ Ensures that a robust system of internal control and risk
management is in place
§ Maintains high quality reporting of financial and
environmental performance internally and externally
§ Supports the Chief Executive Officer in developing and
implementing strategy
Senior Independent Director
§ Leads the annual Boards assessment of the performance
of the Chairman
§ Available to meet with shareholders on matters where
usual channels are deemed inappropriate
§ Deputises for the Chairman, as necessary
§ Acts as an intermediary between the other Directors
Non-Executive Directors
§ Constructively challenge and provide advice to the
Executive Directors
§ Effectively contribute to the development of strategy
§ Scrutinise the performance of management in meeting
agreed goals and monitor the delivery of Group strategy
§ Serve as members of Board Committees and chair the
Audit and Remuneration Committees
Governance Corporate Governance
73
BALANCE OF EXECUTIVE/NON-EXECUTIVE DIRECTORS
GENDER DIVERSITY
Executive: 2
Chairman: 1
Female: 3
Non-Executive: 7
Male: 7
LENGTH OF TENURE OF NON-EXECUTIVE DIRECTORS
NATIONALITY OF DIRECTORS
Less than three years: 2
Swedish: 1
German: 1
Seven to nine years: 3
Dutch: 2
Three to six years: 3
American: 2
British: 4
Areas of significant skills and expertise of the Non-Executive Directors on the Boards
Percentage of the
Non-Executive Directors
Knowledge of corporate governance issues for listed companies
Operational experience in the Group’s main geographical markets
Human resource management and executive remuneration
Corporate responsibility
Corporate strategy and organisation
Marketing and customer relations
Financial and organisational audit
Executive board experience in a large international listed company
Operational experience in the telecommunications and information technology sectors
Legal matters
Banking, tax and corporate finance
Operational experience in the Group’s product markets
38%
100%
100%
100%
100%
100%
75%
75%
75%
75%
63%
50%
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RELX Group Annual reports and financial statements 2016
Key activities of the Boards
The Boards hold regular scheduled meetings throughout the year,
and in 2016 held seven scheduled meetings. The Boards’
schedules ensure that all relevant matters are considered during
those meetings. The schedule is set by the Chairman, with support
from the relevant Company Secretary.
In 2016, the Boards considered the following:
§ reports from the Chief Executive Officer and Chief Financial
Officer on the Group’s actual and forecasted operational
and financial performance
§ strategic and business presentations, including two
full-day strategy reviews
§ annual and interim results
§ dividend declarations and policy, together with returns to
shareholders through share buybacks
§ returns made on capital previously invested by the Group
§ budgets and annual strategy plan 2016-2019
§ capital structure and funding requirements
§ the Group’s principal risks and review and ongoing
monitoring of risk management and internal control
§ the Terms of Reference for each of their Committees
§ Board succession and executive talent management
§ appointments and re-appointments to the Boards and
appointments to Board Committees
§ the Group’s Operating and Governance Principles
§ investor relations activities
§ litigation update
§ their own performance, that of their Committees and of each
Director, including the Chairman
§ updates on major acquisitions, investments and disposals
§ reports from the Committee Chairmen on the key activities
of the Board Committees
Independence of the Non-Executive Directors
The Boards review the independence of the Non-Executive
Directors every year, based on the criteria for independence set
out in the UK Code. The UK Code does not consider the Chairman
to be independent due to the unique role he has in corporate
governance. Notwithstanding this, Anthony Habgood met the
independence criteria contained in the UK Code when he was
appointed Chairman in 2009. The Boards consider all Non-
Executive Directors (other than the Chairman) to be independent
of management and free from any business or other relationship
which could materially interfere with their ability to exercise
independent judgement.
Terms of appointment
RELX PLC and RELX NV shareholders maintain their rights to appoint
individuals to the respective Boards in accordance with the provisions
of the articles of association of these companies. However, no
individual may be appointed to the Boards unless recommended by
the joint Nominations Committee. Members of that Committee
abstain when their own re-appointment is being considered.
As a general rule, Non-Executive Directors’ letters of appointment
provide that individuals serve for an initial term of three years, and
are typically expected to serve two three-year terms, although the
Boards may invite an individual to serve for an additional period of
three years. The notice period applicable to Non-Executive Directors
is one month . The notice period applicable to the service contracts of
the Executive Directors is 12 months. Details of the terms of
appointment and the remuneration of both Executive and
Non-Executive Directors are set out in the Directors’ Remuneration
Report, on pages 91 to 104.
In compliance with the UK Code, all Directors seek re-election by
shareholders annually, except for those Directors retiring
immediately after the respective Annual General Meetings.
Board changes
Changes during the year in the composition of the Boards and
Board Committees are set out in the table on page 76.
Wolfhart Hauser succeeded Lisa Hook as the Senior Independent
Director with effect from April 2016. In addition, during the year,
Carol Mills and Robert MacLeod were appointed as independent
Non-Executive Directors of the Boards, replacing Lisa Hook and
Robert Polet both of whom retired from the Boards after ten and
nine years of service respectively. Ms Mills was also appointed as
a member of the Audit and Remuneration Committees, with Mr
MacLeod appointed as a member of the Remuneration
Committee.
In accordance with the articles of association of RELX PLC, Directors
are normally subject to election by shareholders at the first Annual
General Meeting following their appointment by the Board.
In accordance with the UK Code, all Directors will retire from the
Boards of RELX NV and RELX PLC at the respective Annual
General Meetings and will offer themselves for re-election. Based
on the review of performance and effectiveness by the Corporate
Governance Committee of each individual seeking re-election, the
Boards have accepted a recommendation from the Nominations
Committee that each of these Directors be proposed for
re-election at the 2017 Annual General Meeting of the respective
company. Details of the annual evaluation of the Boards,
Committees and Directors are set out on page 75.
Board induction and development
The Chairman and the Company Secretary of each Board are
responsible for ensuring that an effective induction programme
takes place for new Directors. Following appointment and as
required, all new Directors receive a full, formal and tailored
induction, which is designed to meet their individual needs based
on their knowledge and experience. This includes the provision of
a comprehensive briefing pack and induction programme, as well
as other relevant information to assist that Director in performing
their duties.
Upon joining the Boards as Non-Executive Directors in April 2016,
inductions for Robert MacLeod and Carol Mills were designed
taking into account their previous knowledge and experience, and
the roles that they were asked to undertake for RELX Group.
Governance Corporate Governance
75
In accordance with the requirements of the UK Code, an
independent external evaluation will be carried out in 2017/18.
A review of the performance of the Chairman of the Boards was
led by the Senior Independent Director. The Chairman was not
present during discussion among the Non-Executive Directors
relating to his performance. The conclusions of the review were
subsequently considered at a meeting of the Boards.
Conclusions of the 2016 review
The review confirmed that, overall, the Directors are of the
view that the Boards remain engaged and committed, and that
there is a culture where openness and debate are encouraged
around the Boardroom table. It further confirmed that the
Directors believe that the Boards continue to be appropriately
involved in key decisions taken by the Group, monitoring the
performance of the Group and developing the Group’s
strategy. All Directors commended the Chairman on his
effective leadership of the Boards, and believed that the
Boards have an appropriate blend of experience, skills and
diversity to provide leadership for the Group. An area of focus
for the Boards in 2017 is a review of key people measures,
including employee turnover and satisfaction.
Based on the findings of the review, the Corporate Governance
Committee concluded that the Boards and their Committees
function effectively and collaboratively and with an
appropriate level of engagement with management. The
Committee also concluded that the performance of each
Director continues to be effective and that they demonstrate
commitment to their respective roles.
Progress made during 2016 in response to 2015 review
observations
Feedback provided during the evaluation also confirmed that
good progress is being made in response to the prior year’s
observations, particularly in ensuring a continued focus for
the Boards on succession planning, so that an appropriate
level of experience and knowledge of the Group is maintained
as Board membership evolves.
Both received briefings from the leaders of the main business
operating units, and also from the Chief Strategy Officer, in order
to enhance and deepen their understanding of RELX Group, its
businesses and the competitive environment in which it operates.
They also received presentations from the Group’s key corporate
functions, including finance, and from a number of the Group’s
principal external advisers. Given their first-time appointments to
the Board of a Dutch-listed company, each was provided with an
in-depth briefing on their duties as a Director. Ms Mills also
received a similar briefing in respect of her duties as a Director of a
UK-listed company.
Following their appointments to the Remuneration Committee,
Mr MacLeod and Ms Mills received a briefing on executive
remuneration from the Human Resources Director, and having
joined the Audit Committees, Ms Mills undertook a comprehensive
Audit Committee induction programme including a briefing from
the external auditor, designed to ensure familiarisation with the
Committee’s oversight responsibilities.
In addition to scheduled Board and Board Committee meetings
held during the year, the Directors attend other meetings and site
visits to support their continuing development. The Non-Executive
Directors also have opportunities to meet RELX Group Business
Leaders and other senior executives.
Board information and support
All Directors have complete and timely access to the information
required to discharge their responsibilities fully and efficiently.
They have access to the services of the respective Company
Secretaries, who are responsible for the accurate and timely flow
of information to the Boards and advising the Chairman on all
corporate governance matters. The Company Secretary of each
Board attends all of its meetings. The Directors also have access
to other members of the Group’s management, staff and external
advisers, and may take independent professional advice in the
furtherance of their duties, at the relevant company’s expense.
Each of the Directors is expected to attend all meetings of the
Boards and Committees of which they are a member. Where a
Director is unable to attend a Board or Committee meeting, they
are provided with the papers relating to that meeting and are able
to discuss issues arising with the respective chairman and other
Board and Committee members. They are also provided with a
copy of the meeting minutes.
Board evaluation
The Directors consider the evaluation of the Boards, its Committees
and members to be an important aspect of corporate governance.
Each year, the Boards undertake an annual evaluation of their own
effectiveness and performance, and that of their Committees and
individual Directors. In 2016, the Boards undertook an internal
evaluation, overseen by the Corporate Governance Committee and
supported by the Company Secretaries.
Using questionnaires completed by all Directors, the Committee
explored key areas including: the performance of the Boards;
Board composition and succession planning; talent management
and executive leadership succession; risk management,
corporate governance and compliance; agenda planning and
quality of information provided by management; and Board
Committee effectiveness. The Chairman conducted interviews
with each of the Directors.
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RELX Group Annual reports and financial statements 2016
Board Committees
The Boards have established a number of Committees, to which they have delegated certain powers. The structure of these Committees,
and a summary of their key responsibilities, is set out below. All the Committees have written terms of reference, which are available on
our website: www.relx.com
Membership of each Committee and attendance during the year are also set out below.
The Boards
Audit Committees
Responsible for the oversight
of financial reporting, risk
management and internal
control policies, and the
effectiveness of the internal
and external audit processes.
The Committees comprise only
independent Non-Executive
Directors.
Remuneration Committee
Responsible for considering the
remuneration of the Group’s
Executive Directors and the
Chairman, and advising on
remuneration of senior
executives below Board level.
The Committee comprises only
Non-Executive Directors.
Nominations Committee
Responsible for keeping under
review the composition of the
Boards and the Board
Committees, and the
recruitment of new Directors.
The Committee comprises only
Non-Executive Directors.
Corporate Governance
Committee
Responsible for reviewing
ongoing developments and
best practice in corporate
governance, assessing the
performance of the Directors,
and monitoring the structure,
operation and membership of
the Board Committees. The
Committee comprises only
Non-Executive Directors.
Report of the Audit
Committees page 105
Directors’ Remuneration
Report page 81
Report of the Nominations
Committee page 80
Attendance at meetings of the Boards and Board Committees
The table below shows the attendance of Directors at meetings of the Boards and the Board Committees during the year.
Attendance is expressed as the number of meetings attended out of the number eligible to be attended.
Director
Anthony Habgood (Chairman)
Erik Engstrom
Nick Luff
Wolfhart Hauser
Adrian Hennah
Lisa Hook (2)
Marike van Lier Lels
Robert MacLeod (3)
Carol Mills (3)
Robert Polet (2)
Linda Sanford
Ben van der Veer
Committee
appointments
R N C
–
–
R N C
A C
R N C
A C
R C
A R C
R C
A C
A N C
Boards (1)
7/7
7/7
7/7
7/7
7/7
0/2
7/7
5/5
5/5
2/2
7/7
7/7
Audit Remuneration Nominations
3/3
–
–
3/3
–
1/2
–
–
–
–
–
3/3
4/4
–
–
4/4
–
1/1
–
3/3
3/3
0/1
–
–
–
–
–
–
5/5
–
5/5
–
3/3
–
5/5
5/5
Corporate
Governance
5/5
–
–
5/5
5/5
0/1
5/5
4/4
4/4
1/1
5/5
5/5
Board Committee
membership key
A
Audit
Remuneration
R
N Nominations
C
Corporate Governance
Committee Chairman
(1) The Boards of RELX PLC, RELX NV and RELX Group plc. In addition to the seven scheduled meetings above, in 2016 serving Directors attended two full-day strategy and
business review meetings.
(2) Ms Hook and Mr Polet retired from the Boards with effect from the respective 2016 Annual General Meeting of each company. Ms Hook retired as a member of the Remuneration,
Nominations and Corporate Governance Committees, and Mr Polet retired as a member of the Remuneration and Corporate Governance Committees, on 21 April 2016.
Due to longstanding conflicts, Ms Hook was unable to attend the February and April Boards and Corporate Governance Committee meetings, and Mr Polet was unable to
attend the February Remuneration Committee meeting.
(3) Mr MacLeod and Ms Mills were appointed as Non-Executive Directors with effect from the respective 2016 Annual General Meeting of each company. Mr MacLeod was
appointed as a member of the Remuneration and Corporate Governance Committees on 21 April 2016. Ms Mills was appointed as a member of the Audit, Remuneration and
Corporate Governance Committees on 21 April 2016.
Governance Corporate Governance
77
Shareholder engagement
RELX PLC and RELX NV participate in regular dialogue with
shareholders. Each reports to its shareholders through the
publication of the Group’s interim and full-year reports, following
which presentations are made by the Chairman, Chief Executive
Officer and Chief Financial Officer on the Group’s business, and
these are simultaneously webcast. In addition, quarterly trading
updates are provided ahead of the Annual General Meetings of the
two parent companies and towards the end of the financial year,
and a conference call with investors was held following the
third-quarter trading update for 2016.
In addition, a teach-in focused on developments in the Legal
business was held for analysts and investors in November 2016,
which was also made available on our website at
www.relx.com
The Chief Executive Officer, the Chief Financial Officer and the
investor relations team meet institutional shareholders on a
regular basis and the Chairman also makes himself available to
major institutions as appropriate.
The interim and annual results announcements and presentations,
together with the trading updates, other important announcements
and corporate governance documents concerning the Group, are
available on our website. RELX NV has adopted a bilateral
shareholder contact policy, which is also available on our website.
The Boards of RELX PLC and RELX NV commission periodic reports
on the attitudes and views of the companies’ institutional
shareholders and the results are presented to the respective Boards.
The Boards also receive regular updates from the Group’s Head of
Investor Relations on the views of shareholders through a briefing
which is a standing agenda item for all meetings of the Boards.
Annual General Meetings
The Annual General Meetings provide an opportunity for the Boards
to communicate with individual shareholders. The Chairman, the
Chief Executive Officer, the Chief Financial Officer, the Chairmen of
the Board Committees, other Directors and a representative of the
external auditors are available to answer questions from
shareholders. Both RELX PLC and RELX NV offer electronic voting
facilities in relation to proxy voting at shareholder meetings.
Internal control and risk management
RELX Group has established internal controls and risk
management practices that are embedded into the operations of
the businesses, based on the Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring
Organisations of the Treadway Commission (COSO).
Details of the principal risks facing the Group and how these are
mitigated are set out on pages 60 to 63.
Additionally, in order to provide reasonable assurance against
material inaccuracies or loss, and on the effectiveness of the
systems of internal control and risk management, the Group has
adopted the three lines of defence assurance model shown
opposite.
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1st Line of Defence
Group businesses maintain systems of internal
control which are appropriate to the nature and
scale of their activities and address all significant
strategic, operational, financial and legal
compliance risks that they face.
2nd Line of Defence
Central functions that are responsible for
1) designing policies, 2) introducing and sharing best
practice, 3) monitoring and evaluating compliance
with RELX policies and relevant legislation and
regulation and appropriate remediation.
3rd Line of Defence
Internal audit provides independent assurance on
the effectiveness of the 1st and 2nd lines of defence.
The Boards and Audit Committees
Note: In addition to the Group’s internal controls, the Group is also audited externally.
The report of the external auditor has been included from pages 108 to 118.
Parent companies
The Boards of RELX PLC and RELX NV have each adopted a
schedule of matters which are required to be brought to them for
decision. During 2016, the Boards of RELX PLC and RELX NV
exercised independent supervisory roles over the activities and
systems of internal control of RELX Group plc. The Boards of RELX
PLC and RELX NV also approved the strategy and the annual
budgets of RELX Group plc, and received regular reports on its
operations, including the treasury and risk management activities.
Major transactions proposed by the Board of RELX Group plc
required the approval of the Boards of both RELX PLC and RELX NV.
The RELX PLC and RELX NV Audit Committees met on a regular
basis to review the systems of internal control and risk
management of RELX Group plc.
RELX Group plc
The Board of RELX Group plc is responsible for the system of
risk management and internal control of the Group and has
implemented an ongoing process for identifying, assessing,
monitoring and managing the principal risks faced by its
businesses. This process was in place throughout the year ended
31 December 2016, and up to the date of the approvals of the
Annual Reports and Financial Statements 2016. The Board
monitors these systems of internal control and risk management
and annually carries out a review of their effectiveness.
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RELX Group Annual reports and financial statements 2016
RELX Group plc has an established framework of procedures and
internal control, with which the management of each business is
required to comply. The Board has adopted a schedule of matters
that are required to be brought to it for decision. The Group operates
authorisation and approval processes throughout all of its
operations. Access controls exist where processes have been
automated to ensure the security of data. Management information
systems have been developed to identify risks and to enable
assessment of the effectiveness of the systems of internal control.
RELX Group plc has a Code of Ethics and Business Conduct that
provides a guide for achieving its business goals and requires
officers and employees to behave in an open, honest, ethical
and principled manner. The Code also outlines confidential
procedures enabling employees to report any concerns about
compliance, or about the Group’s financial reporting practice.
The Code is available on our website at www.relx.com
Each business area has identified and evaluated its principal risks,
the controls in place to manage those risks and the levels of
residual risk accepted. Risk management and control procedures
are embedded into the operations of the business and include the
monitoring of progress in areas for improvement that come to
management and Board attention.
The principal risks facing RELX Group businesses are regularly
reported to and assessed by the Board and Audit Committee.
With the close involvement of business management and central
functions, the risk management and control procedures ensure
that the Group is managing its business risks effectively and in
a coordinated manner across the businesses with clarity on the
respective responsibilities and interdependencies. Litigation
and other legal regulatory matters are managed by legal directors
in the business.
The RELX Group plc Audit Committee receives regular reports on
the identification and management of principal risks, and reviews
these reports. The Audit Committee also receives regular reports
from both internal and external auditors on internal control and
risk management matters. In addition, each business area is
required, at the end of the financial year, to review the
effectiveness of internal controls and risk management and
report its findings on a detailed basis to the management of RELX
Group plc. These reports are summarised and, as part of the
annual review of effectiveness, submitted to the Audit Committee.
The Chairman of the Audit Committee reports to the Board on any
significant internal control matters arising.
Annual review
As part of the year-end procedures, the Audit Committees and
Boards reviewed the effectiveness of the systems of internal
control and risk management, during the 2016 financial year. This
included consideration of risk appetite (defined as the Group's
willingness to take on risk) for each principal risk. Risk appetite is
based on an assessment of the level of residual risk, taking
account of inherent risk and mitigation effort. The assessment is
rated, in relation to the Group's objectives for the current level of
residual risk, in three broad categories: reduce, accept and willing
to extend. The level of residual risk which the Group is prepared to
accept will vary, with a high level of mitigation effort over
operational, financial and compliance risks. The residual risk level
for external and strategic risks may be extended if doing so is in
line with the Group's strategic objectives, values and stakeholder
interests and if shareholder returns could be increased. The
objective of these systems of internal control and risk
management is to manage, rather than eliminate, the risk of
failure to achieve business objectives. Accordingly, they can only
provide reasonable, but not absolute, assurance against material
misstatement or loss. The Boards have confirmed, subject to the
above, that as regards financial reporting risks, the respective
risk management and control systems provide reasonable
assurance against material inaccuracies or loss and have
functioned properly during the year.
Responsibilities in respect of the
financial statements
The Directors of RELX PLC, RELX NV and RELX Group plc are
required to prepare financial statements as at the end of each
financial period, in accordance with applicable law and regulations,
which give a true and fair view of the state of affairs, and of the profit
or loss, of the respective companies and their subsidiaries, joint
ventures and associates. They are responsible for maintaining
proper accounting records, for safeguarding assets, and for taking
reasonable steps to prevent and detect fraud and other irregularities.
The Directors are also responsible for selecting suitable accounting
policies and applying them on a consistent basis, and making
judgements and estimates that are prudent and reasonable.
Applicable accounting standards have been followed and the RELX
Group consolidated financial statements, which are the
responsibility of the Directors of RELX PLC and RELX NV, are
prepared using accounting policies which comply with International
Financial Reporting Standards as issued by the International
Accounting Standards Board and as adopted by the European Union.
Having taken into account all of the matters considered by the
Boards and brought to the attention of the Boards, the Directors
are satisfied that the Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable, and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
Going concern
The Directors of RELX PLC and RELX NV, having made appropriate
enquiries, consider that adequate resources exist for the Group
to continue in operational existence for the foreseeable future and
that, therefore, it is appropriate to adopt the going concern basis
in preparing the 2016 financial statements. In reaching these
conclusions, the Directors of RELX PLC and RELX NV have had due
regard to the Group’s financial position as at 31 December 2016,
the strong free cash flow of the Group, the Group’s ability to access
capital markets and the principal risks facing the Group.
A commentary on the Group’s cash flows, financial position and
liquidity for the year ended 31 December 2016 is set out in the Chief
Financial Officer’s report on pages 54 to 59. This shows that after
taking account of available cash resources and committed bank
facilities that back up short-term borrowings, all of the Group’s
borrowings that mature within the next two years can be covered.
The Group’s policies on liquidity, capital management and
management of risks relating to interest rate, foreign exchange
and credit exposures are set out on pages 150 to 154. The principal
risks facing the Group are set out on pages 60 to 63.
Governance Corporate Governance
79
US certificates
As required by Section 302 of the US Sarbanes-Oxley Act 2002
and by related rules issued by the US Securities and Exchange
Commission (the Commission), the Chief Executive Officer and
Chief Financial Officer of RELX PLC and RELX NV certify in the
respective Annual Reports 2016 on Form 20-F to be filed with the
Commission that they are responsible for establishing and
maintaining disclosure controls and procedures and that they
have:
§ designed such disclosure controls and procedures to ensure that
material information relating to the Group is made known to them
§ evaluated the effectiveness of the Group’s disclosure controls
and procedures
§ based on their evaluation, disclosed to the Audit Committees
and the external auditors all significant deficiencies in the
design or operation of disclosure controls and procedures and
any frauds, whether or not material, that involve management
or other employees who have a significant role in the Group’s
internal controls
§ presented in the RELX Group Annual Report 2016 on Form 20-F
their conclusions about the effectiveness of the disclosure
controls and procedures
Viability statement
Each year management develops a three-year strategy plan that
reflects the expected operating environment. This plan forms the
basis for Group and divisional targets. In 2016, our strategy is
unchanged. Our objective is to deliver improved outcomes for
professional and business customers across industries, to help
them make better decisions, get better results and be more
productive. We do this by leveraging a deep understanding of our
customers to develop increasingly sophisticated information-
based analytics and decision tools which combine content and
data with analytics and technology in global platforms. We aim to
build leading positions in long-term global growth markets and
leverage our skills, assets and resources, both to build solutions
for our customers and to pursue cost efficiencies. Further details
on our strategy and 2016 progress are on pages 4 and 5. Whilst
management selected three years for its review and quantitative
testing of the Group’s viability, reflecting the length of the annual
strategy plan period, it also considered longer-term
developments.
The three-year strategic plan for our businesses includes
management’s assessment of the anticipated operational risks
affecting the business and assumes that current economic
conditions broadly persist, financing will be available on similar
terms to those negotiated recently and interest rates will follow
market expectations. Management then considers the viability of
the business should unexpected events arise. A full description of
the principal risks facing our business is set out on pages 60 to 63
along with the mitigating controls. In assessing viability, a
cross-functional team comprised of business unit, risk, strategy
and treasury personnel estimate the quantitative impact of each
individual risk on the Group’s revenue and profit.
The analysis then considers the effect of various sets of multiple
risks occurring simultaneously, combined with the inability
A Disclosure Committee, comprising the Company Secretaries of
RELX PLC and RELX NV and other senior managers of the Group,
provides assurance to the Chief Executive Officer and Chief
Financial Officer regarding their Section 302 certifications.
Section 404 of the US Sarbanes-Oxley Act 2002 requires the
Chief Executive Officer and Chief Financial Officer of RELX PLC
and RELX NV to certify in the respective Annual Reports 2016 on
Form 20-F that they are responsible for maintaining adequate
internal control structures and procedures for financial reporting
and to conduct an assessment of their effectiveness. The
conclusions of the assessment of internal control structures and
financial reporting procedures, which are unqualified, are
presented in the RELX Group Annual Report 2016 on Form 20-F.
to access the debt capital markets to refinance scheduled
liabilities as they become due. Reflecting the importance of
proprietary data and potential disruption or loss of data
sources, we modelled the impact of a worst-case scenario
assuming the invalidation of certain intellectual property
rights and inability to use certain third-party information. The
analysis concluded that even with the simultaneous
occurrence of these risks and no access to the debt capital
markets, the Group would still have sufficient funds to trade,
settle its liabilities as they come due and remain compliant with
its financial covenants.
In addition to scenario modelling, the Directors bi-annually
review the Group’s principal risks, assess the likelihood and
impact of each risk together with the effectiveness of mitigating
controls. The Directors also receive regular updates from
management on treasury, tax, acquisitions and divestments
and periodic briefings on significant risk areas including
information security, technology and legal and regulatory
matters. Finally, separate from the annual strategy plan, the
Directors periodically receive updates from business area
management on their operations, prospects and risks. Whilst
these reviews and discussions naturally focus more closely on
the quantifiable risks facing the business, they also cover risks
that may occur outside of the three-year planning period.
As a result of stress-testing the three-year strategic plan and
supported by regular reviews of risk during the year, the
Directors confirm that they have a reasonable expectation that
the Group will be able to continue its operations and meet its
liabilities as they fall due over the next three years and are not
aware of any longer-term operational or strategic risks that
would result in a different outcome from the three-year review.
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80
RELX Group Annual reports and financial statements 2016
Report of the Nominations Committee
This report has been prepared by the joint Nominations
Committee of RELX PLC and RELX NV and has been approved by
the respective Boards.
§ the review of the composition of the Audit Committees and
Remuneration Committee, following the changes to the Boards
which took place in April 2016
Membership
The Committee comprises only Non-Executive Directors. The
members of the Committee who served during the year were:
§ Anthony Habgood (Committee Chairman)
§ Lisa Hook (until 21 April 2016)
§ Ben van der Veer
§ Wolfhart Hauser
Responsibilities
The principal role and responsibilities of the Committee are to
provide assistance to the Boards by identifying individuals
qualified to become Directors and recommending to the
Boards the appointment of such individuals. The
responsibilities of the Committee are set out in written Terms
of Reference (available at www.relx.com
) and include:
§ to keep under review the size and composition of the
Boards
§ to develop and agree the specification for the recruitment
of new Directors
§ to procure the recruitment of new Directors
§ to recommend to the Boards the appointment of candidates
subject, where appropriate, to the approval of shareholders
of RELX PLC and RELX NV
§ to recommend Directors to serve on the Committees of the
Boards, having regard to the criteria for service on each
Committee as set out in the Terms of Reference for such
Committees, and to recommend members to serve as the
Chair of those Committees
§ to make recommendations to the Boards in relation to the
election or re-election of Directors at the Annual General
Meetings of RELX PLC and RELX NV
§ to review and make recommendations to the Boards in
relation to any Directors’ actual or potential conflicts of
interest
Activities of the Committee
During the year, the Committee met three times and its main areas
of focus were:
§ the appointments of Robert MacLeod and Carol Mills as
Non-Executive Directors
§ the re-appointment of Wolfhart Hauser as a Non-Executive
Director, and his appointment as the Senior Independent
Director in April 2016
§ the re-appointment of Marike van Lier Lels as a Non-Executive
Director of RELX NV
§ succession planning for Non-Executive Directors
Composition and diversity of the Boards
The Committee seeks to ensure that the Boards and their
Committees comprise an appropriate balance of skills,
experience, independence and knowledge of RELX Group’s
businesses, and diversity, including gender. The Committee has
established a formal, rigorous and transparent procedure for the
recruitment of candidates to the Boards and recommendations by
the Committee are made principally on the basis of a candidate’s
merit, against objective criteria and with due regard for the
benefits of diversity. The Committee recognises the benefits that
diversity on the Boards can bring and continues to meet its target
of the Boards being comprised of at least 30% women. The
Committee will continue to monitor developments in relation to
Board diversity. Details of the Group’s approach to diversity and
inclusion more generally in its workforce can be found in the
Corporate Responsibility Report on page 46.
Two Non-Executive Directors, Robert MacLeod and Carol Mills,
were appointed to the Boards in April 2016. The Committee
retained Kingsley Gate Partners LLP and The Zygos Partnership,
independent recruitment consultancies specialising in
non-executive appointments with no other connection to
RELX Group, to carry out the search for these new Non-Executive
Directors. Following a rigorous and transparent process of
assessments and interviews, the Committee recommended to the
Boards that Robert MacLeod and Carol Mills be proposed for
election as Non-Executive Directors at the Annual General
Meetings in April 2016. As part of the selection process, the
Committee considered, among other things, their ability to devote
sufficient time to the role of Non-Executive Director,
Mr MacLeod's and Ms Mills' existing external interests, and their
independence as defined under the UK Code.
The charts on page 73 illustrate in more detail the composition of
the Boards.
Conflicts of interest
During the year, the Committee monitored Directors’ conflicts of
interest in respect of their external appointments, and undertook
an annual review of these. No actual conflicts were identified.
However, situations were identified which could potentially give
rise to a conflict of interest, and the Boards authorised those
situations and put in place appropriate procedures to manage any
potential conflicts at the recommendation of the Committee. More
information on conflicts of interest can be found in the RELX PLC
Directors’ Report on page 172.
Director re-elections
The Committee reviewed the results of the evaluation of the
effectiveness and performance of the Boards, their Committees
and the individual Directors, which had been overseen by the
Corporate Governance Committee. Details of the 2016/17 Board
evaluation can be found on page 75. Following this review, the
Committee recommended that each Director on the Boards as at
31 December 2016 be put forward for re-election at the 2017
Annual General Meetings.
Governance Remuneration Report
81
Directors’ Remuneration Report
The Directors’ Remuneration Report (the Report) describes
how the Group applies the principles of good governance
relating to Directors’ remuneration. This Report has been
prepared by the Remuneration Committee of RELX Group plc
(the Committee) in accordance with the UK Corporate
Governance Code, the UK Listing Rules, the Large and
Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 (the UK Regulations) and the
Dutch Corporate Governance Code (the Dutch Code).
The Report was approved by the Boards of RELX PLC, RELX
NV and RELX Group plc.
Introduction from the Remuneration
Committee Chairman
The current remuneration policy was approved by shareholders
at the 2014 Annual General Meeting (AGM) of RELX PLC for three
years and can be found at www.relx.com/go/remunerationpolicy
or on pages 79 to 85 of the 2013 Remuneration Report. As a result,
an updated remuneration policy is being proposed to shareholders
for approval at the 2017 RELX PLC AGM and the RELX NV AGM,
with the first awards under the new policy to be granted to existing
Executive Directors in the first quarter of 2018. The new policy,
which is proposed to apply for three years from the conclusion of
the 2017 RELX PLC AGM, is set out in the Remuneration Policy
Report on pages 84 to 90.
RELX PLC and RELX NV shareholders will be invited to vote
(by way of a binding vote) on the proposed new remuneration policy
at the 2017 AGMs of RELX PLC and RELX NV respectively.
The implementation of the current policy during 2016 is described
on pages 92 to 104 (the Annual Remuneration Report).
RELX PLC shareholders will be invited to vote (by way of a
non-binding advisory vote) on the 2016 Annual Remuneration
Report at the RELX PLC AGM.
Our Report therefore has two parts, the first directly below
dealing with the new policy and the second starting on page 91,
describing the implementation of the existing policy in 2016.
Proposed new remuneration policy
A key area of focus for the Committee during 2016 was the review
of the remuneration policy for Directors.
In reviewing the policy, the Committee took into account its desire
to retain and attract top executive talent, promote the continued
strong strategic and financial performance of the business and
maintain executive alignment with long-term shareholder
interests. The Committee considered feedback received from
shareholders since the adoption of the current policy in 2014 and
trends in market practice, and was cognisant of the global nature
of the RELX business. As a data analytics and technology-driven
business with half of its revenue being derived from the US
market, the Group primarily competes for talent with US-based
information and technology companies. The Committee also
considered the pay practices of the FTSE 30, reflective of the
company’s position around the middle of this group.
Earlier this year, we also consulted with shareholders
representing over 45% of our issued share capital and
shareholder representative bodies in the UK, the Netherlands
and the US. I will comment on the consultation in greater detail
below, but for now would like to express my gratitude for the
feedback received, which has helped to shape the final design
of the proposed policy.
Outline of the proposed new remuneration policy for Executive
Directors
Our objective with the new policy is to maintain the overall
remuneration for Executive Directors broadly at current levels
using the same combination of performance metrics for the
incentive plans as used presently as these have supported
consistent, predictable and strong financial performance by the
business and significant value creation for shareholders over the
last five years. Our business strategy continues to be to grow the
core business through organic investment and the build-out of
new products, with bolt-on acquisitions where we are the natural
owner, as well as portfolio rationalisation through selective
divestments. We are therefore retaining the same performance
metrics for the long-term incentive, as these align with, and
support, our strategy by focussing on sustained earnings growth,
return on invested capital and shareholder returns.
We propose simplifying the incentive framework for Executive
Directors by reducing the number of plans in which they
participate from four (one annual and three multi-year incentive
plans) to two (one annual and one multi-year incentive plan).
We propose to eliminate any future participation by Executive
Directors in the BIP share matching plan (Bonus Investment Plan)
and the ESOS (Executive Share Option Scheme). Under the new
policy, they will participate only in the AIP (Annual Incentive Plan)
and the LTIP (Long Term Incentive Plan). Overall incentive
opportunity will be broadly maintained at current policy levels by
adding a deferred share element to the AIP and increasing the
potential award under the LTIP to offset the elimination of their
future participation in the other two multi-year incentive plans.
We will maintain the target opportunity for the annual incentive
which is paid in cash at the current level (100% of salary) and will
reduce the maximum possible cash annual incentive payable to
Executive Directors from 150% of salary under the current policy
to 133% of salary under the new policy. We will add a deferred
share element to the AIP of 50% of salary at target and 67% of
salary at maximum. This means that the total AIP opportunity
(cash plus deferred shares) will be 150% of salary at target and
200% at maximum. The deferred share element will equal
one-third of the total of any earned incentive under the AIP and will
be paid in RELX shares, which will not be released for three years.
We intend to continue to use profit after tax, revenue, cash flow
conversion and individual Key Performance Objectives (KPOs),
which are chosen to align with the company’s strategy and create
a platform for sustainable future performance, as the AIP
performance measures. We will lower the caps on the payout
amounts for each individual financial performance element to
150% of target, and for the KPO element to 100% of target.
AIP performance targets (financial and KPOs) will be set by the
Committee following the same robust process which has been
used in recent years and will be designed to be challenging but
achievable. Financial targets are set by reference to the previous
year’s performance and internal and external forecasts for the
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RELX Group Annual reports and financial statements 2016
following year. Over the last seven years, payout levels under the
AIP for Executive Directors have been at relatively consistent
levels at around 100% of target, or 70% of maximum, reflective of
RELX’s consistent and strong financial performance. This year, we
are significantly increasing the level of retrospective disclosure of
AIP targets by disclosing both the actual achievement for the
financial measures as well as the full scale of potential outcomes
from threshold to maximum for each of these measures and the
percentage achievement for KPOs for the 2016 AIP (see page 93).
The LTIP will be based on the same foundations as before,
focussing on sustained earnings growth, through earnings per
share (EPS), return on invested capital (ROIC) and total
shareholder return (TSR), as these continue to support the
execution of our business strategy and promote continued
long-term value creation. We believe that, together, EPS, ROIC and
TSR provide a balanced set of measures. In order to maintain the
proportion of remuneration which is tied to TSR performance, as a
percentage of salary, at a similar level to the current policy level,
we will adjust the relative weighting of the performance measures
in the LTIP from 1/3rd for each under the current policy to 40% EPS,
40% ROIC and 20% TSR under the new policy. The increase in
weighting of EPS and ROIC reflects the impact of the elimination of
BIP (which has EPS and ROIC as its two performance measures).
To partly offset the elimination of the Executive Directors’
participation in the other two multi-year incentive plans in which
they currently participate (BIP and ESOS), we propose to increase
the maximum opportunity under the LTIP from 250% to 450% of
salary for the CEO and from 200% to 375% of salary for other
Executive Directors. The maximum opportunity under BIP is
currently 100% of salary and under ESOS is 250% of salary for the
CEO and 200% of salary for the CFO. The threshold award vesting
level in respect of each performance measure will be reduced to
25%. The targets for each three-year performance period will be
set with regard to prior years’ results, internal and external
forecasts for the performance period and the strategic plan for
the business. They are designed to provide exceptional reward for
exceptional performance, whilst providing a reasonable
expectation that a payout at the lower end of the scale is attainable,
subject to robust performance.
The overall remuneration which would be received under the new
policy if threshold performance was achieved for all financial
measures in the AIP and LTIP is less than what would be achieved
for threshold performance under all of the incentive plans under
the current policy.
To even further strengthen long-term alignment with
shareholders, we will increase the shareholding requirements
from 300% to 400% of salary for the CEO and from 200% to 300%
of salary for other Executive Directors and lengthen the LTIP
post-vesting holding period from six months to two years.
Under the new pension policy, and as part of his ongoing
membership of the legacy defined benefit scheme, the CEO is
subject to higher annual increases in his personal contributions
(2% per annum increases versus 1% under the current policy) and
in the participation fee (3% per annum increases versus 2% under
the current policy) and is also subject to a 2% cap on annual
increases in pensionable earnings. These changes are designed to
manage the costs inherent in operating this scheme and mean
that by 2020, the CEO will contribute to the pension 19% of his base
salary in excess of the pension scheme’s earnings cap. In respect
of the defined contribution plan, we have reduced the maximum
company contribution from 30% of salary per annum under the
current policy to 25% and the company contribution rate for the
current CFO (which was approved under the current policy) will be
reduced from 30% to 25% over the next two years.
In developing the proposed new policy for Executive Directors, the
Committee considered the pay policies for employees across the
Group generally and the incentive plan participation of the wider
senior management population. Subject to receiving shareholder
approval for the new policy, the Committee will decide on the most
appropriate way to align senior management’s incentive plan
participation with that of the Executive Directors.
Shareholder consultation
As noted, we consulted extensively with shareholders
representing a total of over 45% of our combined PLC and NV
issued share capital and shareholder representative bodies in
the UK, the Netherlands and the US on our proposed new policy.
We had a high level of engagement and are pleased to report that
virtually all investors with whom we met indicated support for
the general direction of the proposed new remuneration policy.
§ All investors welcomed the simplified design, the addition
of a deferred share element to the AIP, the increase in share
ownership requirements and lengthening of the LTIP
post-vesting holding period and our commitment to increased
disclosure of AIP targets and outcomes.
§ Investors appreciated our consistent company performance
over the past five years and acknowledged that remuneration
at the company historically had been well correlated with
company performance, which was felt to be important.
§ While shareholders hold divergent views about individual
performance metrics, there was agreement that the balanced
mix of EPS, ROIC and TSR had supported the company’s
performance and an understanding of why the company feels
it appropriate to continue to use these financial measures for
the LTIP.
§ Some investors sought reassurance that the new policy was
sufficient to retain the current Executive Directors. A number
of shareholders also raised concerns about the elimination
of the ESOS option plan and sought reassurance that the
Executive Directors felt the proposed new policy was fair.
Some investors were concerned that the financial measures,
in particular ROIC, might disincentivise management from
taking appropriate business risks, for example in respect of
acquisitions, which may be required to drive further growth in
the business. The Committee believes that the mix of financial
measures provides adequate incentive.
§ When asked how we compared total quantum under the
new policy with total quantum under the current policy, we
explained that we had looked at the CEO’s total remuneration
received for the 2013-15 cycle under the existing policy and
compared the outcome under the proposed new policy, had it
been in place at the relevant time, against this amount. The two
amounts were very close to each other. Furthermore, the
overall maximum grant face values of incentives (annual and
long-term), as a percentage of salary, are lower under the new
policy than under the current policy.
We believe that the proposed changes result in a simplified
remuneration policy which addresses the shareholder feedback
Governance Remuneration Report
83
we have received and more closely reflects current investor
preferences, whilst retaining the elements of our current
remuneration structure which we believe have contributed to
RELX’s strong and consistent financial performance and
significant value creation for shareholders over the past five years.
As in previous years, the Report has been prepared in a manner
which balances the specific local requirements of the UK
Regulations and the Dutch Code with the desire to provide
additional information which may be helpful to our broader global
investor base.
Wolfhart Hauser
Chairman, Remuneration Committee
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RELX Group Annual reports and financial statements 2016
Remuneration Policy Report
Set out in this section is the company’s proposed new remuneration policy for Directors, which, subject to shareholder approval by
RELX PLC and RELX NV shareholders, will apply for three years from the conclusion of the RELX PLC AGM to be held on 20 April 2017.
The key changes from the previous remuneration policy (which is set out in the 2013 Annual Reports and Financial Statements and was
approved by RELX PLC shareholders at the 2014 AGM and the rationale for the changes are explained in the Committee Chairman’s
introduction on pages 81 to 83.
Remuneration policy table – Executive Directors
All footnotes to the policy table can be found on pages 86 to 87.
ANNUAL BASE SALARY
Purpose and link to strategy
To recruit and retain the best executive talent globally to execute our strategic objectives at appropriate cost.
Operation
Salaries for Executive Directors are set and reviewed annually by the Remuneration Committee (the Committee) with changes typically
taking effect on 1 January. In exceptional circumstances, the Committee may review salaries more frequently.
When reviewing salaries, the Committee considers the executive’s role and sustained value to the company in terms of skill, experience
and overall contribution and the company’s guidelines for salaries for all employees for the year. Periodically, competitiveness with
companies which are comparable in respect of industry, size, international scope and complexity is also considered in order to ensure
the company’s ability to attract and retain executives.
For the last five years, Executive Directors’ salary increases have been 2.5% per annum.
Performance framework
N/A
Maximum value
Salary increases to Executive Directors will remain within the range of increases for the wider employee population. However, the
Committee has discretion to exceed this to take account of individual circumstances such as change in responsibility, increases in scale
or complexity of the business, inflation or alignment to market level.
Recovery of sums paid
No provision.
RETIREMENT BENEFITS
Purpose and link to strategy
Retirement plans are part of remuneration packages designed to recruit and retain the best executive talent at appropriate cost.
Operation
Our policy is to offer competitive long-term sustainable defined contribution plans. Any amount above applicable limits, for example
HMRC’s annual allowance in the UK, will be paid in cash and will be subject to tax and social security deductions. In certain
circumstances, executives can take cash instead of pension contributions.
The UK defined benefit schemes are closed to new hires. Continued membership of legacy defined benefit schemes requires annual
increases to contributions and participation fees from all members, who have a choice to switch to the defined contribution plan at any time.
The CEO is a member of a UK legacy defined benefit pension arrangement, accruing 1/30th of final year pensionable earnings for each
year (pro-rated for part years) of service, with a normal retirement age of 60. In line with all UK defined benefit scheme members, the
CEO’s contributions have been increasing annually since 2011 and will be 11% of pensionable earnings up to the base scheme’s earnings
cap from 1 March 2017. The contribution rate will increase by a further two percentage points each year to 17% by 1 March 2020. The CEO
also pays a participation fee which, from 1 March 2017, will be 10% of the amount of his pensionable earnings in excess of the base
scheme’s earnings cap. The participation fee will increase annually by three percentage points to 19% by 1 March 2020. In addition, from
March 2017, a cap will be introduced of 2% per annum on the increase in the CEO’s pensionable earnings.
Performance framework
N/A
Maximum value
Defined contribution plan – maximum company contribution of 25% of salary per annum or equivalent cash in lieu. The CFO currently
receives 30% of salary under an arrangement which was made pursuant to the previous remuneration policy, which contained a 30% of
salary maximum. From March 2017, the CFO’s company contribution will decrease by 1% to 29% and then by a further two percentage
points each year to 25% by March 2019.
Defined benefit scheme – accrual of 1/30th of final year pensionable earnings for every year of service up to a maximum of 2/3rds of
pensionable earnings. As noted above under “Operation”, the CEO is subject to increases in his contributions and in the participation fee,
as well as a cap on annual increases in pensionable earnings, as part of his ongoing membership of this scheme.
Recovery of sums paid
No provision.
Governance Remuneration Report
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OTHER BENEFITS
Purpose and link to strategy
To provide competitive benefits at appropriate cost.
Operation
Other benefits, subject to periodic review, may include private medical and dental cover, life assurance, tax return preparation costs, car
benefits, directors’ and officers’ liability insurance, relocation benefits and expatriate allowances and other benefits available to employees
generally, including, where appropriate, the tax on such benefits.
Performance framework
N/A
Maximum value
The maximum for ongoing benefits for Executive Directors will not normally exceed 10% of salary (excluding relocation benefits and any
tax related charge on benefits which is met by the company). However, the Committee may provide reasonable benefits beyond this
amount in exceptional situations, such as a change in the individual’s circumstances caused by the company, or if there is a significant
increase in the cost of providing the agreed benefit.1
Recovery of sums paid
No provision.
AIP (ANNUAL INCENTIVE PLAN)
Purpose and link to strategy
The annual incentive provides focus on the delivery of annual financial targets and the achievement of annual objectives and milestones
which are chosen to align with the company’s strategy and create a platform for sustainable future performance. The compulsory
deferral of one-third of any annual incentive earned into RELX shares for three years promotes longer-term alignment of Executive
Directors’ interests with shareholders’ interests, including an element of post-termination shareholding.
Why performance measures are chosen and how targets are set
Performance measures include a balanced set of financial targets and Key Performance Objectives (KPOs), which are appropriately
weighted and which support current strategy and incentivise the Executive Directors to achieve the desired outcomes without undue
risk of focusing on any one financial measure.
The targets are designed to be challenging. They are set with reference to the previous year’s performance and internal and external
forecasts for the following year.
Operation
The Committee reviews and sets the financial targets and KPOs annually, taking into account internal forecasts and strategic plans.
It approves four to six KPOs for each Executive Director, reflecting critical business priorities for which each is accountable. At least one
KPO will relate to the achievement of sustainability targets.
Following year end, the Committee compares actual performance with the financial targets and assesses the achievement of individual
KPOs. Two-thirds of any annual incentive earned is paid in cash to the Executive Director and the remaining one-third is deferred into
RELX shares, which are not released to the Executive Director for three years.
Dividend equivalents accrued during the deferral period are payable in respect of the shares that vest.
On a change in control, the default position is that deferred shares vest. Alternatively, the Committee may determine that deferred
shares will not vest and will instead be exchanged for equivalent awards in the acquiring company.
Performance framework
The measures include financial targets, which have a weighting of at least 70%, and individual KPOs, with each element assessed separately.
§ The minimum payout is zero.
§ If threshold is reached for each of the financial measures, the overall payout for the financial measures is 10.5% of salary. If the
financial measure with the lowest weighting pays out at threshold and the others do not pay out at all, the overall payout for financial
measures is 1.5% of salary. There is no threshold level for KPOs.
§ Payout for target performance is 150% of salary.
Following an assessment of achievement and scoring of KPOs, the Committee agrees the overall level of earned incentive for each
Executive Director.
Committee discretion applies.2,3,4
Maximum value
The maximum potential annual incentive is 200% of annual base salary. This includes the deferred share element but excludes dividend
equivalents payable in respect of the deferred shares.
Recovery of sums paid
Claw-back applies.5
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RELX Group Annual reports and financial statements 2016
LONG TERM INCENTIVE PLAN
Purpose and link to strategy
The Long Term Incentive Plan (LTIP) is designed to provide a long-term incentive for Executive Directors to achieve the key performance
measures that support the company’s strategy, and to align their interests with shareholders.
Why performance measures are chosen and how targets are set
Our strategic focus is on continuing to transform the core business through organic investment and the build out of new products into
adjacent markets and geographies, supplemented by selective portfolio acquisitions and divestments. The performance measures in the
LTIP are chosen to support this strategy by focusing on sustained earnings growth, return on invested capital and shareholder return.
Targets are set with regard to previous results and internal and external forecasts for the performance period and the strategic plan for
the business. They are designed to provide exceptional reward for exceptional performance, whilst allowing a reasonable expectation
that reward at the lower end of the scale is attainable, subject to robust performance.
Operation
Annual awards of performance shares, with vesting subject to:
§ performance measured over three financial years
§ continued employment (subject to the provisions set out in the “Policy on payments for loss of office” section)
§ meeting shareholding requirements (400% of salary for the CEO and 300% of salary for the CFO)
Executive Directors are to retain their net (after tax) vested shares for a holding period of two years after vesting.
Dividend equivalents accrued during the performance period are payable in respect of the performance shares that vest.
On a change of control, the default position is that awards vest on a pro-rated basis, subject to an assessment of performance against targets
at that time. Alternatively, the Committee may determine that the awards will not vest and will instead be exchanged for equivalent awards in
the acquiring company.
Performance framework
The performance measures are EPS, ROIC and relative TSR, weighted 40%:40%:20% respectively and assessed independently,
such that a payout can be received under any one of the measures (or, for TSR, in respect of one of the three comparator groups).
§ The minimum payout is zero.
§ If each of the measures vests at threshold, the overall payout is 25% of the award. If the measure with the lowest weighting vests
at threshold and the others do not vest at all, the overall payout is 2% of the award.
§ Payout in line with expectations is 50% of the maximum award.
Dividend equivalents are not taken into account in the above payout levels.
Committee discretion applies.2,3,4
Maximum value
The maximum grant in any year is up to 450% of base salary for the CEO and up to 375% of base salary for other Executive Directors
(not including dividend equivalents).
Recovery of sums paid
Claw-back applies.5
1. Other benefits: Maximum value has increased from 5% under the previous policy to 10% to reflect increases in the cost of providing the agreed benefits. The
level of benefits provided to Executive Directors has not changed.
2. Discretion in respect of AIP and LTIP payout levels: In determining the level of payout under the AIP and vesting under the LTIP, the Committee takes into account
RELX’s overall business performance and value created for shareholders over the period in review and other relevant factors. It has discretion to adjust the
vesting and payout levels (subject always to the maximum individual limits) if it believes this would result in a fairer outcome. This discretion will only be used in
exceptional circumstances and the Committee will explain in the next Remuneration Report the extent to which it has been exercised and the reasons for doing so.
3. Discretion to vary performance measures under the AIP and the LTIP: The Committee may vary the financial measures applying to a current annual incentive
year and performance measures for LTIP awards already granted if a change in circumstances leads it to believe that the arrangement is no longer a fair
measure of performance. Any new measures will not be materially less, or more, challenging than the original ones.
4. Discretion on termination of employment under the AIP and the LTIP: The Committee’s discretion on termination of employment is described under the
“Policy on payments for loss of office” section on pages 88 to 89.
5. Malus and claw-back under the AIP and the LTIP: Under the AIP and the LTIP, the Committee has discretion to apply malus and claw-back (i) if the payout
(including the AIP deferred shares element) was calculated on the basis of materially misstated financial or other data, in which case it can withhold a payout
and can seek to recover the difference in value between the incorrect payout and the amount that would have been paid had the correct data been used or (ii) if
there has been serious misconduct on the part of the individual, in which case the Committee may withhold an AIP payout, lapse unvested LTIP awards and may
require repayment of AIP and LTIP gains arising during a specified period. Under the LTIP, the Committee also has discretion to apply malus and claw-back if a
participant breaches post-termination restrictive covenants, in which case unvested awards would lapse and the Committee may require repayment of gains
arising during the period beginning six months before termination and ending on the date the post-termination restrictive covenants are stated to expire.
Serious misconduct has been added as a trigger event under the AIP and the LTIP since the previous policy to increase the circumstances in which we can apply
malus and claw-back.
Governance Remuneration Report
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6. Explanation of differences between the company’s policy on Executive Directors’ remuneration and the policy for other employees: Incentives: A larger
percentage of Executive Directors’ remuneration is performance related than that of other employees. All managers participate in an annual incentive plan,
but participation levels, measures and targets vary according to their role, seniority and local business priorities. Approximately 100 senior executives
currently participate in the LTIP and/or the Bonus Investment Plan (BIP) and about 1,000 participate in the Executive Share Option Scheme (ESOS). Grant levels
under all plans vary according to role and seniority. In considering the proposed new remuneration policy for Executive Directors, under which the Executive
Directors will only participate in the AIP and the LTIP, the Committee considered the incentive plan participation for the wider senior management population.
Assuming shareholder approval is received for the new policy for Executive Directors, the Committee will decide on the most appropriate way to align the senior
management population’s incentive plan participation with that of the Executive Directors. Other benefits: The range and level of retirement and other benefits
provided to employees vary according to role, seniority and local market practice. This is to ensure that we provide competitive packages which are appropriate
to specific roles. In reducing the maximum company contribution for Executive Directors under the defined contribution pension plan, the Committee took into
account the contribution rates for Executive Directors and for the wider employee population.
7. Changes to pay components: The changes which have been made since the previous remuneration policy, together with the rationale for the changes, are
described in the Committee Chairman’s introduction on pages 81 to 83 and in notes 1 and 5 above.
Remuneration outcomes in different performance scenarios
The Committee considers the level of remuneration that may be paid in the context of the performance delivered and value added for
shareholders. The charts below are an illustration of how the CEO’s and CFO’s regular annual remuneration could vary under different
performance scenarios. The salary, benefits and pension levels are the same in all three scenarios in each chart. Salary is based on
2017 salary. Benefits is based on the most recent figure from the Single Total Figure table. Pension, annual incentive and LTIP are all
based on the policy table’s award levels and percentages applied to the 2017 salary. Annual incentive amounts include the one-third
portion which is subject to compulsory deferral into RELX shares for three years, although the deferral portion is separately identified
within the annual incentive amount in the charts. The performance assumptions which have been used are as follows: Minimum means
no AIP payout and no LTIP vesting. In line with expectations means AIP payout at 150% of salary (of which one-third is deferred into
shares) and LTIP vesting at half of the award. Maximum means AIP payout at 200% of salary (of which one-third is deferred into shares)
and LTIP vesting at 100% of the award.
No share price movement is assumed and any dividend equivalents payable in respect of the AIP deferred shares and the LTIP are
not included.
CEO REMUNERATION (£’000)
CFO REMUNERATION (£’000)
9,664
6,395
55%
42%
28%
25%
1,937
100%
30%
20%
Minimum
In line with
expectations
Maximum
LTIP
LTIP
AIP deferred shares
AIP deferred
AIP cash
AIP cash
Salary, benefits, pension
Salary, benefits, pension
LTIP
AIP deferred shares
AIP cash
Salary, benefits, pension
3,253
40%
32%
28%
890
100%
4,915
53%
29%
18%
Minimum
In line with
expectations
Maximum
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RELX Group Annual reports and financial statements 2016
Approach to recruitment remuneration – Executive Directors
When agreeing the components of a remuneration package on the appointment of a new Executive Director, or an internal promotion to
the Board, the Committee would seek to align the package with the remuneration policy stated in the policy table. However, on an internal
promotion to the Board, any existing contractual obligations and commitments may continue to be honoured, even if not consistent with
the prevailing policy. For example, if the individual is a member of the legacy defined benefit pension scheme, the Committee will consider
the pension arrangements in the context of the package as a whole and may allow continued participation.
The Committee’s general principle on recruitment is to offer a competitive remuneration package to attract high-calibre candidates
from a global talent pool. Basic salary would be set at an appropriate level for the candidate, taking into account all relevant factors.
As a data analytics and technology-driven business, with half of its revenue in the US, the company primarily competes for talent with
US-based information and technology companies.
The various components and the company’s approach are as follows:
Standard package on recruitment*
To offer remuneration in line with the policy table (including the limits), taking into account the principles set out above.
Compensation for forfeited entitlements
The Committee may make awards and payments on hiring an external candidate to compensate him or her for entitlements forfeited on
leaving the previous employer. If such a decision is made, the Committee will attempt to reflect previous entitlements as closely as
possible using a variety of tools, including cash and share based awards. Malus and claw-back provisions will apply where appropriate.
If necessary to facilitate the grant of awards, the Committee may rely on the one person exemption from shareholder approval in the UK
Listing Rules.
Relocation allowances and expenses
The type and size of relocation allowances and expenses will be determined by the specific circumstances of the new recruit.
*The standard package comprises annual base salary, retirement benefits, other benefits, AIP and LTIP.
Shareholding requirement
The Executive Directors are subject to shareholding requirements. These are a minimum of 400% of annual base salary for the CEO and
300% of annual base salary for other Executive Directors. On joining or promotion to the Board, Executive Directors are given a period of
time, typically up to five years, to build up to their requirement.
Policy on payments for loss of office
In line with the company’s policy, the service contracts of the existing Executive Directors contain 12-month notice periods.
The circumstances in which an Executive Director’s employment is terminated will affect the Committee’s determination of any payment
for loss of office, but it expects to apply the principles outlined in the table on the next page. The Committee reserves the right to depart
from these principles where appropriate in light of any taxation requirements to which the company or the Executive Director is subject
(including, without limitation, section 409A of the US Internal Revenue Code), or other legal obligations. Treatment of legacy awards
granted under multi-year incentive plans in which the Executive Directors no longer participate will be in accordance with those plans
and the policy on payments for loss of office summarised in the Remuneration Policy Report in the 2013 Annual Reports and Financial
Statements.
Governance Remuneration Report
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Policy on payments for loss of office (continued)
GENERAL 1
INCENTIVES
Mutually agreed termination/termination by the company other than for cause2
The Executive Director would be entitled to salary, benefits
and other contractual payments in the normal way up to the
termination date and would be paid for any accrued but
untaken holiday.
Salary: Payment of up to 12 months’ salary to reflect the notice
period or payment in lieu of notice.
Other benefits: Where possible, benefits would be continued for
up to the duration of any unworked period of notice (not exceeding
the maximum stated in the policy table) or the Executive Director
would receive a cash payment (not exceeding the cost to the
company of providing those benefits).
Pension: Deferred or immediate pension in accordance with
scheme rules, with a credit in respect of, or payment for up to, the
full period of any unworked period of notice. There is provision
under the defined benefit pension scheme for members leaving
company service by reason of permanent incapacity to make an
application to the scheme trustee for early payment of their
pension.
Other: The company may pay compensation in respect of any
statutory employment rights and may make other appropriate and
customary payments.
The company would have due regard to principles of mitigation of
loss. Reductions would be applied to reflect any portion of the
notice period that is worked and/or spent on gardening leave.
On injury, disability, ill-health or death, the Committee reserves
the right to vary the treatment outlined in this section.
Employee instigated resignation
The Executive Director would not receive any payments for loss of
office. The Executive Director would be entitled to salary, benefits
and other contractual payments in the normal way up to the
termination date and would be paid for any accrued but untaken
holiday.
Pension: A deferred or immediate pension would be payable in
accordance with the scheme rules.
Dismissal for cause
The Executive Director would be entitled to salary, benefits and
other contractual payments in the normal way up to the
termination date and would be paid for any accrued but untaken
holiday, but would not receive any payments for loss of office.
Pension: A deferred or immediate pension would be payable in
accordance with the scheme rules.
Annual incentive: Any unpaid annual incentive for the previous year
and a pro-rata payment in respect of the part of the financial year
up to the termination date would generally be payable (subject to
the deferral provisions), with the amount being determined by
reference to the original performance criteria. However, the
Committee has discretion to decide otherwise depending on the
reason for termination and other specific circumstances. The
company would not pay any annual incentive in respect of any part
of the financial year following the termination date (e.g. for any
unworked period of notice). Any unvested AIP deferred shares
would vest in full at the end of the deferral period. The annual
incentive claw-back provisions would apply.
LTIP: The default position is that unvested LTIP awards would be
pro-rated to reflect time employed and would vest subject to
performance measured at the end of the relevant performance
period and subject to the Executive Director continuing to meet his
shareholding requirement on a pro-rated basis. The Committee
has discretion to allow unvested LTIP awards to vest earlier and to
adjust the application of time pro-rating and performance
conditions, subject to the plan rules.
Annual incentive: The Executive Director would be entitled to receive
an annual incentive for a completed previous year (subject to the
deferral provisions), but not a pro-rated annual incentive in respect
of a part year up to the termination date, unless the Committee
decides otherwise in the specific circumstances. Any unvested
AIP deferred shares would vest in full at the end of the deferral
period. Annual incentive claw-back provisions would apply.
LTIP: All outstanding LTIP awards would lapse on the date of notice.
Annual incentive: The Executive Director would not receive any
unpaid annual incentive. Any unvested AIP deferred shares lapse
on the date of dismissal.
LTIP: All outstanding LTIP awards would lapse on the date of
dismissal.
1.
2.
In addition to what is set out in this section, on termination for any reason, Erik Engstrom will be entitled to payment of amounts held in his “Retirement Account”.
Before he joined the company’s UK defined benefit scheme, he was not a member of any company pension scheme and RELX made annual contributions of 19.5% of
base salary to a deferred compensation plan. Contributions to this Retirement Account ceased when he became a member of the UK defined benefit arrangement.
In cases where the approved leaver treatment applies, the AIP and LTIP have a default position as well as giving the Committee discretion to adjust the default
treatment within certain parameters. The Committee would only expect to exercise such discretion where the Committee believes the personal circumstances
of the Executive Director so require.
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RELX Group Annual reports and financial statements 2016
Remuneration policy table – Non-Executive Directors
FEES
Purpose and link to strategy
To enable RELX to recruit Non-Executive Directors with the right balance of personal skills and experience to make a major contribution
to the Boards and Committees of a global business which is listed in London, Amsterdam and New York.
Operation
RELX Chairman: Receives an aggregate annual fee with no additional fees, e.g. Committee Chairman fees. In respect of RELX PLC and
RELX Group plc, the Committee determines, on the advice of the Senior Independent Director, the Chairman’s fee. In respect of RELX NV,
the Committee makes a recommendation, on the advice of the Senior Independent Director, to the Board of RELX NV, which determines
the Chairman’s fee.
Other Non-Executive Directors: Receive an aggregate annual fee in respect of their memberships of the Boards of RELX PLC, RELX NV
and RELX Group plc. Additional fees are payable to the Senior Independent Director and Committee Chairmen. Fees are also payable for
membership of Board Committees. In future, attendance or international travel fees may be paid. The Boards determine the level of
fees, subject to applicable law.
Fees may be reviewed annually, although in practice they have changed on a less frequent basis. When reviewing fees, consideration is
given to the time commitment required, the complexity of the role and the calibre of the individual. Periodically, comparative market data
is also reviewed, the primary source for which is the practice of FTSE 30 companies, with reference also to the Euronext Amsterdam
(AEX) index and US-listed companies.
Maximum value
The aggregate annual fee limit for fees paid to the Chairman and the Non-Executive Directors in respect of their memberships of the
Boards of RELX PLC, RELX NV and RELX Group plc is approximately £2m. The shareholders of RELX PLC and RELX Group plc have
approved a maximum total annual fee limit of £500,000 and £1,000,000 respectively. Additional fees for membership of or chairing Board
Committees and assuming additional responsibilities such as acting as Senior Independent Director, are not subject to these maximum
limits. The shareholders of RELX NV have approved a maximum annual fee limit of €600,000 for all fees borne by RELX NV.
OTHER BENEFITS
Purpose and link to strategy
To provide competitive benefits at appropriate cost.
Operation
Other benefits for Non-Executive Directors are reviewed periodically and may include private medical cover, tax return preparation
costs, secretarial benefits, car benefits, travel and related subsistence costs, including, where appropriate, the tax on such benefits.
Maximum value
There is no prescribed maximum amount.
Approach to recruitment remuneration – Non-Executive
Directors
Following recruitment, a new Non-Executive Director will be
entitled to fees and other benefits in accordance with the
company’s remuneration policy. No additional remuneration is
paid on recruitment. However, any reasonable expenses incurred
during the recruitment process will be reimbursed.
Policy on payments for loss of office – Non-Executive Directors
In addition to unpaid accrued fees, the Non-Executive Directors
are entitled to receive one month’s fees for loss of office if their
appointment is terminated before the end of its term.
Service contracts and letters of appointment
There are no further obligations in the Directors’ service contracts
and letters of appointment which are not otherwise disclosed in
this Report which could give rise to a remuneration payment or
loss of office payment. All Directors’ service contracts and letters
of appointment are available for inspection at the company’s
registered office. The Executive Directors’ service contracts do
not have a fixed expiry date.
Consideration of employment conditions elsewhere in the
company
When the Committee reviews the Executive Directors’ salaries
annually, it takes into account the company’s guidelines for
salaries for all employees for the forthcoming year. We do not
currently use any other remuneration comparison metrics when
determining the quantum and structure of Directors’ pay. We have
not consulted with employees in connection with our policy on
Directors’ remuneration.
Consideration of shareholder views
Our practice is to consult shareholders and consider their views
when formulating, or changing, our policy. The Committee has
recently consulted extensively with shareholders (representing
a total of over 45% of the company’s combined PLC and NV issued
share capital) and shareholder representative bodies in the UK,
the Netherlands and the US on the proposed new remuneration
policy. We are grateful for the constructive feedback, which was
taken into account in our final proposals.
Previous remuneration policy and prior commitments
Any payments which are still to be made under arrangements
made and awards granted under the previous remuneration policy
(which is included in the 2013 Annual Reports and Financial
Statements and was approved by RELX PLC shareholders at the
2014 Annual General Meeting) will be made consistent with that
policy. The provisions of the previous policy which relate to
arrangements and awards granted under the previous policy will
therefore continue to apply until all payments in relation to those
arrangements and awards have been made.
The Committee also reserves the right to make any remuneration
or loss of office payments if the terms were agreed prior to the
approval of the previous policy or prior to an individual being
appointed as a Director.
Governance Remuneration Report
91
Introduction to the Annual Remuneration Report from the
Remuneration Committee Chairman
In 2016 the company made further strategic and operational progress, and continued to evolve its business profile. Our strategy remains
consistent: to be a global professional information solutions provider, a company that delivers improved outcomes for professional and
business customers across industries. We are systematically migrating all of our businesses towards electronic decision tools, adding
broader datasets, embedding more sophisticated analytics and leveraging more powerful technology, primarily through organic
development. Electronic and face-to-face, our preferred formats, now generate 87% of our total revenues. 2016 saw the company
continue its consistent, positive financial performance, with underlying revenue and profit growth across all four business areas.
Underlying revenue growth was 4%. Underlying operating profit growth was 6%, and adjusted earnings per share (EPS) at constant
currencies grew 8%.
These results carry forward the strong financial results of the company over the preceding five years, with consistent revenue, profit
and earnings per share growth. With more predictable revenues, a higher growth profile and improving returns the company continues
to improve its quality of earnings. This consistent strong financial performance is reflected in good achievements against targets under
the multi-year incentive plans.
The 2016 annual incentive payments to the Executive Directors were just above target, resulting in payouts of around 70% of the
maximum opportunity, which is a level that has been relatively consistent over the past six years and is in line with the consistent annual
financial progress made by the business during this time. This year we have significantly increased the retrospective disclosure of AIP
targets by disclosing both the actual achievement for the financial measures, as well as the full scale of potential outcomes from
threshold to maximum for each of these measures, and the percentage achievement for KPOs for the 2016 AIP (see page 93).
The 2014-16 cycle of the LTIP (Long Term Incentive Plan) vested at 94% with return on invested capital (ROIC) and total shareholder
return (TSR) targets having been fully achieved and EPS above the middle of the target range. On average, over the three year period,
adjusted EPS growth at constant currencies was 8.7% p.a.. ROIC and EPS performance in respect of the 2014-16 cycle of the BIP (Bonus
Investment Plan) and the ESOS (Executive Share Option Scheme) resulted in respective vesting percentages of 98% and 100% of the
awards granted. These outcomes reflect the strong and consistent returns and earnings growth achieved by the business and how the
challenging targets set by the Committee have been perceived by the market. Over the 2014-16 period, ROIC increased from 12.1%
to 13.0% while in the six years since it was introduced as a metric into our multi-year incentives, ROIC has increased from 10.4% to 13.0%,
demonstrating the Group’s commitment to improved returns. The share price over this period has increased by 60%.
In line with increases for the wider employee population, the Committee has approved 2017 salary increases for the Executive Directors
of 2.5%.
The audited sections of the Report are clearly marked.
Wolfhart Hauser
Chairman, Remuneration Committee
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92
RELX Group Annual reports and financial statements 2016
Annual Remuneration Report
Single Total Figure of Remuneration – Executive Directors (audited)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Short-term employee benefits
Share based awards
Total
£’000
Salary
Benefits(4)
Annual
Incentive
Pension(5)
UK statutory
basis(1, 3)
Dutch Civil
Code basis (2)
UK statutory
basis(1)
Dutch Civil
Code basis (2)
Erik Engstrom 2016
2015
2016
2015
Nick Luff
1,160
1,131
683
666
73
73
15
19
1,184
1,189
697
700
847
766
205
200
7,299
8,257
3,374
1,570
3,461
3,253
1,948
1,928
10,563
11,416
4,974
3,155
6,725
6,412
3,548
3,513
(1)
UK statutory basis (columns (e) and (g)): These figures are calculated in accordance with the methodology set out in the UK
Regulations. The figure for performance-related share based awards includes share price appreciation since the date the award
was granted. In the case of Erik Engstrom’s figures, the amount included that relates to share price appreciation is £4.4m for 2015
and £3.3m for 2016. For Nick Luff, the amount included that relates to share price appreciation is £0.4m for 2015 and £1.3m for 2016.
The figures for 2015 in column (e) disclosed in last year’s Report were, as required by the UK Regulations, based on an estimate
using prescribed average share prices and exchange rates and have been restated in this Report to reflect the actual amount vested
and the actual share prices and exchange rates on the vesting dates of the 2013-15 cycle of BIP, LTIP and ESOS and the PSP granted
to Nick Luff with a performance period ended 31 December 2015. The vesting percentages under these plans were determined on
26 February 2016 and were in line with those disclosed on page 80 in the 2015 Remuneration Report. Using the share prices and
exchange rates on the vesting dates increased the 2015 disclosed figure by £547k for Erik Engstrom and by £106k for Nick Luff.
The 2016 figures reflect the vesting of the 2014-16 cycle of BIP, LTIP and ESOS. As the BIP, LTIP and ESOS vest after the approval
date of this Report, the average share prices and exchange rates for the last quarter of 2016 have been used to arrive at an estimated
figure under the UK statutory basis in respect of these awards. The proportion of the value of Erik Engstrom’s share based awards
under the UK statutory basis that relates to share price appreciation between the dates of grant and vesting is 56% (or £4.4m) for
2015 (reported on an estimated basis in the 2015 Remuneration Report as being £3.9m) and 48% (or £3.3m) for 2016 using, as
required, the average share prices and exchange rates for the last quarter of 2016.
(2)
(3)
(4)
(5)
Dutch Civil Code basis (columns (f) and (h)): These figures comply with the requirements of the Dutch Civil Code. The figures for
share based awards comprise the multi-year incentive charges in accordance with IFRS2 – Share based Payment. These IFRS2
charges do not reflect the actual value received on vesting.
Exchange rates used for share based awards: The exchange rates used to convert share based awards to pounds sterling are
(i) for the UK statutory basis, those that applied at the vesting dates or, if vesting has not occurred at the time of sign off of this
Report, the average exchange rates for the last quarter of 2016; (ii) for dividend equivalents, the actual pounds sterling payment
made; and (iii) for estimated dividend equivalents in respect of awards for which vesting has not occurred at the time of sign off of
this Report and which are yet to be paid, the average exchange rates for the last quarter of 2016.
Benefits: Each Executive Director receives a car allowance, private medical/dental insurance and the company meets the cost of
tax return preparation.
Pension: The figures are calculated in accordance with the methodology set out in the UK Regulations and reflect (i) for defined
benefit schemes the calculation method set out in the UK Regulations less Directors’ contributions and participation fee; and
(ii) for defined contribution schemes, payments made to the scheme or to the Executive Director in lieu of pension.
(6) Total remuneration for Directors: This is set out in note 28 to the consolidated financial statements on page 161.
Governance Remuneration Report
93
2016 Annual Incentive
Set out below is a summary of performance against each financial measure and the resulting annual incentive payments for 2016
(payable in March 2017):
Relative
weighting
Achievement vs target
Performance
measure
Revenue
Adjusted net profit
after tax
30%
30%
Cash conversion
10%
Key Performance
Objectives (KPOs)(3)
30%
Erik Engstrom
(six KPOs)
Key Performance
Objectives (KPOs)(3)
30%
Nick Luff
(six KPOs)
Payout as %
of salary
Erik Engstrom
Payout as %
of salary
Nick Luff
30.9%
30.9%
31.8%
31.8%
10.9%
10.9%
28.5%
28.5%
Revenue was £6,895m versus a target(1) of £6,874m, resulting in
achievement versus target of 100.3% and a payout(2) of 103% of 30%.
Adjusted net profit after tax was £1,488m versus a target(1) of £1,479m,
resulting in achievement versus target of 100.6% and a payout(2) of
106% of 30%.
Cash flow was £2,016m (95% conversion) versus a target(1) of £1,998m,
resulting in achievement versus target of 100.9% and a payout(2) of
109% of 10%.
The first KPO, related to business profile evolution, organic growth
acceleration and integration of targeted acquisitions, was slightly
exceeded.
The second KPO, related to further portfolio reshaping and disposals,
was fully achieved.
The third KPO, related to the development of the Group’s global
functions, was fully achieved.
The fourth KPO, related to technology and product initiatives that
extend across the four business areas, was fully achieved.
The fifth KPO, related to specific priorities and market segment
milestones and metrics within each business area, was almost
fully achieved.
The sixth KPO, related to meeting the quantified targets and
completing the actions listed as 2016 objectives in the Corporate
Responsibility Report. The targets, and achievements against those
targets, are summarised on pages 44 to 51 in this Annual Reports and
Financial Statements 2016 and are more fully set out in detail on pages
11 to 66 in the Corporate Responsibility Report which can be found
at www.relx.com/go/CRReport. This KPO was almost fully achieved.
The first KPO, related to 2016 business performance and financial
results, was slightly exceeded.
The second KPO, related to tax matters and procedures, was almost
fully achieved.
The third KPO, related to achieving specific deliverables on balance
sheet priorities, was fully achieved.
The fourth KPO, related to the management of the audit and audit
transition, was fully achieved.
The fifth KPO, related to specific deliverables and metrics for the
finance function, was fully achieved.
The sixth KPO, related to meeting the quantified targets and
completing the actions listed as 2016 objectives in the Corporate
Responsibility Report. The targets, and achievements against those
targets, are summarised on pages 44 to 51 in this Annual Reports and
Financial Statements 2016 and are more fully set out in detail on
pages 11 to 66 in the Corporate Responsibility Report which can be
found at www.relx.com/go/CRReport. This KPO was almost fully
achieved.
Total payment
102.1%
102.1%
£1,184,047
£697,247
(1) On an equivalent basis (at actual exchange rates and after the net impact of acquisitions and disposals completed during the year).
(2) For achievement above target, each 0.1% of overachievement increased the payout ratio for that component by 1 percentage point up to a maximum payout ratio
of 150% at 105% achievement versus target. For achievement below target, each 0.1% of underachievement reduced the payout ratio by 1.5 percentage points
down to a threshold payout ratio of 10% at 94% achievement versus target.
(3) The maximum payout for the KPO component is 100% of 30%.
The Board believes that disclosing details beyond the level of specificity that is included above would be commercially sensitive and
would give competitors an unfair insight into our strategic direction and annual execution plans.
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RELX Group Annual reports and financial statements 2016
Multi-year incentives
Multi-year incentives with a performance period ended 31 December 2016 were the 2014 BIP, LTIP and ESOS granted to Executive
Directors.
The Committee assessed the performance measures for these awards and made an overall assessment of underlying business
performance and other relevant factors. The vesting outcome resulting from this review is summarised below.
LTIP: 2014-16 cycle performance outcome
Performance
measure
Weighting
Performance range and
vesting levels set at grant (1)
Achievement against the
performance range
Resulting vesting
percentage
TSR over the three-year performance
period
Average growth in adjusted EPS over
the three-year performance period(2)
1/3rd
1/3rd
ROIC in the third year of the
performance period(2)
1/3rd
In upper quartile of all three
comparator groups
100.0%
8.7% p.a.
81.7%
13.6%(3)
100.0%
below median
median
upper quartile
below 5% p.a.
5% p.a.
6% p.a.
7% p.a.
8% p.a.
9% p.a.
10% p.a.
11% p.a. and above
below 11.6%
11.6%
11.85%
12.1%
12.35%
12.6%
12.85%
13.1% and above
0%
30%
100%
0%
33%
52.5%
65%
75%
85%
92.5%
100%
0%
33%
52.5%
65%
75%
85%
92.5%
100%
Total vesting percentage:
93.9%
Calculated on a straight-line basis for performance between the points.
(1)
(2) The calculation methodology for EPS and ROIC is set out in the 2013 Notices of Annual General Meetings, which can be found on the company’s website.
(3) For 2016, ROIC on page 57 of the Chief Financial Officer's report of 13.0% equates to 13.6% under the plan methodology.
BIP: 2014-16 cycle performance outcome
Performance
measure
Weighting
Performance range and
vesting levels set at grant (1)
Achievement against the
performance range
Resulting vesting
percentage
Average growth in adjusted EPS over
the three-year performance period(2)
50%
ROIC in the third year of the
performance period(2)
50%
below 4% p.a.
4% p.a.
6.5% p.a.
9% p.a. or above
below 11.6%
11.6%
12.1%
12.6% or above
0%
50%
75%
100%
0%
50%
75%
100%
8.7% p.a.
96.7%
13.6%(3)
100.0%
Total vesting percentage:
98.3%
(1) Calculated on a straight-line basis for performance between the points.
(2) The calculation methodology for EPS and ROIC is set out in the 2010 Notices of Annual General Meetings, which can be found on the company’s website.
(3) For 2016, ROIC on page 57 of the Chief Financial Officer's report of 13.0% equates to 13.6% under the plan methodology.
ESOS: 2014-16 cycle performance outcome
Performance
measure
Average growth in adjusted EPS over
the three-year performance period(2)
Weighting
100%
Performance range and
vesting levels set at grant (1)
Achievement against the
performance range
Resulting vesting
percentage
below 4% p.a.
4% p.a.
6% p.a.
8% p.a. or above
0%
33%
80%
100%
8.7% p.a.
100%
(1) Calculated on a straight-line basis for performance between the stated average adjusted EPS growth percentages.
(2) The calculation methodology for EPS is set out in the 2013 Notices of Annual General Meetings, which can be found on the company’s website.
Governance Remuneration Report
95
Single Total Figure of Remuneration – Non-Executive Directors (audited)
Anthony Habgood
Wolfhart Hauser
Adrian Hennah
Lisa Hook(2)
Marike van Lier Lels(3)
Robert MacLeod(4)
Carol Mills(4)
Robert Polet(2)
Linda Sanford
Ben van der Veer(3)
Total fee
Benefits(1)
Total
2016
2015
2016
2015
2016
2015
£625,000 £550,000
£94,010
£130,808
£77,500
£90,000
£43,333
£110,000
€115,000 €86,038
N/A
£62,423
£72,827
N/A
£77,500
£30,000
£77,500
£90,000
€142,500 €119,000
£2,305
£780
£780
£1,620
€1,025
£1,620
£1,620
€1,025
£2,242
£780
£780
£1,620
£627,305 £552,242
£94,790
£131,588
£78,280
£90,780
£111,620
£44,953
€86,038
€116,025
N/A
£62,423
N/A
N/A
£72,827
N/A
£79,120
£31,620
£1,620
£1,620
£79,120
£91,620
€1,159 €143,525 €120,159
(1) Benefits comprise the notional benefit of tax filing support provided to Non-Executive Directors for filings outside their home country resulting from their
directorships with the Group. The incremental assessable benefit charge per tax return for 2016 was £840 (unchanged from 2015) for a UK tax return and £780
(unchanged from 2015) for a Netherlands tax return. Anthony Habgood’s benefits also include £1,525 (£1,462 in 2015) in respect of private medical insurance.
Further, the company meets all reasonable travel, subsistence, accommodation and other expenses, including any tax where such expenses are deemed
taxable, incurred by the Non-Executive Directors and the Chairman in the course of performing their duties.
(2) Retired at the 2016 AGMs.
(3) The pounds sterling equivalent of the total fees and benefits for Marike van Lier Lels and Ben van der Veer (converted at the average exchange rate applicable to
the years of reporting) were £95,102 (£62,347 in 2015) and £117,643 (£87,072 in 2015) respectively for 2016. For the purposes of reporting the total fees and
benefits for the two Directors, the pounds sterling benefit relating to the UK tax return has been converted into euros at the average exchange rate for the
relevant year.
(4) Appointed at the 2016 AGMs.
(5) The total remuneration for Directors is set out in note 28 to the consolidated financial statements on page 161.
N/A denotes that the individual was not a Director at the relevant date.
Non-Executive Directors’ fees
The fees in the Single Total Figure table for Non-Executive Directors reflect the following fees in 2016:
Chairman
Non-Executive Directors
Senior Independent Director
Chairman of:
– Audit Committee
– Remuneration Committee
Committee membership fee:
– Audit Committee
– Remuneration Committee
– Nominations Committee
Annual fee 2017
Annual fee 2016
£625,000
£75,000/€95,000
£30,000
£625,000
£75,000/€95,000
£30,000
€35,000
£25,000
€35,000
£25,000
£15,000/€20,000
£15,000/€20,000
£10,000/€12,500
£15,000/€20,000
£15,000/€20,000
£10,000/€12,500
Fees may be reviewed annually, although in practice they have changed on a less frequent basis. As disclosed on page 81 of the 2015
Remuneration Report, the last review took place during 2015 as a result of which a number of adjustments were made to the fees which
took effect on 1 January 2016.
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RELX Group Annual reports and financial statements 2016
Total pension entitlements (audited)
Erik Engstrom is a member of the Group’s UK defined benefit
pension arrangements. Further details are provided in the Policy
Report on page 79 of the 2013 Remuneration Report and below.
The CEO pays a participation fee on the amount of his pensionable
base salary which exceeds the scheme earnings cap. This fee was
5% until 31 March 2016, increased to 7% on 1 April 2016 and will be
10% from 1 March 2017.
Pension – Standard information
Pension – UK statutory basis
Age at
December
2016
Normal
retirement
age
Director’s
contributions
Participation
fee
Total of Director’s
contributions &
participation fee
Accrued annual
pension at
31 December 2015
Accrued annual
pension at
31 December 2016
Single figure
pensions value
53
60
£14,657
£65,606
£80,263
£308,014
£354,368
£846,824(1)
(1) Net of Director’s contribution and participation fee.
Scheme interests awarded during the financial year (audited)
CURRENT MULTI-YEAR INCENTIVE PLANS
Basis on which
award is made
Face value
of award at
grant(1)
Value of awards
if vest in line with
expectations(2)
Percentage of maximum that
would be received if threshold
performance achieved(3)
End of
performance
period
BIP – matching share awards
Erik Engstrom
Nick Luff
Opportunity to invest
cash and/or shares
up to value of annual
incentive target
opportunity and
receive up to 1 for 1
matching award
£1,131,402
£758,039
£666,232
£446,375
LTIP – performance share awards
Erik Engstrom
250% of salary
£2,828,516
£1,414,258
Nick Luff
200% of salary
£1,332,488
£666,244
If one measure pays out at
threshold, the overall payout is 25%.
If both measures pay out at
threshold, the overall payout is 50%.
31 December
2018
If the measure with the lowest payout
at threshold pays out at threshold, the
overall payout is 3%. If each measure
pays out at threshold, the overall
payout is 32%.
31 December
2018
ESOS – market value options
Erik Engstrom
250% of salary
£2,828,516
£452,563
33%
31 December
2018
Nick Luff
200% of salary
£1,332,488
£213,198
(1) The face value of the LTIP and ESOS awards is calculated using (i) the middle market quotation of a PLC ordinary share (£12.550); (ii) the closing price of a NV
ordinary share (€15.285); and (iii) the GBP:EUR exchange rate on the day before grant (14 March 2016). These share prices are used to determine the number
of awards granted, as well as to set option exercise prices. The face value of the ESOS options shown in this column has not been reduced to reflect the fact
that the aggregate option price is payable on exercise. The face value of the BIP matching award to Erik Engstrom, who invested in NV ADRs, is calculated
using (i) the closing price of a NV ADR ($17.100); and (ii) the GBP:USD exchange rate on the day before grant (14 March 2016). The face value for Nick Luff’s BIP
matching award, who invested in PLC and NV ordinary shares, is calculated on the same basis as the LTIP and ESOS face values.
(2) For BIP, LTIP and ESOS, vesting in line with expectations is as per the performance scenario chart disclosed on page 83 of the 2013 Remuneration Report,
i.e. 67% for BIP, 50% for LTIP and 80% for ESOS. For options vesting in line with expectations, a valuation factor of 20% of the face value of the award at grant
has been applied.
(3) Threshold payout levels for each measure have been included. Where there are multiple measures, it is possible to achieve threshold, and hence payout,
in respect of just one of the measures (or, for TSR, in respect of one of the three TSR comparator groups). The performance measures and targets for awards
granted in 2016 under each of the plans are set out on page 97.
Governance Remuneration Report
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The following targets and vesting scales apply to awards granted
in 2016:
BIP: 2016-18 cycle
Match earned on
personal investment
0%
50%
75%
100%
Average growth
in adjusted EPS over
the three-year
performance period*
below 4% p.a.
4% p.a.
6.5% p.a.
9% p.a. or above
ROIC in the third year
of the performance
period*
below 12.3%
12.3%
12.8%
13.3% or above
(b) certain companies were then excluded:
§ those with mainly domestic revenues (as they do not
reflect the global nature of the Group’s customer base);
§ those engaged in extractive industries (as they are
exposed to commodity cycles); and
§ financial services companies (as they have a different
risk/reward profile).
(c)
the remaining companies were then ranked by market
capitalisation and, for each comparator group, the 20
companies above and below the Group were taken; and
*EPS and ROIC have equal weighting and straight-line vesting applies to
performance between the points.
(d)
relevant listed global peers operating in businesses similar to
those of the Group but not otherwise included were added.
Vesting percentage of EPS
and ROIC tranches*
0%
33%
52.5%
65%
75%
85%
92.5%
100%
Average growth
in adjusted EPS over
the three-year
performance period
below 5% p.a.
5% p.a.
6% p.a.
7% p.a.
8% p.a.
9% p.a.
10% p.a.
11% p.a. or above
ROIC in the third year
of the performance period
below 12.3%
12.3%
12.55%
12.8%
13.05%
13.3%
13.55%
13.8% or above
*Vesting is on a straight-line basis for performance between the stated average
adjusted EPS growth/ROIC percentages.
ESOS: 2016-2018 cycle
Proportion of the
award vesting
Average growth in adjusted EPS over
the three-year performance period*
0%
33%
80%
100%
below 4% p.a.
4% p.a.
6% p.a.
8% p.a. or above
*Vesting is on a straight-line basis for performance between the stated average
adjusted EPS growth percentages.
LTIP: 2016-18 cycle
Vesting is dependent on three separate performance measures of
equal weighting: a TSR measure comprising three comparator
groups, an EPS measure and a ROIC measure.(1)
Vesting percentage of each third of the
TSR tranche(2)
TSR ranking within the relevant
TSR comparator group
0%
30%
100%
below median
median
upper quartile
1) The calculation methodology for TSR, EPS and ROIC is set out in the 2013
Notices of Annual General Meetings, which can be found on the company’s
website.
(2) Vesting is on a straight-line basis for performance between the minimum
and maximum levels.
The three TSR comparator groups (Sterling, Euro and US Dollar)
reflect the fact that the Group accesses equity capital markets
through three exchanges – London, Amsterdam and New York –
in three currency zones. The Group’s TSR performance is
measured separately against each comparator group and each
ranking achieved will produce a payout, if any, in respect of
one-third of the TSR measure. The proportion of the TSR measure
that vests will be the sum of the three payouts.
Each comparator group comprises approximately 40 companies.
The companies for the 2016-18 LTIP cycle were selected on the
following basis (unchanged from prior year):
(a)
they were in a relevant market index or were the largest listed
companies on the relevant exchanges at the end of the year
before the start of the performance period: the FTSE 100 for
the Sterling group; AEX, Euronext and the Frankfurt Stock
Exchange for the Euro group; and the S&P 500 for the US
Dollar group;
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RELX Group Annual reports and financial statements 2016
External appointments
The Committee believes that the experience gained by allowing
Executive Directors to serve as Non-Executive Directors on the
boards of other organisations is of benefit to the Group.
Accordingly, Executive Directors may, subject to the approval of
the Chairman and the CEO (or the Chairman only in the case of the
CEO), serve as Non-Executive Directors on the boards of up to two
non-associated companies (of which only one may be a major
company) and they may retain remuneration arising from such
appointments.
Erik Engstrom is a Non-Executive Director of Smith & Nephew plc
and received fees of £71,785 for 2016 (£69,650 in 2015).
Nick Luff is a Non-Executive Director of Lloyds Banking Group plc
and received fees of £165,000 for 2016 (£135,000 in 2015).
Payments to past Directors and payments for loss of office
(audited)
There have been no payments for loss of office in 2016.
Statement of Directors’ shareholdings and other share interests
(audited)
Shareholding requirement
The Committee believes that a closer alignment of interests can
be created between senior management and shareholders if
executives build and maintain a significant personal stake in the
Group. The shareholding requirements applicable to the Executive
Directors are set out in the table below. Shares that count for this
purpose are any type of RELX PLC or RELX NV security owned
outright by the individual and their spouse, civil partner or
dependent child. There has been no change to the interests
reported below between 31 December 2016 and 20 February 2017.
Meeting the shareholding requirement is both a vesting condition
for awards granted and a requirement to maintain eligibility for
future awards. Shareholding requirements fall away on leaving
the company.
On 31 December 2016, the Executive Directors’ shareholdings
were as follows (valued using the middle market closing prices of
the relevant securities):
Shareholding
requirement
(% of 31 December 2016
annual base salary)
Actual shareholding
as at 31 December 2016
(% of 31 December 2016
annual base salary)
Erik Engstrom
Nick Luff
300%
200%
1082%
421%
Share interests (number of shares held)
Erik Engstrom
Anthony Habgood
Wolfhart Hauser
Adrian Hennah
Lisa Hook (until 21 April 2016)
Marike van Lier Lels
Nick Luff
Robert MacLeod (from 21 April 2016)
Carol Mills (from 21 April 2016)
Robert Polet (until 21 April 2016)
Linda Sanford
Ben van der Veer
RELX PLC ordinary shares
31 December
1 January
2016
2016
RELX NV ordinary shares
1 January
2016
31 December
2016
TOTAL RELX ordinary shares
31 December
1 January
2016
2016
127,040
50,000
4,107
10,508
67,534
3,250*
N/A
1,000
6,700
160,036
50,000
11,542
10,508
100,010
3,250
6,500
N/A
6,700
802,151
38,450
3,091
7,382
3,000
73,233
N/A
3,000
10,766
803,742
38,450
3,091
N/A
3,000
108,960
N/A
3,000
10,766
929,191
88,450
7,198
10,508
7,382
3,000
140,767
3,250*
N/A
1,000
9,700
10,766
963,778
88,450
14,633
10,508
N/A
3,000
208,970
3,250
6,500
N/A
9,700
10,766
*Number of shares held on the date of appointment which was subsequent to 1 January 2016.
N/A denotes that the individual was not a Director at the relevant date.
Governance Remuneration Report
99
Multi-year incentive interests (audited)
The tables below and on page 100 set out vested but unexercised and unvested options and unvested share awards held by the Executive
Directors including details of options and awards granted and options exercised and awards vested during the year of reporting.
All outstanding unvested options and share awards are subject to performance conditions. For disclosure purposes, any PLC and NV
ADRs awarded under the multi-year plans are included as ordinary shares. Between 31 December 2016 and the date of this Report,
there have been no changes in the options or share awards held by the Executive Directors.
Erik Engstrom
OPTIONS
ESOS
Year of
grant
2012
2013(1)
2014
2015
2016
Type of
security
PLC ord
NV ord
PLC ord
NV ord
PLC ord
NV ord
PLC ord
NV ord
PLC ord
NV ord
Total PLC ords
Total NV ords
No. of
options
held on
1 Jan
2016
198,836
214,923
178,799
191,230
145,604
158,166
119,771
126,358
643,010
690,677
No. of
options
granted
during
2016
112,690
119,312
112,690
119,312
Option
price on
date of
grant
£5.155
€5.871
£7.345
€8.147
£9.245
€10.286
£11.520
€15.003
£12.550
€15.285
No. of
options
exercised
during
2016
198,836
214,923
Market
price per
share at
exercise
£12.401
€15.015
198,836
214,923
No. of
options
held on
31 Dec
2016
178,799
191,230
145,604
158,166
119,771
126,358
112,690
119,312
556,864
595,066
Unvested
options
vesting on
Options
exercisable
until
09 May 23
09 May 23
Apr 17 07 Apr 24
Apr 17 07 Apr 24
Apr 18 02 Apr 25
Apr 18 02 Apr 25
Mar 19 15 Mar 26
Mar 19 15 Mar 26
(1) The performance outcome for the ESOS 2013 was disclosed on page 80 of the 2015 Remuneration Report.
SHARES
BIP
LTIP
Total PLC ords
Total NV ords
Year of
grant
2013(1)
2014
2015
2016
2013(1)
2014
2015
2016
Type of
security
NV ord
NV ord
NV ord
NV ord
PLC ord
NV ord
PLC ord
NV ord
PLC ord
NV ord
PLC ord
NV ord
No. of
unvested
shares
held on
1 Jan 2016
148,924
125,174
97,607
178,799
191,230
145,604
158,166
119,771
126,359
444,174
847,460
No. of
shares
awarded
during
2016
94,965
112,690
119,312
112,690
214,277
Market
price per
share at
award
€8.147
€10.286
€15.003
€15.285
£7.345
€8.147
£9.245
€10.286
£11.520
€15.003
£12.550
€15.285
Market
price per
share at
vesting/
performance
testing
No. of
unvested/
Non-
performance
tested shares
held on
31 Dec 2016
No. of shares
vested/
performance
tested during
2016
145,200
€15.133
End of
performance
period
Date
of release
125,174
97,607
94,965
Dec 2016
Dec 2017
Dec 2018
H1 2017
H1 2018
H1 2019
Dec 2016
Dec 2016
Dec 2017
Dec 2017
Dec 2018
Dec 2018
H1 2017
H1 2017
H1 2018
H1 2018
H1 2019
H1 2019
145,604
158,166
119,771
126,359
112,690
119,312
378,065
721,583
166,873
178,474
£12.495
€15.133
166,873
323,674
(1) The performance outcomes for the BIP and LTIP 2013 were disclosed on page 80 of the 2015 Remuneration Report.
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100
RELX Group Annual reports and financial statements 2016
Nick Luff
OPTIONS
ESOS
Year of
grant
2014
2015
2016
Type of
security
PLC ord
NV ord
PLC ord
NV ord
PLC ord
NV ord
Total PLC ords
Total NV ords
SHARES
Year of
grant
2014
2015
2016
2014
2015
2016
2014
Type of
security
PLC ord
NV ord
PLC ord
NV ord
PLC ord
NV ord
PLC ord
NV ord
PLC ord
NV ord
PLC ord
NV ord
PLC ord
NV ord
BIP
LTIP
PSP(1)
Total PLC ords
Total NV ords
No. of
options
held on
1 Jan
2016
65,656
72,228
56,423
59,526
122,079
131,754
No. of
unvested
shares
held on
1 Jan 2016
32,630
35,174
28,187
29,520
65,656
72,229
56,423
59,526
65,656
72,229
248,552
268,678
Option
price on
date of
grant
£9.900
€11.378
£11.520
€15.003
£12.550
€15.285
Market
price per
share at
award
£9.900
€11.378
£11.520
€15.003
£12.550
€15.285
£9.900
€11.378
£11.520
€15.003
£12.550
€15.285
£9.900
€11.378
No. of
options
granted
during
2016
53,087
56,207
53,087
56,207
No. of
shares
awarded
during
2016
26,543
28,103
53,087
56,207
79,630
84,310
No. of
options
exercised
during
2016
Market
price per
share at
exercise
No. of
options
held on
31 Dec
2016
65,656
72,228
56,423
59,526
53,087
56,207
175,166
187,961
Unvested
options
vesting on
Options
exercisable
until
Sep 17 02 Sep 24
Sep 17 02 Sep 24
Apr 18 02 Apr 25
Apr 18 02 Apr 25
Mar 19 15 Mar 26
Mar 19 15 Mar 26
No. of shares
vested/
performance
tested during
2016
Market
price per
share at
vesting/
performance
testing
No. of
unvested/
Non-
performance
tested shares
held on
31 Dec 2016
32,630
35,174
28,187
29,520
26,543
28,103
65,656
72,229
56,423
59,526
53,087
56,207
262,526
280,759
£12.495
€15.133
61,276
67,411
61,276
67,411
End of
performance
period
Date
of release
H1 2017
Dec 2016
H1 2017
Dec 2016
Dec 2017 H1 2018
H1 2018
Dec 2017
H1 2019
Dec 2018
H1 2019
Dec 2018
H1 2017
Dec 2016
H1 2017
Dec 2016
H1 2018
Dec 2017
H1 2018
Dec 2017
H1 2019
Dec 2018
H1 2019
Dec 2018
(1) The performance outcome for this PSP award is set out on page 80 of the 2015 Remuneration Report.
Governance Remuneration Report
101
Performance graphs
The graphs below show total shareholder returns for RELX PLC and RELX NV, calculated on the basis of the average share price in the
30 trading days before the respective year end and assuming dividends were reinvested. RELX PLC’s performance is compared with the
FTSE 100 and RELX NV with the AEX Index (to reflect their respective memberships of those indices). The three-year charts cover the
performance period of the 2014-16 cycle of the LTIP.
3 years
RELX PLC vs FTSE 100 – 3-YEAR TSR
RELX NV vs AEX – 3-YEAR TSR
%
200
175
150
125
100
75
50
25
0
5 years
+71%
∆=54%
+17%
D ec-13
RELX PLC
D ec-14
D ec-15
FTSE 100
D ec-16
%
200
175
150
125
100
75
50
25
0
+70%
∆=38%
+32%
D ec-13
RELX NV
D ec-14
D ec-15
AEX Index
D ec-16
RELX PLC vs FTSE 100 – 5-YEAR TSR
RELX NV vs AEX – 5-YEAR TSR
%
350
300
250
200
150
100
50
0
+215%
∆=161%
+54%
%
350
300
250
200
150
100
50
0
+229%
∆=143%
+86%
D ec-11
D ec-12
RELX PLC
D ec-13
D ec-14
D ec-15
FTSE 100
D ec-16
D ec-11
D ec-12
D ec-13
D ec-14
D ec-15
D ec-16
RELX NV
AEX Index
10 years
RELX PLC vs FTSE 100 – 10-YEAR TSR
RELX NV vs AEX – 10-YEAR TSR
%
350
300
250
200
150
100
50
0
+239%
∆=175%
+64%
%
350
300
250
200
150
100
50
0
+170%
∆=134%
+36%
D ec-06
D ec-07
D ec-08
D ec-09
D ec-10
D ec-11
D ec-12
D ec-13
D ec-14
D ec-15
D ec-16
D ec-06
D ec-07
D ec-08
D ec-09
D ec-10
D ec-11
D ec-12
D ec-13
D ec-14
D ec-15
D ec-16
RELX PLC
FTSE 100
RELX NV
AEX Index
UK Regulations require disclosure of the relative share performance for the eight calendar years ended 31 December 2016, of
RELX PLC. During that period the total return for the FTSE 100 was +121% while TSR for RELX PLC was +262%, an outperformance
of 141 percentage points.
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CEO historical pay table
The table below shows the historical CEO pay over a nine-year period. The year 2008 has been included to show the pre-2009 position,
as 2009 was a transition year with three CEO incumbents.
£’000
CEO
2008
2009(3)
2010
2011
2012
2013
2014
2015
2016
Sir Crispin
Davis
Sir Crispin
Davis
Ian
Smith
Erik
Engstrom
Erik
Engstrom
Erik
Engstrom
Erik
Engstrom
Erik
Engstrom
Erik
Engstrom
Erik
Engstrom
Erik
Engstrom
Annualised base
salary
Annual incentive
payout as a % of
maximum
Multi-year incentive
vesting as a % of
maximum
CEO total
(UK statutory basis)(1)
CEO total (Dutch Civil
Code basis)(2)
1,181
1,181
900
1,000
1,000
1,025
1,051
1,077
1,104
1,131
1,160
61%
30%
37%
71%
67%
66%
73%
70%
71%
70%
68%
100%
0%
0%
0%
0%
0%
70%(4)
96%(4)
90%(4)
97%(4)
97%(4)
7,193
706
1,033
426
3,140
2,738
11,145(5)
5,463
17,447(6)
11,416(7) 10,563(8)
6,631
(514)
1,033
431
2,675
5,045
5,443
6,100
6,839
6,412
6,725
(1) UK statutory basis: This is described in footnote (1) to the Single Total Figure of Remuneration table on page 92.
(2) Dutch Civil Code basis: This is described in footnote (2) to the Single Total Figure of Remuneration table on page 92.
(3) Sir Crispin Davis was CEO from 1 January to 31 March, Ian Smith was CEO from 1 April to 10 November and Erik Engstrom was CEO from 11 November to
31 December.
(4) The 2016 and 2015 percentages reflect BIP, LTIP and ESOS. The 2014 percentage reflects the final tranche of the discontinued Reed Elsevier Growth Plan (REGP),
BIP and ESOS. The 2013 percentage reflects BIP and ESOS only and the 2012 figure reflects BIP and the first tranche of the discontinued REGP.
(5) The 2012 figure reflects the vesting of the first tranche of the discontinued REGP and includes the entire amount that was performance tested over the 2010-12
period, including the 50% of shares deferred until 2015 in accordance with the plan rules including £3m attributed to share price appreciation.
(6) The 2014 figure includes the vesting of the second and final tranche of the discontinued REGP and includes £8.8m attributed to share price appreciation.
(7) The 2015 figure includes £4.4m attributed to share price appreciation. The UK statutory basis has been restated for actual share prices and exchange rates
applicable on the dates of vesting (see page 92 for further detail).
(8) The 2016 figure includes £3.3m attributed to share price appreciation.
RELX Group Annual reports and financial statements 2016 Governance Remuneration Report
103
Comparison of change in CEO pay with change in employee pay
The table below shows the percentage change in remuneration
(salary, benefits and annual incentive) from 2015 to 2016 for the
CEO compared with the average employee.
Salary
Benefits
Annual incentive
% change from 2015 to 2016
CEO
2.5%
0.3%
-0.4%
Average employee(1)
2.5%
2.5%
1.3%
(1) This reflects a substantial proportion of our global employee population.
Relative importance of spend on pay
The following table sets out the total employee costs for all
employees, as well as the amounts paid in dividends and share
repurchases.
Employee costs*
Dividends
Share repurchases
2016 (£m)
2015 (£m) % change
2,114
683
700
1,751
583
500
+21%
+17%
+40%
*Employee costs include wages and salaries, social security costs, pensions
and share based and related remuneration. After adjusting for fluctuations
in the Group’s principal trading currencies, employee costs rose 10%
in constant currency.
The targets and vesting scales for the multi-year incentive awards
to be granted in 2017 are as follows:
BIP: 2017-19 cycle
Match earned on
personal investment
Average growth in
adjusted EPS over the
three-year performance
period*
ROIC in the third year of
the performance period*
0%
50%
75%
100%
below 4% p.a.
4% p.a.
6.5% p.a.
9% p.a. or above
below 12.5%
12.5%
13.0%
13.5% or above
*EPS and ROIC have equal weighting and straight-line vesting applies to
performance between the points.
LTIP: 2017-19 cycle
Vesting is dependent on three separate performance measures of
equal weighting: a TSR measure (comprising three comparator
groups), an EPS measure and a ROIC measure.(1)
Vesting percentage of each third
of the TSR tranche(2)
TSR ranking within the relevant
TSR comparator group
0%
30%
100%
below median
median
upper quartile
Implementation of remuneration policy in 2017
Salary: The Committee has awarded a salary increase of 2.5% to
the Executive Directors, which means that, from 1 January 2017,
Erik Engstrom’s salary rose to £1,188,686 and Nick Luff’s salary to
£699,979. This is in line with the guidelines agreed for employees in
the Group’s most significant locations globally for 2017.
(1) The calculation methodology for TSR, EPS and ROIC is set out in the 2013
Notices of Annual General Meetings, which can be found on the company’s
website. The methodology for selecting the TSR comparator group
companies is unchanged from 2013 (see page 89 of the 2013 Remuneration
Report). Each comparator group comprises approximately 40 companies.
The companies for the 2017-19 LTIP cycle were selected on the same basis
as the comparator groups for prior cycles under this plan.
(2) Vesting is on a straight-line basis for performance between the minimum
AIP: The operation of the AIP in 2017 remains the same as in 2016.
Details of annual financial targets and KPOs are not disclosed
prospectively as the Board believes that these are commercially
sensitive and that disclosing them would give competitors an
unfair insight into our strategic direction and annual execution
plans. The targets are designed to be challenging relative to the
2017 execution plan.
Multi-year incentives: The award levels (% of salary) for 2017 are:
BIP opportunity
LTIP
ESOS
CEO
100%
250%
250%
CFO
100%
200%
200%
and maximum levels.
Vesting percentage of EPS
and ROIC tranches*
0%
33%
52.5%
65%
75%
85%
92.5%
100%
Average growth
in adjusted
EPS over the three-year
performance period
ROIC in the third year of
the performance period
below 5% p.a.
5% p.a.
6% p.a.
7% p.a.
8% p.a.
9% p.a.
10% p.a.
11% p.a. or above
below 12.5%
12.5%
12.75%
13.0%
13.25%
13.5%
13.75%
14.0% or above
*Vesting is on a straight-line basis for performance between the stated average
adjusted EPS growth/ROIC percentages.
ESOS: 2017-19 cycle
Proportion of the award vesting
Average growth in adjusted EPS over
the three-year performance period*
0%
30%
80%
100%
below 4% p.a.
4% p.a.
6% p.a.
8% p.a. or above
*Vesting is on a straight-line basis for performance between the stated average
adjusted EPS growth percentages.
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RELX Group Annual reports and financial statements 2016
Remuneration Committee advice
The Committee consists of independent Non-Executive Directors
and the Chairman of RELX Group plc. Details of members and
their attendance are contained in the Corporate Governance
section on page 76. The Chief Legal Officer & Company Secretary
attends meetings as secretary to the Committee. At the invitation
of the Chairman of the Committee, the CEO of RELX Group plc
attends appropriate parts of the meetings. The CEO of RELX Group
plc is not in attendance during discussions about his
remuneration.
The Human Resources Director advised the Committee during
the year.
Willis Towers Watson is the external adviser, appointed by the
Committee through a competitive process. Willis Towers Watson
also provided actuarial and other human resources consultancy
services to some Group companies during the year. The
Committee is satisfied that the firm’s advice continues to be
objective and independent, and that no conflict of interest exists.
The individual consultants who work with the Committee do not
provide advice to the Executive Directors, or act on their behalf.
Willis Towers Watson is a member of the Remuneration
Consultants’ Group and conducts its work in line with the UK Code
of Conduct for executive remuneration consulting. During 2016,
Willis Towers Watson received fees of £50,946 for advice given to
the Committee, charged on a time and expense basis.
Shareholder vote at 2016 Annual General Meetings
At the Annual General Meeting of RELX PLC, on 21 April 2016, votes cast by proxy and at the meeting in respect of the Directors’
remuneration were as follows:
Resolution
Votes For
% For
Votes Against
% Against
Total votes cast
Votes Withheld
Remuneration Report (advisory)
741,001,137
85.66% 124,094,898
14.34% 865,096,035
38,282,891
Wolfhart Hauser
Chairman, Remuneration Committee
22 February 2017
Governance Report of the Audit Committees
105
Report of the Audit Committees
This report has been prepared by the Audit Committees of
RELX PLC and RELX NV in conjunction with the Audit Committee
of RELX Group plc (the Committees) and has been approved by the
respective Boards. It provides an overview of the membership,
responsibilities and activities of the Committees. The RELX PLC
and RELX NV Audit Committees fulfil their roles from the
perspective of the parent companies and both Committees have
access to the reports to and the work of the RELX Group plc Audit
Committee in this respect.
Membership
The Committees comprise at least three independent
Non-Executive Directors. The members of each of the
Committees who served during the year were:
§ Ben van der Veer (Chairman of the Committees)
§ Adrian Hennah
§ Linda Sanford
§ Marike van Lier Lels
§ Carol Mills (from 21 April 2016).
Adrian Hennah, a UK chartered accountant, and Ben van
der Veer, a registered accountant in the Netherlands,
are considered to have significant, recent and relevant
financial experience.
Responsibilities
The main role and responsibilities of the Committees are
to assist the respective Boards in fulfilling their oversight
responsibilities regarding:
§ the integrity of the Group’s interim and full year financial
statements and financial reporting processes;
§ risk management and internal controls, and the
effectiveness of the internal auditors; and
§ the performance of the external auditors and the
effectiveness of the external audit process, including
monitoring the independence and objectivity of Ernst
& Young.
The Committees report to the respective Boards on their
activities, identifying any matters in respect of which they
consider that action or improvement is needed and making
recommendations as to the steps to be taken.
The terms of reference of each Audit Committee are reviewed
annually and a copy of each is published on the Group’s
website, www.relx.com
Committee meetings
The Committees met five times during 2016. The Audit Committee
meetings are typically attended by the RELX Chief Executive
Officer, the RELX Chief Financial Officer, the RELX Financial
Controller, the RELX Chief Legal Officer, the RELX Head of Audit
and Risk, and audit partners from the external auditors.
Financial reporting
In discharging their responsibilities in respect of the 2016 interim
and full year financial statements, the Committees have:
§ reviewed and discussed areas of significant judgement in the
preparation of the financial statements, including in particular:
i.
the carrying values of goodwill and intangible assets – the
significant judgements in respect of asset carrying values
relate to the assumptions underlying the value in use
calculations including discount rates and long-term growth
assumptions. The Committees received and discussed
reports from the RELX Financial Controller on the
methodology and the basis of the assumptions used;
ii. capitalisation of internally generated intangible assets
– the capitalisation of costs related to the development of new
products and business infrastructure, together with the useful
economic lives applied to the resulting assets, requires the
exercise of judgement. The Committees received reports
from the RELX Financial Controller on the amounts
capitalised and asset lives selected for major projects;
iii. uncertain tax positions – assessing potential liabilities
across numerous jurisdictions is complex and requires
judgement in making tax determinations. The Committees
received and discussed reports from the RELX Head of
Taxation on the potential liabilities identified and
judgements applied;
iv. reviewed the recognition of certain pension scheme
liabilities which are subject to judgement. The Committees
received and discussed reports from the RELX Financial
Controller on the methodology and the basis
of the assumptions used;
§ reviewed the critical accounting policies and compliance
with applicable accounting standards and other disclosure
requirements and received regular update reports on
accounting and regulatory developments;
§ received and considered the Financial Reporting Council’s
audit quality review of Deloitte’s audit of the Group’s financial
statements for the year ended 31 December 2015. There were
no significant findings from the review;
§ reviewed the disclosures made in relation to internal control,
risk management, the going concern statement and the
viability statement. The Committees received and discussed
reports from the RELX Head of Audit and Risk and the RELX
Treasurer on the processes undertaken and assumptions used
in formulating these disclosures; and
§ considered whether the Annual Report taken as a whole was
fair, balanced and understandable.
The Committees also received detailed written and verbal reports
from the external auditors on these matters. The Committees were
satisfied with the explanations provided and conclusions reached.
Risk management and internal controls
With respect to their oversight of risk management and internal
controls, the Committees have:
§ received and discussed regular reports summarising the
status of the Group’s risk management activities, including
actions to mitigate risks, and the findings from internal audit
reviews and the actions agreed with management. Areas of
focus in 2016 included: operational and financial controls;
regulatory compliance; business continuity planning; review
of information security including the management of data
privacy; post acquisition integration; and continued compliance
with the requirements of Section 404 of the US Sarbanes-Oxley
Act relating to the documentation and testing of internal
controls over financial reporting;
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106
§§ reviewed and approved the internal audit plan for 2017 and
monitored execution of the 2016 plan, including progress in
respect of recommendations made;
The external auditors have confirmed their independence and
compliance with the Group policy on auditor independence to the
Audit Committees.
Ernst &Young LLP and Ernst & Young Accountants LLP were first
appointed auditors of the parent companies and RELX Group plc
for the financial year ended 31 December 2016. The auditors are
required to rotate the lead audit partners responsible for the audit
engagements every five years. The year ended 31 December 2016
was the first year for the lead engagement partners for RELX PLC
and RELX NV.
The Committees have conducted their review of the performance
of the external auditors and the effectiveness of the external audit
process for the year ended 31 December 2016. The review was based
on a survey of key stakeholders across the Group, consideration
of public reports by regulatory authorities on key Ernst & Young
member firms and the quality of the auditors’ reporting to and
interaction with the Audit Committees. Based on this review, the
Audit Committees were satisfied with the performance of the
auditors and the effectiveness of the audit process.
Change of external auditor
Following a competitive audit tender process in 2015, Ernst &
Young LLP and Ernst & Young Accountants LLP were appointed
as external auditors for the year ended 31 December 2016,
replacing Deloitte, at the Annual General Meetings of RELX PLC
and RELX NV in April 2016. The Audit Committees had primary
responsibility for the appointment of the auditor and made the
recommendation on appointment that went to the Board. As
such, the Audit Committees confirm that they were in compliance
with the provisions of The Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee Responsibilities) Order
2014 during the financial year ended 31 December 2016.
The Committees have monitored the audit transition process
throughout 2016 and have assessed the effectiveness of the audit
process to ensure a smooth transition from the former auditors.
Audit Committee effectiveness
The effectiveness of the Audit Committees was reviewed as
part of the 2016 evaluation of the Boards which confirmed that
the Committees continue to function effectively. Details of the
evaluation are set out on page 75.
Ben van der Veer
Chairman of the Audit Committees
22 February 2017
§§ reviewed the resources, terms of reference and effectiveness of
the RELX Group plc risk management and internal audit functions;
§§ received presentations from: the RELX Chief Compliance
Officer on the compliance programmes, including the
operation of the Group’s codes of conduct, training
programmes and whistleblowing arrangements and the
RELX Chief Legal Officer on legal issues and claims;
§§ received reports from the RELX Chief Strategy Officer
and Chief Legal Officer on information security and other
technology-related risks;
§§ received updates from the RELX Treasurer on pension
arrangements and funding, treasury policies and risk
management and compliance with treasury policies;
§§ received presentations from the RELX Head of Taxation on tax
policies and related matters;
§§ received regular updates from the RELX Chief Financial
Officer on developments within the finance function; and
§§ received presentations from chief financial officers of
major businesses including a presentation on the accounting
shared services centre.
External audit effectiveness
The Group has a well-established policy on audit effectiveness
and independence of auditors that sets out inter alia: the
responsibilities of each Audit Committee in the selection of
auditors to be proposed for appointment or re-appointment and
for agreement on the terms of their engagement, scope and
remuneration; the auditor independence requirements and the
policy on the provision of non-audit services; the rotation of audit
partners and staff; and the conduct of meetings between the
auditors and the Audit Committees. This policy has been updated
to reflect the Financial Reporting Council's Revised Ethical
Standard 2016 and Revised Guidance on Audit Committees 2016,
including an update to expand the list of prohibited non-audit
services. The policy is available on the website,
www.relx.com
The auditors are precluded from engaging in non-audit
services that would compromise their independence or violate
any professional requirements or regulations affecting their
appointment as auditors. The auditors may, however, provide
non-audit services which do not conflict with their independence,
and where their skills and experience make them a logical
supplier, subject to pre-approval by the Audit Committees.
Non-audit services performed in the Netherlands are limited to
audit assurance activities. The Committees will continue to review
the policy on the provision of non-audit services in the light of
ongoing regulatory developments.
The Committees have, each quarter, reviewed and agreed the
non-audit services provided in 2016, together with the associated
fees which are set out in note 4 to the consolidated financial
statements. The non-audit services provided were in the areas of
audit-related activities such as royalty assurance, tax advice and
compliance, due diligence and other transaction-related services.
RELX Group Annual reports and financial statements 2016 Financial statements and other financial information
107
Financial
statements
and other
information
In this section
108 Independent auditors’ report
119 Consolidated financial statements
124 Notes to the Consolidated
financial statements
168 5 year summary
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108
RELX Group Annual reports and financial statements 2016
Independent auditors’ report
UNITED KINGDOM – Ernst & Young LLP
TO: THE MEMBERS OF RELX PLC
NETHERLANDS – Ernst & Young Accountants LLP
TO: THE GENERAL MEETING OF RELX NV
For the purpose of these reports, the terms ‘we’ and ‘our’ denote Ernst & Young LLP in relation to the UK responsibilities and reporting
obligations to the Members of RELX PLC and Ernst & Young Accountants LLP in relation to Dutch responsibilities and reporting
obligations to the General Meeting of RELX NV. RELX PLC and RELX NV jointly own RELX Group plc, which holds all the Group’s operating
businesses and financing activities. RELX PLC, RELX NV, RELX Group plc and its subsidiaries, joint ventures and associates are together
known as ’the Group‘. The reports of Ernst & Young LLP and Ernst & Young Accountants LLP are presented in the left and right hand
columns of this report respectively. Where separate columns are not presented, the content of the reports of Ernst & Young LLP and
Ernst & Young Accountants LLP are identical unless clearly marked otherwise.
The financial statements (‘the Financial Statements’) comprise:
§ the consolidated financial statements of the Group (‘the Consolidated Financial Statements’);
§ the parent company financial statements of RELX PLC (‘the PLC Company Accounts’); and
§ the parent company financial statements of RELX NV (‘the NV Company Accounts’), each of which are defined below.
1. OPINIONS
We have audited the Consolidated Financial Statements of the Group, which is based in London and Amsterdam, for the year ended
31 December 2016 which comprise the consolidated statement of financial position as at 31 December 2016, the consolidated income
statement, the consolidated statement of comprehensive income, the consolidated statement of cash flows, and the consolidated
statement of changes in equity for the year then ended and notes to the Consolidated Financial Statements 1 to 31, including a summary
of the significant accounting policies and other explanatory information.
In addition, Ernst & Young LLP has audited the PLC Company Accounts (which comprise the company statement of financial position as
at 31 December 2016, the company statement of changes in equity for 2016 and the notes 1 to 4 comprising a summary of the significant
accounting policies and other explanatory information) and Ernst & Young Accountants LLP has audited the NV Company Accounts,
based in Amsterdam, (which comprise the company statement of financial position as at 31 December 2016, the company statement of
comprehensive income, and the company statement of changes in equity for 2016 and the notes 1 to 8 to the NV Company Accounts,
including the summary of the significant accounting policies and other explanatory information).
RELX PLC
In our opinion:
RELX NV
In our opinion:
§ the Consolidated Financial Statements and the PLC
§ the Consolidated Financial Statements give a true and fair
Company Accounts give a true and fair view of the state of
the Group’s and of RELX PLC’s affairs as at 31 December
2016 and of the Group’s profit for the year then ended;
§ the Consolidated Financial Statements have been properly
prepared in accordance with International Financial
Reporting Standards (‘IFRS’) as adopted by the European
Union and as issued by the International Accounting
Standards Board.
§ the PLC Company Accounts have been properly prepared in
accordance with United Kingdom Accounting Standards,
including FRS 101 ‘Reduced Disclosure Framework’; and
view of the financial position of the Group as at 31 December
2016 and of its result and its cash flows for the year then ended
in accordance with International Financial Reporting
Standards (‘IFRS’) as adopted by the European Union and as
issued by the International Accounting Standards Board and
with Part 9 of Book 2 of the Dutch Civil Code; and
§ the NV Company Accounts give a true and fair view of the
financial position of RELX NV as at 31 December 2016 and of its
result for 2016 in accordance with FRS 101 ‘Reduced Disclosure
Framework’ as a result of applying Section 362 (1) of Book 2 of
the Dutch Civil Code.
§ both the Consolidated Financial Statements and the PLC
Company Accounts have been prepared in accordance with
the requirements of the Companies Act 2006 and, as
regards the Consolidated Financial Statements, Article 4 of
the IAS Regulation.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including
the Dutch Standards on Auditing. Our responsibilities under those
standards are further described in the ‘Auditor’s responsibilities’
section 7 of our report.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Independence
We are independent of RELX Group in accordance with the
Verordening inzake de onafhankelijkheid van accountants bij
assurance-opdrachten (ViO, Code of Ethics for Professional
Accountants, a regulation with respect to independence) and
other relevant independence regulations in the Netherlands.
Furthermore we have complied with the Verordening gedrags-
en beroepsregels accountants (VGBA, Dutch Code of Ethics).
Financial statements and other information Independent auditors' report
109
2. OVERVIEW
Materiality
Audit scope
§ Overall group materiality is £74.0 million which represents approximately five per cent of profit before tax.
§ We performed a full scope audit for nine components and specific procedures for a further six
components.
§ The components where we performed full or specific audit procedures accounted for 83% of absolute
profit before tax, 83% of revenue and 82% of total assets.
Key audit matters
§ Uncertain tax positions
§ Internally developed intangible assets
§ Aspects of revenue recognition
§ Carrying value of goodwill and intangible assets
§ Finance systems
§ Transition as auditor, including auditing opening balances
3. OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT
We identified the risks of material misstatement described below as those that had the greatest effect on our overall audit strategy,
the allocation of resources in the audit and the direction of the efforts of the audit team (key audit matters). In addressing these risks,
we have performed certain procedures including the procedures below which were designed in the context of the financial statements
as a whole and, consequently, we do not express any opinion on these individual areas. We have communicated the key audit matters
to the Boards. The key audit matters are not a comprehensive reflection of all matters discussed.
RISK
OUR RESPONSE TO THE RISK
KEY OBSERVATIONS COMMUNICATED
TO THE AUDIT COMMITTEES
Uncertain tax positions
Refer to the Report of the Audit Committees on page 105 and note 10 Taxation of the Consolidated Financial Statements on page 136
The Group is subject to tax in numerous
jurisdictions. Its complex organisation and
operational structure give rise to potential
tax exposures that require management
to exercise judgement in making
determinations as to the amount of tax
that is payable.
The Group reports cross-border
transactions undertaken between
subsidiaries on an arm’s-length basis in tax
returns in accordance with Organisation for
Economic Co-operation and Development
(OECD) guidelines. However, transfer
pricing relies on the exercise of judgement
and it is frequently possible for there to be a
range of legitimate and reasonable views.
The Group is subject to tax authority audits
as a matter of routine and has a number of
open tax enquiries.
As a result, it has recognised a number of
provisions against uncertain tax positions,
the valuation of which requires significant
judgement.
We focused on this area due to the
significance of the balance and the
subjectivity in determining the
quantification of the provision and the
judgement around the trigger for
recognition or release. There is a risk that
the tax provisions may be incorrectly
quantified, impacting the provision and the
effective tax rate.
Procedures on the uncertain tax positions
were performed centrally by the Group
team supported by overseas team
including specialists:
We concluded that management’s
judgements in relation to the extent of
provisions for uncertain tax positions are
appropriate.
§ We assessed the processes and tested
controls over the tax provisioning
process.
§ We met with tax management to
understand the Group cross-border
transactions, status of all significant
provisions, and any changes to
management’s judgements in the year.
§ We read correspondence with tax
authorities and external advisors to
inform our assessment of recorded
estimates and evaluate the
completeness of the provisions
recorded.
§ We evaluated management’s
methodology to record or release
provisions following tax audits,
settlements and the expiry of
timeframes.
§ We tested the calculation of the year end
provisions by inspecting underlying
documentation and supporting
schedules.
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RELX Group Annual reports and financial statements 2016
3. OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT (CONTINUED)
RISK
OUR RESPONSE TO THE RISK
Internally developed intangible assets
KEY OBSERVATIONS COMMUNICATED
TO THE AUDIT COMMITTEES
Refer to the Report of the Audit Committees on page 105 and note 16 Intangible assets of the Consolidated Financial Statements on
page 146
The Group capitalised internally developed
intangible assets of £280 million in the
current year. The capitalisation of costs
related to the development of new products
and business infrastructure, together with
the useful economic lives applied to the
resulting assets, requires the exercise of
judgement.
We focused on this area as the Group has
invested significantly in a number of
projects across the business. It is
inherently judgemental with respect to
technical feasibility, intention and ability to
complete the intangible asset, ability to use
or sell the asset, generation of future
economic benefits and the ability to
measure the costs reliably. This results in
a risk that expenditures may be
inappropriately capitalised.
We did not identify any evidence of material
misstatement in the capitalisation of
internally developed intangible assets.
We performed procedures in each business
area with material additions in the year:
§ We assessed the processes and tested
controls for the capitalisation of
internally generated intangible assets
and identification of indicators of
impairment.
§ We assessed the accounting policy and
methodology for capitalisation of
expenditures.
§ We evaluated the accuracy and valuation
of amounts capitalised to assess that
costs are directly attributable and
necessary to create, produce, and
prepare the asset to be capable of
operating in the manner intended by
management.
§ When new systems were brought into use,
we tested that the allocation of costs and
commencement of amortisation for each
geography were appropriate and
assessed management’s determination
of useful economic life.
Aspects of revenue recognition
Refer to note 2 Segment Analysis of the Consolidated Financial Statements on page 126
The Group earns revenue from a variety of
sources among the different business
areas, including annual subscriptions,
transactional usage and exhibition fees.
The nature of the risk associated with the
accurate recording of revenue varies.
We recognise that revenue is a key metric
upon which the Group is judged, that the
Group has annual internal targets, and that
the Group has incentive schemes that are
partially impacted by revenue growth.
We have determined that there is a risk in
relation to each of the business areas
reflective of the opportunity to commit
fraud in the respective revenue streams.
These key risks include the recognition of
revenue in the incorrect period and manual
adjustments or override of controls by
management.
We did not identify evidence of material
misstatement in the revenue recognised in
the year.
At each full scope and specific scope audit
location with significant revenue streams,
we performed procedures to address the
specific risk in each business area.
§ We assessed the processes and tested
controls over each significant revenue
stream.
§ We evaluated the appropriateness of
journal entries impacting revenue, as well
as other adjustments made in the
preparation of the financial statements.
We considered unusual journals such as
those posted outside of expected days, or
by unexpected individuals. We also
evaluated management’s controls over
such adjustments.
§ We inspected a sample of contracts to
check that revenue recognition was in
accordance with the contract terms and
the group’s revenue recognition policies.
§ For revenue streams which have
judgemental elements, we evaluated
management’s assumptions.
Financial statements and other information Independent auditors' report
111
3. OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT (CONTINUED)
RISK
OUR RESPONSE TO THE RISK
Carrying value of goodwill and intangible assets
KEY OBSERVATIONS COMMUNICATED
TO THE AUDIT COMMITTEES
Refer to the Report of the Audit Committees on page 105 and note 15 Goodwill and note 16 Intangible assets of the Consolidated
Financial Statements on pages 144 and 146, respectively
We noted the assumptions relating to the
impairment models fell within acceptable
ranges.
We agree with management’s conclusion
that no impairment of goodwill or intangible
assets is required in the year.
Our understanding and testing of IT systems
and controls supported our audit approach.
We focused on this area due the size of the
goodwill balance of £6,392 million and
intangible assets net book amount of
£3,604 million at 31 December and
because the Directors’ assessment of the
value in use of the Group’s Cash
Generating Units (‘CGU’) involves
judgement about the future results of the
Group and the discount rates applied to
cash flow forecasts.
Finance systems
The Group has many IT systems which are
vital to the ongoing operations and to the
integrity of the financial reporting process.
Due to the global nature of the Group and its
operations, the applications, associated
infrastructure and IT processes which
support significant business and financial
processes are spread across a number of
locations. These are delivered by a mix of
in-house teams and third party support
providers who may reside in different
countries from the physical location of the
IT infrastructure or the location of the RELX
business users. Building our
understanding of the IT environment
including interfaces between them was an
area of audit focus.
We assessed the key information used in
determining the valuation including the
weighted average cost of capital, cash flow
forecasts and the implicit growth,
including specialist support as necessary.
We also conducted a sensitivity analysis to
understand by how much these
projections would need to change for there
to be an impairment.
We assessed management’s
consideration as to whether indicators of
impairment existed based on the ongoing
business rationale, including the stage of
completion for internally developed
intangible assets. Where indicators were
present for intangible assets, we focused
on the key judgements around the
expected cash flows, or future benefits as
compared to the current and future
development costs where applicable.
We utilised IT auditors to support our
evaluation of the design and operation of
IT controls to address the Group's control
objectives and financial reporting risks.
§ We made inquiries of management to
understand the IT environment and
walked through the financial processes
end-to-end in order to understand
where IT systems were integral to the
Group accounting processes.
§ We performed data analytic procedures
in certain locations and business areas
to understand the flow of transactions
and perform specific test procedures.
§ We tested the IT general controls
environment for the key applications.
§ Where appropriate, we received reports
from the service auditors of the
outsourced systems and evaluated the
adequacy of the work performed and
followed up on matters arising,
performing further procedures as
necessary.
§ Where required, we tested
compensating controls or performed
alternative procedures to complement
the controls based audit approach.
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KEY OBSERVATIONS COMMUNICATED
TO THE AUDIT COMMITTEES
We have executed our audit in accordance
with our transition plan. Accounting
principles have been consistently applied
and we have not identified any misstatements
in the financial statements as a result of our
opening balance procedures.
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RELX Group Annual reports and financial statements 2016
3. OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT (CONTINUED)
RISK
OUR RESPONSE TO THE RISK
Transition as auditor, including auditing opening balances
Initial audit engagements involve a number
of considerations not associated with
recurring audits. Compared to the ongoing
audit process in future years, these
procedures are either incremental in
nature or accelerated as compared to the
recurring audit cycle.
Given this is our first year as the Group’s
auditors there is a risk of inappropriate
reliance on opening balances and
inconsistent application of accounting
principles. In addition, there is a risk of an
inappropriate audit approach resulting
from incomplete or incorrect information
about the Group and its global operations.
At the beginning of our audit, we developed
a transition plan which included among
other things:
§ Knowledge sharing with the Audit
Committee, Group Financial Reporting,
Audit & Risk Management, Legal,
Compliance, and local management,
which included incremental site visits,
gaining an understanding of the
business, significant processes, and
operations at the central processing
location.
§ Interaction with the predecessor
auditors, including reviewing the prior
year audit files and formal hand over
procedures as prescribed by our
professional standards.
§ Obtaining an understanding of the
control environment and significant
processes and considering whether
management has applied a suitable
control framework.
§ Obtaining sufficient appropriate audit
evidence regarding the opening
balances including the selection and
application of accounting principles.
§ Assessing the impact of any control
observations and unrecorded audit
differences in the prior year audit.
§ Observing clearance meetings with
senior management, the Audit
Committee, and the predecessor
auditors for the 2015 audit.
Financial statements and other information Independent auditors' report
113
4. OUR APPLICATION OF MATERIALITY
The scope of our work is influenced by materiality. We apply the concept of materiality in planning and performing the audit, in evaluating
the effect of identified misstatements on the audit and in forming our audit opinion. As we develop our audit strategy, we determine
materiality at the overall level and at the individual account level (referred to as our ‘performance materiality’).
Materiality
£74.0 million
Performance
materiality
£56.0 million
Reporting
threshold
£3.7 million
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate could reasonably be expected to influence the
economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our
audit procedures.
We determined materiality for the Group to be £74.0 million, which is set at approximately five per cent of profit before tax. We believe
that this materiality basis provides us with the best assessment of the requirements of the users of the financial statements. The
auditors in the prior period determined materiality for the Group to be £85.0 million in the comparative period, which was approximately
six and a half per cent of profit before tax.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that
performance materiality was approximately 75 per cent of our materiality, namely £56.0 million. We have set performance materiality at
this percentage due to our initial assessment of the control environment and the historic lack of significant audit findings as noted in the
review of the predecessor audit files.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is
undertaken based on a percentage of total performance materiality. The performance materiality set for each component is based on
the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component.
In the current period, the range of performance materiality allocated to components was £13.5 million to £33.8 million. The performance
materiality in the prior year, as determined by predecessor auditors, did not exceed £35.0 million.
Reporting threshold
An amount below which identified misstatements are considered as being clearly inconsequential.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £3.7 million, which is set
at approximately five per cent of materiality. The auditors in the prior period reported differences in excess of £1.7 million in the
comparative period, which was approximately two per cent of planning materiality.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other
relevant qualitative considerations in forming our opinion. We have also taken into account misstatements that in our opinion are
material for the users of the financial statements for qualitative reasons.
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RELX Group Annual reports and financial statements 2016
5. AN OVERVIEW OF THE SCOPE OF OUR AUDIT
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the Group’s and the parent companies’ circumstances and have been
consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the
overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report
and Financial Statements to identify material inconsistencies with the audited financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the
audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Tailoring our scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for
each entity within the Group which, when taken together, enable us to form an opinion on the Consolidated Financial Statements under
International Standards on Auditing (UK and Ireland) by Ernst & Young LLP and Dutch law, including the Dutch Standards on Auditing by
Ernst & Young Accountants LLP. We take into account size, risk profile, changes in the business environment and other factors when
assessing the level of work to be performed at each entity.
The Group has centralised processes for key judgements and determination of accounting policies. Certain areas of audit focus, namely
internally developed intangible assets, revenue recognition, and IT system management are decentralised processes delineated by
business area. We have tailored our audit response accordingly and procedures for the areas of focus were performed or directed by the
Group audit team.
In assessing the risk of material misstatement to the Consolidated Financial Statements, and to ensure that we had adequate
quantitative coverage of significant accounts, we selected fifteen components covering entities within the United Kingdom, the
Netherlands, the United States, France, Switzerland, Australia, and Japan which include the principal business units within the Group.
The fifteen components where we performed full or specific scope audit procedures accounted for 83% of the Group profit before tax
on an absolute basis1, 83% coverage of the Group’s revenue and 82% of the Group’s total assets. For the current year, the full scope
components contributed 57% of the Group profit before tax on an absolute basis, 75% of the Group’s revenue and 72% of the Group’s total
assets. The specific scope components contributed 26% of the Group profit before tax on an absolute basis, 8% of the Group’s revenue
and 10% of the Group’s total assets. The audit scope of these components may not have included testing of all significant accounts of the
component but will have contributed to the coverage of significant accounts tested for the Group. A further breakdown of the size of these
components compared to key metrics of the Group is provided below.
1 Coverage of profit before tax measured on an absolute basis for each component (components with a loss would be added to both the numerator and denominator)
PROFIT BEFORE TAX (ABSOLUTE)
REVENUE
17%
17%
8%
25%
58%
Full scope
Specific scope
Other procedures
TOTAL ASSETS
18%
10%
75%
72%
The components where we performed other procedures represent a number of small components, none representing more than 2% of
group revenue and/or absolute profit before tax. We performed procedures including analytical review, review of internal audit reports,
and testing of consolidation journals, intercompany eliminations and foreign currency translation recalculations at the Group level to
re-examine our assessment that there are no significant risks of material misstatement within these components. We performed
specific additional substantive testing procedures as a result of this review.
We have obtained an understanding of the entity-level controls of the Group as a whole which assisted us in identifying and assessing
risks of material misstatement due to fraud or error, as well as assisting us in determining the most appropriate audit strategy.
Financial statements and other information Independent auditors' report
115
Integrated team structure
The overall audit strategy is determined by the UK senior statutory auditor, Nigel Jones and Dutch statutory auditor Guus van Eimeren.
RELX Group plc is based in the UK, however, due to the structure of the RELX PLC and RELX NV ownership, the Group team includes
members from both the UK and the Netherlands. The Dutch auditor travelled to the UK many times during the current year’s audit and
members of the Group audit team in both jurisdictions work together as an integrated team. Both partners attended certain Audit
Committee meetings during the course of the audit and concluded on key judgements.
Involvement with component teams
In establishing our overall approach to the Group audit we determined the type of work that needed to be undertaken at each of the
components by us, as the Group audit team, or by component auditors from other EY global network firms operating under our
instruction, including the key audit matters detailed above.
During the current year’s audit cycle, visits were undertaken by the Group audit team to component teams in the United Kingdom, the
Netherlands, the United States, France, Switzerland, the Philippines and Australia. These visits involved meeting local management
and discussing the audit approach with the component audit team and any issues arising from their work. The Group audit team
participated in key discussions, via conference calls with all full and specific scope locations. The Group audit team interacted regularly
with the component teams where appropriate during various stages of the audit, reviewed key working papers and were responsible for
the scope and direction of the audit process. This, together with the additional procedures performed at group level, gave us appropriate
audit evidence for our opinion on the Consolidated Financial Statements.
6. OTHER REPORTING
RELX PLC
Our opinion on other matters prescribed by the Companies
Act 2006 is unmodified
In our opinion:
§ the part of the Directors’ Remuneration Report to be audited
has been properly prepared in accordance with the
Companies Act 2006; and
§ the information given in the Strategic Report and the
Directors’ Report for the financial year is consistent with the
Consolidated Financial Statements and the PLC Company
Accounts.
Matters on which we are required to report by exception:
a. ISAs UK and Ireland reporting
We are required to report to you if, in our opinion, financial and
non-financial information in the annual report is:
RELX NV
Report on other information included the annual report and
financial statements
In addition to the financial statements and our auditors’ report
thereon, the annual reports and financial statements contain
other information that consists of:
§ Report of the Board of RELX NV;
§ other information pursuant to Part 9 of Book 2 of the Dutch
Civil Code;
§ 5 year summary;
§ Other financial information;
§ Shareholder information.
Based on the following procedures performed, we conclude that
the other information:
§ is consistent with the financial statements and does not
§ materially inconsistent with the information in the audited
contain material misstatements;
financial statements; or
§ contains the information as required by Part 9 of Book 2 of the
§ apparently materially incorrect based on, or materially
Dutch Civil Code.
inconsistent with, our knowledge of the Group acquired in
the course of performing our audit; or otherwise
misleading.
In particular, we are required to report whether we have
identified any inconsistencies between our knowledge
acquired in the course of performing the audit and the
directors’ statement that they consider the annual report and
financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the entity’s performance, business
model and strategy; and whether the annual report
appropriately addresses those matters that we communicated
to the audit committee that we consider should have been
disclosed.
We have read the other information. Based on our knowledge and
understanding obtained through our audit of the financial
statements or otherwise, we have considered whether the other
information contains material misstatements. By performing
these procedures, we comply with the requirements of Part 9 of
Book 2 of the Dutch Civil Code and the Dutch Standard 720. The
scope of the procedures performed is less than the scope of those
performed in our audit of the financial statements.
Engagement
We have been engaged by the General Meeting at 13 January 2016
as auditor of RELX NV since the audit of the year 2016 and we are
the statutory auditor since that date up until today.
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RELX Group Annual reports and financial statements 2016
6. OTHER REPORTING (CONTINUED)
b. Companies Act 2006 reporting
We are required to report to you if, in our opinion:
§ adequate accounting records have not been kept by RELX
PLC, or returns adequate for our audit have not been
received from branches not visited by us; or
§ RELX PLC financial statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
§ certain disclosures of directors’ remuneration specified by
law are not made; or
§ we have not received all the information and explanations
we require for our audit.
c. Listing Rules review requirements
We are required to review:
§ The directors’ statement in relation to going concern, and
longer-term viability, set out on page 173; and
§ The part of the Corporate Governance Statement relating to
the company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review.
We have no exceptions to report in respect of the matters in
a, b and c.
Statement on the Directors’ Assessment of the Principal
Risks that would threaten the solvency of liquidity of the
entity (ISAs UK & Ireland reporting)
We are required to give a statement as to whether we have
anything material to add or to draw attention to in relation to:
§ the directors’ confirmation in the annual report that they
have carried out a robust assessment of the principal risks
facing the entity, including those that would threaten its
business model, future performance, solvency or liquidity;
§ the disclosures in the annual report that describe those
risks and explain how they are being managed or mitigated;
§ the directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the entity’s
ability to continue to do so over a period of at least twelve
months from the date of approval of the financial
statements; and
§ the directors’ explanation in the annual report as to how
they have assessed the prospects of the entity, over what
period they have done so and why they consider that period
to be appropriate, and their statement as to whether they
have a reasonable expectation that the entity will be able to
continue in operation and meet its liabilities as they fall due
over the period of their assessment, including any related
disclosures drawing attention to any necessary
qualifications or assumptions.
We have nothing material to add or to draw attention to.
Financial statements and other information Independent auditors' report
117
7. SCOPE AND RESPONSIBILITIES
RELX PLC
Respective responsibilities of Directors and Auditors
As explained more fully in the Directors’ Responsibilities
Statement set out on page 173, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility is
to audit and express an opinion on the financial statements in
accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to
comply with the Auditing Practices Board’s Ethical Standards
for Auditors.
This report is made solely to the company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are
required to state to them in an auditors’ report and for no other
purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
RELX NV
Directors’ and Audit Committee’s responsibilities
The Directors are responsible for:
§ the preparation and fair presentation of the Consolidated
Financial Statements in accordance with IFRSs as adopted by
the European Union and Part 9 of Book 2 of the Dutch Civil Code,
and for the preparation of the other information;
§ the preparation and fair presentation of the NV Company
Accounts in accordance with FRS 101 ‘Reduced Disclosure
Framework’ as a result of applying Section 362 (1) of Book 2 of
the Dutch Civil Code;
§ the preparation of the other information, including the report of
the Board in accordance with Part 9 of Book 2 of the Dutch Civil
Code and other information pursuant to Part 9 of Book 2 of the
Dutch Civil Code;
§ such internal control as the directors determine is necessary to
enable the preparation of the Financial Statements that are free
from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the Directors are
responsible for assessing the Group’s and RELX NV’s ability to
continue as a going concern. Based on the financial reporting
frameworks mentioned, the Directors should prepare the
Consolidated Financial Statements and NV Company Accounts
using the going concern basis of accounting unless the Directors
either intend to liquidate the Group and/or RELX NV or to cease
operations, or have no realistic alternative but to do so. The
Directors should disclose in the Financial Statements events and
circumstances that may cast significant doubt on the Group’s
and/or RELX NV’s ability to continue as a going concern.
The Audit Committee is responsible for overseeing the Group’s
financial reporting process.
Auditor’s responsibilities
Our objective is to plan and perform the audit assignment in a
manner that allows us to obtain sufficient and appropriate audit
evidence for our opinion.
Our audit has been performed with a high, but not absolute, level
of assurance, which means we may not have detected all errors
and fraud.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on
the basis of these financial statements. The materiality affects
the nature, timing and extent of our audit procedures and the
evaluation of the effect of identified misstatements on our opinion.
Because we are ultimately responsible for the opinion, we are
also responsible for directing, supervising and performing the
group audit. In this respect we have determined the nature and
extent of the audit procedures to be carried out for group entities.
Decisive were the size and/or the risk profile of the group entities
or operations. On this basis, we selected group entities for which
an audit or review had to be carried out on the complete set of
financial information or specific items
For more information about an audit of financial statements,
we refer to the NBA website:
https://www.nba.nl/Vaktechniek/Verklaringen/
voorbeeldverklaringen-voorbeeldbrieven/
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RELX Group Annual reports and financial statements 2016
8. SIGNING
Nigel Jones
(Senior Statutory Auditor)
For and on behalf of
Ernst & Young LLP
London
22 February 2017
Guus van Eimeren
Ernst & Young Accountants LLP
Amsterdam
22 February 2017
Notes:
1. The maintenance and integrity of the RELX Group website is the responsibility of the directors; the work carried out by the auditors
does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have
occurred to the financial statements since they were initially presented on the web site.
2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions.
Financial statements and other information Consolidated Financial Statements
119
Consolidated income statement
FOR THE YEAR ENDED 31 DECEMBER
Revenue
Cost of sales
Gross profit
Selling and distribution costs
Administration and other expenses
Share of results of joint ventures
Operating profit
Finance income
Finance costs
Net finance costs
Disposals and other non-operating items
Profit before tax
Current tax
Deferred tax
Tax expense
Net profit for the year
Attributable to:
Parent companies’ shareholders
Non-controlling interests
Net profit for the year
Earnings per share
FOR THE YEAR ENDED 31 DECEMBER
Basic earnings per share
RELX PLC
RELX NV
Diluted earnings per share
RELX PLC
RELX NV
Note
2
3
8
8
9
10
11
11
11
11
2016
£m
6,895
(2,488)
4,407
(1,109)
(1,627)
37
1,708
8
(203)
(195)
(40)
1,473
(374)
70
(304)
1,169
2015
£m
5,971
(2,129)
3,842
(965)
(1,444)
64
1,497
3
(177)
(174)
(11)
1,312
(370)
72
(298)
1,014
2014
£m
5,773
(2,006)
3,767
(934)
(1,467)
36
1,402
7
(169)
(162)
(11)
1,229
(357)
88
(269)
960
1,161
8
1,169
1,008
6
1,014
955
5
960
2016
2015
2014
56.3p
56.3p
46.4p
49.4p
43.0p
45.8p
55.8p
55.8p
46.0p
48.9p
42.5p
45.3p
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RELX Group Annual reports and financial statements 2016
Consolidated statement of comprehensive income
FOR THE YEAR ENDED 31 DECEMBER
Net profit for the year
Items that will not be reclassified to profit or loss:
Actuarial (losses)/gains on defined benefit pension schemes
Tax on items that will not be reclassified to profit or loss
Total items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Fair value movements on cash flow hedges
Transfer to net profit from cash flow hedge reserve
Tax on items that may be reclassified to profit or loss
Total items that may be reclassified to profit or loss
Other comprehensive income/(loss) for the year
Total comprehensive income for the year
Attributable to:
Parent companies’ shareholders
Non-controlling interests
Total comprehensive income for the year
Note
2016
£m
1,169
2015
£m
1,014
6
10
19
19
10
(262)
45
(217)
670
(165)
46
19
570
353
1,522
1,514
8
1,522
157
(34)
123
99
(104)
29
18
42
165
1,179
1,173
6
1,179
2014
£m
960
(266)
63
(203)
137
(81)
19
13
88
(115)
845
840
5
845
Financial statements and other information Consolidated Financial Statements
121
Consolidated statement of cash flows
FOR THE YEAR ENDED 31 DECEMBER
Cash flows from operating activities
Cash generated from operations
Interest paid
Interest received
Tax paid (net)
Net cash from operating activities
Cash flows from investing activities
Acquisitions
Purchases of property, plant and equipment
Expenditure on internally developed intangible assets
Purchase of investments
Proceeds from disposals of property, plant and equipment
Gross proceeds from business disposals
Payments on business disposals
Dividends received from joint ventures
Net cash used in investing activities
Cash flows from financing activities
Dividends paid to shareholders of the parent companies
Distributions to non-controlling interests
Increase/(decrease) in short-term bank loans, overdrafts and commercial paper
Issuance of term debt
Repayment of term debt
Repayment of finance leases
Acquisition of non-controlling interest
Repurchase of ordinary shares
Purchase of shares by employee benefit trust
Proceeds on issue of ordinary shares
Net cash used in financing activities
Note
12
12
12
12
12
12
26
26
2016
£m
2015
£m
2014
£m
2,236
(160)
8
(402)
1,682
(361)
(51)
(282)
(6)
1
18
(31)
44
(668)
(683)
(9)
271
603
(474)
(7)
–
(700)
(29)
23
(1,005)
1,882
(140)
8
(343)
1,407
(191)
(65)
(242)
(16)
1
75
(41)
57
(422)
(583)
(8)
(339)
500
(186)
(9)
–
(500)
(23)
24
(1,124)
1,851
(139)
13
(348)
1,377
(396)
(67)
(203)
(6)
10
78
(25)
44
(565)
(565)
(7)
232
589
(300)
(10)
(15)
(600)
(39)
45
(670)
Increase/(decrease) in cash and cash equivalents
12
9
(139)
142
Movement in cash and cash equivalents
At start of year
Increase/(decrease) in cash and cash equivalents
Exchange translation differences
At end of year
122
9
31
162
276
(139)
(15)
122
132
142
2
276
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RELX Group Annual reports and financial statements 2016
Consolidated statement of financial position
AS AT 31 DECEMBER
Non-current assets
Goodwill
Intangible assets
Investments in joint ventures
Other investments
Property, plant and equipment
Deferred tax assets
Derivative financial instruments
Current assets
Inventories and pre-publication costs
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Assets held for sale
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Borrowings
Taxation
Provisions
Non-current liabilities
Derivative financial instruments
Borrowings
Deferred tax liabilities
Net pension obligations
Provisions
Liabilities associated with assets held for sale
Total liabilities
Net assets
Capital and reserves
Share capital
Share premium
Shares held in treasury
Translation reserve
Other reserves
Shareholders’ equity
Non-controlling interests
Total equity
Note
2016
£m
15
16
17
17
18
10
19
20
21
19
12
22
19
23
25
19
23
10
6
25
26
26
26
27
2015
£m
5,231
3,156
101
141
229
349
51
9,258
158
1,601
31
122
1,912
15
11,185
2,901
49
624
581
21
4,176
60
3,278
1,000
384
100
4,822
9
9,007
2,178
6,392
3,604
102
137
242
444
49
10,970
209
1,956
20
162
2,347
6
13,323
3,425
85
1,159
612
23
5,304
110
3,684
1,137
636
89
5,656
5
10,965
2,358
226
3,003
(1,471)
727
(165)
2,320
38
2,358
224
2,748
(1,393)
224
341
2,144
34
2,178
The consolidated financial statements were approved by the Board of Directors and authorised for issue on 22 February 2017. They were
signed on its behalf by:
A J Habgood
Chairman
N L Luff
Chief Financial Officer
Financial statements and other information Consolidated Financial Statements
123
Consolidated statement of changes in equity
Share
capital
£m
224
Share
premium
£m
2,887
Shares held
in treasury
£m
(1,464)
Translation
reserve
£m
(137)
Other
reserves
£m
880
Shareholders’
equity
£m
2,390
Non-
controlling
interests
£m
33
Note
14
14
26
14
Balance at 1 January 2014
Total comprehensive income
for the year
Dividends paid
Issue of ordinary shares,
net of expenses
Repurchase of ordinary shares
Cancellation of shares
Increase in share based
remuneration reserve
(net of tax)
Settlement of share awards
Acquisitions
Acquisition of non-controlling
interest
Exchange differences on
translation of capital and
reserves
Balance at 1 January 2015
Total comprehensive income
for the year
Dividends paid
Issue of ordinary shares,
net of expenses
Repurchase of ordinary shares
Cancellation of shares
Bonus issue of ordinary shares
Increase in share based
remuneration reserve
(net of tax)
Settlement of share awards
Acquisitions
Exchange differences on
translation of capital
and reserves
Balance at 1 January 2016
Total comprehensive income
for the year
Dividends paid
Issue of ordinary shares,
net of expenses
Repurchase of ordinary shares
Cancellation of shares
Increase in share based
remuneration reserve
(net of tax)
Settlement of share awards
Exchange differences on
translation of capital
and reserves
–
–
–
(639)
930
–
27
–
–
39
(1,107)
–
–
–
(623)
269
–
–
49
–
19
–
–
2
–
(11)
–
–
–
–
–
–
43
–
–
–
–
–
–
(3)
212
(110)
2,820
–
–
24
–
–
(18)
–
–
–
(78)
–
–
–
–
(4)
18
–
–
–
(2)
224
–
–
–
–
(6)
–
–
8
2,748
(1,393)
–
–
23
–
–
–
–
–
–
–
(722)
713
–
39
Total
equity
£m
2,423
845
(572)
45
(639)
–
48
–
1
840
(565)
45
(639)
–
48
–
–
5
(7)
–
–
–
–
–
1
(13)
(2)
(15)
–
2,106
1,173
(583)
24
(623)
–
–
47
–
–
–
2,144
1,514
(683)
23
(722)
–
44
–
1
31
6
(8)
–
–
–
–
–
–
4
1
34
8
(9)
–
–
–
–
–
1
2,137
1,179
(591)
24
(623)
–
–
47
–
4
1
2,178
1,522
(692)
23
(722)
–
44
–
137
–
–
–
–
–
–
–
–
74
74
99
–
–
–
–
–
–
–
–
51
224
670
–
–
–
–
–
–
703
(565)
–
–
(919)
48
(27)
–
(13)
–
107
1,074
(583)
–
–
(265)
–
47
(49)
–
10
341
844
(683)
–
–
(707)
44
(39)
Balance at 31 December 2016
226
232
3,003
(108)
(1,471)
(167)
727
35
(165)
–
2,320
5
38
5
2,358
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124
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
1 Basis of preparation and accounting policies
Basis of preparation
RELX PLC and RELX NV are separate, publicly-held entities. RELX PLC’s ordinary shares are listed in London and, through a depositary
receipt, in New York, and RELX NV’s ordinary shares are listed in Amsterdam and, through a depositary receipt, in New York. RELX PLC
and RELX NV jointly own RELX Group plc, which holds all the Group’s operating businesses and financing activities. RELX PLC, RELX NV,
RELX Group plc and its subsidiaries, joint ventures and associates are together known as “the Group”.
The Governing Agreement determines the equalisation ratio between RELX PLC and RELX NV shares. One RELX PLC ordinary share
confers an equivalent economic interest to one RELX NV ordinary share.
As a result of these arrangements, all shareholders can be regarded as having interests in a single economic entity. Consequently, the
Directors have concluded that the Group forms a single reporting entity for the presentation of consolidated financial statements.
Accordingly, the Group consolidated financial information represents the interests of both sets of shareholders and is presented by both
RELX PLC and RELX NV as their respective consolidated financial statements.
The Directors of RELX PLC and RELX NV, having made appropriate enquiries, consider that adequate resources exist for the Group to
continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in
preparing the consolidated financial statements for the year ended 31 December 2016.
In preparing the consolidated financial statements, subsidiaries of the Group are accounted for under the acquisition method and
investments in associates and joint ventures are accounted for under the equity method. All intra-group transactions and balances
are eliminated.
On acquisition of a subsidiary, or interest in an associate or joint venture, fair values, reflecting conditions at the date of acquisition, are
attributed to the net assets, including identifiable intangible assets acquired. Adjustments are made to bring accounting policies into line
with those of the Group. The results of subsidiaries sold or acquired are included in the consolidated financial statements up to or from
the date that control passes from or to the Group.
Non-controlling interests in the net assets of the Group are identified separately from shareholders’ equity. Non-controlling interests
consist of the amount of those interests at the date of the original acquisition and the non-controlling share of changes in equity since the
date of acquisition.
Accounting policies
The Group’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as
adopted by the European Union and as issued by the International Accounting Standards Board (IASB). The accounting policies under
IFRS are included in the relevant notes to the consolidated financial statements. The accounting policies below are applied throughout
the financial statements and are unchanged from those applied in preparing the consolidated financial statements for the year ended 31
December 2015 and the combined financial statements for the year ended 31 December 2014 with the exception of changes to the
calculation of earnings per share in 2015, which is set out in note 11.
Foreign exchange translation
The consolidated financial statements are presented in sterling.
Transactions in foreign currencies are recorded at the rate of exchange prevailing on the date of the transaction. Non-monetary assets
and liabilities that are measured at historical cost in foreign currencies are translated using the exchange rate at the date of the
transaction . At each statement of financial position date, monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rate prevailing on the statement of financial position date. Exchange differences arising are recorded in the income
statement other than where hedge accounting applies, as set out on pages 150 to 154.
Assets and liabilities of foreign operations are translated at exchange rates prevailing on the statement of financial position date. Income
and expense items and cash flows of foreign operations are translated at the average exchange rate for the period. Significant individual
items of income and expense and cash flows in foreign operations are translated at the rate prevailing on the date of transaction.
Exchange differences arising are classified as equity and transferred to the translation reserve. When foreign operations are disposed
of, the related cumulative translation differences are recognised within the income statement in the period.
The Group uses derivative financial instruments, primarily forward contracts, to hedge its exposure to certain foreign exchange risks.
Details of the Group’s accounting policies in respect of derivative financial instruments are set out on page 150.
Financial statements and other information Notes to the consolidated financial statements
125
1 Basis of preparation and accounting policies (continued)
Critical judgements and key sources of estimation uncertainty
The most significant accounting policies in determining the financial condition and results of the Group, and those requiring the most
subjective or complex judgement, relate to and are included in the following notes:
§ valuation of goodwill and intangible assets – notes 15 and 16
§ capitalisation of development spend – note 16
§ taxation – note 10
§ accounting for defined benefit pension schemes – note 6.
Other significant accounting policies
The accounting policy in respect of revenue recognition is also significant in determining the financial condition and results of the Group,
although the application of this policy is more straightforward. This policy is included in note 2.
Standards and amendments effective for the year
The interpretations and amendments to IFRS effective for 2016 have not had a significant impact on the Group’s accounting policies
or reporting.
Standards, amendments and interpretations not yet effective
New accounting standards and amendments and their expected impact on the future accounting policies and reporting of the Group
are set out below.
IFRS 9 – Financial Instruments (effective for the 2018 financial year). The standard replaces the existing classification and measurement
requirements in IAS 39 – Financial Instruments: Recognition and Measurement. Adoption of the standard is not expected to have a
significant impact on the measurement, presentation or disclosure of financial assets and liabilities in the consolidated financial
statements.
IFRS 15 – Revenue from Contracts with Customers (effective for the 2018 financial year). The new standard provides a single point of
reference for revenue recognition, including guidance in relation to identification of the contract and licensing arrangements. Based on
management’s assessment of the standard and current contracts in place, the adoption of IFRS 15 is not expected to have a material
impact on the full year revenue or revenue growth rates.
IFRS 16 – Leases (effective for the 2019 financial year with earlier adoption permitted). The standard replaces the existing leasing
standard, IAS 17 – Leases. The new standard eliminates the distinction between operating and finance leases and requires lessees to
recognise all leases with a lease term of greater than 12 months in the statement of financial position. Based on the preliminary
assessment performed, assets and liabilities will increase but there will not be a material impact on net assets or profit before tax on
adoption of the standard. Management will assess the full impact this standard will have on the Group during 2017.
Additionally, a number of amendments and interpretations have been issued which are not expected to have any significant impact
on the Group’s accounting policies and reporting.
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126
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
2 Segment analysis
Accounting policy
The Group’s reported segments are based on the internal reporting structure and financial information provided to the Boards.
Adjusted operating profit is the key segmental profit measure used by the Group in assessing performance. Adjusted operating
profit is reconciled to operating profit on page 127.
Revenue represents the value of sales less anticipated returns on transactions completed by performance, excluding customer
sales taxes.
Revenues are recognised for the various categories as follows: subscriptions – on periodic despatch of subscribed product or
rateably over the period of the subscription where performance is not measurable by despatch; transactional – on despatch or
occurrence of the transaction; and advertising – on publication or over the period of online display.
Revenue recognition policies, while an area of management focus, are generally straightforward in application as the timing of
product or service delivery and customer acceptance for the various revenue types can be readily determined. Allowances for
product returns are deducted from revenues based on historical return rates. Where sales consist of two or more components
that operate independently, revenue is recognised as each component is completed by performance, based on attribution of
relative value.
RELX Group is a global provider of information and analytics for professional and business customers across industries operating in
four major market segments: Scientific, Technical & Medical, providing information and analytical solutions to help customers advance
science and improve healthcare outcomes; Risk & Business Analytics, providing solutions and decision tools that enable customers
to evaluate and manage risk and develop market intelligence; Legal, providing information and analytics to professionals in legal,
corporate, government and non-profit organisations; and Exhibitions, organising exhibitions and conferences.
ANALYSIS BY BUSINESS SEGMENT
Revenue
Adjusted operating profit
Scientific, Technical & Medical
Risk & Business Analytics
Legal
Exhibitions
Sub-total
Unallocated items
Total
ANALYSIS OF REVENUE BY GEOGRAPHICAL ORIGIN
North America
United Kingdom
The Netherlands
Rest of Europe
Rest of world
Total
ANALYSIS OF REVENUE BY GEOGRAPHICAL MARKET
North America
United Kingdom
The Netherlands
Rest of Europe
Rest of world
Total
2016
£m
2,320
1,906
1,622
1,047
6,895
–
6,895
2015
£m
2,070
1,601
1,443
857
5,971
–
5,971
2014
£m
2,048
1,439
1,396
890
5,773
–
5,773
2016
£m
853
686
311
269
2,119
(5)
2,114
2016
£m
3,693
1,055
813
707
627
6,895
2016
£m
3,778
504
118
1,091
1,404
6,895
2015
£m
760
575
274
217
1,826
(4)
1,822
2015
£m
3,166
996
649
614
546
5,971
2015
£m
3,215
461
117
958
1,220
5,971
2014
£m
762
506
260
217
1,745
(6)
1,739
2014
£m
2,884
1,013
636
686
554
5,773
2014
£m
2,878
455
153
1,053
1,234
5,773
Financial statements and other information Notes to the consolidated financial statements
127
2016
£m
4,954
875
1,066
6,895
2016
£m
3,618
3,163
114
6,895
2015
£m
4,179
906
886
5,971
2015
£m
3,123
2,736
112
5,971
2014
£m
3,839
1,012
922
5,773
2014
£m
2,966
2,672
135
5,773
2 Segment analysis (continued)
ANALYSIS OF REVENUE BY FORMAT
Electronic
Print
Face-to-face
Total
ANALYSIS OF REVENUE BY TYPE
Subscriptions
Transactional
Advertising
Total
ANALYSIS BY BUSINESS SEGMENT
Scientific, Technical & Medical
Risk & Business Analytics
Legal
Exhibitions
Total
Expenditure on
acquired goodwill and
intangible assets
2016
£m
19
288
83
21
411
2015
£m
7
41
96
67
211
2014
£m
25
330
48
23
426
Capital expenditure
additions
Amortisation of acquired
intangible assets
Depreciation and other
amortisation
2016
£m
86
67
156
26
335
2015
£m
74
56
161
27
318
2014
£m
56
53
145
27
281
2016
£m
88
147
73
38
346
2015
£m
77
131
56
32
296
2014
£m
79
116
57
34
286
2016
£m
82
45
113
17
257
2015
£m
86
33
95
14
228
2014
£m
94
34
94
15
237
Capital expenditure comprises additions to property, plant and equipment and internally developed intangible assets. Amortisation of
acquired intangible assets includes amounts in respect of joint ventures of £3m (2015: £3m; 2014: £3m) in Legal and £1m (2015: £1m;
2014: £1m) in Exhibitions.
ANALYSIS OF NON-CURRENT ASSETS BY GEOGRAPHICAL LOCATION
North America
United Kingdom
The Netherlands
Rest of Europe
Rest of world
Total
2016
£m
8,174
906
135
801
461
10,477
2015
£m
6,824
787
125
723
399
8,858
Non-current assets by geographical location exclude amounts relating to deferred tax and derivative financial instruments.
Operating profit is reconciled to adjusted operating profit as follows:
RECONCILIATION OF OPERATING PROFIT TO ADJUSTED OPERATING PROFIT
Operating profit
Adjustments:
Amortisation of acquired intangible assets
Acquisition-related costs
Reclassification of tax in joint ventures
Reclassification of finance income in joint ventures
Adjusted operating profit
2016
£m
1,708
346
51
10
(1)
2,114
2015
£m
1,497
296
35
(6)
–
1,822
2014
£m
6,569
701
109
816
414
8,609
2014
£m
1,402
286
30
21
–
1,739
The share of post-tax results of joint ventures of £37m (2015: £64m; 2014: £36m) included in operating profit comprised £10m
(2015: £37m; 2014: £16m) relating to Legal, £27m (2015: £28m; 2014: £20m) relating to Exhibitions and nil (2015: £1m loss; 2014: nil)
relating to Risk & Business Analytics.
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128
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
3 Operating profit
Operating profit is stated after charging/(crediting) the following:
Staff costs
Wages and salaries
Social security costs
Pensions
Share based remuneration
Total staff costs
Depreciation and amortisation
Amortisation of acquired intangible assets
Share of joint ventures’ amortisation of acquired intangible assets
Amortisation of internally developed intangible assets
Depreciation of property, plant and equipment
Total depreciation and amortisation
Other expenses and income
Cost of sales including pre-publication costs and inventory expenses
Operating lease rentals expense
Operating lease rentals income
Note
6
7
16
16
18
2016
£m
1,767
198
111
38
2,114
342
4
189
68
603
2015
£m
1,490
169
58
34
1,751
292
4
157
71
524
2014
£m
1,415
167
95
32
1,709
282
4
158
79
523
2,488
102
(6)
2,129
90
(5)
2,006
91
(8)
The amortisation of acquired intangible assets is included within administration and other expenses.
4 Auditors’ remuneration
Auditors’ remuneration
Payable to the auditors of the parent companies
Payable to the auditors of the Group’s subsidiaries
Audit services
Audit-related assurance services
Tax services
Other services: Consulting
Other services: Due diligence and other transaction-related services
Non-audit services
Total auditors’ remuneration
2016
£m
2015
£m
2014
£m
0.8
4.5
5.3
0.4
0.4
0.1
0.4
1.3
6.6
0.8
4.2
5.0
0.8
0.9
0.2
0.3
2.2
7.2
0.6
4.2
4.8
0.5
1.0
–
0.3
1.8
6.6
Amounts payable to the auditors of the Group’s subsidiaries include amounts for the audit of internal controls over financial reporting
in accordance with the US Sarbanes-Oxley Act. Non-audit services performed in the Netherlands or by Ernst & Young Accountants LLP
in 2016 (and Deloitte Accountants BV in 2015 and 2014 ) are limited to audit-related assurance services.
5 Personnel
NUMBER OF PEOPLE EMPLOYED: FULL-TIME EQUIVALENTS
At 31 December
Average during the year
Business segment
Scientific, Technical & Medical
Risk & Business Analytics
Legal
Exhibitions
Sub-total
Corporate/shared functions
Total
Geographical location
North America
United Kingdom
The Netherlands
Rest of Europe
Rest of world
Total
2016
2015
2014
2016
2015
2014
7,500
8,200
10,700
4,000
30,400
800
31,200
13,700
4,900
1,400
2,800
8,400
31,200
7,200
7,600
10,500
3,800
29,100
900
30,000
13,400
4,700
1,500
2,800
7,600
30,000
7,000
7,400
9,500
3,700
27,600
900
28,500
13,300
4,300
1,600
2,800
6,500
28,500
7,300
7,900
10,600
3,900
29,700
900
30,600
13,500
4,800
1,500
2,800
8,000
30,600
7,200
7,500
10,000
3,700
28,400
900
29,300
13,400
4,500
1,500
2,800
7,100
29,300
6,900
7,300
9,600
3,500
27,300
900
28,200
13,400
4,200
1,600
2,800
6,200
28,200
Financial statements and other information Notes to the consolidated financial statements
129
6 Pension schemes
Accounting policy
The expense of defined benefit pension schemes and other post-retirement employee benefits is determined using the projected
unit credit method and charged in the income statement as an operating expense, based on actuarial assumptions reflecting market
conditions at the beginning of the financial year. Actuarial gains and losses are recognised in full in the statement of comprehensive
income in the period in which they occur.
Past service costs and credits are recognised immediately at the earlier of when plan amendments or curtailments occur and when
related restructuring costs or termination benefits are recognised. Settlements are recognised when they occur.
Net pension obligations in respect of defined benefit schemes are included in the statement of financial position at the present value
of scheme liabilities, less the fair value of scheme assets. Where schemes are in surplus, i.e. assets exceed liabilities, the net
pension assets are separately included in the statement of financial position. Any net pension asset is limited to the extent that the
asset is recoverable.
The expense of defined contribution pension schemes and other employee benefits is charged in the income statement as incurred.
Critical judgement and key source of estimation uncertainty
At 31 December 2016, the Group operates defined benefit pension schemes in the UK and the US. These schemes require
management to exercise judgement in estimating the ultimate cost of providing post-employment benefits, especially given the
length of each scheme’s liabilities. Accounting for defined benefit pension schemes involves judgement about uncertain events,
including the life expectancy of the members, salary and pension increases, inflation, the future operation of each scheme and the
rate at which the future pension payments are discounted. Estimates for these factors are used in determining the pension cost and
liabilities reported in the financial statements. The estimates made around future developments of each of the critical assumptions
are made in conjunction with independent actuaries, and each scheme is subject to a periodic review by independent actuaries.
Information regarding some of the assumptions used for valuation is provided below, together with a sensitivity analysis.
A number of pension schemes are operated around the world. The largest defined benefit schemes as at 31 December 2016 are in the UK
and the US. In November 2015, the Netherlands defined benefit pension scheme together with all associated assets and liabilities, was
transferred into an industry-wide collective defined contribution scheme. This scheme is now accounted for as a defined contribution
pension plan, with no deficit or surplus recognised on the balance sheet. Prior to this, the scheme was a career average salary scheme and
was open to new hires.
Major defined benefit schemes in place at 31 December 2016
The UK scheme is a final salary scheme and is closed to new hires. Members accrue a portion of their final pensionable earnings based on
the number of years of service. The US scheme is a cash balance scheme and is closed to new hires. Members earn pay credits dependent
on age and years of service up to certain limits which are added to an account balance that accrues interest at specified minimum rates.
Each of the major defined benefit schemes is administered by a separate fund that is legally separated from the Group. The trustees
of the pension funds in the UK and plan fiduciaries of the US scheme are required by law to act in the interest of the funds’ beneficiaries.
In the UK, the trustees of the pension fund are responsible for the investment policy with regard to the assets of the fund. The board of
trustees consists of an equal number of company-appointed and member nominated Directors. In the US, the fiduciary duties for the
scheme are allocated between committees which are staffed by senior employees of the Group; the investment committee has the
primary responsibility for the investment and management of plan assets.
The funding of the Group’s major schemes reflects the different rules within each jurisdiction.
In the UK the level of funding is determined by statutory triennial actuarial valuations in accordance with pensions legislation. Where the
scheme falls below 100% funded status, the Group and the scheme trustees must agree on how the deficit is to be remedied. The UK
Pensions Regulator has significant powers and sets out in codes and guidance the parameters for scheme funding.
The US scheme has an annual statutory valuation which forms the basis for establishing the employer contribution each year (subject to
ERISA and IRS minimums). Should the statutory funded status fall to below 100%, the US Pension Protection Act requires the deficit to
be rectified with additional contributions over a seven-year period.
Employer cash contributions to defined benefit pension schemes, in respect of 2017, are expected to be approximately £66m. A pension
deficit funding contribution of £20m is also expected to be made in 2017, relating to the UK scheme recovery plan.
In addition to the contributions set out above, the Group has committed to providing a further £130m of deficit funding contributions to the
UK scheme over the period from 2018 to 2022.
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130
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
6 Pension schemes (continued)
The pension expense, including amounts in relation to the UK, US (for all years) and NL (for 2014 and 2015 only) defined benefit schemes,
and defined contribution schemes in total, recognised within operating profit consists of:
Defined benefit pension expense (net of settlement and past service credits)
Defined contribution pension expense
Total
2016
£m
36
75
111
2015
£m
6
52
58
2014
£m
48
47
95
The amounts recognised in the income statement in respect of defined benefit pension schemes during the year are presented by major
scheme as follows:
Service cost
Settlement and past service credits
Defined benefit pension expense
Net interest on net defined benefit obligation
Net defined benefit pension expense
2016
2015
2014
UK
£m
27
–
27
9
36
US
£m
14
(5)
9
5
14
Total
£m
41
(5)
36
14
50
UK
£m
34
(1)
33
14
47
US
£m
18
–
18
5
23
NL
£m
15
(60)
(45)
2
(43)
Total
£m
67
(61)
6
21
27
UK
£m
31
–
31
8
39
US
£m
18
–
18
4
22
NL
£m
14
(15)
(1)
3
2
Total
£m
63
(15)
48
15
63
Net interest on net defined benefit pension scheme liabilities is presented within net finance costs in the income statement. Service cost,
including settlements and past service credits, is presented within operating profit.
Settlements and past service credits in 2015 primarily relate to the transfer of the Netherlands scheme to a collective industry-wide
scheme.
The significant valuation assumptions, determined for each major scheme in conjunction with the respective independent actuaries
are presented below. The net defined benefit pension expense for each year is based on the assumptions and scheme valuations set at
31 December of the prior year.
As at 31 December
Discount rate
Inflation
2016
UK
2.65%
3.25%
US
4.00%
2.50%
2015
UK
3.85%
3.05%
US
4.45%
2.50%
UK
3.75%
2.90%
2014
US
4.25%
2.50%
NL
2.30%
2.00%
Discount rates are set by reference to high-quality corporate bond yields.
Mortality assumptions make allowance for future improvements in longevity and have been determined by reference to applicable
mortality statistics. The average life expectancy assumptions are set out below:
As at 31 December 2016
Member currently aged 60 years
Member currently aged 45 years
Male average life
expectancy
Female average
life expectancy
UK
86
87
US
86
87
UK
89
90
US
89
89
Financial statements and other information Notes to the consolidated financial statements
131
6 Pension schemes (continued)
The amount recognised in the statement of financial position in respect of defined benefit pension schemes at the start and end of the
year and the movements during the year were as follows:
Defined benefit obligation
At start of year
Service cost
Past service credits
Interest on pension scheme liabilities
Actuarial (loss)/gain on financial assumptions
Actuarial gain/(loss) arising from experience
assumptions*
Contributions by employees
Benefits paid
Liabilities transferred on settlement**
Exchange translation differences
At end of year
Fair value of scheme assets
At start of year
Interest income on plan assets
Return on assets excluding amounts included
in interest income
Contributions by employer
Contributions by employees
Benefits paid
Assets transferred on settlement**
Exchange translation differences
At end of year
Opening net deficit
Service cost
Net interest on net defined benefit obligation
Settlement and past service credits
Contributions by employer
Actuarial (losses)/gains
Exchange translation differences
Net defined benefit obligation
2016
UK
£m
US
£m
Total
£m
UK
£m
2015
US
£m
(3,089)
(27)
–
(117)
(774)
22
(7)
109
–
–
(3,883)
2,838
108
502
44
7
(109)
–
–
3,390
(251)
(27)
(9)
–
44
(250)
–
(493)
(955)
(14)
5
(45)
(61)
3
–
95
36
(184)
(1,120)
822
40
46
41
–
(95)
(36)
159
977
(133)
(14)
(5)
5
41
(12)
(25)
(143)
(4,044)
(41)
5
(162)
(835)
25
(7)
204
36
(184)
(5,003)
3,660
148
548
85
7
(204)
(36)
159
4,367
(384)
(41)
(14)
5
85
(262)
(25)
(636)
(3,267)
(34)
1
(121)
57
179
(7)
103
–
–
(3,089)
2,870
107
(77)
34
7
(103)
–
–
2,838
(397)
(34)
(14)
1
34
159
–
(251)
(932)
(18)
–
(40)
40
(1)
–
50
–
(54)
(955)
810
35
(55)
36
–
(50)
–
46
822
(122)
(18)
(5)
–
36
(16)
(8)
(133)
NL
£m
(778)
(15)
31
(16)
12
4
(4)
15
699
52
–
665
14
(2)
48
4
(15)
(670)
(44)
–
(113)
(15)
(2)
60
48
14
8
–
Total
£m
(4,977)
(67)
32
(177)
109
182
(11)
168
699
(2)
(4,044)
4,345
156
(134)
118
11
(168)
(670)
2
3,660
(632)
(67)
(21)
61
118
157
–
(384)
* The gain recognised in 2015 principally related to a scheme experience gain arising as a result of the UK 2015 triennial valuation.
** The difference in assets and liabilities transferred resulted in a settlement credit of £29m in 2015. In addition to the settlement credit,
past service credits of £31m were recognised on transfer of the Netherlands pension scheme, which resulted in a settlement and past
service credit of £60m in total. In 2016, the settlement relates to an annuity purchase in the US.
As at 31 December 2016, the defined benefit obligations comprised £4,760m (2015: £3,849m) in relation to funded schemes and £243m
(2015: £195m) in relation to unfunded schemes.
The weighted average duration of defined benefit scheme liabilities is 20 years in the UK (2015: 20 years) and 13 years in the US
(2015: 14 years). Deferred tax assets of £145m (2015: £103m) are recognised in respect of the pension scheme deficits.
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132
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
6 Pension schemes (continued)
Amounts recognised in the statement of comprehensive income are set out below:
Gains and losses arising during the year:
Experience gains/(losses) on scheme liabilities
Experience gains/(losses) on scheme assets
Actuarial gains/(losses) on the present value of scheme liabilities due to changes in:
– discount rates
– inflation
– other actuarial assumptions
Net cumulative losses at start of year
Net cumulative losses at end of year
2016
£m
25
548
(873)
(96)
134
(262)
(584)
(846)
2015
£m
182
(134)
96
(64)
77
157
(741)
(584)
The major categories and fair values of scheme assets at the end of the reporting period are as follows:
FAIR VALUE OF SCHEME ASSETS
2016
2015
Equities
Government bonds
Corporate bonds
Property funds
Cash
Other*
Total
UK
£m
1,261
1,390
–
329
69
341
3,390
US
£m
330
104
527
–
15
1
977
Total
£m
1,591
1,494
527
329
84
342
4,367
UK
£m
1,216
1,196
–
374
29
23
2,838
US
£m
285
70
417
–
35
15
822
2014
£m
28
272
(773)
159
48
(266)
(475)
(741)
Total
£m
1,501
1,266
417
374
64
38
3,660
*In 2016 ,’Other’ mainly consists of collateralised loans, direct lending and ground leases
Assets and obligations associated with the schemes are sensitive to changes in the market values of assets and the market-related
assumptions used to value scheme liabilities. In particular, adverse changes to asset values, discount rates or inflation could increase
future pension costs and funding requirements.
Typically the Group’s schemes are exposed to: investment risks, whereby actual rates of return on plan assets may be below those rates
used to determine the defined benefit obligations and interest rate risks, whereby scheme deficits may increase if bond yields in the UK
and the US decline and are not offset by returns in government and corporate bond portfolios. The schemes are also exposed to other
risks, such as unanticipated future increases in: member longevity patterns, inflation, and future salaries, all potentially leading to an
increase in scheme liabilities.
Investment policies of each scheme are intended to ensure continuous payment of defined benefit pensions in the short-term and
long-term. Efforts are made to limit risks on marketable securities by adopting investment policies that diversify assets across
geographies and among equities, government and corporate bonds, property funds and cash. Asset allocations are dependent on
a variety of factors including the duration of scheme liabilities and the statutory funded status of the plan.
All equities and government and corporate bonds have quoted prices in active markets.
Sensitivity analysis
The valuation of the Group’s pension scheme liabilities involves significant actuarial assumptions, being the life expectancy of the
members, inflation and the rate at which the future pension payments are discounted. Differences arising from actual experience or future
changes in assumptions may materially affect future pension charges. In particular, changes in assumptions for discount rates, inflation
and life expectancies that are reasonably possible would have the following approximate effects on the defined benefit pension obligations:
Increase/decrease of 0.25% in discount rate:
Increase/decrease of 0.25% in the expected inflation rate:
Increase/decrease of one year in assumed life expectancy:
£m
225
135
178
The above analysis has been calculated on the same basis used to determine the defined benefit obligation recognised in the statement
of financial position. There has been no change in the methods used to prepare the analysis compared with prior years. This sensitivity
analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that changes in the above
assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Financial statements and other information Notes to the consolidated financial statements
133
7 Share based remuneration
Accounting policy
The fair value of share based remuneration is determined at the date of grant and recognised as an expense in the income
statement on a straight-line basis over the vesting period, taking account of the estimated number of shares that are expected to
vest. Market based performance criteria are taken into account when determining the fair value at the date of grant. Non-market
based performance criteria are taken into account when estimating the number of shares expected to vest. The fair value of share
based remuneration is determined by use of a binomial or Monte Carlo simulation model as appropriate. All of the Group’s share
based remuneration is equity settled.
The Group provides a number of share based remuneration schemes to Directors and employees. The principal share based
remuneration schemes are the Executive Share Option Schemes (ESOS), the Long-Term Incentive Plan (LTIP), the Retention Share Plan
(RSP) and the Bonus Investment Plan (BIP). The last and final tranche of awards under the Reed Elsevier Growth Plan (REGP) was made
in 2013 which vested in 2015. No further awards are outstanding under this plan. Share options granted under ESOS are exercisable
after three years and up to 10 years from the date of grant at a price equivalent to the market value of the respective shares at the date of
grant. Conditional shares granted under LTIP, RSP and BIP are exercisable after three years for nil consideration if conditions are met.
Other awards principally relate to all employee share based saving schemes in the UK and the Netherlands.
Share based remuneration awards are, other than upon retirement or in exceptional circumstances, subject to the condition that the
employee remains in employment at the time of exercise.
Conditional shares granted under LTIP, REGP, RSP and BIP between 2013 and 2016 are subject to the achievement of growth targets
of adjusted earnings per share measured at constant exchange rates as well as the achievement of a targeted percentage return on
invested capital of the Group. LTIP grants between 2013 and 2016, REGP grants in 2013 and RSP grants in 2014 are also variable subject
to the achievement of a total shareholder return performance target.
The weighted average fair value per award is based on full vesting on achievement of non-market-related performance conditions and
stochastic models for market-related components. The conditional shares and option awards are recognised in the income statement
over the vesting period, being between three and five years, on the basis of expected performance against the non-market-related
conditions, with the fair value related to market-related components unchanging.
2016 GRANTS
Share options
Conditional shares
2015 GRANTS
Share options
Conditional shares
2014 GRANTS
Share options
Conditional shares
In respect of RELX PLC
ordinary shares
In respect of RELX NV
ordinary shares
Weighted
average fair
value per
award
£
Number of
shares
’000
Weighted
average fair
value per
award
£
Number of
shares
’000
1,727
1,706
1,911
1,841
2,285
2,296
1.49
11.51
1.23
10.44
1.13
8.48
1,668
1,778
1,827
1,874
1,810
2,406
1.12
11.41
0.77
9.72
0.70
7.63
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134
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
7 Share based remuneration (continued)
The main assumptions used to determine the fair values, which have been established with advice from and data provided by
independent actuaries, are set out below:
ASSUMPTIONS FOR GRANTS MADE DURING THE YEAR
Weighted average share price at date of grant
– Share options*
– Conditional shares
Expected share price volatility
Expected option life
Expected dividend yield
Risk-free interest rate
Expected lapse rate
In respect of RELX PLC
ordinary shares
In respect of RELX NV
ordinary shares
2016
2015
2014
2016
2015
2014
£12.52
£12.68
17%
4 years
3.0%
0.7%
2-5%
£11.44
£11.55
19%
4 years
3.5%
0.8%
2-5%
£9.26
£9.23
19%
4 years
3.8%
1.5%
2-5%
€15.31
€15.28
19%
4 years
3.0%
0.0%
2-4%
€14.80
€14.98
19%
4 years
4.2%
0.0%
2-4%
€10.31
€10.30
19%
4 years
4.5%
0.6%
2-4%
* Weighted average exercise price at date of grant is disclosed in the table below.
Expected share price volatility has been estimated based on relevant historical data in respect of the RELX PLC and RELX NV ordinary
share prices. Expected share option life has been estimated based on historical exercise patterns in respect of RELX PLC and RELX NV
share options.
The share based remuneration options outstanding as at 31 December 2016, in respect of both RELX PLC and RELX NV ordinary shares,
are set out below:
SHARE OPTIONS
Outstanding at 1 January 2014
Granted
Exercised
Forfeited
Expired
Outstanding at 1 January 2015
Granted
Exercised
Forfeited
Expired
Outstanding at 1 January 2016
Granted
Exercised
Forfeited
Expired
Outstanding at 31 December 2016
Exercisable at 31 December 2014
Exercisable at 31 December 2015
Exercisable at 31 December 2016
In respect of RELX PLC
ordinary shares
In respect of RELX NV
ordinary shares
Number of
shares under
option
’000
Weighted
average
exercise
price
(pence)
Number of
shares under
option
’000
Weighted
average
exercise
price
(€)
11,727
2,285
(3,318)
(832)
(535)
9,327
1,911
(2,053)
(254)
(191)
8,740
1,727
(1,954)
(424)
(147)
7,942
3,163
3,105
2,598
549
827
520
514
577
629
978
627
694
618
704
1,164
519
489
470
865
550
551
598
13,288
1,810
(4,214)
(535)
(881)
9,468
1,827
(1,716)
(680)
(438)
8,461
1,668
(1,778)
(310)
(144)
7,897
5,352
4,886
4,770
7.00
10.31
7.24
6.68
6.68
7.58
14.80
7.32
7.51
6.18
9.27
15.31
8.05
12.41
8.56
10.71
7.22
8.02
8.91
The weighted average share price at the date of exercise of share options and vesting of conditional shares during 2016 was 1,278p
(2015: 1,118p; 2014: 885p) for RELX PLC ordinary shares and €15.23 (2015: €14.50; 2014: €9.77) for RELX NV ordinary shares.
Financial statements and other information Notes to the consolidated financial statements
135
7 Share based remuneration (continued)
RANGE OF EXERCISE PRICES FOR OUTSTANDING SHARE OPTIONS
2016
2015
2014
RELX PLC ordinary shares (pence)
401-600
601-800
801-1,000
1,001-1,200
1,201-1,400
1,401-1,600
Total
RELX NV ordinary shares (€)
4.01-6.00
6.01-8.00
8.01-10.00
10.01-12.00
12.01-14.00
14.01-16.00
16.01-18.00
Total
Weighted
average
remaining
period until
expiry
(years)
Number of
shares under
option
’000
Weighted
average
remaining
period until
expiry
(years)
Weighted
average
remaining
period until
expiry
(years)
Number of
shares under
option
’000
Number of
shares under
option
’000
1,672
1,922
1,732
1,657
949
10
7,942
1,380
965
1,181
1,239
114
3,002
16
7,897
3.6
3.4
5.3
6.2
9.2
9.7
5.1
4.2
2.2
5.6
7.2
7.5
8.7
8.3
6.4
2,950
2,856
1,903
1,031
–
–
8,740
1,924
1,446
1,971
1,333
143
1,625
19
8,461
4.0
4.4
6.3
9.3
–
–
5.3
5.4
2.8
5.9
8.2
8.4
9.2
9.0
6.3
5,045
3,089
1,193
–
–
–
9,327
3,111
2,464
2,406
1,487
–
–
–
9,468
4.5
5.4
9.3
–
–
–
5.4
6.5
3.0
6.6
9.2
–
–
–
6.0
Share options are expected, upon exercise, to be met by the issue of new ordinary shares.
8 Net finance costs
Accounting policy
Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that takes a substantial
period of time to bring to use are capitalised. All other interest on borrowings is expensed as incurred. The cost of issuing
borrowings is generally expensed over the period of borrowing so as to produce a constant periodic rate of charge.
Interest on short-term bank loans, overdrafts and commercial paper
Interest on term debt
Total borrowing costs
Losses on loans and derivatives not designated as hedges
Fair value losses on designated fair value hedge relationships
Net financing charge on defined benefit pension schemes
Finance costs
Interest on bank deposits
Gains on loans and derivatives not designated as hedges
Finance income
Net finance costs
2016
£m
(15)
(160)
(175)
(14)
–
(14)
(203)
6
2
8
(195)
2015
£m
(11)
(141)
(152)
(3)
(1)
(21)
(177)
3
–
3
(174)
2014
£m
(13)
(134)
(147)
(7)
–
(15)
(169)
7
–
7
(162)
A net loss of £26m (2015: £48m; 2014: £52m) on interest rate derivatives designated as cash flow hedges was recognised in other
comprehensive income and accumulated in the hedge reserve. This included losses of £18m (2015: £42m; 2014: £54m) related to foreign
exchange movements on debt hedges, which were reclassified immediately to the income statement and offset £18m (2015: £42m; 2014:
£54m) of foreign exchange gains on the related debt. The remaining loss of £8m (2015: loss of £6m; 2014: gain of £2m) recognised in other
comprehensive income may be reclassified to the income statement in future periods. Including the £18m (2015: £42m; 2014: £54m) of
foreign exchange losses, losses of £27m (2015: £48m; 2014: £56m) in total were transferred from the hedge reserve in the period.
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136
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
9 Disposals and other non-operating items
Accounting policy
Assets of businesses that are available for immediate sale in their current condition and for which a sales process is considered
highly probable to complete are classified as assets held for sale and are carried at the lower of carrying value and fair value less
costs to sell. Fair value is based on anticipated disposal proceeds, typically derived from firm or indicative offers from potential
acquirers. Non-current assets are not amortised or depreciated following their classification as held for sale. Liabilities of
businesses held for sale are also separately classified on the statement of financial position. Fair value movements in the venture
capital portfolio, which are classified as held for trading, are reported within disposals and other items – see note 17.
Revaluation of held for trading investments
Loss on disposal of businesses and assets held for sale
Net loss on disposals and other non-operating items
10 Taxation
2016
£m
(13)
(27)
(40)
2015
£m
8
(19)
(11)
2014
£m
8
(19)
(11)
Accounting policy
Tax expense comprises current and deferred tax. Current and deferred tax are charged or credited in the income statement except
to the extent that the tax arises from a transaction or event which is recognised, in the same or a different period, outside the income
statement (either in other comprehensive income, directly in equity, or through a business combination), in which case the tax
appears in the same statement as the transaction that gave rise to it.
Current tax is the amount of corporate income taxes expected to be payable or recoverable based on the profit for the period as
adjusted for items that are not taxable or not deductible, and is calculated using tax rates and laws that were enacted or
substantively enacted at the date of the statement of financial position. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is subject to interpretation. Provisions are established where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Current tax includes amounts provided in respect of uncertain tax positions when management expects that, upon examination of
the uncertainty by a tax authority in possession of all relevant knowledge, it is more likely than not that an economic outflow will
occur. Changes in facts and circumstances underlying these provisions are reassessed at the date of each statement of financial
position, and the provisions are remeasured as required to reflect current information.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the statement of financial position. Deferred tax is calculated using tax rates and laws that have been enacted or
substantively enacted at the end of the reporting period, and which are expected to apply when the related deferred tax asset is
realised or the deferred tax liability is settled.
Deferred tax liabilities are generally recognised for all taxable temporary differences but not recognised for taxable temporary
differences arising on investments in subsidiaries, associates and joint ventures where the reversal of the temporary difference
can be controlled and it is probable that the difference will not reverse in the foreseeable future. Deferred tax liabilities are not
recognised on temporary differences that arise from goodwill which is not deductible for tax purposes.
Deferred tax assets are recognised to the extent it is probable that taxable profits will be available against which the deductible
temporary differences can be utilised, and are reviewed at the end of each reporting period and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are not recognised in respect of temporary differences that arise on initial recognition of assets
and liabilities acquired other than in a business combination. Deferred tax is not discounted.
Financial statements and other information Notes to the consolidated financial statements
137
10 Taxation (continued)
Accounting policy (continued)
Critical judgement and key source of estimation uncertainty
The Group is subject to tax in numerous jurisdictions, giving rise to complex tax issues that require management to exercise
judgement in making tax determinations. As a multinational enterprise, our tax returns in the countries in which we operate are
subject to tax authority audits as a matter of routine. While the Group is confident that tax returns are appropriately prepared and
filed, amounts are provided in respect of uncertain tax positions that reflect the risk with respect to tax matters under active
discussion with tax authorities, or which are otherwise considered to involve uncertainty.
Provisions against uncertain tax positions are measured using one of the following methods, depending on which of the methods
management expects will better predict the amount it will pay over to the tax authority:
•
•
The Single Best Estimate – where there is a single outcome that is more likely than not to occur. This will happen, for example,
where the tax outcome is binary (such as whether an entity can deduct an item of expenditure) or the range of possible
outcomes is narrow or concentrated on a single value. The most likely outcome may be that no tax is expected to be payable, in
which case the provision is nil; or
A Probability-Weighted Expected Value – where, on the balance of probabilities, something will be paid to the tax authority but
the possible outcomes are widely dispersed with low individual probabilities (i.e. there is no single outcome more likely than not
to occur). In this case, the provision is the sum of the probability-weighted amounts in the range.
In assessing provisions against uncertain tax positions, management uses in-house tax experts, professional firms and previous
experience to inform the evaluation of risk. However, it remains possible that uncertainties will ultimately be resolved at amounts
greater or smaller than the liabilities recorded.
In particular, although we report cross-border transactions undertaken between Group subsidiaries on an arm’s-length basis in
tax returns in accordance with OECD guidelines, transfer pricing relies on the exercise of judgement and it is frequently possible
for there to be a range of legitimate and reasonable views. This means that it is impossible to be certain that the returns basis will be
sustained on examination. Discussions with tax authorities relating to cross-border transactions and other matters are ongoing in
each of our major trading jurisdictions. Although the timing and amount of final resolution of these uncertain tax positions cannot
be reliably predicted, no significant impact on the profitability of the Group is expected in the near term.
Estimation of income taxes also includes assessments of the recoverability of deferred tax assets. Deferred tax assets are only
recognised to the extent that they are considered recoverable based on existing tax laws and forecasts of future taxable profits
against which the underlying tax deductions can be utilised. The recoverability of these assets is reassessed at the end of each
reporting period, and changes in recognition of deferred tax assets will affect the tax liability in the period of that reassessment.
Current tax
United Kingdom
The Netherlands
Rest of world
Total current tax charge
Deferred tax
Tax expense
2016
£m
(80)
(51)
(243)
(374)
70
(304)
2015
£m
(65)
(45)
(260)
(370)
72
(298)
2014
£m
(36)
(93)
(228)
(357)
88
(269)
Cash tax paid in the year was £402m (2015: £343m; 2014: £348m), which is different to the tax expense for the year set out above.
There are a number of reasons why the cash tax payments in a particular year will be different from the tax expense in the accounts:
Deferred tax:
§ Tax expense includes deferred tax, which is an accounting adjustment arising from temporary differences;
§ Temporary differences occur when an item has to be included in the income statement in one year but is taxed in another year; and
§ There are significant deferred tax liabilities on intangible assets recognised as a result of acquisition accounting, which are credited
to the income statement as the intangible asset is amortised for accounting purposes.
Timing differences:
§ Tax payments relating to a particular year’s profits are typically due partly in the year and partly in the following year.
Prior period adjustments:
§ Current tax expense is the best estimate at the end of the period of cash tax expected to be paid; and
§ To the extent the final liability is higher or lower than that estimate, any cash tax impact will occur in a later period.
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138
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
10 Taxation (continued)
Items recorded in equity and other comprehensive income:
§ Some of the benefits of tax deductions related to share based payments, pensions and hedging are credited to equity or other
comprehensive income rather than to tax expense, and so the cash tax liability will be lower than the current tax expense in years
when those deductions are available.
Set out below is a reconciliation of the difference between tax expense for the period and the theoretical expense calculated by
multiplying accounting profit by the applicable tax rate.
As an enterprise with two listed parent companies in different jurisdictions, we believe the most meaningful applicable rate is that
obtained by multiplying the accounting profits and losses of all consolidated entities by the applicable domestic rate in each of those
entities’ jurisdictions.
The net tax expense charged on profit before tax differs from the theoretical amount that would arise using the weighted average of tax
rates applicable to accounting profits and losses of the consolidated entities, as follows:
Profit before tax
Tax at average applicable rates
Tax effect of share of results of joint ventures
Expenses not deductible for tax purposes
US state taxes
Non-deductible costs of share based remuneration
Non-deductible disposal-related gains and losses
Tax losses of the period not recognised
Recognition and utilisation of tax losses that arose in prior years
Other adjustments in respect of prior periods
Deferred tax effect of changes in tax rates
Tax expense
2016
£m
1,473
(330)
7
(18)
(13)
(1)
(8)
(2)
32
28
1
(304)
2015
£m
1,312
(299)
11
(16)
(9)
(3)
4
(2)
–
16
–
(298)
2014
£m
1,229
(292)
21
(14)
(12)
–
(22)
(4)
4
50
–
(269)
The weighted average applicable tax rate for the year was 22.4% (2015: 22.8%; 2014: 23.7%), reflecting the applicable rates in the
countries where the Group earns profits. Based on current business plans, this mix of profits is not expected to change significantly
in the future. The average rate will benefit by less than 0.5% from the announced reduction in the corporate tax rate in the UK from
the current 20% to 17% from 2020.
Tax expense was 20.7% of profit before tax (2015: 22.7%; 2014: 21.9%). Subject to any one-off adjustments resulting from the settlement
of uncertain tax positions, or any disposal profit or loss not taxed at average rates, it is expected that tax expense as a proportion of profit
before tax will continue to be broadly in line with the weighted average applicable tax rate.
The following tax has been recognised in other comprehensive income or directly in equity during the year:
Tax on items that will not be reclassified to profit or loss
Tax on actuarial movements on defined benefit pension schemes
Tax on items that may be reclassified to profit or loss
Tax on fair value movements on cash flow hedges
Net tax credit/ (debit) recognised in other comprehensive income
Tax credit on share based remuneration recognised directly in equity
2016
£m
45
19
64
10
2015
£m
(34)
18
(16)
17
2014
£m
63
13
76
20
A number of changes to the UK corporation tax system, including reductions of the main rate of corporation tax from 20% to 19% with
effect from 1 April 2017, and from 19% to 18% with effect from 1 April 2020, were substantively enacted on 26 October 2015. A further
reduction of the tax rate from 18% to 17% with effect from 1 April 2020 was substantively enacted on 6 September 2016. The Group has
measured its UK deferred tax assets and liabilities at the end of the reporting period at 17% (2015: 18%), which has resulted in
recognition of a deferred tax credit of £1m in tax expense, a charge of £5m in other comprehensive income, and a charge of £1m directly
in equity for the period.
Financial statements and other information Notes to the consolidated financial statements
139
10 Taxation (continued)
Deferred tax assets
Deferred tax liabilities
Total
2016
£m
444
(1,137)
(693)
2015
£m
349
(1,000)
(651)
Movements in deferred tax liabilities and assets (before taking into consideration the offsetting of balances within the same jurisdiction)
are summarised as follows:
Deferred tax liabilities
Deferred tax assets
Excess of tax
allowances
over
amortisation
£m
Acquired
intangible
assets
£m
Other
temporary
differences
£m
Excess of
amortisation
over tax
allowances
£m
Tax losses
carried
forward
£m
Pensions
liabilities
£m
Other
temporary
differences
£m
(361)
41
–
–
(19)
(339)
9
–
–
(63)
(734)
85
–
(22)
(31)
(702)
91
–
(38)
(118)
(241)
(38)
1
–
(13)
(291)
4
4
–
(55)
323
(56)
–
–
(16)
251
(28)
–
–
40
36
(6)
–
3
(1)
32
26
–
3
9
161
(15)
(45)
–
2
103
(1)
33
–
10
224
61
–
–
10
295
(31)
17
–
46
Total
£m
(592)
72
(44)
(19)
(68)
(651)
70
54
(35)
(131)
(393)
(767)
(338)
263
70
145
327
(693)
Deferred tax (liability)/asset at
1 January 2015
Credit/(charge) to profit
(Charge)/credit to equity/other
comprehensive income
Acquisitions
Exchange translation differences
Deferred tax (liability)/asset at
1 January 2016
Credit/(charge) to profit
Credit to equity/other comprehensive
income
Acquisitions
Exchange translation differences
Deferred tax (liability)/asset at
31 December 2016
Other deferred tax liabilities include temporary differences in respect of property, plant and equipment, capitalised development spend
and financial instruments. Other deferred tax assets include temporary differences in respect of share based remuneration provisions
and financial instruments.
As a result of parent company exemptions on dividends from subsidiaries and capital gains on disposal there are no significant taxable
temporary differences associated with investments in subsidiaries, branches, associates and interests in joint arrangements.
Deferred tax assets in respect of tax losses and other deductible temporary differences have only been recognised to the extent that it is
more likely than not that sufficient taxable profits will be available to allow the asset to be recovered. Accordingly, no deferred tax asset
has been recognised in respect of unused trading losses of approximately £111m (2015: £57m) carried forward at year end. The deferred
tax asset not recognised in respect of these losses is approximately £30m (2015: £12m). Of the unrecognised losses, £31m (2015: £27m)
will expire if not utilised within 10 years, and £80m (2015: £30m) will expire after more than 10 years.
Deferred tax assets of approximately £7m (2015: £8m) have not been recognised in respect of tax losses and other temporary
differences carried forward of £42m (2015: £45m), which can only be used to offset future capital gains.
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140
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
11 Earnings per share
Accounting policy
With effect from 6 April 2016, the UK government has abolished tax credits on dividends paid after this date, including the 2015 final
dividend, which was paid in May 2016. As a result of the abolition of this credit, dividends and therefore earnings per share are equal
for both RELX PLC and RELX NV. Earnings per share is calculated by taking the reported net profit attributable to shareholders and
dividing this by the total weighted average number of shares.
In calculating earnings per share of the Group up until the end of 2015 (prior to the abolition of the tax credit), the earnings for each
class of share were calculated on the basis that earnings are fully distributed. The Group’s usual practice is for only a portion of
earnings to be distributed by way of dividends. Until the end of 2015, dividends paid to RELX PLC and RELX NV shareholders were,
other than in special circumstances, equalised at the gross level inclusive of the prevailing UK tax credit available to certain RELX
PLC shareholders. The allocation of earnings between the RELX PLC shares and the RELX NV shares reflected the differential in
dividend payments declared as a result of the tax credit, with the balance of earnings assumed to be distributed as a capital
distribution, in equal amounts per share.
Adjusted earnings per share is calculated by dividing adjusted net profit attributable to shareholders by the total weighted average
number of shares for the Group.
EARNINGS PER SHARE – FOR THE YEAR ENDED 31 DECEMBER 2016
Basic earnings per share for RELX PLC and RELX NV (pence)
Diluted earnings per share for RELX PLC and RELX NV (pence)
ALLOCATION OF EARNINGS – 2015 AND 2014
FOR THE YEAR ENDED 31 DECEMBER
RELX PLC
Allocation of distributed earnings
Allocation of undistributed earnings
Total net profit allocated to RELX PLC shares
RELX NV
Allocation of distributed earnings
Allocation of undistributed earnings
Total net profit allocated to RELX NV shares
Total net profit attributable to parent companies' shareholders
Net profit
attributable to
parent companies’
shareholders
£m
1,161
1,161
2016
Weighted average
number of shares
(millions)
2,062.3
2,079.8
EPS
(pence)
56.3p
55.8p
2014
£m
284
206
490
281
184
465
955
2015
£m
294
224
518
291
199
490
1,008
Financial statements and other information Notes to the consolidated financial statements
141
11 Earnings per share (continued)
EARNINGS PER SHARE – 2015 AND 2014
FOR THE YEAR ENDED 31 DECEMBER
Basic earnings per share
RELX PLC
RELX NV
Diluted earnings per share
RELX PLC
RELX NV
2015
2014
Weighted
average
number of
shares
(millions)
1,116.2
992.4
Weighted
average
number of
shares
(millions)
1,140.2
1,014.2
EPS
(pence)
46.4p
49.4p
EPS
(pence)
43.0p
45.8p
1,125.9
1,001.6
46.0p
48.9p
1,152.7
1,026.0
42.5p
45.3p
The diluted figures are calculated after taking account of potential additional ordinary shares arising from share options and conditional
shares. 2014 comparative share numbers reflect the bonus issue declared on 30 June 2015.
ADJUSTED EARNINGS PER SHARE
2016
2015
2014
Adjusted net
profit
attributable
to parent
companies’
shareholders
£m
Weighted
average
number of
shares
(millions)
Adjusted net
profit
attributable
to parent
companies’
shareholders
£m
Weighted
average
number of
shares
(millions)
Adjusted net
profit
attributable
to parent
companies’
shareholders
£m
Weighted
average
number of
shares
(millions)
Adjusted
EPS
(pence)
Adjusted
EPS
(pence)
Adjusted
EPS
(pence)
Adjusted earnings per share for RELX
PLC and RELX NV (pence)
1,488 2,062.3
72.2p
1,275
2,108.6
60.5p
1,213
2,154.4
56.3p
RECONCILIATION OF ADJUSTED NET PROFIT ATTRIBUTABLE TO PARENT COMPANIES' SHAREHOLDERS
Net profit attributable to parent companies’ shareholders
Adjustments (post-tax):
Amortisation of acquired intangible assets
Acquisition-related costs
Net financing charge on defined benefit pension schemes
Disposals and other non-operating items
Other deferred tax credits from intangible assets*
Adjusted net profit attributable to parent companies’ shareholders
2016
£m
1,161
364
38
10
6
(91)
1,488
2015
£m
1,008
311
27
16
(2)
(85)
1,275
2014
£m
955
280
21
11
14
(68)
1,213
* Movements on deferred tax liabilities arising on acquired intangible assets that do not qualify for tax amortisation.
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142
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
12 Statement of cash flows
Accounting policy
Cash and cash equivalents comprise cash balances, call deposits and other short-term highly liquid investments and are held in the
statement of financial position at fair value.
RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS
Profit before tax
Disposals and other non-operating items
Net finance costs
Operating profit
Share of results of joint ventures
Amortisation of acquired intangible assets
Amortisation of internally developed intangible assets
Depreciation of property, plant and equipment
Share based remuneration
Total non-cash items
(Increase)/decrease in inventories and pre-publication costs
Increase in receivables
Increase/(decrease) in payables
Increase in working capital
Cash generated from operations
CASH FLOW ON ACQUISITIONS
Purchase of businesses
Investment in joint ventures
Deferred payments relating to prior year acquisitions
Total
RECONCILIATION OF NET BORROWINGS
At start of year
Increase/(decrease) in cash and cash equivalents
(Increase)/decrease in short-term bank loans, overdrafts and
commercial paper
Issuance of term debt
Repayment of term debt
Repayment of finance leases
Change in net borrowings resulting from cash flows
Borrowings in acquired businesses
Inception of finance leases
Fair value and other adjustments to borrowings and related
derivatives
Exchange translation differences
At end of year
2016
£m
1,473
40
195
1,708
(37)
342
189
68
38
637
(24)
(146)
98
(72)
2,236
2016
£m
(336)
(1)
(24)
(361)
2015
£m
1,312
11
174
1,497
(64)
292
157
71
34
554
(17)
(150)
62
(105)
1,882
2015
£m
(158)
(8)
(25)
(191)
2014
£m
1,229
11
162
1,402
(36)
282
158
79
32
551
3
(66)
(3)
(66)
1,851
2014
£m
(347)
(15)
(34)
(396)
2016
£m
(3,782)
2015
£m
(3,550)
2014
£m
(3,072)
9
(139)
142
(271)
(603)
474
7
(384)
–
(3)
339
(500)
186
9
(105)
–
(12)
(232)
(589)
300
10
(369)
(20)
(3)
Note
13
Cash and
cash
equivalents
£m
122
Borrowings
£m
(3,902)
Related
derivative
financial
instruments
£m
(2)
9
–
–
–
–
9
–
–
–
(281)
(603)
474
7
(403)
–
(3)
–
10
–
–
–
10
–
–
Net borrowings comprise cash and cash equivalents, loan capital, finance leases, promissory notes, bank and other loans, derivative
financial instruments that are used to hedge certain borrowings and adjustments in respect of cash collateral received/paid. The Group
monitors net borrowings as part of capital and liquidity management.
–
31
162
1
(536)
(4,843)
(23)
(4)
(19)
(22)
(509)
(4,700)
4
(119)
(3,782)
(7)
(79)
(3,550)
Financial statements and other information Notes to the consolidated financial statements
143
13 Acquisitions
During the year a number of acquisitions were made for a total consideration of £369m (2015: £178m; 2014: £356m), after taking account
of net cash acquired of £10m (2015: £3m; 2014: £9m). The net assets of the businesses acquired are incorporated at their fair value to the
Group. Provisional fair values of the consideration given and of the assets and liabilities acquired are summarised below:
Goodwill
Intangible assets
Property, plant and equipment
Current assets
Current liabilities
Borrowings
Deferred tax
Net assets acquired
Consideration (after taking account of £10m (2015: £3m; 2014: £9m) net cash acquired)
Less: consideration deferred to future years
Less: acquisition date fair value of equity interest
Net cash flow
Fair value
2016
£m
Fair value
2015
£m
Fair value
2014
£m
222
189
1
12
(20)
–
(35)
369
369
(15)
(18)
336
100
111
–
9
(23)
–
(19)
178
178
(20)
–
158
240
187
3
21
(39)
(20)
(36)
356
356
(8)
(1)
347
Goodwill, being the excess of the consideration over the net tangible and intangible assets acquired, represents benefits which do not
qualify for recognition as intangible assets, including: the ability of a business to generate higher returns than individual assets; skilled
workforces; and acquisition synergies that are specific to the Group. In addition, goodwill arises on the recognition of deferred tax
liabilities in respect of intangible assets for which amortisation does not qualify for tax deductions.
The fair values of the assets and liabilities acquired in the last 12 months are provisional pending the completion of the valuation
exercises. Final fair values will be incorporated in the 2017 consolidated financial statements. There were no significant adjustments
to the provisional fair values of prior year acquisitions established in 2015.
The businesses acquired in 2016 contributed £29m to revenue, increased adjusted operating profit by £5m, decreased net profit by
£15m and contributed £9m to net cash inflow from operating activities for the part year under the Group’s ownership and before taking
account of acquisition financing costs. Had the businesses been acquired at the beginning of the year, on a pro forma basis the Group
revenues, adjusted operating profit and net profit attributable to parent companies’ shareholders for the year would have been £6,938m,
£2,121m and £1,165m respectively, before taking account of acquisition financing costs.
14 Equity dividends
ORDINARY DIVIDENDS PAID IN THE YEAR
RELX PLC
RELX NV
Total
2016
£m
356
327
683
2015
£m
295
288
583
2014
£m
285
281
566
Ordinary dividends declared and paid in the year ended 31 December 2016, in amounts per ordinary share, comprise: a 2015 final
dividend of 22.3p (2015: 19p; 2014: 17.95p) and a 2016 interim dividend of 10.25p (2015: 7.4p; 2014: 7p), giving a total of 32.55p (2015: 26.4p;
2014: 24.95p) for RELX PLC; and a 2015 final dividend of €0.288 (2015: €0.285; 2014: €0.243) and a 2016 interim dividend of €0.122 (2015:
€0.115; 2014: €0.098), giving a total of €0.410 (2015: €0.400; 2014: €0.341) for RELX NV.
The Directors of RELX PLC have proposed a final dividend of 25.7p (2015: 22.3p; 2014: 19p), giving a total for the financial year of 35.95p
(2015: 29.7p; 2014: 26p). The Directors of RELX NV have proposed a final dividend of €0.301 (2015: €0.288; 2014: €0.285), giving a total for
the financial year of €0.423 (2015: €0.403; 2014: €0.383). The total cost of funding the proposed final dividends is expected to be £526m,
for which no liability has been recognised at the statement of financial position date.
RELX NV dividends per share were adjusted retrospectively in the prior year to reflect the bonus issue declared on 30 June 2015.
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144
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
14 Equity dividends (continued)
Until the end of 2015, dividends paid to RELX PLC and RELX NV shareholders were, other than in special circumstances, equalised at the
gross level inclusive of the prevailing UK tax credit received by certain RELX PLC shareholders. With effect from 6 April 2016 the UK
government abolished the dividend tax credits previously available to certain RELX PLC shareholders, impacting dividends paid after
this date.
The Employee Benefit Trust (EBT) has currently waived the right to receive dividends on RELX PLC and RELX NV shares. For RELX PLC,
this waiver has been applied to dividends paid in 2016, and was also applicable in 2015 and 2014. For RELX NV, this waiver has been
applied to dividends paid in 2016, and was also applicable in 2015.
15 Goodwill
Accounting policy
On the acquisition of a subsidiary or business, the purchase consideration is allocated between the net tangible and intangible
assets on a fair value basis, with any excess purchase consideration representing goodwill. Goodwill arising on acquisitions also
includes amounts corresponding to deferred tax liabilities recognised in respect of acquired intangible assets.
Goodwill is recognised as an asset and reviewed for impairment when there is an indicator that the asset may be impaired and at
least annually. Any impairment is recognised immediately in the income statement and not subsequently reversed.
On disposal of a subsidiary or business, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.
At each statement of financial position date, the carrying amounts of tangible and intangible assets and goodwill are reviewed to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount, which is the higher of value in use and fair value less costs to sell, of the asset is estimated in order to
determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other
assets, value in use estimates are made based on the cash flows of the cash generating unit to which the asset belongs. Intangible
assets with an indefinite useful life are tested for impairment at least annually and whenever there is any indication that the asset
may be impaired.
If the recoverable amount of an asset or cash generating unit is estimated to be less than its net carrying amount, the net carrying
amount of the asset or cash generating unit is reduced to its recoverable amount. Impairment losses are recognised immediately
in the income statement in administration and other expenses.
Critical judgement and key source of estimation uncertainty
The carrying amounts of goodwill and indefinite lived intangible assets in each business are reviewed for impairment at least
annually. The carrying amounts of all other intangible assets are reviewed where there are indications of possible impairment.
An impairment review involves a comparison of the carrying value of the asset with estimated values in use based on the latest
management cash flow projections, approved by the Boards. Key areas of judgement in estimating the values in use of businesses
are the growth in cash flows over a forecast period of up to five years, the long-term growth rate assumed thereafter and the
discount rate applied to the forecast cash flows. A description of the key assumptions and sensitivities is provided below.
At start of year
Acquisitions
Disposals/reclassified as held for sale
Exchange translation differences
At end of year
2016
£m
5,231
222
(19)
958
6,392
2015
£m
4,981
100
(34)
184
5,231
Financial statements and other information Notes to the consolidated financial statements
145
15 Goodwill (continued)
The carrying amount of goodwill is after cumulative amortisation of £1,284m (2015: £1,105m), which was charged prior to the adoption
of IFRS, and £9m (2015: £9m) of subsequent impairment charges recorded in prior years.
Impairment review
Impairment testing of goodwill and indefinite lived intangible assets is performed at least annually in accordance with the methodology
described above. There were no charges for impairment of goodwill in 2016 (2015: nil; 2014: nil).
Goodwill is compiled and assessed among groups of cash generating units, which represent the lowest level at which goodwill is
monitored by management. Typically, acquisitions are integrated into existing business units, and the goodwill arising is allocated to the
groups of cash generating units (CGUs) that are expected to benefit from the synergies of the acquisition. As the business areas have
become increasingly integrated and globalised, the current CGU allocation reflects the global leverage of assets, skills, knowledge and
technology platforms, and the monitoring of goodwill by management.
GOODWILL
Scientific, Technical & Medical
Risk & Business Analytics
Legal
Exhibitions
Total
The key assumptions used for each group of cash generating units are disclosed below:
KEY ASSUMPTIONS
Scientific, Technical & Medical
Risk & Business Analytics
Legal
Exhibitions
2016
£m
1,549
2,829
1,499
515
6,392
2015
£m
1,301
2,270
1,230
430
5,231
2016
2015
Nominal
long-term
market
growth rate
Pre-tax
discount rate
Nominal
long-term
market
growth rate
Pre-tax
discount rate
10%
12%
12%
13%
3%
3%
2%
3%
10%
12%
12%
13%
3%
3%
2%
3%
The pre-tax discount rates used are based on the Group’s weighted average cost of capital, adjusted to reflect a risk premium specific to
each business. Nominal long-term market growth rates, which are applied after the forecast period of up to five years, do not exceed the
long-term average growth prospects for the sectors and territories in which the businesses operate.
A sensitivity analysis has been performed based on changes in key assumptions considered to be reasonably possible by management:
an increase in the discount rate of 0.5%; a decrease in the compound annual growth rate for cash flow in the five-year forecast period of
2.0%; and a decrease in the nominal long-term market growth rates of 0.5%. The sensitivity analysis shows that no impairment charges
would result from these scenarios.
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146
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
16 Intangible assets
Accounting policy
Intangible assets acquired as part of a business combination are stated in the statement of financial position at their fair value as
at the date of acquisition, less accumulated amortisation. Internally generated intangible assets are stated in the statement of
financial position at the directly attributable cost of creation of the asset, less accumulated amortisation.
Intangible assets acquired as part of business combinations comprise: market-related assets (e.g. trademarks, imprints, brands);
customer-related assets (e.g. subscription bases, customer lists, customer relationships); editorial content; software and systems
(e.g. application infrastructure, product delivery platforms, in-process research and development); contract-based assets
(e.g. publishing rights, exhibition rights, supply contracts); and other intangible assets. Internally generated intangible assets
typically comprise software and systems development where an identifiable asset is created that is probable to generate future
economic benefits.
Intangible assets, other than journal titles determined to have indefinite lives, are amortised on a straight-line basis over their
estimated useful lives. The estimated useful lives of intangible assets with finite lives are as follows: market and customer-related
assets – 3 to 40 years; content, software and other acquired intangible assets – 3 to 20 years; and internally developed intangible
assets – 3 to 10 years. Journal titles determined to have indefinite lives are not amortised and are subject to impairment review
at least annually, including a review of events and circumstances to ensure that they continue to support an indefinite useful life.
Critical judgements and key sources of estimation uncertainty
On acquisition of a subsidiary or business, the purchase consideration is allocated between the net tangible and intangible assets
other than goodwill on a fair value basis, with any excess purchase consideration representing goodwill. The valuation of acquired
intangible assets represents the estimated economic value in use, using standard valuation methodologies, including as
appropriate, discounted cash flow, relief from royalty and comparable market transactions. Acquired intangible assets are
capitalised and amortised systematically over their estimated useful lives, subject to impairment review. The assumptions used
are subject to management judgement.
Appropriate amortisation periods are selected based on assessments of the longevity of the brands and imprints, the strength
and stability of customer relationships, the market positions of the acquired assets and the technological and competitive risks
that they face. Certain intangible assets in relation to acquired science and medical publishing businesses have been determined
to have indefinite lives. The longevity of these assets is evidenced by their long-established and well-regarded journal titles, and
their characteristically stable market positions. The assumptions used are subject to management judgement.
Development spend embraces investment in new products and other initiatives, ranging from the building of online delivery
platforms, to launch costs of new services, to building new infrastructure and applications. Launch costs and other ongoing
operating expenses of new products and services are expensed as incurred. The costs of building product applications, platforms
and infrastructure are capitalised as intangible assets, where the investment they represent has demonstrable value and the
technical and commercial feasibility is assured. Costs eligible for capitalisation must be incremental, clearly identified and directly
attributable to a particular project. The resulting assets are amortised over their estimated useful lives. Impairment reviews are
carried out at least annually where indicators of impairment are identified. Judgement is required in the assessment of the potential
value of a development project, the identification of costs eligible for capitalisation and the selection of appropriate asset lives.
Financial statements and other information Notes to the consolidated financial statements
147
16 Intangible assets (continued)
Cost
At 1 January 2015
Acquisitions
Additions
Disposals/reclassified as held for sale
Exchange translation differences
At 1 January 2016
Acquisitions
Additions
Disposals/reclassified as held for sale
Exchange translation differences
At 31 December 2016
Accumulated amortisation
At 1 January 2015
Charge for the year
Disposals/reclassified as held for sale
Exchange translation differences
At 1 January 2016
Charge for the year
Disposals/reclassified as held for sale
Exchange translation differences
At 31 December 2016
Net book amount
At 31 December 2015
At 31 December 2016
Market and
customer-
related
£m
Content,
software
and other
£m
Total
acquired
intangible
assets
£m
Internally
developed
intangible
assets
£m
2,965
68
–
(4)
129
3,158
103
–
–
611
3,872
1,179
173
(4)
54
1,402
204
–
287
1,893
3,041
43
–
(3)
52
3,133
86
–
–
460
3,679
2,443
119
(3)
52
2,611
138
–
390
3,139
6,006
111
–
(7)
181
6,291
189
–
–
1,071
7,551
3,622
292
(7)
106
4,013
342
–
677
5,032
1,884
–
242
(110)
37
2,053
–
280
(100)
317
2,550
1,104
157
(105)
19
1,175
189
(96)
197
1,465
Total
£m
7,890
111
242
(117)
218
8,344
189
280
(100)
1,388
10,101
4,726
449
(112)
125
5,188
531
(96)
874
6,497
1,756
1,979
522
540
2,278
2,519
878
1,085
3,156
3,604
Included in content, software and other acquired intangible assets are assets with a net book value of £175m (2015: £212m) that arose
on acquisitions completed prior to the adoption of IFRS that have not been allocated to specific categories of intangible assets. Internally
developed intangible assets typically comprise software and systems development where an identifiable asset is created that is
expected to generate future economic benefits.
Included in market and customer-related intangible assets are £123m (2015: £103m) of journal titles relating to Scientific, Technical &
Medical determined to have indefinite lives based on an assessment of their historical longevity and stable market positions. In 2015,
following a review by management, £280m of brands and imprints relating to Scientific, Technical and Medical previously determined to
have an indefinite useful life were assigned a useful life of 20 years. Indefinite lived intangibles are tested for impairment at least annually.
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148
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
17 Investments
Accounting policy
Investments, other than investments in joint arrangements and associates, are stated in the statement of financial position at fair
value. Investments held as part of the venture capital portfolio are classified as held for trading, with changes in fair value reported
in disposals and other non-operating items in the income statement. All other investments are classified as available for sale with
changes in fair value recognised directly in equity until the investment is disposed of or is determined to be impaired, at which time
the cumulative gain or loss previously recognised in equity is brought into the net profit or loss for the period. All items recognised
in the income statement relating to investments, other than investments in joint arrangements and associates, are reported as
disposals and other non-operating items.
Available for sale investments and venture capital investments held for trading represent investments in listed and unlisted
securities. The fair value of listed securities is determined based on quoted market prices, and of unlisted securities on
management’s estimate of fair value based on standard valuation techniques, including market comparisons and discounts of
future cash flows, having regard to maximising the use of observable inputs and adjusting for risk. Advice from valuation experts
is used as appropriate.
All joint arrangements are classified as joint ventures because the Group shares joint control and has rights to the net assets of the
arrangements. Investments in joint ventures and associates are accounted for under the equity method and stated in the statement
of financial position at cost as adjusted for post-acquisition changes in the Group’s share of net assets, less any impairment in value.
Investments in joint ventures
Available for sale investments
Venture capital investments held for trading
Total
2016
£m
102
2
135
239
2015
£m
101
2
139
242
The value of venture capital investments and available for sale investments has been determined by reference to other observable
market inputs or, when these are not available, by reference to inputs we believe would reflect the assumptions market participants
would use. Gains and losses included in the consolidated income statement are provided in note 9.
An analysis of changes in the carrying value of investments in joint ventures is set out below:
At start of year
Share of results of joint ventures
Dividends received from joint ventures
Disposals and transfers
Additions
Exchange translation differences
At end of year
2016
£m
101
37
(44)
(7)
1
14
102
2015
£m
125
64
(57)
(34)
8
(5)
101
Financial statements and other information Notes to the consolidated financial statements
149
17 Investments (continued)
Summarised aggregate information in respect of the Group’s share of joint ventures is set out below:
Revenue
Net profit for the year
Total assets
Total liabilities
Net assets
Goodwill
Total
RELX Group 's share
2016
£m
131
37
92
(49)
43
59
102
2015
£m
152
64
83
(45)
38
63
101
The Group’s consolidated other comprehensive income includes no income or losses relating to joint ventures in either period.
18 Property, plant and equipment
Accounting policy
Property, plant and equipment are stated in the statement of financial position at cost less accumulated depreciation. No depreciation
is provided on freehold land. Freehold buildings and long leases are depreciated over their estimated useful lives up to a maximum
of 50 years. Short leases are written off over the duration of the lease. Depreciation is provided on other assets on a straight-line
basis over their estimated useful lives as follows:
– land and buildings: land – not depreciated; leasehold improvements – shorter of life of lease and 10 years;
– fixtures and equipment: plant – 3 to 20 years; office furniture, fixtures and fittings – 5 to 10 years; computer systems,
communication networks and equipment – 3 to 7 years.
Cost
At start of year
Acquisitions
Capital expenditure
Disposals/reclassified as held for sale
Exchange translation differences
At end of year
Accumulated depreciation
At start of year
Charge for the year
Disposals/reclassified as held for sale
Exchange translation differences
At end of year
2016
Land and
buildings
£m
Fixtures and
equipment
£m
205
–
6
(13)
33
231
117
9
(7)
20
139
595
1
48
(52)
95
687
454
59
(50)
74
537
2015
Land and
buildings
£m
Fixtures and
equipment
£m
201
–
8
(11)
7
205
114
9
(10)
4
117
600
–
68
(89)
16
595
460
62
(80)
12
454
Total
£m
800
1
54
(65)
128
918
571
68
(57)
94
676
Total
£m
801
–
76
(100)
23
800
574
71
(90)
16
571
Net book amount
92
150
242
88
141
229
No depreciation is provided on freehold land of £16m (2015: £14m). The net book amount of property, plant and equipment at
31 December 2016 includes £20m (2015: £19m) in respect of assets held under finance leases relating to fixtures and equipment.
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150
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
19 Financial instruments
Accounting policy
Financial instruments comprise investments (other than investments in joint ventures or associates), trade receivables, cash and
cash equivalents, payables and accruals, borrowings and derivative financial instruments.
Investments (other than investments in joint ventures and associates) are classified as either held for trading or available for sale,
as described in note 17. (These investments are typically classified as either Level 2 or 3 in the IFRS13 fair value hierarchy.) The fair
value of such investments is based on standard valuation techniques, including market comparisons and discounts of future cash
flows, having regard to maximising the use of observable inputs and adjusting for risk.
Trade receivables are carried in the statement of financial position at invoiced value less allowance for estimated irrecoverable
amounts. Irrecoverable amounts are estimated based on the ageing of trade receivables, experience and circumstance.
Borrowings and payables are recorded initially at fair value and subsequently carried at amortised cost (other than fixed rate
borrowings in designated hedging relationships for which the carrying amount of the hedged portion of the borrowings is
subsequently adjusted for the gain or loss attributable to the hedged risk).
Derivative financial instruments are used to hedge interest rate and foreign exchange risks. Where an effective hedge is in place
against changes in the fair value of fixed rate borrowings, the hedged borrowings are adjusted for changes in fair value attributable
to the risk being hedged with a corresponding income or expense included in the income statement within finance costs. The
offsetting gains or losses from remeasuring the fair value of the related derivatives are also recognised in the income statement
within finance costs. When the related derivative expires, is sold or terminated, or no longer qualifies for hedge accounting, the
cumulative change in fair value of the hedged borrowing is amortised in the income statement over the period to maturity of the
borrowing using the effective interest method.
Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are
recognised (net of tax) in other comprehensive income and accumulated in the hedge reserve. If a hedged firm commitment or
forecasted transaction results in the recognition of a non-financial asset or liability, then, at the time that the asset or liability is
recognised, the associated gains or losses on the derivative that had previously been recognised in other comprehensive income are
included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of an asset or a liability,
amounts deferred in the hedge reserve are recognised in the income statement in the same period in which the hedged item affects
net profit or loss. Any ineffective portion of hedges is recognised immediately in the income statement.
Cash flow hedge accounting is discontinued when a hedging instrument expires or is sold, terminated or exercised, or no longer
qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in other
comprehensive income is either retained in the hedge reserve until the firm commitment or forecasted transaction occurs, or,
where a hedged transaction is no longer expected to occur, is immediately credited or expensed in the income statement.
Derivative financial instruments that are not designated as hedging instruments are classified as held for trading and recorded in
the statement of financial position at fair value, with changes in fair value recognised in the income statement.
The fair values of interest rate swaps, interest rate options, forward rate agreements and forward foreign exchange contracts
represent the replacement costs calculated using observable market rates of interest and exchange. The fair value of long-term
borrowings is calculated by discounting expected future cash flows at observable market rates. (These instruments are accordingly
classified as Level 2 in the IFRS13 fair value hierarchy.)
The main financial risks faced by the Group are liquidity risk, market risk – comprising interest rate risk and foreign exchange risk –
and credit risk. Financial instruments are used to finance the Group's businesses and to hedge interest rate and foreign exchange risks.
The Group’s businesses do not enter into speculative derivative transactions. Details of financial instruments subject to liquidity,
market and credit risks are described below.
Liquidity risk
The Group maintains a range of borrowing facilities and debt programmes to fund its requirements at competitive rates.
The balance of long-term debt, short-term debt and committed bank facilities is managed to provide security of funding, taking into account the
cash generation cycle of the business and the uncertain size and timing of acquisition spend. To accommodate the significant free cash flow
generated by the Group and to capitalise on an inexpensive source of funding, a meaningful portion of the overall debt portfolio is typically kept
short-term as long as there exists acceptable liquidity in the commercial paper markets and sufficient capacity under committed credit lines.
The Group's treasury policies ensure adequate liquidity by requiring that (a) no more than $1.5bn of term debt matures in any 12-month period,
(b) the sum of term debt maturing over the ensuing 12 months plus short-term borrowings is less than the sum of available cash plus
committed facilities and (c) minimum levels of borrowing with maturities over three and five years are maintained.
The treasury policies ensure debt efficiency by (a) targeting certain levels of short-term borrowings across a given year, (b) maintaining a
weighted average maturity of the gross debt portfolio of approximately 5 years and (c) minimising surplus cash balances. From time to time,
based on cash flow and market conditions, the Group may redeem term debt early or repurchase outstanding debt in the open market.
Financial statements and other information Notes to the consolidated financial statements
151
19 Financial instruments (continued)
Debt is issued to meet the funding requirements of various jurisdictions and in the currencies that are needed. It is recognised that debt
can act as a natural translation hedge of earnings, net assets and net cash flow in currencies other than the reporting currency. For this
reason, the majority of the Group’s net debt is denominated in US dollars and euros, reflecting the Group’s largest geographical
markets.
There were no changes to the Group’s long-term approach to capital and liquidity management during the year.
The remaining contractual maturities for borrowings and derivative financial instruments are shown in the table below. The table shows
undiscounted principal and interest cash flows and includes contractual gross cash flows to be exchanged as part of cross-currency
interest rate swaps and forward foreign exchange contracts where there is a legal right of set-off.
At 31 December 2016
Borrowings
Fixed rate borrowings
Floating rate borrowings
Derivative financial liabilities
Interest rate derivatives
Cross-currency interest rate swaps
Forward foreign exchange contracts
Derivative financial assets
Interest rate derivatives
Cross-currency interest rate swaps
Forward foreign exchange contracts
Total
At 31 December 2015
Borrowings
Fixed rate borrowings
Floating rate borrowings
Derivative financial liabilities
Cross-currency interest rate swaps
Forward foreign exchange contracts
Derivative financial assets
Interest rate derivatives
Cross-currency interest rate swaps
Forward foreign exchange contracts
Total
Carrying
amount
£m
Within
1 year
£m
1-2 years
£m
2-3 years
£m
3-4 years
£m
4-5 years
£m
More than
5 years
£m
Total
£m
Contractual cash flow
(3,937)
(906)
(479)
(822)
(345)
(2)
(733)
(82)
(555)
–
(72)
–
(2,617)
(4)
(4,801)
(910)
(14)
(37)
(144)
–
(21)
(1,675)
35
13
21
(4,969)
17
9
1,598
(1,373)
–
(252)
(512)
8
234
467
(402)
(1)
(18)
(215)
8
7
205
(829)
(2)
(20)
(51)
9
7
51
(561)
(2)
(20)
–
–
7
–
(87)
(12)
(618)
–
(17)
(949)
(2,453)
–
539
–
(2,712)
42
803
2,321
(5,964)
Carrying
amount
£m
(3,288)
(614)
Within
1 year
£m
(548)
(221)
(35)
(74)
(20)
(1,233)
36
2
44
(3,929)
14
8
1,210
(790)
Contractual cash flow
1-2 years
£m
2-3 years
£m
3-4 years
£m
4-5 years
£m
More than
5 years
£m
Total
£m
(445)
(261)
(18)
(445)
13
8
430
(718)
(285)
(137)
(211)
(201)
5
196
203
(430)
(655)
–
(469)
–
(1,679)
(3)
(4,081)
(622)
(15)
(43)
4
5
44
(660)
(16)
–
(532)
–
(812)
(1,922)
4
6
–
(475)
–
470
–
(1,744)
40
693
1,887
(4,817)
The carrying amount of derivative financial liabilities comprises £16m (2015: £16m) in relation to fair value hedges, £153m (2015: £80m)
in relation to cash flow hedges and £30m (2015: £13m) not designated as hedging instruments, less £4m of cash collateral paid to swap
counterparties which has been offset against the related derivative financial liabilities (2015: £5m of cash collateral received which has
been offset against the related derivative financial assets) (see 'Credit risk' below). The carrying amount of derivative financial assets
comprises £32m (2015: £36m) in relation to fair value hedges, £22m (2015: £41m) in relation to cash flow hedges and £15m (2015: £10m)
not designated as hedging instruments. The expected cash flows in respect of the cash collateral have been included in the tables above
together with the cash flows for the related cross-currency interest rate swaps.
At 31 December 2016, the Group had access to a $2,000m committed bank facility maturing in July 2020, which was undrawn. This facility
backs up short-term borrowings. All borrowings that mature within the next two years can be covered by the facility and by utilising
available cash resources.
The committed bank facility, together with certain private placements, is subject to financial covenants typical to the Group’s size and
financial strength. The Group had significant headroom within these covenants for the year ended 31 December 2016. There are no
financial covenants in any outstanding public bonds.
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152
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
19 Financial instruments (continued)
Market risk
The Group’s primary market risks are to interest rate fluctuations and exchange rate movements. Derivatives are used to hedge or
reduce the risks of interest rate and exchange rate movements and are not entered into unless such risks exist. Derivatives used by
the Group for hedging a particular risk are not specialised and are generally available from numerous sources. The impact of market
risks on net post-employment benefit obligations and taxation is excluded from the following market risk sensitivity analysis.
Interest rate exposure management
The Group’s interest rate exposure management policy aims to minimise interest costs with an acceptable level of year on year volatility.
To achieve this, the Group uses fixed rate term debt, interest rate swaps, forward rate agreements and interest rate options. Interest
rate derivatives are used only to hedge an underlying risk and no net market positions are held.
At 31 December 2016, 46% of gross borrowings were either fixed rate or had been fixed through the use of interest rate swaps, forward
rate agreements and options. A 100 basis point reduction in interest rates would result in an estimated decrease in net finance costs of
£25m (2015: £18m), based on the composition of financial instruments including cash, cash equivalents, bank loans and commercial
paper borrowings at 31 December 2016. A 100 basis point rise in interest rates would result in an estimated increase in net finance costs
of £25m (2015: £18m).
The impact on net equity of a theoretical change in interest rates as at 31 December 2016 is restricted to the change in carrying value
of floating rate to fixed rate interest rate derivatives in a designated cash flow hedge relationship and undesignated interest rate
derivatives. A 100 basis point reduction in interest rates would result in an estimated increase in net equity of £2m (2015: not applicable
as no such derivatives) and a 100 basis point increase in interest rates would reduce net equity by an estimated £2m (2015: not applicable
as no such derivatives). The impact of a change in interest rates on the carrying value of fixed rate borrowings in a designated fair value
hedge relationship would be offset by the change in carrying value of the related interest rate derivative. Fixed rate borrowings not in a
designated hedging relationship are carried at amortised cost.
Foreign currency exposure management
Translation exposures arise on the earnings and net assets of business operations in countries other than those of each parent
company. Some of these exposures are offset by denominating borrowings in US dollars, euros and other currencies. Currency
exposures on transactions denominated in a foreign currency are generally hedged using forward contracts. In addition, recurring
transactions and future investment exposures may be hedged, in advance of becoming contractual. The precise policy differs according
to the specific circumstances of the individual businesses. Highly predictable future cash flows may be covered for transactions
expected to occur during the next 24 months (50 months for the Scientific, Technical & Medical subscription businesses) within limits
defined according to the period before the transaction is expected to become contractual. Cover takes the form of foreign exchange
forward contracts.
As at 31 December 2016, the amount of outstanding foreign exchange cover against future transactions was £1.5bn (2015: £1.4bn).
A theoretical weakening of all currencies by 10% against sterling at 31 December 2016 would decrease the carrying value of net
assets, excluding net borrowings, by £658m (2015: £541m). This would be offset to a degree by a decrease in net borrowings of £389m
(2015: £286m). A strengthening of all currencies by 10% against sterling at 31 December 2016 would increase the carrying value of net
assets, excluding net borrowings, by £658m (2015: £541m) and increase net borrowings by £389m (2015: £286m).
A retranslation of the Group's net profit for the year, assuming a 10% weakening of all foreign currencies against sterling but excluding
transactional exposures, would reduce net profit by £105m (2015: £86m). A 10% strengthening of all foreign currencies against sterling
on this basis would increase net profit for the year by £105m (2015: £86m).
Credit risk
The Group seeks to manage interest rate risk and limit foreign exchange risks described above by the use of financial instruments and as
a result has a credit risk from the potential non-performance by the counterparties to these financial instruments, which are unsecured.
The amount of this credit risk is normally restricted to the amounts of any hedge gain and not the principal amount being hedged. The
Group also has a credit exposure to counterparties for the full principal amount of cash and cash equivalents. Credit risks are controlled
by monitoring the credit quality of these counterparties, principally licensed commercial banks and investment banks with strong
long-term credit ratings, and the amounts outstanding with each of them.
In certain situations, the Group enters into credit support arrangements with derivative counterparties to mitigate the credit exposures
arising from hedge gains on the related financial instruments. Under these arrangements, the Group receives (or pays) cash collateral
equal to the mark to market valuation of the related derivative asset (or liability) on monthly settlement dates. At 31 December 2016,
£4m of cash collateral had been paid, and the resulting receivable balance was offset against the related derivative liabilities of £5m in
the statement of financial position (2015: £5m of cash collateral received and the resulting payable balance offset against the related
derivative assets of nil).
The Group has treasury policies in place which do not allow concentrations of risk with individual counterparties and do not allow
significant treasury exposures with counterparties which are rated lower than A-/A3 by Standard & Poor’s, Moody’s and Fitch.
At 31 December 2016, cash and cash equivalents totalled £162m (2015: £122m), of which 94% (2015: 91%) was held with banks rated
A-/A3 or better.
Financial statements and other information Notes to the consolidated financial statements
153
19 Financial instruments (continued)
The Group also has credit risk with respect to trade receivables due from its customers, which include national and state governments,
academic institutions and large and small enterprises including law firms, book stores and wholesalers. The concentration of credit
risk from trade receivables is limited due to the large and broad customer base. Trade receivable exposures are managed locally in the
business units where they arise. Where appropriate, business units seek to minimise this exposure by taking payment in advance and
through management of credit terms. Allowance is made for bad and doubtful debts based on management’s assessment of the risk
taking into account the ageing profile, experience and circumstance. The maximum exposure to credit risk is represented by the
carrying amount of each financial asset, including derivative financial instruments, recorded in the statement of financial position.
Included within trade receivables are the following amounts which are past due but for which no allowance has been made: past due up
to one month £187m (2015: £146m); past due two to three months £96m (2015: £76m); past due four to six months £45m (2015: £40m); and
past due greater than six months £31m (2015: £17m). Examples of trade receivables which are past due but for which no allowance has
been made include those receivables where there is no concern over the creditworthiness of the customer and where the history
of dealings with the customer indicate the amount will be settled.
Hedge accounting
The hedging relationships that are designated under IAS 39 – Financial Instruments are described below.
Fair value hedges
The Group has entered into interest rate swaps and cross-currency interest rate swaps to hedge the exposure to changes in the fair
value of fixed rate borrowings due to interest rate and foreign currency movements which could affect the income statement. Interest
rate derivatives (including cross-currency interest rate swaps) with a principal amount of £1,403m were in place at 31 December 2016
swapping fixed rate term debt issues denominated in US dollars (USD) and euros to floating rate USD and euro debt respectively for the
whole or part of their term (2015: £897m swapping fixed rate term debt issues denominated in USD, sterling and euros to floating rate
USD, sterling and euro debt respectively for the whole or part of their term).
The gains and losses on the borrowings and related derivatives designated as fair value hedges, which are included in the income
statement, for the three years ended 31 December 2016 were as follows:
GAINS/(LOSSES) ON BORROWINGS
AND
RELATED DERIVATIVES
1 January
2014
£m
Fair value
movement
gain/(loss)
£m
Exchange
gain/(loss)
£m
1 January
2015
£m
Fair value
movement
gain/(loss)
£m
Exchange
gain/(loss)
£m
1 January
2016
£m
Fair value
movement
gain/(loss)
£m
De-
Designated
£m
Exchange
gain/
(loss)
£m
31
December
2016
£m
USD debt
Related interest rate swaps
GBP debt
Related interest rate swaps
EUR debt
Related interest rate swaps
Swiss franc (CHF) debt
Related CHF to USD
cross-currency interest
rate swaps
6
(6)
–
(19)
19
–
4
(4)
–
(65)
65
–
(3)
3
–
(1)
1
–
(31)
31
–
65
(65)
–
Total relating to USD, GBP, EUR
and CHF debt
(74)
30
Total related interest rate
swaps
Net loss
74
–
(30)
–
–
–
–
–
–
–
1
(1)
–
–
–
–
1
(1)
–
3
(3)
–
(20)
20
–
(26)
26
–
–
–
–
(2)
2
–
6
(6)
–
15
(16)
(1)
–
–
–
(43)
19
43
–
(20)
(1)
1
(1)
–
–
–
–
2
(2)
–
–
–
–
3
(3)
–
2
(2)
–
(14)
14
–
(9)
8
(1)
–
–
–
13
(13)
–
–
–
–
(21)
21
–
–
–
–
–
–
–
14
(14)
–
–
–
–
–
–
–
1
(1)
–
–
–
–
(3)
3
–
–
–
–
16
(16)
–
–
–
–
(33)
32
(1)
–
–
–
(21)
(8)
14
(2)
(17)
20
(1)
8
–
(14)
–
2
–
16
(1)
All fair value hedges were highly effective throughout the three years ended 31 December 2016.
Gross borrowings as at 31 December 2016 included £30m (2015: £28m) in relation to fair value adjustments to borrowings previously
designated in a fair value hedge relationship which were de-designated in 2008. The related derivatives were closed out on
de-designation with a cash inflow of £62m. £3m (2015: £3m) of these fair value adjustments were amortised in the year as a reduction
to finance costs.
Gross borrowings also included £6m (2015: nil) in relation to fair value adjustments to borrowings previously designated in a fair value
hedging relationship which were de-designated during the year. £8m (2015: nil) of these fair value adjustments were amortised in the
year as a reduction to finance costs. The related derivatives remained on the balance sheet at 31 December 2016 with a carrying value of
£8m (2015: £14m).
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154
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
19 Financial instruments (continued)
Cash flow hedges
The Group enters into two types of cash flow hedge:
1
2
Debt hedges comprising interest rate derivatives which fix the interest expense on a portion of forecast floating rate debt (including
commercial paper, short-term bank loans and floating rate term debt), and cross-currency interest rate derivatives which hedge
the cash flow exposure arising from foreign currency denominated debt.
Revenue hedges comprising forward foreign exchange contracts which fix the exchange rate on a portion of future foreign currency
subscription revenues forecast by the businesses for up to 50 months.
Movements in the hedge reserve in 2015 and 2016, including gains and losses on cash flow hedging instruments, were as follows:
Hedge reserve at 1 January 2015: gains deferred
Losses arising in 2015
Amounts recognised in income statement
Exchange translation differences
Hedge reserve at 1 January 2016: gains/(losses) deferred
Losses arising in 2016
Amounts recognised in income statement
Exchange translation differences
Hedge reserve at 31 December 2016: gains/(losses) deferred
Debt
hedges
£m
Revenue
hedges
£m
Total hedge
reserve
pre-tax
£m
6
(48)
48
–
6
(26)
27
1
8
29
(56)
(19)
2
(44)
(139)
19
(5)
(169)
35
(104)
29
2
(38)
(165)
46
(4)
(161)
All cash flow hedges were highly effective throughout the two years ended 31 December 2016.
A deferred tax credit of £28m (2015: credit of £8m; 2014: charge of £10m) in respect of the above gains and losses at 31 December 2016
was also deferred in the hedge reserve.
Of the amounts recognised in the income statement in the year, losses of £19m (2015: gains of £19m; 2014: gains of £37m) were
recognised in revenue, and losses of £27m (2015: £48m; 2014: £56m) were recognised in finance costs. A tax credit of £12m (2015: credit
of £1m; 2014: charge of £9m) was recognised in relation to these items.
The deferred gains and losses on cash flow hedges at 31 December 2016 are currently expected to be recognised in the income
statement in future years as follows:
2017
2018
2019
2020
2021 and beyond
Gains/(losses) deferred in hedge reserve at end of year
Debt
hedges
£m
Revenue
hedges
£m
Total hedge
reserve
pre-tax
£m
–
3
(2)
(2)
9
8
(87)
(55)
(26)
(1)
–
(169)
(87)
(52)
(28)
(3)
9
(161)
The cash flows for these hedges are expected to occur in line with the recognition of the gains and losses in the income statement, other
than in respect of certain forward foreign exchange hedges on subscriptions, where cash flows may be expected to occur in advance of
the subscription year.
Financial statements and other information Notes to the consolidated financial statements
155
20 Inventories and pre-publication costs
Accounting policy
Inventories and pre-publication costs are stated at the lower of cost, including appropriate attributable overhead, and estimated net
realisable value. Such costs typically comprise direct internal labour costs and externally commissioned editorial and other fees.
Pre-publication costs, representing costs incurred in the origination of content prior to publication, are expensed systematically
reflecting the expected sales profile over the estimated economic lives of the related products, generally up to five years.
Annual reviews are carried out to assess the recoverability of carrying amounts.
Raw materials
Pre-publication costs
Finished goods
Total
21 Trade and other receivables
Trade receivables
Allowance for doubtful debts
Prepayments and accrued income
Total
2016
£m
2
152
55
209
2016
£m
1,782
(56)
1,726
230
1,956
2015
£m
1
101
56
158
2015
£m
1,461
(51)
1,410
191
1,601
Trade receivables are predominantly non-interest bearing and their carrying amounts approximate to their fair value.
Trade receivables are stated net of a provision for allowances for doubtful debts. The movements in the provision during the year were
as follows:
At start of year
Charge for the year
Trade receivables written off
Exchange translation differences
At end of year
22 Trade and other payables
Trade payables
Accruals
Social security and other taxes
Other payables
Deferred income
Total
2016
£m
51
4
(6)
7
56
2016
£m
297
650
114
423
1,941
3,425
2015
£m
50
11
(9)
(1)
51
2015
£m
244
529
94
395
1,639
2,901
Trade and other payables are predominately non-interest bearing and their carrying amounts approximate to their fair value.
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156
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
23 Borrowings
Accounting policy
Borrowings are recorded initially at fair value and subsequently carried at amortised cost, other than fixed rate borrowings in
designated hedging relationships for which the carrying amount of the hedged portion of the borrowings is subsequently adjusted
for the gain or loss attributable to the hedged risk. When the related derivative in such a hedging relationship expires, is sold or
terminated, or no longer qualifies for hedge accounting, the cumulative change in fair value of the hedged borrowing is amortised in
the income statement over the period to maturity of the borrowing using the effective interest method.
Financial liabilities measured at amortised cost:
Short-term bank loans, overdrafts and commercial paper
Term debt
Finance leases
Term debt in fair value hedging relationships
Term debt previously in fair value hedging relationships
Total
2016
Falling due
within
1 year
£m
Falling due in
more than
1 year
£m
521
299
5
–
334
1,159
–
2,021
9
1,399
255
3,684
2015
Falling due
within
1 year
£m
Falling due in
more than
1 year
£m
218
400
6
–
–
624
–
1,527
9
1,355
387
3,278
Total
£m
521
2,320
14
1,399
589
4,843
Total
£m
218
1,927
15
1,355
387
3,902
The total fair value of financial liabilities measured at amortised cost is £3,071m (2015: £2,366m). The total fair value of term debt in fair
value hedging relationships is £1,517m (2015: £1,439m). The total fair value of term debt previously in fair value hedging relationships is
£660m (2015: £488m).
The parent companies of the Group, RELX PLC and RELX NV, have given joint and several guarantees of certain long-term and
short-term borrowings issued by subsidiaries of RELX Group plc. Included within term debt above are debt securities issued by RELX
Capital Inc., a 100% indirectly-owned finance subsidiary of the parent companies, which have been registered with the US Securities and
Exchange Commission. The parent companies have fully and unconditionally guaranteed these securities, which are not guaranteed by
any other subsidiary of the parent companies.
Analysis by year of repayment
2016
2015
Short-term
bank loans,
overdrafts
and
commercial
paper
£m
Term debt
£m
Finance
leases
£m
521
–
–
–
–
–
–
521
633
219
700
496
–
2,260
3,675
4,308
5
4
3
2
–
–
9
14
Short-term
bank loans,
overdrafts
and
commercial
paper
£m
Term debt
£m
Finance
leases
£m
218
–
–
–
–
–
–
218
400
594
322
566
427
1,360
3,269
3,669
6
4
3
1
1
–
9
15
Total
£m
1,159
223
703
498
–
2,260
3,684
4,843
Total
£m
624
598
325
567
428
1,360
3,278
3,902
Within 1 year
Within 1 to 2 years
Within 2 to 3 years
Within 3 to 4 years
Within 4 to 5 years
After 5 years
After 1 year
Total
Short-term bank loans, overdrafts and commercial paper were backed up at 31 December 2016 by a $2,000m (£1,620m) committed bank
facility maturing in July 2020, which was undrawn.
Financial statements and other information Notes to the consolidated financial statements
157
23 Borrowings (continued)
Analysis by currency
2016
2015
Short-term
bank loans,
overdrafts
and
commercial
paper
£m
13
189
240
79
521
Term debt
£m
2,274
604
1,430
–
4,308
Finance
leases
£m
14
–
–
–
14
Total
£m
2,301
793
1,670
79
4,843
Short-term
bank loans,
overdrafts
and
commercial
paper
£m
136
–
49
33
218
Term debt
£m
1,971
1,010
688
–
3,669
Finance
leases
£m
15
–
–
–
15
Total
£m
2,122
1,010
737
33
3,902
US dollars
£ sterling
Euro
Other currencies
Total
Included in the US dollar amounts for term debt above is £732m (2015: £629m) of debt denominated in euros (€600m; 2015: €600m) and
Swiss francs (CHF 275m; 2015: CHF 275m) that was swapped into US dollars on issuance and against which there are related derivative
financial instruments, which, as at 31 December 2016, had a fair value of £39m (2015: £17m).
24 Lease arrangements
Accounting policy
Assets held under leases which confer rights and obligations similar to those attaching to owned assets are classified as assets
held under finance leases and capitalised within property, plant and equipment or software and the corresponding liability to pay
rentals is shown net of interest in the statement of financial position as obligations under finance leases. The capitalised value of the
assets is depreciated on a straight-line basis over the shorter of the periods of the leases or the useful lives of the assets concerned.
The interest element of the lease payments is allocated so as to produce a constant periodic rate of charge.
Operating lease rentals are charged to the income statement on a straight-line basis over the period of the leases. Rental income
from operating leases is recognised on a straight-line basis over the term of the relevant lease.
The Group has exposures to sub-lease shortfalls in respect of certain property leases for periods up to 2024. Provisions are
recognised for net liabilities expected to arise on these exposures. Estimation of the provisions requires judgement in respect
of future head lease costs, sub-lease income and the length of vacancy periods.
Finance leases
At 31 December 2016, future finance lease obligations fall due as follows:
Within one year
In the second to fifth years inclusive
Less: future finance charges
Total
Present value of future finance lease obligations payable:
Within one year
In the second to fifth years inclusive
Total
The fair value of the lease obligations approximates to their carrying amount.
2016
£m
2015
£m
5
9
14
–
14
5
9
14
6
9
15
–
15
6
9
15
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158
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
24 Lease arrangements (continued)
Operating leases
At 31 December 2016, outstanding commitments under non-cancellable operating leases fall due as follows:
Within one year
In the second to fifth years inclusive
After five years
Total
2016
£m
114
338
115
567
2015
£m
98
292
143
533
The Group leases various properties, principally offices, which have varying terms and renewal rights that are typical to the territory in
which they are located. Of the above outstanding commitments, £559m (2015: £524m) relate to land and buildings.
The Group has a number of properties that are sub-leased. The future lease receivables contracted with sub-tenants fall due as follows:
Within one year
In the second to fifth years inclusive
After five years
Total
25 Provisions
2016
£m
17
68
–
85
2015
£m
15
48
11
74
Accounting policy
Provisions are recognised when a present obligation exists as a result of a past event, the obligation is reasonably estimable, and it
is probable that settlement will be required. Provisions are measured at the best estimate of the expenditure required to settle the
obligation at the statement of financial position date.
At start of year
Charged
Utilised
Exchange translation differences
Total
2016
£m
121
–
(24)
15
112
2015
£m
123
13
(20)
5
121
Provisions principally relate to leasehold properties, including sub-lease shortfalls and guarantees given in respect of certain property
leases for various periods up to 2024.
At 31 December 2016, provisions are included within current and non-current liabilities as follows:
Current liabilities
Non-current liabilities
Total
2016
£m
23
89
112
2015
£m
21
100
121
Financial statements and other information Notes to the consolidated financial statements
159
26 Share capital, share premium and shares held in treasury
Accounting policy
Shares of RELX PLC and RELX NV that are repurchased by the respective parent companies and not cancelled are classified as
shares held in treasury. The consideration paid, including directly attributable costs, is recognised as a deduction from equity.
Shares of the parent companies that are purchased by the Employee Benefit Trust are also classified as shares held in treasury,
with the cost recognised as a deduction from equity. The consolidated share capital of the Group is the aggregate of the RELX PLC
and RELX NV individual share capitals.
RELX PLC
CALLED UP SHARE CAPITAL – ISSUED AND FULLY PAID
At start of year
Issue of ordinary shares
Cancellation of shares
At end of year
RELX NV
CALLED UP SHARE CAPITAL – ISSUED AND FULLY PAID
At start of year
Issue of ordinary shares
Bonus issue of ordinary shares
Cancellation of shares
At end of year
At end of year*
No. of shares
1,175,914,837
1,907,786
(33,700,000)
1,144,122,623
No. of shares
1,048,162,690
1,730,714
–
(30,000,000)
1,019,893,404
2016
£m
170
–
(5)
165
2016
€m
73
–
–
(2)
71
£m
61
No. of shares
1,205,397,320
2,017,517
(31,500,000)
1,175,914,837
No. of shares
697,153,245
1,926,109
349,083,336
–
1,048,162,690
2015
£m
174
–
(4)
170
2015
€m
49
–
24
–
73
£m
54
* The RELX NV sterling information has been translated using the exchange rates as disclosed in note 29 to the consolidated
financial statements.
NUMBER OF ORDINARY SHARES
Year ended 31 December
RELX PLC
At start of period
Issue of ordinary shares
Repurchase of ordinary shares*
Net release of shares by the Employee Benefit Trust
Cancellation of shares
At end of year
RELX NV
At start of period
Issue of ordinary shares
Repurchase of ordinary shares*
Bonus issue
Net release of shares by the Employee Benefit Trust
Cancellation of shares
At end of year
Shares in
issue
(millions)
Treasury
shares
(millions)
2016
Shares in
issue net of
treasury
shares
(millions)
2015
Shares in
issue net of
treasury
shares
(millions)
1,175.9
1.9
–
–
(33.7)
1,144.1
1,048.2
1.7
–
–
–
(30.0)
1,019.9
(69.3)
–
(29.2)
1.2
33.7
(63.6)
(62.9)
–
(26.1)
–
1.3
30.0
(57.7)
1,106.6
1.9
(29.2)
1.2
–
1,080.5
1,127.7
2.0
(25.7)
2.6
–
1,106.6
985.3
1.7
(26.1)
–
1.3
–
962.2
650.5
1.9
(15.8)
347.2
1.5
–
985.3
*2015 numbers adjusted to reflect the bonus issue of RELX NV shares declared on 30 June 2015, a total of 45.8m RELX PLC and RELX NV
shares were repurchased in 2015.
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160
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
26 Share capital, share premium and shares held in treasury (continued)
During the year, RELX PLC repurchased 29.2m (2015: 25.7m; 2014: 35.2m) RELX PLC ordinary shares for an average price of 1,279p and
RELX NV repurchased 26.1m (2015: 15.8m; 2014: 20.4m) RELX NV ordinary shares for an average price of €15.14. The total consideration
for the repurchases was £700m (2015: £500m; 2014: £600m). These shares are held in treasury.
The Employee Benefit Trust purchases RELX PLC and RELX NV shares which, at the trustees’ discretion, can be used in respect of
the exercise of share options and to meet commitments under conditional share awards. During the year, the Employee Benefit Trust
purchased 1.2m RELX PLC shares and 1.1m RELX NV shares for a total cost of £29m (2015: £23m; 2014: £39m). At 31 December 2016,
shares held by the Employee Benefit Trust were £81m (2015: £90m) at cost.
The issue of ordinary shares in the year relates to the exercise of share options. Details of share option and conditional share schemes
are set out in note 7 on page 133.
All of the RELX PLC and RELX NV ordinary shares rank equally with respect to voting rights and rights to receive dividends, except for
shares held in treasury by the respective parent company, which do not attract voting or dividend rights. There are no restrictions on
the rights to transfer shares.
At 31 December 2016, RELX PLC shares held in treasury related to 4,229,442 (2015: 5,454,942) RELX PLC ordinary shares held by
the Employee Benefit Trust; and 59,415,287 (2015: 63,879,780) RELX PLC ordinary shares held by the parent company. At 31 December
2016, RELX PLC shares held by the Employee Benefit Trust were £38m (2015: £41m) at cost. During December 2016, 33.7m (2015: 31.5m)
RELX PLC ordinary shares held in treasury were cancelled.
At 31 December 2016, RELX NV shares held in treasury related to 4,519,358 (2015: 5,740,212) RELX NV ordinary shares held by the
Employee Benefit Trust; and 53,204,378 (2015: 57,113,394) RELX NV ordinary shares held by the parent company. At 31 December 2016,
RELX NV shares held by the Employee Benefit Trust were £43m (2015: £49m) at cost. During December 2016, 30.0m (2015: nil) RELX NV
ordinary shares held in treasury were cancelled.
On 8 December 2016, RELX PLC and RELX NV announced a non-discretionary programme to repurchase further ordinary shares up
to the value of £100m. At 31 December 2016, an accrual of £100m was recognised in respect of this non-discretionary commitment.
A further 3.7m RELX PLC ordinary shares and 3.3m RELX NV ordinary shares have been repurchased in January and February 2017
under this programme.
A bonus share issue was declared on 30 June 2015 for existing RELX NV shareholders on the basis of 0.538 bonus shares for each RELX
NV ordinary share held. A total of 349.1m RELX NV ordinary shares were issued, of which 1.9m were held by the Employee Benefit Trust.
27 Other reserves
At start of year
Profit attributable to parent companies’ shareholders
Dividends paid
Actuarial (losses)/gains on defined benefit pension schemes
Fair value movements on cash flow hedges
Transfer to net profit from cash flow hedge reserve
Tax recognised in other comprehensive income
Increase in share based remuneration reserve (net of tax)
Cancellation of shares
Settlement of share awards
Exchange translation differences
At end of year
Hedge
reserve
2016
£m
Other
reserves
2016
£m
(30)
–
–
–
(165)
46
19
–
–
–
(3)
(133)
371
1,161
(683)
(262)
–
–
45
44
(707)
(39)
38
(32)
Total
2016
£m
341
1,161
(683)
(262)
(165)
46
64
44
(707)
(39)
35
(165)
Total
2015
£m
107
1,008
(583)
157
(104)
29
(16)
47
(265)
(49)
10
341
Other reserves principally comprise retained earnings and the share based remuneration reserve.
Financial statements and other information Notes to the consolidated financial statements
161
28 Related party transactions
Transactions between RELX PLC, RELX NV, RELX Group plc and subsidiaries of the Group have been eliminated within the consolidated
financial statements. Transactions with joint ventures were made on normal market terms of trading and comprise sales of goods and
services of £2m (2015: nil; 2014: nil). There were no transactions related to the rendering and receiving of services (2015: £14.0m; 2014:
nil). As at 31 December 2016, amounts owed by joint ventures were nil (2015: £1m; 2014: £1m) and amounts due to joint ventures were nil
(2015: £1m; 2014: £6m). See note 6 for details of the Group’s participation in defined benefit pension schemes.
Key management personnel are also related parties as defined by IAS 24 – Related Party Disclosures and comprise the Executive
and Non-Executive Directors of RELX PLC and RELX NV. Key management personnel remuneration is set out below. For reporting
purposes, salary, benefits and annual incentive payments are considered short-term employee benefits.
KEY MANAGEMENT PERSONNEL REMUNERATION
Salaries, other short-term employee benefits and non-executive fees
Post-employment benefits
Share based remuneration*
Total
2016
£m
5
1
5
11
2015
£m
5
1
5
11
EXECUTIVE DIRECTORS
Total executive directors
Salary
£’000
1,843
1,797
1,763
Benefits
£’000
88
92
236
Annual
incentive
£’000
1,881
1,889
1,855
Cost of share
based
remuneration*
£’000
Cost of
pension
provision*
£’000
5,409
5,181
5,284
1,052
966
711
2016
2015
2014
2014
£m
5
1
5
11
Total
£’000
10,273
9,925
9,849
* The share based remuneration charge comprises the multi-year incentive scheme charges in accordance with IFRS 2 – Share Based
Payment. These IFRS 2 charges do not reflect the actual value received on vesting. The cost of pension provision comprises the transfer
value of the increase in accrued pension during the year (net of inflation, directors’ contributions and participation fee) for defined benefit
schemes and payments made to defined contribution schemes or in lieu of pension.
NON-EXECUTIVE DIRECTORS
Fees and benefits
2016
£’000
1,364
2015
£’000
1,145
2014
£’000
1,143
The remuneration of non-executive directors comprises fees for services, and benefits primarily relating to tax filing support in respect
of filings resulting from their directorships. No termination benefits were paid to directors during 2016 (2015: nil; 2014: £238,023).
No loans, advances or guarantees have been provided on behalf of any director. The aggregate gains made by executive directors on the
exercise of options during 2016 were £3,082,715 (2015: £1,474,715; 2014: £1,101,114).
29 Exchange rates
The following exchange rates have been applied in preparing the consolidated financial statements:
Euro to sterling
US dollars to sterling
30 Approval of financial statements
Income statement
2016
1.22
1.36
2015
1.38
1.53
2014
1.24
1.65
Statement of
financial position
2016
1.17
1.23
2015
1.36
1.47
The consolidated financial statements were approved and authorised for issue by the Boards of Directors of RELX PLC and RELX NV on
22 February 2017.
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162
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
31 Related undertakings
A full list of related undertakings (comprising subsidiaries, joint ventures, associates and other significant holdings) is set out below.
All are 100% owned directly or indirectly by the Group except where percentage ownership denoted in (x%).
Share
Class
Reg Office
Company Name
Australia
Adaptris Pty Ltd
Burwood Publications Pty Limited
Elsevier (Australia) Pty Ltd
Fair Events Pty Ltd (49%)
FircoSoft Australia Pty Ltd
First 4 Farming Australia Pty Ltd
LexisNexis Risk Solutions Assets Australia Pty Ltd
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary and
Redeemable
Preference
Ordinary
LexisNexis Risk Solutions Australia Pty Ltd
Units
LexisNexis Risk Solutions Unit Trust
Reed Elsevier Acquisition Company Pty Limited
Ordinary
Reed Elsevier Construction Information Services Pty Limited Ordinary
Ordinary
Reed Elsevier Holding Company Pty Limited
Ordinary
Reed Exhibitions Australia Pty Limited
Ordinary
Reed International Books Australia Pty Ltd
Ordinary
Reed Oz Comic-Con Pty Limited (80%)
Ordinary
RELX Australia Pty Limited
Austria
Expoxx Messebau GmbH
LexisNexis Verlag ARD ORAC GmbH & Co KG
ORAC Gesellschaft m.b.H.
Reed CEE GmbH
Reed Messe Salzburg GmbH
Reed Messe Wien GmbH
RELX Austria GmbH
System StandBau GmbH
Belgium
LexisNexis BVBA
First 4 Farming Europe NV
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Ordinary
Ordinary-A,
Ordinary-B
Registered Capital
MLex Belgium SPRL
Brazil
Elsevier Editora Ltda
Elsevier Participacoes Ltda
FIircoSoft Brazil Consultoria e Sevicos de Informatica Limitada Ordinary
LexisNexis Informações e Sistemas Empresariais Ltda.
LexisNexis Serviços de Análise de Risco Ltda.
MLex Brasil Midia Mercadologica Ltda
Reed Exhibitions Alcântara Machado Ltda.
Canada
LexisNexis Canada Inc.
Quotas
Quotas
Quotas shares
Quotas shares
Quotas
Quotas shares
Reed Exhibitions Inc.
RELX Canada Ltd.
Class A (non-voting),
Class B (voting)
Common
Unlimited Class A,
Unlimited Class B,
Unlimited Class C,
Unlimited Class D,
Unlimited Class E,
Unlimited Class F,
Unlimited Class G,
Unlimited Class H
Ordinary
Chile
Encyclopédie Médico-Chirurgicale Chile Limitada
China
Beijing Bakery China Exhibitions Co., Ltd (25%)
Registered Capital
Beijing Medtime Elsevier Education Technology Co., Ltd (49%) Registered Capital
Registered Capital
Beijing Reed Elsevier Science and Technology Co, Ltd
Registered Capital
Beijing Reed Guanghe Exhibition Co., Ltd (80%)
Registered Capital
CBI (Shanghai) Co Ltd
Registered Capital
C-One Energy Co Ltd
Registered Capital
Genilex Information Technology Co. Ltd. (40%)
Registered Capital
ICIS Consulting (Beijing) Co Ltd
Registered Capital
KeAi Communications Co Ltd (49%)
Registered Capital
LexisNexis Risk Solutions (Shanghai) Information
Technologies Co., Ltd.
MLex Consulting (Beijing) Co., Ltd
Reed Elsevier Information Technology (Beijing) Co. Ltd.
Reed Exhibitions (China) Co., Ltd
Reed Exhibitions (Shanghai) Co. Ltd
Reed Hongda Exhibitions (Henan) Co., Ltd (51%)
Reed Huabai Exhibitions (Beijing) Co., Ltd (51%)
Reed Huabo Exhibitions (Shenzhen) Co., Ltd (65%)
Reed Huaqun Exhibitions Co., Ltd (52%)
Reed Kuozhan Exhibitions (Shanghai) Co., Ltd (60%)
Reed Sinopharm Exhibitions Co. Ltd. (50%)
RELX (China) Investment Co., Ltd.
Shanghai CBI Business Development Co. Ltd
Shanghai Datong Medical Information Technology Co, Ltd
Shanghai SinoReal Exhibitions Co., Ltd (27.5%)
Colombia
LexisNexis Risk Solutions S.A.S.
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Ordinary
Registered Capital
Registered Capital
Registered Capital
Ordinary
AUS1
AUS2
AUS3
AUS4
AUS5
AUS1
AUS3
AUS3
AUS3
AUS2
AUS2
AUS2
AUS2
AUS3
AUS2
AUS2
AUT1
AUT2
AUT2
AUT1
AUT3
AUT1
AUT3
AUT4
BEL1
BEL2
BEL3
BRA1
BRA2
BRA3
BRA4
BRA4
BRA5
BRA4
CAN1
CAN2
CAN3
CHL1
CHN1
CHN2
CHN3
CHN4
CHN5
CHN6
CHN7
CHN8
CHN9
CHN10
CHN11
CHN3
CHN4
CHN12
CHN13
CHN4
CHN14
CHN4
CHN12
CHN4
CHN15
CHN16
CHN17
CHN18
COL1
Share
Class
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Company Name
Denmark
Atira A/S
Reed Elsevier Denmark ApS
Dubai, UAE
Reed Exhibitions Free Zone-LLC
RELX Middle East FZ-LLC
Egypt
Elsevier Egypt for Consultancy LLC
France
Registered Capital
Elsevier Holding France SAS
Registered Capital
Elsevier Masson SAS
Ordinary
EVOLUPRINT SAS
Ordinary
FircoSoft SAS
Ordinary
GIE EDI-DATA
Ordinary
GIE JURIS-DATA
Ordinary
GOODWEB SAS
LEXISNEXIS BUSINESS INFORMATION SOLUTIONS
Ordinary
LEXISNEXIS BUSINESS INFORMATION SOLUTIONS HOLDING Ordinary
Ordinary
LEXISNEXIS INTERNATIONAL DEVELOPMENT SERVICES
Ordinary
LEXISNEXIS SA
Registered Capital
PRK –PUBLICITE ROBERT KRIER
Registered capital
Reed Exhibitions ISG SARL
Ordinary
REED EXPOSITIONS FRANCE SAS
Registered capital
Reed MIDEM SAS
Ordinary
REED ORGANISATION SAS
Registered capital
RELX France S.A.
SAFI SA
Ordinary
Germany
Bar Convent GmbH
Collexis GmbH
Elsevier GmbH
Elsevier Information Systems GmbH
LexisNexis GmbH
MedCongress GmbH
REC Publications GmbH
Reed Exhibitions (Germany) GmbH
Reed Exhibitions Deutschland GmbH
Reed Exhibitions Holdings GmbH
Reed Travel (Germany) GmbH
RELX Deutschland GmbH
Tschach Solutions GmbH
Hong Kong
Ascend China Holding Limited
CBI China Co Ltd
CBI Group Co. Ltd
Elsevier (Hong Kong) Limited
JC Exhibition and Promotion Limited
JYLN Sager Limited
MLex Asia Ltd
Reed Exhibitions Limited
RELX (Greater China) Ltd
India
B I Churchill Living Stone Pvt Ltd
Comic Con India Private Limited (36%)
FircoSoft India Private Ltd
Harcourt (India) Pvt Ltd
Reed Elsevier Publishing (India) Pvt. Ltd.
Reed Manch Exhibitions Private Limited (60%)
Reed SI Exhibitions Private Limited (51%)
Reed Triune Exhibitions Private Limited (51%)
RELX India Private Limited
Indonesia
PT Reed Panorama Exhibitions (50%)
Ireland
Armanatta Holding Limited
Butterworth (Ireland) Limited
Elsevier Services Ireland Limited
Elsevier Ireland Limited
I.W.P.M. (Holdings) Limited
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Registered Capital
Ordinary
Registered Capital
Ordinary
Equity shares
Ordinary
Ordinary
Equity shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Mapflow International Limited
Mapflow Limited
Israel
LexisNexis Israel Ltd.
Italy
Elsevier S.R.L.
ICIS Italia SRL
Reed Exhibitions ISG Italy S.R.L.
Reed Exhibitions Italia srl
Ordinary
Ordinary, A Ordinary
Ordinary
Ordinary
6% Cumulative,
Deferred Ordinary,
Ordinary
Ordinary
Ordinary
Ordinary
Registered Capital
Ordinary
Ordinary
Ordinary
Reg Office
DNK1
DNK1
UAE1
UAE2
EGY1
FRA1
FRA1
FRA2
FRA3
FRA4
FRA4
FRA5
FRA4
FRA6
FRA4
FRA4
FRA5
FRA7
FRA5
FRA8
FRA5
FRA8
FRA9
DEU1
DEU3
DEU3
DEU3
DEU5
DEU1
DEU1
DEU1
DEU1
DEU1
DEU6
DEU1
DEU7
HNK1
HNK2
HNK3
HNK4
HNK1
HNK5
HNK6
HNK5
HNK7
IND1
IND2
IND3
IND1
IND4
IND5
IND6
IND7
IND1
IDN1
IRE1
IRE2
IRE4
IRE 3
IRE2
IRE1
IRE1
ISR1
ITA1
ITA2
ITA1
ITA3
Financial statements and other information Notes to the consolidated financial statements
163
31 Related undertakings (continued)
Share
Class
Ordinary
Ordinary
Registered Capital
Common Stock
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Company Name
Japan
Ascend Japan KK
Elsevier Japan KK
Elsevier Publishing KK
LexisNexis Japan KK
Reed Exhibition Japan
Reed ISG Japan KK
Korea (South)
Elsevier Korea LLC
LexisNexis Legal and Professional Service Korea Ltd
Reed Exhibitions Korea Limited
Reed K. Fairs Limited (70%)
Luxembourg
FIRCOSOFT Luxembourg Sàrl
Malaysia
LexisNexis Malaysia Sdn Bhd
Reed Exhibitions Sdn Bhd
TJ Ventures Sdn Bhd
Mexico
Masson-Doyma Mexico, S.A.
Reed Exhibitions Mexico S.A. de C.V.
Morocco
Reed Exhibitions Morocco SARL
New Zealand
LexisNexis NZ Limited
Phillipines
Reed Elsevier Shared Services (Philippines) Inc.
Poland
Elsevier sp. z.o.o.
Russia
Ecwatech Company ZAO
LexisNexis OOO
Real Estate Events Direct OOO (80%)
RELX OOO
Saudi Arabia
Reed Sunaidi Exhibitions (50%)
Singapore
Elsevier (Singapore) Pte Ltd
F4F Agriculture (Asia Pacific) Pte Ltd
ICIS Investment Singapore Pte Ltd
ICIS Services Pte Ltd
Lexis-Nexis Philippines Pte Limited (75%)
Reed Business Information Pte Ltd
RE (HAPL) Pte Ltd
RELX (Singapore) Pte. Ltd.
SAFI Asia Pte Ltd
South Africa
Ordinary
FIRCOSOFT South Africa Proprietary Limited
Ordinary
Globalrange SA Pty Ltd
Ordinary
Korbitec Proprietary Limited (90%)
Ordinary
LegalPerfect Software Solutions (Pty) Ltd (90%)
Ordinary
LexisNexis Academic (Pty) Ltd (90%)
Ordinary
LexisNexis Proprietary Limited (90%)
LexisNexis Risk Management Proprietary Limited (90%)
Ordinary
Property Payment Exchange (SA) (Pty) Limited (“Pexsa”) (90%) Ordinary
Ordinary
RELX (Pty) Ltd.
Ordinary
Reed Events (Pty) Ltd (90%)
A-shares
Reed Exhibitions (Pty) Limited (90%)
A-shares
Reed Exhibitions Management Pty Ltd (90%)
Ordinary
Thebe Reed Exhibitions Group (Pty) Limited (90%)
A-shares
Thebe Reed Venue Management (Pty) Limited (90%)
Ordinary
Winsearch Services (Pty) Ltd (90%)
Spain
Elsevier Espana, S.L.
Reed Elsevier Spain, S.L.
Switzerland
Elsevier Finance SA
FIRCOSOFT Schweiz GmbH
RELX Intellectual Properties SA
RELX Risks SA
RELX Swiss Holdings SA
Taiwan
Elsevier Taiwan LLC
Thailand
Reed Tradex Company Limited (49%)
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Registered Capital
Registered Capital
Registered Capital
Ordinary
Ordinary
Ordinary
Ordinary
Preference shares
Ordinary
Ordinary
Ordinary
Ordinary
Participations
Ordinary
Registered Capital
Preference shares
Reg Office
JPN1
JPN2
JPN2
JPN3
JPN4
JPN5
KOR1
KOR2
KOR3
KOR3
LUX1
MYS1
MYS1
MYS1
MEX1
MEX2
MAR1
NZL1
PHL1
POL1
RUS1
RUS2
RUS3
RUS2
SAU1
SGP1
SGP2
SGP3
SGP3
SGP3
SGP4
SGP1
SGP3
SGP4
ZAF1
ZAF2
ZAF3
ZAF3
ZAF3
ZAF3
ZAF3
ZAF3
ZAF3
ZAF4
ZAF4
ZAF4
ZAF4
ZAF4
ZAF3
ESP1
ESP2
CHE1
CHE2
CHE1
CHE1
CHE1
TWN1
THA1
Company Name
The Netherlands
AGRM Solutions C.V.
Boom B.V.
Elsevier B.V.
Elsevier Employment Services B.V.
Elsevier Reed Finance B.V.
LexisNexis Business Information Solutions B.V.
LexisNexis Univentio B.V.
Reed Business B.V.
Reed Business Financiële Educatie Groep B.V.
Reed Elsevier Dochtermaatschappij Amsterdam B.V.
RELX Finance B.V.
RELX Holdings B.V.
RELX N.V.
RELX Nederland B.V.
RELX Overseas B.V.
RELX US Holdings (Amsterdam) B.V.
Turkey
Elsevier STM Bilgi Hizmetleri Limited Şirketi
Reed Tüyap Fuarcilik A.Ș.(50%)
United Kingdom
Accuity Solutions Limited
Accuity Solutions UK Limited
Adaptris Group Limited
Adaptris Limited
AG Gateway Europe
Ascend Holdings Limited
Ascend Worldwide Group Holdings Limited
Ascend Worldwide Limited
Avenue Exhibitions Limited
Avenue Publications Limited
Axxia Systems Limited
B.E.D. Exhibitions Limited
Berrows Pension Trustees Limited
Bluegrill Limited
Bookset Systems Limited
Bookwise Extra Ltd
Bradfield Brett Holdings Limited
Bradfield, Brett & Company Limited
Butterworth & Co. (Overseas) Limited
Butterworth & Co. (Publishers) Limited
Butterworth (Eurolex) Limited
Butterworth (Telepublishing) Limited
Butterworths Limited
Cahners Exposition Group (Maritime) Limited
Cargofax International Limited
Carlton Magazines Limited
Cliveden Holdings Limited
Compliance Limited
Computaprint Limited
Cordery Compliance Limited (72%)
Cordery Limited (72%)
Crediva Limited
DBT Limited
Dew Events Limited
Drayton Legal Recoveries Limited
E & P Events LLP (50%)
Eclipse Group Limited
EIBTM Holdings Limited
Electronic Media Limited
Elsevier Limited
Elsevier UK Holdings Limited
Endrick Leisure Limited
Evan Steadman Communications Group Limited
Share
Class
Reg Office
Partnership Interest
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
E Shares / RE Shares
E Shares / RE Shares
Ordinary
Ordinary
A-shares / B-shares
Ordinary
Ordinary
Ordinary
Ordinary
Limited by Guarantee
Ordinary
Ordinary,
Ordinary C,
Ordinary D,
Ordinary-A
Ordinary
non-voting, Ordinary
Ordinary-A,
Ordinary-B
non-voting
Ordinary,
Ordinary-A
Ordinary
Ordinary
Ordinary
Ordinary
A Ordinary,
B Ordinary
7 1/2% Preferred
Income, Ordinary
Ordinary
Ordinary
4.5% Cum.
Preference,
‘A’ Ordinary,
‘B’ Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
‘A’ Ordinary,
‘B’ Ordinary
Ordinary
Ordinary
Class A (voting),
Class B of £1
(non-voting)
Ordinary-A,
Ordinary-B
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
No Shares
Deferred, Ordinary
Ordinary
Ordinary C,
Ordinary-A,
Ordinary-B
Ordinary
Ordinary
Ordinary
Ordinary
NLD1
NLD1
NLD1
NLD1
NLD1
NLD1
NLD2
NLD1
NLD1
NLD1
NLD1
NLD1
NLD1
NLD1
NLD1
NLD1
TUR1
TUR2
GBR2
GBR2
GBR2
GBR2
GBR3
GBR2
GBR2
GBR2
GBR4
GBR4
GBR1
GBR4
GBR1
GBR4
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR5
GBR4
GBR1
GBR1
GBR1
GBR1
GBR2
GBR5
GBR5
GBR6
GBR2
GBR4
GBR7
GBR4
GBR1
GBR4
GBR2
GBR8
GBR1
GBR9
GBR4
O
v
e
r
v
i
e
w
B
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s
i
n
e
s
s
r
e
v
i
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w
i
F
n
a
n
c
i
a
l
r
e
v
i
e
w
G
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v
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r
n
a
n
c
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F
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
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a
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d
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t
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e
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i
n
f
o
r
m
a
t
i
o
n
164
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
31 Related undertakings (continued)
Company Name
United Kingdom cont.
Everyform Limited
Farmade Management Systems Limited
Felix Learning Systems Limited
Fern Hollow Productions Limited
Fircosoft Limited
First 4 Farming Limited
Formpart (APL) Limited
Formpart (ASV) Limited
Formpart (BTL) Limited
Formpart (CAL) Limited
Formpart (CLR) Limited
Formpart (CWC) Limited
Formpart (DCS) Limited
Formpart (EPL) Limited
Formpart (EPS) Limited
Formpart (HPL) Limited
Formpart (IMG) Limited
Formpart (IMS) Limited
Formpart (KPL) Limited
Formpart (MDL) Limited
Formpart (No.15) Limited
Formpart (No.17) Limited
Formpart (No.20) Limited
Formpart (No.23) Limited
Formpart (No.5) Limited
Formpart (PDL) Limited
Formpart (PLK) Limited
Formpart (QVL) Limited
Formpart (RIS) Limited
Formpart (RSA) Limited
Formpart (SFL) Limited
Formpart (VMP) Limited
Formpart (WMPL) Limited
Friday Press Limited
George Philip Holdings Limited
George Philip Limited
Hallplaza Limited
Hooper Systems & Technology (Holdings) Limited
Hooper Systems & Technology Limited
ILTM Media Limited
Imbibe Media Ltd
Indicium Financial Limited
Industrial And Trade Fairs Limited
InferMed Limited
Information Handling Limited (85%)
Insurance Initiative
Intinco Limited
John Wright & Sons (Printing) Limited
Kervit Ceramics Limited
Kings Reach Investments Limited
Legend Exhibitions Limited
LexisNexis Risk Solutions UK Limited
Marktile Limited
Matthews Drew And Shelbourne Limited
Mendeley Limited
Messenger Newspapers Group Limited
Microtax Limited
Microwave Exhibitions & Publishers Limited
MLex Limited (91%)
Share
Class
Ordinary A,
Ordinary B,
Ordinary C,
Ordinary D
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary-A,
Ordinary-B
Ordinary-A,
Ordinary-B
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Deferred, Ordinary
Ordinary
Ordinary,
Ordinary-A,
Ordinary-B
Ordinary-A,
Ordinary-B
Ordinary
Ordinary-A,
Ordinary-B
Ordinary
Ordinary
Ordinary
Ordinary
Cumulative
Preference,
Ordinary,
Ordinary A,
Redeemable
Cumulative
Preference
Ordinary
Ordinary
Ordinary,
Preference
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary-A,
Ordinary-B
Ordinary
Ordinary
10% Redeemable
Cumulative
Preference,
Deferred, Ordinary,
Ordinary
Ordinary
‘A’ Ordinary,
‘B’ Ordinary
Ordinary
A Ordinary Shares,
Ordinary
Reg Office
Company Name
GBR9
GBR2
GBR1
GBR1
GBR2
GBR2
GBR1
GBR2
GBR1
GBR2
GBR2
GBR2
GBR2
GBR1
GBR1
GBR1
GBR2
GBR2
GBR2
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR2
GBR2
GBR2
GBR2
GBR1
GBR2
GBR1
GBR1
GBR1
GBR1
GBR4
GBR1
GBR1
GBR4
GBR4
GBR10
GBR4
GBR8
GBR1
GBR10
GBR1
GBR1
GBR1
GBR1
GBR4
GBR11
GBR1
GBR1
GBR8
GBR1
GBR1
GBR4
GBR5
Morecourt Limited
Moreover Technologies Ltd.
Mosby International Limited
Neptune Collections Limited
New Science Publications Limited
Newsflo Ltd
Offshore Europe (Management) Limited
Offshore Europe Partnership (50%)
OPG 1 Ltd
Orbit House Services Limited
Oxford Spires Management Co; Ltd (55%)
Peopletracer Limited
Prean Holdings Limited
Professional Books Limited
Purcastle Limited
RBI (Chichester) Limited
RBI Electrical-Electronic Year Books Limited
RBI Investments Limited
RBI Printers Limited
RBI Publishing Services Limited
RE (APM) Limited
RE (AZWHG) Limited
RE (BFP) Limited
RE (CBCL) Limited
RE (DH1929) Limited
RE (GPB) Limited
RE (IDM) LIMITED
RE (SEG) Limited
RE (SEL) Limited
RE (SOE) Limited
RE Directors (No.1) Limited
RE Directors (No.2) Limited
RE Secretaries Limited
Reed (International Services) Limited
Reed Aerospace Exhibitions Limited
Reed All-Energy Limited
Reed Business Information (Holdings) Ltd
Reed Business Information Ltd
Reed Consumer Books Limited
Reed Decorative & Building Products Limited
Reed Educational Publishing Limited
Reed Elsevier (UIG) Limited
Reed Elsevier Pension Investment Management Limited
Reed Elsevier Pension Trustee Limited
Reed Events Limited
Reed Exhibitions Limited
Reed Exhibitions Personal Care Limited
Reed Healthcare Communications Limited
Reed International (Properties) Limited
Reed Midem Limited
Reed Nominees Limited
Reed Overseas Corporation Limited
Reed Publishing Corporation Limited
Reed Publishing Holdings Limited
Reed Travel Group (France) Limited
Reed Travel Group (Italy) Limited
RELX Corporation Ltd
RELX (Holdings) Limited
RELX (Investments) plc
RELX (UK) Holdings Limited
RELX (UK) LIMITED
RELX Group plc
Share
Class
Ordinary
Ordinary
Ordinary
Deferred
Ordinary
Ordinary
Ordinary
Partnership Interest
Ordinary
Ordinary
Ordinary
Ordinary
Deferred, Ordinary
Ordinary, Preferred
Ordinary
3% Non-Cumulative
Preference,
Ordinary
Ordinary
5% Non-Cumulative
Preference,
Ordinary
Ordinary
Ordinary
Stock Units
Ordinary
Ordinary
16 2/3% Cum.
Redeemable
Preference,
Ordinary
Ordinary
Ordinary
‘A’ Ordinary,
‘B’ Ordinary
A Ordinary, Ordinary
Cumulative
Redeemable
Preference,
Ordinary,
Ordinary-A
Ordinary-A,
Ordinary-B,
Preferred Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Deferred, Ordinary
Ordinary-A,
Ordinary-B
Ordinary-A
6% Cummulative
Preference,
Deferred Ordinary,
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
‘E’ Ordinary,
Ordinary,
‘R’ Ordinary
Reg Office
GBR1
GBR1
GBR1
GBR4
GBR1
GBR8
GBR4
GBR4
GBR1
GBR1
GBR12
GBR6
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR2
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR2
GBR4
GBR4
GBR4
GBR1
GBR1
GBR1
GBR1
GBR4
GBR4
GBR2
GBR2
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR4
GBR4
GBR4
GBR2
GBR1
GBR4
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
Financial statements and other information Notes to the consolidated financial statements
165
31 Related undertakings (continued)
Company Name
United Kingdom cont.
RELX Overseas Holdings Limited
RELX PLC
REV Venture Partners Limited
RIB Directors 1 Limited
RIB Directors 2 Limited
Ridgmount Books Limited
Rowan Marketing Limited (50%)
RX Business Continuity Limited
S.I. Enterprises Limited
Scaletime Limited
Scripta Technica Limited
Scripta Technica Limited
Seisint Limited
Sharpwise Limited
Sinclair-Stevenson Holdings Limited
Skillslot Limited
Stanford Maritime Limited
St James Press Limited
Storage Expo Limited
Texales (Jeffrey) Limited
Texales (Plant) Limited
Textile Press Limited
TGP 48 Limited
The Emperor’s Warriors Exhibitions Limited
The Estates Gazette Limited
The Lancet Limited
The Medicine Publishing Company Limited
The Medicine Publishing Group Limited
The Viscom Group Limited
Tolley Publishing Company Limited
Tracesmart Group Limited
Tracesmart Limited
Viewstead Limited
Viscom Production Limited
Visualfiles (Scotland) Limited
Visualfiles Limited
Warrington Guardian Series Limited
Websters Software Limited
What to Buy Limited
Woodhead Publishing Limited
World Group Newspapers (North West) Limited
Wunelli Limited
United States
Accuity Asset Verification Services Inc.
Accuity Europe Inc.
Accuity Holdings Inc.
Accuity Inc.
AI Insight, Inc.
Bair Analytics Inc.
C.L.U.E. Inc.
Charles Jones LLC
De Pluimen LLC
Derman, Inc.
Diio LLC
Dunlap-Hanna Publishers (50%)
EDIWatch. Inc.
Elsevier Inc.
Elsevier Medical Information LLC
Elsevier STM Inc.
Enclarity, Inc.
ExitCare LLC
Fire Solutions Inc.
Flightstats, Inc.
Gaming Business Asia LLC (50%)
GCLRA LLC
Globalrange Corporation
Gold Standard, Inc.
Share
Class
Ordinary,
Preference
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary,
Ordinary-A
Ordinary
Ordinary
‘A’ Ordinary
‘A’ Ordinary, ‘B’
Ordinary,
Cumulative
Preference
Ordinary
Ordinary
Non-Cumulative
Redeemable
Preference,
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary-A,
Ordinary-B
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary, A Equity
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Common Stock
Common Stock
Common Stock and
Preferred Stock
Common Stock
Common Stock
Common Stock
Common Stock
Membership Interest
Membership Interest
Common Stock
Membership Interest
Partnership Interest
Common Stock
Common Stock
Membership Interest
Common Stock
Common Stock
Membership Interest
Common and
Preferred Stock
Common Stock
Membership Interest
Membership Interest
Common Stock
Ordinary shares
Reg Office
Company Name
GWN, LLC
Health Market Science, Inc.
HRW and WBS Canada Corporation, Inc.
IDG-RBI China Publishers LLC
Informed Decisions, LLC
Innovata, LLC
Intelligize, Inc.
J.Allan Sheehan Scholarship Fund Inc.
Knovel Corporation
KNOW X LLC
Lex Machina Inc.
Lexis, Inc.
LexisNexis Claims Solutions Inc.
LexisNexis Coplogic Solutions Inc.
LexisNexis Insurance Exchange LLC
LexisNexis of Puerto Rico Inc.
LexisNexis Risk Assets Inc.
LexisNexis Risk Data Management Inc.
LexisNexis Risk Data Retrieval Services LLC
LexisNexis Risk Holdings Inc.
LexisNexis Risk Solutions Bureau LLC
LexisNexis Risk Solutions FL Inc.
LexisNexis Risk Solutions GA Inc.
LexisNexis Risk Solutions Inc.
LexisNexis Special Services Inc.
LexisNexis VitalChek Network Inc.
Martindale LLC (70%)
Matthew Bender & Company, Inc.
MEDai, Inc.
MLex US, Inc. (91%)
Mosby Holdings Corp
MWW Clinical Sales Force, Inc. (50%)
Nexis, Inc.
PoliceReports.US, LLC
Portfolio Media, Inc.
QuickLaw America Inc.
RE (CMDGC) Inc.
RE (CMDGC) Inc.
RE (HPII) Inc.
Reed Business Information Inc.
Reed Elsevier Information Holdings Inc.
Reed Elsevier Realty Corporation
Reed Elsevier Technology Services Inc.
Reed Technology and Information Services Inc.
Reed Westminster Cares Inc.
Reed Westminster Inc.
REF Americas LLC
RELX Capital Inc.
RELX Inc.
RELX US Holdings Inc.
Reman, Inc.
REV Partnership LP
Ronald G. Segel Memorial Scholarship Fund Inc.
SAFI Americas LLC (50%)
Schnell Publishing LLC
Signature Information Solutions LLC (70%)
Social Science Electronic Publishing, Inc.
TClara LLC (51%)
The Elsevier Foundation
The Michie Company
The Reed Elsevier Ventures 2005 Partnership LP
The Reed Elsevier Ventures 2006 Partnership LP
The Reed Elsevier Ventures 2008 Partnership LP
The Reed Elsevier Ventures 2009 Partnership LP
The Reed Elsevier Ventures 2010 Partnership LP
The Reed Elsevier Ventures 2011 Partnership LP
The Reed Elsevier Ventures 2012 Partnership LP
The Reed Elsevier Ventures 2013 Partnership LP
The Remick Publishers (50%)
World Compliance, Inc.
Venezuela
Encyclopédie Médico-Chirurgicale Venezuela C.A.
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR2
GBR4
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR1
GBR4
GBR1
GBR1
GBR1
GBR4
GBR4
GBR2
GBR1
GBR1
GBR1
GBR1
GBR1
GBR6
GBR6
GBR2
GBR1
GBR9
GBR1
GBR1
GBR1
GBR2
GBR13
GBR1
GBR14
USA1
USA1
USA1
USA1
USA2
USA2
USA2
USA2
USA3
USA4
USA5
USA8
USA2
USA3
USA3
USA3
USA2
USA3
USA4
USA5
USA3
USA3
USA5
USA3
Share
Class
Membership Interest
Common Stock
Common Stock
Membership Interest
Membership Interest
Membership Interest
Common Stock
No Shares
Common Stock
Membership Interest
Common Stock
Common Stock
Common Stock
Common Stock
Membership Interest
Common Stock
Common Stock
Common Stock
Membership Interest
Common Stock
Membership Interest
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Membership Interest
Common Stock
Class A Common
Common Stock
Common Stock
Common Stock
Common Stock
Membership Interest
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
No Stock
Common Stock
Membership Interest
Common Stock
Common Stock
Common Stock
Common Stock
No shares
No shares
Membership Interest
Membership Interest
Membership Interest
Common Stock
Membership Interest
No Shares
Common Stock
Partnership Interest
Partnership Interest
Partnership Interest
Partnership Interest
Partnership Interest
Partnership Interest
Partnership Interest
Partnership Interest
Partnership Interest
Common Stock
Ordinary
Reg Office
USA3
USA2
USA3
USA3
USA3
USA5
USA3
USA3
USA3
USA2
USA3
USA4
USA2
USA2
USA2
USA6
USA2
USA2
USA2
USA2
USA2
USA2
USA2
USA2
USA6
USA2
USA7
USA3
USA2
USA3
USA3
USA3
USA4
USA2
USA3
USA3
USA3
USA3
USA3
USA5
USA3
USA3
USA3
USA3
USA 4
USA4
USA3
USA4
USA3
USA3
USA3
USA4
USA3
USA3
USA4
USA3
USA3
USA4
USA3
USA4
USA4
USA4
USA4
USA4
USA4
USA4
USA4
USA4
USA8
USA4
VEN1
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d
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166
RELX Group Annual reports and financial statements 2016
Notes to the consolidated financial statements
for the year ended 31 December 2016
31 Related undertakings (continued)
Registered offices
Australia
AUS1: Building B, Level 2, Unit 11, 1 Maitland Place, Baulkham Hills NSW 2153,Australia
AUS2:
AUS3:
AUS4: Grant Thornton, Level 17, 393 Kent St, Sydney, NSW 2000, Australia
AUS5: KPMG, 147 Collins Street, Melbourne, Vic, 3000
Level 10, 10 Help Street, Chatswood NSW 2067, Australia
‘Tower 2’ Level 10, 475 Victoria Avenue, Chatswood NSW 2067
Austria
AUT1: Messeplatz 1, 1020, Wien, Austria
AUT2: Marxergasse 25, 1030, Wien, Austria
AUT3: Am Messezentrum 6, 5020, Salzburg, Austria
Belgium
BEL1:
BEL2:
BEL3:
Grotesteenweg-Zuid 39, 9052 Gent, Belgium
Leernseteenweg 128 Box E, 9800 Deinze, Belgium
67 rue de la Loi, 1040 Etterbeek, Belgium
Brazil
BRA1: Rua Sete de Setembro, nº 111, salas 601,1501/1502, 1601/1602, 1701/1702 e 802 – 8º
Andar, Centro, cidade do Rio de Janeiro, estado do Rio de Janeiro, CEP 20.050-006
BRA2: Rua Sete de , nº 111, salas 1501/1502 e 1601/1602 – parte, Centro, cidade do Rio de
Janeiro, estado do Rio de Janeiro, CEP 20.050-006
BRA3: São Paulo, State of São Paulo, at Rua Bela Cintra, nº 1.200, 8th floor, CEP 01415-002
BRA4: Rua Bela Cintra no. 1200, 10th floor, Sâo Paulo, 01415-001, Brazil
BRA5: Avenida paulista, 2300-Piso Pilotis room 28, Sao Paulo, Sao Paulo 01310-300
Canada
CAN1:
CAN2:
CAN3: 555 RIichmond Street West, Toronto, Ontario, Canada, M5V 3B1
123 Commerce Valley Drive East, Suite 700, Markham, Ontario, L3T 7W8, Canada
905 King Street West, 4TH Floor, Toronto, Ontario, Canada M6K 3G9
Chile
CHL1:
Serrano 172, Santiago, Chile
China
CHN1: Zhongkun Building, Room 612, Gaoliangqiaoxie Street, No. 59, Haidan District, Beijing,
100044, China
CHN2: West Building of Administration Building, Xueyuan Road No. 38 Peking University
Health Science Center , Haidan District, Beijing, 100191, China
CHN3: Oriental Plaza, No. 1 East Chang An Ave, Tower W1, 7th Floor, Unit 1-7, Dong Cheng
District, Beijing, 100738, China
CHN4: Ping An International Finance Center, Room 1504, 15th Floor, Tower A-101, 3-24 floor,
Xinyuan South Road, Chaoyang District, Beijing, 100027, China
CHN5: 4/F Block C, No 999 Jingzhong Road, Changning District, Shanghai, China
CHN6: 9/F, No 3 Zhongshan Er Road, Guangzhou, China
CHN7: Unit 2480, Building 2, No. 7, Chuangxin Road, Science Park of Changping District,
Beijing, China
CHN8: Room 12B, 7th Floor, Oriental Plaza, 1 East Chang An Avenue, Beijing, China
CHN9: 16 Donghuangchenggen North Street, Beijing, 100717, China
CHN10: Room 5106, Raffle City, 268 Middle Xizang Road, Huangpu District, Shanghai,
200001, China
CHN11: Room A 100 of Room 0307, Floor 3, Building 3, 7 Middle Dongsanhuan road,
Chaoyang District, Beijing
CHN12: Intercontinental Center, 42F, 100 Yutong Road, Zhabei District, Shanghai, 200070, China
CHN13: World Expo Mansion, 14F, No. 04-05, No. 8 Business Out Ring Road, Zhengzou New
District, Zhengzou, 450000, China
CHN14: Shenzhen International Chamber of Commerce Tower, Room 1801-1802, 1805,
Fuhua 3rd Road, Futian District, Shenzhen, 518048, China
CHN15: Room 319, 238 Jiangchangsan Road, Jing’an District, Shanghai, China
CHN16: Room 702-2, 200 Huiyuan Road, Jiading Industrial Area, Shanghai
CHN17: No 498, GouShouJing Road, Building 6 Unit 12502-505, Shanghai, Pudong New District,
201203, China
CHN18: Building 2, Room No. 3895, Changjiang Avenue, No. 161, Changliang Farm,
Chongming County, Shanghai Municipality
Colombia
COL1:
Philippe Prietocarrizosa & Uria Abogados, Carrera 9 No. 74-08 Oficina 105, Bogotá, d.c.,
76600, Colombia
Denmark
DNK1: Niels Jernes Vej 10, 9220, Aalborg Øst, Denmark
Dubai, UAE
UAE1: Office No. 328, Building 02, third floor, P.O. Box 502425, Dubai, United Arab Emirates
UAE2: Al Sufouh Complex, Floor 3, No. 304 , Dubai, United Arab Emirates
65, rue Camille Desmoulins, 92130, Issy les Moulineaux, France
Registered offices
France
FRA1:
FRA2: Parc Euronord – 10, rue du Parc – 31150 Bruguieres
FRA3:
FRA4:
FRA5:
FRA6:
FRA7:
FRA8:
FRA9:
247 rue de Bercy 75012 Paris
141 rue de Javel, 75015 Paris
52 Quai de Dion Bouton 92800 Puteaux
Immeuble « Technopolis », 350 rue Georges Besse –Nîmes (30000)
27 quai Alphonse Le Gallo, 92100, Boulogne-Billancourt, France
27-33 quai Alphonse Le Gallo, 92100, Boulogne-Billancourt, France
6-8 Rue Chaptal, 75009 Paris
Völklinger Strasse 4, 40219, Düsseldorf, Germany
Germany
DEU1:
DEU3: Theodor-Heuss-Allee 108, D-60488, Frankfurt am Main, Hesse, Germany
DEU4: Hackerbrücke 6, 80335, Munich, Germany
DEU5: Heerdter Sandberg 30, 40549, Düsseldorf, Germany
DEU6: Schwannstr. 6, 40476 Düsseldorf
DEU7: Steinhäuserstrasse 9, 76135 , Karlsruhe, Germany
20/F Alexandra House, 18 Chater Road, Central, Hong Kong
Hong Kong
HNK1:
HNK2: Level 28, Building 8, 3 Pacific Place, 1 Queens Road East, HONG KONG, Hong Kong
HNK3: Unit 204 2/F, Malaysia Bldg., 50 Gloucester Rd, Wanchai, Hong Kong
HNK4: Level 54 Hopewell Center, 183 Queens Road East (Tricor Office), Hong Kong
HNK5: Flat 2, 19/F Henan Building 90-92, Jaffe Road Wanchai, Hong Kong, Hong Kong
HNK6: 703 Silvercord, Tower 2, 30 Canton Road, Tsimshatsui, Kowloon, Hong Kong
HNK7: 3901, 39th Floor Hopewell Center, 183 Queens Road East, Wanchai, Hong Kong, Hong Kong
India
IND1:
IND2:
IND3:
IND4:
IND5:
IND6:
IND7:
818, 8th Floor, Indraprakash Builing, 21 Barakhamba Road, New Delhi, 110001, India
B9/5 Vasant Vihar, New Delhi, 110057, India
n°664 Level 6 – Chennai Regus – Citi Centre – 10/11 Dr Radhakrishnan Salai,
Mylapore – Chennai 600004
18, Kotla Lane, Rouse Avenue, New Delhi, 110002, India
B-15/192, Pharma Apartments, Patparganj, , I.P. Extension, New Delhi, 110092, India
B-9, "A" Block, LSC, Naraina Vihar, Ring Road, New Delhi, 110028, India
#25, 3rd floor, 8th Main Road, Vasanthnager, Bangalore, 560052, India
Indonesia
IDN1:
Panorama Building, 5th Floor, Jalan Tomang Raya No. 63, Jakarta, 11440, Indonesia
Ireland
IRL1:
IRL2:
IRL3:
IRL4:
80 Harcourt Street, Dublin 2, Ireland
Arthur Cox Building, Earlsfort Terrace, Dublin 2, Ireland
(A&L Goodbody Secretarial Services), 25/28 North Wall Quay, Dublin 1, D01 H104,
Ireland
Suite 4320, Atlantic Avenue, Westpark Business Campus, Shannon, Clare, Ireland
Israel
ISR1: Meitar, attorneys at Law, 16 Abba Hillel Road, Ramat Gan, 5250608, Israel
Italy
ITA1:
ITA2:
ITA3: Milano (MI) Via Marostica 1 cap 20146
Via Marostica 1, 20146, Milan, Italy
Studio Colombo e Associati, Via Cino del Duca 5, 20122, Milano, Italy
Japan
JPN1: Kyodo Tsushin Kaikam 2F, 2-2-5 Toronomon, Minato-ku, Tokyo, 105-0001
JPN2: Ark Mori Building, 1-12-32 Akasaka, Minato-ku, Tokyo, 107-6029, Japan
JPN3:
JPN4: Shinjuku-Nomura Bldg., 1-26-2 Nishi-shinjuku, Shinjuku-ku, Tokyo, Japan
JPN5:
13-12 Rokubancho, Chiyoda-ku, Tokyo, JAPAN
1-9-15, Higashi Azabu, Minato-ku Tokyo Japan
Korea (South)
KOR1: Chunwoo Building, 4th floor, 534 Itaewon-dong, Yongsan-gu, Seoel, 140-861,
KOR2:
KOR3:
Korea, Republic of
206 Noksapyeong-daero, Yongsan-gu, Seoel, Korea, Republic of
"Room 4401, Trade Tower, 159-1, Samseong-dong, Gangnam-gu Seoul, 135-729,
Republic of Korea”
Luxembourg
LUX1: Bloc B 19-21, Route d’Arlon, L-8009 Strassen, Luxembourg
Malaysia
MYS1:
6th Floor, Akademi Etiqa, No. 23 Jalan Melaka , 50100 Kuala Lumpur, Malaysia.
Egypt
EGY1:
Land Mark Office Building, 2nd Floor, 90th Street, City Center, 5th Settlement,
New Cairo, Cairo, Egypt
Mexico
MEX1:
Insurgentes Sur # 1388 Piso 8, Col. Actipan, Deleg. Benito Juarez, C.P. 03230 Ciudad de
México, México
MEX2: Av. Insurgentes No. 1388, Piso 8, Col. Actipan, 03230 Mexico, Mexico
Financial statements and other information Notes to the consolidated financial statements
167
Registered offices
United Kingdom
GBR1:
GBR2: Quadrant House, The Quadrant, Sutton, Surrey, SM2 5AS, United Kingdom
GBR3: AG Gateway Global Network, 85 Great Portland Street, First Floor, London,
1-3 Strand, London, WC2N 5JR, United Kingdom
W1W 7LT, United Kingdom
GBR4: Gateway House 28 The Quadrant, Richmond, Surrey, TW9 1DN, United Kingdom
GBR5: Lexis House, 30 Farringdon Street, London, EC4A 4HH, United Kingdom
GBR6: Global Reach , Dunleavy Drive , Cardiff, CF11 0SN, United Kingdom
GBR7:
GBR8: The Boulevard, Langford Lane, Kidlington, Oxford, OX5 1GB, United Kingdom
GBR9:
The Eye, 1 Procter Street, London, WC1V 6EU, United Kingdom
c/o RELX (UK) Limited, Butterworths Limited, 4 Hill Street, Edinburgh,
EH2 3JZ, Scotland
GBR10: 35 – 37 St. Marys Gate, Nottingham, United Kingdom, NG1 1PU
GBR11: 1st Floor 80 Moorbridge Road, Maidenhead, Berkshire, London, SL8 8BW,
United Kingdom
GBR12: 40 Kimbolton Road, Bedford, England, MK40 2NR
GBR13: 80 High Street, Sawston Cambridge CB22 3HJ
GBR14: 1000 Lakeside , Western Road , Portsmouth , PO6 3EN, United Kingdom
1007 Church Street, Evanston IL 60201
1000 Alderman Dr., Alpharetta, GA 30005
230 Park Ave, New York, NY 10169
1105 North Market St, Wilmington, DE 19801
3355 West Alabama Street, Houston, TX 77098
US
USA1:
USA2:
USA3:
USA4:
USA5:
USA6: Puerta Del Condado #1095, Wilson Ave, Local #3, San Juan, PR 00907
N909 N. Sepulveda Blvd., 11th Floor, El Segundo, CA 90245
USA7:
313 Washington Street, Suite 400, Newton, MA 02458
USA8:
Venezuela
VEN1: Avenida Banca, Torre BOD, Piso 21, La Castellana, Estado Miranda, Caracas, Venezuela
31 Related undertakings (continued)
Registered offices
Morocco
MAR1: Forum Bab Abdelaziz au 62, Angle Blvd. d’Anfa, , 6ème étage, Apt 61, Casablanca,
Morocco
New Zealand
NZL1:
Level 1, 138 The Terrace, P.O. Box 472, Wellington 6011, New Zealand
Phillipines
PHL1: Building H, 2nd Floor, U.P. Ayalaland TechnoHub, Commonwealth Avenue, Quezon City,
Metro Manila, 1101, Philippines
Poland
POL1: Natpoll Building, ul. Migdalowa 4/59, 02-796, Warsaw, Poland
Russia
RUS1: Pokrovka Street 27, Building 1, Moscow, Russian Federation
RUS2:
RUS3: Petrozavodskaya street 28/4, Building VI, room 2, 125475, Moscow, Russian Federation
24 Bolshaya Nikitskaya Str., bldg. 5, Moscow 125009, Russian Federation
Saudi Arabia
SAU1: Al Fadl Commercial Center, Jeddah, 21411, Saudi Arabia
Singapore
SGP1:
SGP2:
SGP3:
SGP4:
3 Killiney Road, #08-01 Winsland House 1, Singapore, 239119, Singapore
16 Raffles Quay, #33-03 Hong Leong Building, Singapore, 048581, Singapore
80 Robinson Road, #02-00, Singapore, 068898, Singapore
1 Changi Business Park Crescent, #06-01 Plaza 8 & CBP, Singapore, 48602551,
Singapore
South Africa
ZAF1: Regus Brooklyn Bridge, 3rd Floor Steven House, Brooklyn Bridge Office Park, Fehrsen
ZAF2:
ZAF3:
ZAF4:
Street, Brooklyn, Pretoria
Fourways Gold Park, 1st Floor – Wentworth Building, 32 Roos Street, Fourways, 2191,
South Africa
215 Peter Mokaba Road (North Ridge Road), Morningside, Durban, Kwa-Zulu Natal,
4001, South Africa
Thebe House, 2nd Floor, 166 Jan Smuts Avenue, Rosebank, Johannesburg, 2196,
South Africa
Spain
ESP1: C/ Josep Tarradellas 20-30, 1º / 20029, Barcelona, Spain
ESP2: Calle Zancoeta 0009, 48013, Bilbao, Viscaya, Spain
Switzerland
CHE1: Espace de L’Europe 3, 2002 Neuchatel, Switzerland
CHE2: Bahnhofstrasse 100 – 8001 Zurich
Taiwan
TWN1: Suite N-818, 8/F, Chia Hsin Cement Building, 96 Zhong Shan North Road, Section 2,
Taipei, 10449, Taiwan
Thailand
THA1:
Sathorn Nakorn Building, Floor 32, No. 100/68-69 North Sathon Road, Silom, Bangrak,
Bangkok, 10500, Thailand
The Netherlands
NLD1: Radarweg 29, 1043 NX Amsterdam, Netherlands
NLD2: Galileiweg 8, 2333 BD Leiden, Netherlands
Turkey
TUR1: Maslak Mah. Bilim Sokak Sun Plaza Kat:13 Şişli-Maslak, Istanbul, Turkey
TUR2:
Tüyap Fuar ve Kongre Merkezi, E – 5 Karayolu Üzeri, Gürpınar Kavşağı 34500,
Büyükçekmece , Istanbul, 34500, Turkey
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168
RELX Group Annual reports and financial statements 2016
5 year summary
Note
2016
£m
2015
£m
RELX Group consolidated financial information
Revenue
Reported operating profit
Adjusted operating profit
Reported net profit attributable to shareholders
Adjusted net profit attributable to shareholders
RELX PLC financial information
Reported earnings per ordinary share (pence)
Adjusted earnings per ordinary share (pence)
Dividend per ordinary share (pence)
RELX NV financial information(3)
Reported earnings per ordinary share (pence)
Reported earnings per ordinary share (euro)
Adjusted earnings per ordinary share (euro)
Dividend per ordinary share (euro)
6,895
1,708
2,114
1,161
1,488
56.3p
72.2p
35.95p
56.3p
€0.687
€0.880
€0.423
1
1
2
2
Restated(3),(4)
2013
£m
6,035
1,376
1,749
1,110
1,197
49.0p
54.1p
24.6p
2014
£m
5,773
1,402
1,739
955
1,213
43.0p
56.3p
26.0p
2012
£m
6,116
1,333
1,688
1,044
1,121
45.0p
49.4p
23.0p
5,971
1,497
1,822
1,008
1,275
46.4p
60.5p
29.7p
49.4p
€0.682
€0.835
€0.403
45.8p
€0.568
€0.698
€0.383
51.6p
€0.609
€0.638
€0.329
47.4p
€0.583
€0.608
€0.304
(1) Adjusted figures are presented as additional performance measures used by management. A reconcilation of the adjusted
measures to the comparable GAAP measures can be found on page 188. Adjusted measures are stated before amortisation and
impairment of acquired intangible assets and goodwill, the net financing cost on defined benefit pension schemes and acquisition-
related costs, exceptional prior year tax credits (in 2012 only), and in respect of attributable net profit, reflect a tax rate that excludes
the effect of movements in deferred taxation assets and liabilities that are not expected to crystallise in the near term and includes
the benefit of tax amortisation where available on acquired goodwill and intangible assets. Acquisition-related financing costs and
profit and loss from disposal gains and losses and other non-operating items are also excluded from the adjusted figures.
(2) Dividend per ordinary share is based on the interim dividend and proposed final dividend for the relevant year.
(3) RELX NV amounts and dividend per share reflect the bonus share issue declared on 30 June 2015.
(4) Comparative figures for 2012 have been restated following the adoption of IAS19 Employee Benefits (revised) by the Group in 2013.
Financial statements and other information
169
RELX PLC
Annual Report and
Financial Statements
In this section
170 Directors’ Report
174 Parent company statement of
financial position
175 Parent company statement of changes
in equity
175 Parent company accounting policies
176 Notes to the parent company
financial statements
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170
RELX Group Annual reports and financial statements 2016
Directors’ Report
The Directors present their report, together with the financial
statements of the Group and RELX PLC (the Company), for the year
ended 31 December 2016.
RELX PLC is incorporated as a public limited company and is
registered in England and Wales with registered number 77536.
RELX PLC's registered office is 1-3 Strand, London, WC2N 5JR.
Corporate structure
RELX PLC and RELX NV are separate, publicly-listed holding
companies. RELX PLC’s ordinary shares are traded on the London
and New York stock exchanges, and RELX NV’s ordinary shares are
traded on the Amsterdam and New York stock exchanges. RELX
PLC and RELX NV have equal voting rights in RELX Group plc, which
holds all of RELX Group's operating businesses, subsidiaries and
financing activities. RELX PLC, RELX NV, RELX Group plc and its
subsidiaries, joint ventures and associates are together known as
'RELX Group' or 'the Group'.
Financial statement presentation
Under the Governing Agreement between RELX PLC and RELX NV,
one RELX PLC ordinary share confers an equivalent economic
interest to one RELX NV ordinary share. Therefore, all shareholders
can be regarded as having interests in a single economic entity.
Accordingly, the Group forms a single reporting entity for the
presentation of consolidated financial statements. The Group
consolidated financial statements represent the interests of both
sets of shareholders and are presented by both RELX PLC and
RELX NV as their respective consolidated financial statements. This
Directors’ Report and the financial statements of the Group and
Company should be read in conjunction with the other reports set
out on pages 2 to 106. A review of the Group’s performance during
the year is set out on pages 8 to 51, the principal risks facing the
Group is set out on pages 60 to 63, and the Group statement on
corporate responsibility is set out on pages 42 to 51.
The shares of RELX PLC and RELX NV are regarded as two separate
classes of share which together form the consolidated issued share
capital of the Group. In calculating the earnings per share of the
Group, the earnings for each company are calculated on a fully
distributed basis. The Group’s usual practice is for only a portion of
earnings to be distributed by way of dividends. Dividends paid to
RELX PLC and RELX NV shareholders are, other than in special
circumstances, equalised at a gross level and included, until 6 April
2016, the benefit of the then prevailing UK attributable tax credit
available to certain RELX PLC shareholders. As a result of the
abolition of the UK tax credit, effective from 6 April 2016, reported
earnings per share have the same value for each RELX PLC and
RELX NV share from 2016.
In addition to the reported figures, adjusted profit figures are
presented as additional measures used by management to assess
the performance of the business. These exclude the Group’s share
of amortisation of acquired intangible assets, acquisition-related
costs, tax in joint ventures, disposal gains and losses and other
non-operating items, related tax effects, and movements in
deferred taxation assets and liabilities related to acquired
intangible assets, and include the benefit of tax amortisation where
available on acquired goodwill and intangible assets.
Parent company financial statements
The individual parent company financial statements of the Company
are presented on page 174, and were prepared under Financial
Reporting Standard 101 (FRS 101).
Distributable reserves as at 31 December 2016 were £1,472m
(2015: £1,487m), comprising reserves less shares held in treasury.
Parent company shareholders’ funds as at 31 December 2016 were
£3,112m (2015: £3,114m).
Strategic Report
The Companies Act 2006 requires the Company to present a fair
review of the Group during the financial year. The Strategic Report,
which includes a review of the Group’s business areas, a financial
review, the principal risks facing the Group, any important events
affecting the Group since 31 December 2016, and the likely future
developments in the Group's business, is set out on pages 2 to 63
which are incorporated into this Directors' Report by reference.
The Directors' Report, inclusive of the Strategic Report
incorporated therein, forms the management report for the
purposes of the Financial Conduct Authority's Disclosure and
Transparency Rule 4.1.8R.
Dividends
The Board is recommending a final dividend of 25.70p (2015: 22.30p)
per ordinary share to be paid on 22 May 2017 to shareholders
appearing on the Register at the close of business on 28 April 2017.
Payment of this final dividend remains subject to the approval of the
Company's shareholders at its 2017 Annual General Meeting (AGM).
Together with the interim dividend of 10.25p (2015: 7.40p) per
ordinary share, paid in August 2016, the total ordinary dividends for
the year will be 35.95p (2015: 29.70p).
Details of dividend cover and dividend policy are set out on pages
58 and 59.
Corporate Governance
The Company has complied throughout the year with the provisions
of the UK Corporate Governance Code 2014 (the UK Code), which is
publicly available on the Financial Reporting Council website
(www.frc.org.uk). Details of how the main principles of the UK Code
have been applied and the Directors’ statement on internal control
are set out in the Corporate Governance report on pages 71 to 79,
which are incorporated into this Directors' Report by reference.
Greenhouse gas emissions
The Company is required to state the annual quantity of emissions in
tonnes of carbon dioxide equivalent from Group operational
activities. Details of our emissions during the year ended
31 December 2016 and the actions being taken to reduce them are
set out in the Corporate Responsibility section of the Strategic
Report on pages 50 and 51, which are incorporated into the Directors'
Report by reference. Further details can be found in our online
Corporate Responsibility Report at www.relx.com/go/CRReport.
Directors
The names of the Directors who served on the Board during the
year, and changes to the Board, are set out on pages 66, 67, 74 and
76, which are incorporated into this Directors' Report by reference.
Financial statements and other information Directors' Report
171
Share capital
The Company’s issued share capital comprises a single class of
ordinary shares, all of which are listed on the London Stock
Exchange. All issued shares are fully paid up and carry no additional
obligations or special rights. Each share carries the right to one vote
at general meetings of the Company.
In a general meeting, subject to any rights and restrictions attached
to any shares, on a show of hands every member who is present in
person shall have one vote and every proxy present who has been
duly appointed by one or more members entitled to vote on the
resolution has one vote (although a proxy has one vote for and one
vote against the resolution if: (i) the proxy has been duly appointed by
more than one member entitled to vote on the resolution; and (ii) the
proxy has been instructed by one or more of those members to vote
for the resolution and by one or more other of those members to
vote against it). Subject to any rights or restrictions attached to any
shares, on a vote on a resolution on a poll every member present in
person or by proxy shall have one vote for every share of which
he/she is the holder.
Proxy appointments and voting instructions must be received by the
registrars not less than 48 hours before a general meeting. There
are no specific restrictions on the size of a holding nor on the
transfer of shares, which are both governed by the general
provisions of the Articles and prevailing legislation. The Company is
not aware of any agreements between shareholders that may result
in restrictions on the transfer of shares or on voting rights attached
to the shares.
At the 2016 AGM, shareholders passed a resolution authorising the
Directors to issue shares for cash on a non-pre-emptive basis up to
a nominal value of £16.9m, representing less than 5% of the
Company's issued share capital and authorising the Directors to
issue up to an additional 5% of the issued share capital for cash on a
non-pre-emptive basis in connection with an acquisition or
specified investment. Since the 2016 AGM, no shares have been
issued under this authority. The shareholder authority also
permitted the Directors to issue shares in order to satisfy
entitlements under employee share plans, and details of such
allotments are noted below. The authorities to issue shares will
expire at the 2017 AGM. Two separate resolutions to extend the
authorities will be proposed at the 2017 AGM: (i) to authorise the
Directors to issue shares for cash on a non-pre-emptive basis up to
5% of the issued share capital and to satisfy entitlements under
employee share plans; and (ii) to authorise the Directors to issue up
to 5% of the issued share capital for cash on a non-pre-emptive
basis in connection with an acquisition or specified investment
subject to certain conditions in accordance with the Pre-Emption
Group’s 2015 Statement of Principles.
During the year, 1,907,786 ordinary shares in the Company were
issued in order to satisfy entitlements under employee share plans
as follows: 530,771 under a UK Sharesave option scheme at prices
between 410.80p and 1032.00p per share; and 1,377,015 under
executive share option schemes at prices between 466.50p and
1255.00p per share.
The issued share capital as at 31 December 2016 is shown in note 26
to the consolidated financial statements.
Authority to purchase shares
At the 2016 AGM, shareholders passed a resolution authorising the
purchase of up to 117.6m ordinary shares in the Company
(representing less than 10% of the issued ordinary shares) by
market purchase. During the year, 29,235,507 ordinary shares with
a nominal value of 14 51/116p (representing 2.6% of the ordinary
shares in issue on 31 December 2016) were purchased under this
and the previous authority, for a total consideration of £376m,
including expenses, and subsequently transferred to be held in
treasury. The purpose of the share buyback is to reduce the capital
of the Company.
On 22 December 2016, the Company cancelled 33.7m ordinary
shares held in treasury. Therefore, as at 31 December 2016 there
were 59,415,287 ordinary shares held in treasury, representing
5.2% of the issued ordinary shares. A further 3,745,255 ordinary
shares were purchased between 3 January 2017 and the date of this
report. The authority to make market purchases will expire at the
2017 AGM, at which a resolution to further extend the authority will
be submitted to shareholders.
Substantial share interests
As at 31 December 2016, the Company had been notified by the
following shareholders that they held an interest of 3% or more in
voting rights of its issued share capital pursuant to Rule 5 of the
Disclosure and Transparency Rules (DTR):
§ BlackRock Inc
§ Invesco Limited
§ Legal & General Group plc
9.62%
5.03%
3.40%
The percentage interests stated above are as disclosed at the date
on which the interests were notified to the Company.
Between 31 December 2016 and 20 February 2017, the Company did
not receive any notifications under DTR 5.
Employee Benefit Trust
The trustee of the Employee Benefit Trust held an interest in
4,229,442 ordinary shares in the Company (representing 0.37% of
the issued ordinary shares) as at 31 December 2016. The trustee
may vote or abstain from voting any shares it holds in any way it
sees fit.
Significant agreements – change of control
The Governing Agreement between RELX PLC and RELX NV states
that, upon a change of control of RELX PLC (for these purposes, the
acquisition by a third party of 50% or more of the issued share
capital having voting rights), should there not be a comparable offer
from the offeror for RELX NV, RELX NV may serve notice upon the
Company varying certain provisions of the Governing Agreement,
including the governance and the standstill provisions.
There are a number of borrowing agreements including credit
facilities that, in the event of a change of control of both the Company
and RELX NV and, in some cases, a consequential credit rating
downgrade to sub-investment grade may, at the option of the
lenders, require repayment and/or cancellation as appropriate.
Articles
The Company's Articles of Association, which were not amended
during the year, may only be amended by a special resolution of
shareholders passed at a general meeting of the Company.
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172
Appointment and replacement of Directors
The appointment, re-appointment and replacement of Directors
is governed by the Company's Articles, the Governing Agreement
between RELX PLC and RELX NV, the Companies Act 2006 and
related legislation. RELX PLC shareholders maintain their right to
appoint and re-appoint Directors by way of an ordinary resolution
in accordance with the Articles. However, no individual may be
appointed to the Board unless recommended by the joint
Nominations Committee of RELX PLC and RELX NV. Subject to this
restriction, the Directors may appoint additional or replacement
directors, who may only serve until the following AGM of the
Company, at which time they must retire and, if appropriate, seek
election by the Company's shareholders. A Director may be
removed from office by the Company as provided for by applicable
law, in certain circumstances set out in the Company's Articles, and
at a general meeting of the Company by the passing of an ordinary
resolution.
The Articles provide for a Board of Directors consisting of not fewer
than two, but not more than 20 Directors, who manage the business
and affairs of the Company.
Powers of Directors
Subject to the provisions of the Companies Act 2006, the Company's
Articles and any directions given by special resolutions, the
business of the Company shall be managed by the Board which may
exercise all the powers of the Company.
Directors’ indemnity
In accordance with its Articles, the Company has granted Directors
an indemnity, to the extent permitted by law, in respect of liabilities
incurred as a result of their office. This indemnity was in place for
Directors that served at any time during the 2016 financial year, and
also for each serving Director as at the date of approval of this
report. The Company also purchased and maintained throughout
the year Directors’ and Officers’ liability insurance in respect of
itself and its Directors.
Related party transactions
Internal controls are in place to ensure that any related party
transactions involving Directors or their connected persons are
carried out on an arm’s-length basis and are properly recorded and
disclosed where appropriate.
Conflicts of interest
Under the Companies Act 2006, the Directors have a duty to avoid
situations in which they have, or could have, a direct or indirect
interest that conflicts with the interests of the Company. The Board
has established formal procedures for identifying, assessing and
reviewing any situations where a Director has an interest that
conflicts, or may possibly conflict, with the interests of the
Company.
The Nominations Committee considers any such conflict or
potential conflict and makes a recommendation to the Board on
whether to authorise it, as permitted under the Company's Articles.
In reaching its decision, the Board is required to act in a way it
considers would be most likely to promote the success of the
Company and may impose limits or conditions when giving its
authorisation, if it thinks this is appropriate. Actual or potential
conflicts of interest are reviewed annually by the Nominations
Committee.
Financial Instruments
The Group’s financial risk management objectives and policies,
including hedging activities and exposure to risks, are described in
note 19 to the consolidated financial statements on pages 150 to 154.
Political donations
The Group does not make donations to European Union (EU)
political organisations or incur EU political expenditure. In the US,
Group companies donated £74,264 (2015: £53,791) to political
organisations. In line with US law, these donations were not made
at federal level, but only to candidates and political parties at the
state and local levels.
Employee relations
The Group is committed to employee involvement and participation.
Where appropriate, major announcements are communicated to
employees through internal briefings. Information on performance,
development, organisational changes and other matters of interest
is communicated through briefings and electronic bulletins. The
Company is an equal opportunity employer and does not
discriminate on the grounds of race, gender or other characteristics
in its recruitment or employment policies. The Group seeks
opinions from employees through a triennial survey. The last
employee survey was carried out in 2015. Certain employees
throughout the Group are eligible to participate in the Group’s share
incentive plans.
Disabled persons
RELX Group has a positive approach to diversity and inclusion.
Details of the Group’s Diversity and Inclusion Statement are set out
on page 46, which is incorporated into this Directors' Report by
reference. The Group is committed to the full and fair treatment of
people with disabilities in relation to job applications, training,
promotion and career development. Where existing employees
become disabled, our policy is to provide continuing employment,
support and training wherever practicable.
Disclosures required under UK Listing Rule 9.8.4
The information required by Listing Rule 9.8.4 is set out on the
pages below:
Interest capitalised by the Group
Page
Information required
n/a
(1)
n/a
(2) Publication of unaudited financial information
n/a
(4) Long-term incentive schemes
n/a
(5) Waiver of emoluments by a director
n/a
(6) Waiver of future emoluments by a director
(7) Non pro-rata allotments for cash (issuer)
n/a
(8) Non pro-rata allotments for cash (major subsidiaries) n/a
(9) Parent participation in a placing by a listed subsidiary n/a
n/a
(10) Contracts of significance
n/a
(11) Provision of services by a controlling shareholder
144
(12) Shareholder waiver of dividends
144
(13) Shareholder waiver of future dividends
n/a
(14) Agreements with controlling shareholders
RELX Group Annual reports and financial statements 2016 Financial statements and other information Directors' Report
173
Financial statements and accounting records
The Directors are responsible for preparing the Directors’ Report
and the financial statements in accordance with applicable law and
regulations.
§ the Directors' Report includes a fair review of the development
and performance of the business and the position of the Group,
together with a description of the principal risks and
uncertainties that it faces.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors are
required to prepare the consolidated financial statements in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the EU and Article 4 of the IAS Regulation. The
Directors have elected to prepare the parent company financial
statements in accordance with Financial Reporting Standard 101
Reduced Disclosure Framework. Under company law the Directors
must not approve the accounts unless they are satisfied that they
give a true and fair view of the state of affairs of the Company and of
the profit or loss of the Company for that period.
In preparing the parent company financial statements, the
Directors are required to: select suitable accounting policies and
then apply them consistently; make judgements and accounting
estimates that are reasonable and prudent; state whether Financial
Reporting Standard 101 Reduced Disclosure Framework has been
followed, subject to any material departures being disclosed and
explained in the financial statements; and prepare the financial
statements on a going concern basis unless it is inappropriate to
presume that the Company will continue in business.
In preparing the Group financial statements, IAS1 requires that
Directors: properly select and apply accounting policies; present
information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable
information; provide additional disclosures when compliance with
the specific requirements of IFRS are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity’s financial position and financial
performance; and make an assessment of the company’s ability to
continue as a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Directors’ responsibility statement
Each of the Directors, whose names and roles can be found on
pages 66 to 67 confirms that, to the best of their knowledge:
§ the consolidated financial statements, prepared in accordance
with International Financial Reporting Standards as issued by
the International Accounting Standards Board and as adopted
by the European Union, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group;
§ the parent company financial statements, prepared in
accordance with Financial Reporting Standard 101 'Reduced
Disclosure Framework' (FRS 101), give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company; and
Having taken into account all the matters considered by the Board
and brought to the attention of the Board during the year, the
Directors are satisfied that the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
Neither the Company nor the Directors accept any liability to any
person in relation to the Annual Report except to the extent that
such liability could arise under English law. Accordingly, any liability
to a person who has demonstrated reliance on any untrue or
misleading statement or omission shall be determined in
accordance with Section 90A of the Financial Services and Markets
Act 2000.
Disclosure of information to auditors
In accordance with Section 418 of the Companies Act 2006, each
Director in office at the date the Directors' Report is approved,
confirms that:
§ so far as the Director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
§ he/she has taken all the steps that he/she ought to have taken
as a Director to make himself/herself aware of any relevant
audit information and to establish that the Company's auditors
are aware of that information.
Going concern
The Directors' statement regarding the appropriateness of
adopting the going concern basis of accounting is set out on page 78,
which is incorporated into this Directors' Report by reference.
Long-term viability statement
The Directors' statement regarding the long-term viability of the
Group is set out on page 79, which is incorporated into this Directors'
Report by reference.
Auditors
Resolutions for the re-appointment of Ernst & Young LLP as
auditors of the Company and to authorise the Audit Committee, on
behalf of the Board, to determine their remuneration will be
submitted to shareholders at the 2017 AGM.
By order of the Board
Henry Udow
Company Secretary
22 February 2017
Registered Office
1-3 Strand
London
WC2N 5JR
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174
RELX Group Annual reports and financial statements 2016
Parent company statement of financial position
AS AT 31 DECEMBER
Non-current assets
Investments in subsidiary undertakings
Investments in joint ventures
Current assets
Receivables: amounts due from joint ventures
Total Assets
Current liabilities
Taxation
Other payables
Net assets
Capital and reserves
Share capital
Share premium
Shares held in treasury
Capital redemption reserve
Other reserves
Net profit
Reserves
Shareholders’ equity
Note
1
1
2
2016
£m
77
3,025
3,102
68
68
2015
£m
77
3,023
3,100
69
69
3,170
3,169
3
55
58
1
54
55
3,112
3,114
165
1,295
(645)
22
158
717
1,400
3,112
170
1,284
(604)
17
156
665
1,426
3,114
The parent company financial statements were approved by the Board of Directors and authorised for issue on 22 February 2017.
They were signed on its behalf by:
A J Habgood
Chairman
N L Luff
Chief Financial Officer
Financial statements and other information Parent company financial statements
175
Parent company statement of changes in equity
Balance at 1 January 2015
Total comprehensive income for the year
Dividends paid (4)
Repurchase of ordinary shares
Cancellation of shares
Issue of ordinary shares, net of expenses
Equity instruments granted to employees of the Group
Transfer of net profit to reserves
Balance at 1 January 2016
Total comprehensive income for the year
Dividends paid (4)
Repurchase of ordinary shares
Cancellation of shares
Issue of ordinary shares, net of expenses
Equity instruments granted to employees of the Group
Transfer of net profit to reserves
Balance at 31 December 2016
Share
capital
£m
174
–
–
–
(4)
–
–
–
170
–
–
–
(5)
–
–
–
165
Share
premium
£m
1,274
–
–
–
–
10
–
–
1,284
–
–
–
–
11
–
–
1,295
Shares
held in
treasury
£m
(531)
–
–
(342)
269
–
–
–
(604)
–
–
(376)
335
–
–
–
(645)
Capital
redemption
reserve (1)
£m
13
–
–
–
4
–
–
–
17
–
–
–
5
–
–
–
22
Other
reserves (2)
£m
154
–
–
–
–
–
2
–
156
–
–
–
–
–
2
–
158
Net profit
£m
628
665
–
–
–
–
–
(628)
665
717
–
–
–
–
–
(665)
717
Reserves (3)
£m
1,362
–
(295)
–
(269)
–
–
628
1,426
–
(356)
–
(335)
–
–
665
1,400
Total
£m
3,074
665
(295)
(342)
–
10
2
–
3,114
717
(356)
(376)
–
11
2
–
3,112
(1) The capital redemption reserve does not form part of the distributable reserves balance.
(2) Other reserves relate to equity instruments granted to employees of the Group under share based remuneration arrangements,
and do not form part of the distributable reserves balance.
(3) Distributable reserves at 31 December 2016 were £1,472m (2015: £1,487m) comprising net profit and reserves, net of shares held in treasury.
(4) Refer to note 14 of the RELX Group consolidated financial statements on page 143 for further dividend disclosure.
Parent company accounting policies
Basis of preparation
The parent company meets the definition of a qualifying entity under
FRS 100 (Financial Reporting Standard 100) issued by the Financial
Reporting Council (FRC). Accordingly, the financial statements are
prepared in accordance with FRS 101 (Financial Reporting Standard
101) ‘Reduced Disclosure Framework’ as issued by the Financial
Reporting Council, incorporating the Amendments to FRS 101 issued
by the FRC in July 2015 and the amendments to Company law made by
The Companies, Partnerships and Groups (Accounts and Reports)
Regulations 2015.
As permitted by FRS 101, the company has taken advantage of the
disclosure exemptions available under that standard in relation to
share based payments, financial instruments, capital management,
presentation of comparative information in respect of certain
assets, presentation of a cash flow statement, standards not yet
effective, impairment of assets and related party transactions.
The parent company financial statements have been prepared on
the historical cost basis.
Unless otherwise indicated, all amounts in the financial
statements are in millions of pounds.
The parent company financial statements should be read in
conjunction with the Group consolidated financial statements and
notes presented on pages 119 to 167, which are also presented as
the RELX PLC consolidated financial statements. See the Basis of
Preparation of the consolidated financial statements on page 124.
The parent company financial statements are prepared on a going
concern basis, as explained on page 173.
As permitted by section 408 of the Companies Act 2006, and in
compliance with The Companies, Partnerships and Groups
(Accounts and Reports) Regulations 2015, the company has not
presented its own profit and loss account but has presented the
net profit for the year on the statement of financial position.
The RELX PLC accounting policies under FRS 101 are set out below.
Investments
Fixed asset investments are stated at cost, less provision, if
appropriate, for any impairment in value. The fair value of the award of
share options and conditional shares over RELX PLC ordinary shares
to employees of the Group are treated as a capital contribution.
Other assets and liabilities are stated at historic cost, less
provision, if appropriate, for any impairment in value.
Shares held in treasury
The consideration paid, including directly attributable costs, for
shares repurchased is recognised as shares held in treasury and
presented as a deduction from total equity. Details of share capital
and shares held in treasury are set out in note 26 of the Group
consolidated financial statements.
Foreign exchange translation
Transactions entered into in foreign currencies are recorded at
the exchange rates applicable at the time of the transaction.
Taxation
Refer to note 10 on page 136 of the consolidated financial
statements for the taxation accounting policies.
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176
RELX Group Annual reports and financial statements 2016
Notes to the parent company financial statements
1 Investments
At 1 January 2015
Acquisitions
Disposal
Equity instruments granted to employees of the Group
At 1 January 2016
Equity instruments granted to employees of the Group
At 31 December 2016
The joint venture is set out in note 3.
Subsidiary
undertaking
£m
309
–
(232)
–
77
–
77
Joint
venture
£m
2,314
707
–
2
3,023
2
3,025
Total
£m
2,623
707
(232)
2
3,100
2
3,102
2 Related party transactions
All transactions with joint ventures, subsidiaries and the Group’s employees, which are related parties of RELX PLC, are reflected in
these financial statements. Transactions with key management personnel including share based remuneration costs are set out in note
28 of the Group consolidated financial statements and details of the directors’ remuneration are included in the Directors’ Remuneration
Report on pages 81 to 104.
3 Joint venture as at 31 December 2016
RELX Group plc
Incorporated and operating in Great Britain
1-3 Strand
London WC2N 5JR
RELX Group plc is a holding company for group financing activities and
operating businesses involved in scientific and medical, risk and business
analytics, legal markets and organisation of trade exhibitions
63,226 ordinary voting shares
15,487 non-voting E shares
21,287 non-voting R shares
Equivalent to a 52.9% equity interest and a
50% interest in the voting shares
50%
–
100%
% holding as at
31 December
4 Contingent liabilities
There are contingent liabilities in respect of borrowings of joint ventures guaranteed by RELX PLC as follows:
Guaranteed jointly and severally with RELX NV
2016
£m
4,643
2015
£m
3,697
Financial instruments disclosures in respect of the borrowings covered by the above guarantees are given in note 19 of the Group’s
consolidated financial statements.
Financial statements and other information
177
RELX NV
Annual Report and
Financial Statements
In this section
178 Report of the Board
181 Parent company financial statements
182 Parent company accounting policies
183 Notes to the parent company financial
statements
184 Additional information (unaudited)
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178
RELX Group Annual reports and financial statements 2016
Report of the Board
The Non-Executive and Executive Directors present their joint
report, together with the financial statements of the Group and of
RELX NV (the Company), for the year ended 31 December 2016.
result of the abolition of the UK tax credit, effective from 6 April
2016, reported earnings per share have the same value for each
RELX NV and RELX PLC share from 2016.
RELX PLC and RELX NV are separate, publicly-listed holding
companies. RELX PLC’s ordinary shares are traded on the London
and New York stock exchanges, and RELX NV’s ordinary shares
are traded on the Amsterdam and New York stock exchanges.
RELX PLC and RELX NV have equal voting rights in RELX Group
plc, which holds all of RELX Group’s operating businesses,
subsidiaries and financing activities. RELX PLC, RELX NV, RELX
Group plc and its subsidiaries, associates and joint ventures are
together known as RELX Group or the Group.
In addition to the reported figures, adjusted profit figures are
presented as additional performance measures used by
management. These exclude the Group’s share of amortisation of
acquired intangible assets, acquisition-related costs, tax in joint
ventures, disposal gains and losses and other non-operating
items, related tax effects, and movements in deferred taxation
assets and liabilities related to acquired intangible assets and
include the benefit of tax amortisation where available on
acquired goodwill and intangible assets.
Parent company financial statements
In accordance with article 2:362(1) of the Dutch Civil Code, the
individual parent company financial statements of RELX NV
(presented on pages 177 to 184) were prepared under Financial
Reporting Standard 101 (FRS 101).
The profit attributable to the shareholders of RELX NV was
€869m (2015: €787m) and net assets as at 31 December 2016,
principally representing the investment in RELX Group plc under
the historical cost method and loans to their subsidiaries were
€4,318m (2015: €4,218m). Free reserves as at 31 December 2016
were €4,046m (2015: €3,946m), comprising reserves and paid-in
surplus less shares held in treasury.
Dividends
The Board is recommending a final dividend of €0.301 per ordinary
share. This gives total ordinary dividends for the year of €0.423
(2015: €0.403), (up 5%). The final dividend will be paid on 22 May
2017. Payment of this final dividend remains subject to approval of
the Company's shareholders at its 2017 Annual General Meeting.
Details of dividend cover and dividend policy are set out on page 58.
This report of the Board and the parent company financial
statements should be read in conjunction with the consolidated
financial statements and other reports set out on pages 2 to 168,
which are incorporated by reference herein. Summary
consolidated financial information in euros is set out on page 186.
The consolidated financial statements on pages 108 to 168 are to
be considered as part of the notes to the statutory financial
statements. The Annual Report of RELX NV within the meaning of
article 2:391 of the Dutch Civil Code consists of pages 177 to 180
and, incorporated by reference, pages 2 to 168 and the Corporate
Governance Statement of RELX NV dated 22 February 2017 which
is published on the RELX Group website (www.relx.com) is
incorporated by reference herein in accordance with the
Vaststellingsbesluit nadere voorschriften inhoud bestuursverslag
January 2010 article 2a under 1 sub b.
Principal activities
RELX NV is a holding company. Its principal investment is its
direct 47.1% shareholding in RELX Group plc. RELX Group plc
is a global provider of information and analytics for professional
and business customers across industries. The remaining
shareholding in RELX Group plc is held by RELX PLC. A full
description is set out on page 71.
Financial statement presentation
Under the Governing Agreement between RELX PLC and RELX
NV, one RELX PLC ordinary share confers an equivalent economic
interest to one RELX NV ordinary share. Therefore all
shareholders can be regarded as having interests in a single
economic entity. Accordingly, the Group forms a single reporting
entity for the presentation of consolidated financial statements.
The Group consolidated financial statements represent the
interests of both sets of shareholders and are presented by both
RELX PLC and RELX NV as their respective consolidated financial
statements. A review of the Group’s performance during the year
is set out on pages 8 to 39, a summary of the principal risks facing
the Group is set out on pages 60 to 63, and the Group statement on
corporate responsibility is set out on pages 42 to 51.
The shares of RELX PLC and RELX NV are regarded as two
separate classes of share which together form the consolidated
issued share capital of the Group. In calculating earnings per
share of the Group, the earnings for each company are calculated
on a fully distributed basis. The Group’s usual practice is for only a
portion of earnings to be distributed by way of dividends. Dividends
paid to RELX PLC and RELX NV shareholders are, other than in
special circumstances, equalised at the gross level and included,
until 6 April 2016, the benefit of the then prevailing UK attributable
tax credit of 10% available to certain RELX PLC shareholders. As a
Financial statements and other information Report of the Board
179
On 8 December 2016, the Dutch Monitoring Committee Corporate
Governance Code issued a new revised Dutch Code, which is
expected to apply to financial years starting on or after 1 January
2017.
Significant agreements – change of control
The Governing Agreement between RELX NV and RELX PLC states
that upon a change of control of RELX NV (for these purposes,
the acquisition by a third party of 50% or more of the issued share
capital having voting rights), should there not be a comparable
offer from the offeror for RELX PLC, RELX PLC may serve notice
upon RELX NV varying certain provisions of the Governing
Agreement, including the governance and the standstill provisions.
There are a number of borrowing agreements including credit
facilities that in the event of a change of control of both RELX NV
and RELX PLC and, in some cases, a consequential credit rating
downgrade to sub-investment grade may, at the option of the
lenders, require repayment and/or cancellation as appropriate.
Financial statements and accounting records
The financial statements provide a true and fair view of the state
of affairs of the Company and the Group as of 31 December 2016
and of the profit or loss in 2016. In preparing the financial
statements, the Board ensures that suitable accounting policies,
consistently applied and supported by reasonable judgements and
estimates, have been used and applicable accounting standards
have been followed. The Board is responsible for keeping proper
accounting records, which disclose with reasonable accuracy at
any time the financial position of the company and enable them to
ensure that the financial statements comply with the law. The
Board has general responsibility for taking reasonable steps to
safeguard the assets of the company and to prevent and detect
fraud and other irregularities.
Internal control
As required under sections II.1.4. and II.1.5. of the Dutch Code, the
Audit Committee and the Board have reviewed the effectiveness
of the systems of internal control and risk management during
the last financial year. The objective of these systems is to manage,
rather than eliminate, the risk of failure to achieve business
objectives. Accordingly, they can only provide reasonable, but
not absolute, assurance against material misstatement or loss.
The outcome of this review has been discussed with the external
auditors. The Board confirmed that as regards financial reporting,
the risk management and control systems provide reasonable
assurance against material inaccuracies or loss and have
functioned properly during the financial year.
Share capital
All issued shares are fully paid up and carry no additional
obligations or special rights.
During 2016, 1,730,714 ordinary shares in RELX NV were issued as
follows:
§ under convertible debentures at prices between €5.24
and €15.64
§ under executive share option schemes at prices between €5.40
and €15.29
Information regarding shares outstanding at 31 December 2016
is shown in note 26 to the consolidated financial statements. At
31 December 2016 the total shares held in treasury were 53,204,378.
Another 4,519,538 shares were held by the Employee Benefit Trust.
At the 2016 Annual General Meeting, the shareholders approved
the reduction of the capital of RELX NV by the cancellation of up
to 30 million of its shares held in treasury. On 22 December 2016,
30 million ordinary shares held in treasury were cancelled on the
basis of this authorisation.
Substantial holdings
As at 22 February 2017, based on the public database of and on
notification received from the Netherlands Authority for the
Financial Markets, the Company is aware of interests in the capital
and voting rights of the issued share capital of the Company of at
least 3% by the following persons or organisations:
§ RELX NV
§ Henderson Group Plc
§ BlackRock, Inc.
§ The Bank of New York Mellon Corporation
§ FIL Limited
§ Jupiter Asset Management Ltd.
§ Massachusetts Financial Services Company
Authority to purchase shares
At the 2016 Annual General Meeting, shareholders passed a
resolution delegating authority to the Board to acquire shares in
RELX NV for a period of 18 months from the date of the Annual
General Meeting up to and including 19 October 2017, for the
maximum amount of 10% of the issued capital. During the year,
26.1 million shares were purchased under this and the previous
delegation of authority. As at 31 December 2016 there were
53,204,378 shares held in treasury, representing 5.22% of the
issued shares. A further 3.3 million shares were purchased
between 3 January 2017 and the date of this report.
A resolution to renew the delegation of the authority is to be put to
the 2017 Annual General Meeting, together with a proposal for
approval of the reduction of RELX NV’s capital by cancellation of
accumulated shares held in treasury.
Corporate Governance
RELX NV is subject to the Dutch Corporate Governance Code
issued in December 2008 (the Dutch Code). For further
information on the application of the Dutch Code, see the
Corporate Governance Statement of RELX NV published on the
RELX Group website, www.relx.com, which are incorporated into
this Report of the Board by reference.
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Signed by:
Executive Directors
E Engstrom
(Chief Executive Officer)
N Luff
Non-Executive Directors
A Habgood
(Chairman)
W Hauser
(Senior Independent Director) (Chief Financial Officer)
A Hennah
M van Lier Lels
R MacLeod (appointed 20 April 2016)
C Mills (appointed 20 April 2016)
L Sanford
B van der Veer
Registered office
Radarweg 29
1043 NX Amsterdam
The Netherlands
Chamber of Commerce Amsterdam
Register file No: 33155037
22 February 2017
180
RELX Group Annual reports and financial statements 2016
Directors’ responsibility statement
Each of the Directors whose names and roles can be found on
pages 66 to 67 confirms that to the best of their knowledge that
§ the consolidated financial statements, prepared in accordance
with International Financial Reporting Standards as issued by
the International Accounting Standards Board and as adopted
by the European Union, give a true and fair view of the financial
position and profit or loss of the Group, and
§ the parent company financial statements prepared in
accordance with Financial Reporting Standard 101 'Reduced
Disclosure Framework' (FRS 101) and Part 9 of Book 2 of the
Dutch Civil Code, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company,
and
§ the Report of the Board includes a fair review of the
development and performance of the business during the
financial year and the position of the Group as at 31 December
2016 together with a description of the principal risks and
uncertainties that it faces.
Neither the Company nor the Directors accept any liability to any
person in relation to the Annual Report except to the extent that
such liability arises under Dutch law.
Disclosure of information to auditors
As part of the process of approving the RELX NV 2016 financial
statements, the Board has taken steps to ensure that all relevant
information was provided to the Company's auditors and, so far as
the Board is aware, there is no relevant audit information of which
the Company's auditors are unaware.
Going concern
For details of the businesses’ cash flows, financial position and
liquidity for the year ended 31 December 2016 and the
appropriateness of adopting the going concern assumption, see
the Chief Financial Officer’s Report on pages 54 to 59 and page 78
in the Governance section.
Long-term viability statement
The Directors’ statement regarding the long-term viability of the
Group as required by the UK Corporate Governance Code is set out
on page 79, which is incorporated into this Report of the Board by
reference.
Auditors
Resolutions for the re-appointment of Ernst & Young Accountants
LLP as the Company's auditors and to authorise the Board to
determine their remuneration will be submitted to the forthcoming
Annual General Meeting on 19 April 2017.
Financial statements and other information Parent company financial statements
181
Parent company statement of comprehensive income
FOR THE YEAR ENDED 31 DECEMBER
Administrative expenses
Operating profit
Dividends received from joint ventures
Finance income from joint ventures
Profit before tax
Tax expense
Net profit for the year
Other comprehensive income
Total comprehensive income for the year
Note
2
2016
€m
(2)
(2)
850
27
875
(6)
869
–
869
2015
€m
(3)
(3)
750
30
777
10
787
–
787
Parent company statement of financial position
before appropriation of profit
AS AT 31 DECEMBER
Non-current assets
Investments in joint ventures
Current assets
Amounts due from joint ventures – funding
Amounts due from joint ventures – other
Total assets
Current liabilities
Taxation
Other payables
Net assets
Capital and reserves
Share capital
Paid-in surplus
Shares held in treasury
Other reserves
Reserves
Net profit
Shareholders’ equity
Note
2016
€m
2015
€m
4
4
4
1
2
4,178
4,176
230
5
235
4,413
36
59
95
4,318
71
2,318
(872)
201
1,731
869
4,318
146
3
149
4,325
39
68
107
4,218
73
2,304
(948)
199
1,803
787
4,218
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182
RELX Group Annual reports and financial statements 2016
Parent company statement of changes in equity
Balance at 1 January 2015
Total comprehensive income for the year
Dividends paid (4)
Repurchase of shares
Cancellation of shares
Bonus issue of shares
Issue of shares, net of expenses
Equity instruments granted to employees of the Group
Transfer of net profit to reserves
Balance at 1 January 2016
Total comprehensive income for the year
Dividends paid (4)
Repurchase of shares
Cancellation of shares
Bonus issue of shares
Issue of shares, net of expenses
Equity instruments granted to employees of the Group
Transfer of net profit to reserves
Balance at 31 December 2016
Share
capital
€m
52
–
–
–
(3)
24
–
–
–
73
–
–
–
(2)
–
–
–
–
71
Paid-in
surplus (1)
€m
2,309
–
–
–
–
(24)
19
–
–
2,304
–
–
–
–
–
14
–
–
2,318
Shares held
in
treasury
€m
(635)
–
–
(364)
51
–
–
–
–
(948)
–
–
(386)
462
–
–
–
–
(872)
Other
reserves (2)
€m
197
–
–
–
–
–
–
2
–
199
–
–
–
–
–
–
2
–
201
Net profit (3)
€m
537
787
–
–
–
–
–
–
(537)
787
869
–
–
–
–
–
–
(787)
869
Reserves (3)
€m
1,981
–
(397)
–
(318)
–
–
–
537
1,803
–
(399)
–
(460)
–
–
–
787
1,731
Total
€m
4,441
787
(397)
(364)
(270)
–
19
2
–
4,218
869
(399)
(386)
–
–
14
2
–
4,318
(1) Within paid-in surplus, an amount of €2,165m (2015: €2,151m) is free of tax.
(2)
Other reserves relate to equity instruments granted to employees of the Group under share based remuneration arrangements.
Other reserves do not form part of free reserves.
Free reserves of the company at 31 December 2016 were €4,046m (2015: €3,946m), comprising net profit reserves and paid-in
surplus less shares held in treasury.
(3)
(4) Refer to note 14 of the RELX Group consolidated financial statements on page 143 for further dividend disclosure.
Parent company accounting policies
Basis of preparation
The parent company financial statements have been prepared on
the historical cost basis. As permitted by 2:362 subsection 1 of the
Dutch Civil Code for companies with international operations, the
parent company financial statements have been prepared in
accordance with FRS 101 and in accordance with Part 9 of Book 2
of the Dutch Civil Code.
The parent company meets the definition of a qualifying entity
under FRS 100 (Financial Reporting Standard 100) issued by
the Financial Reporting Council, the standard setting body in the
UK. Accordingly, the financial statements are prepared in
accordance with FRS 101 (Financial Reporting Standard 101)
‘Reduced Disclosure Framework’ as issued by the Financial
Reporting Council, incorporating the Amendments to FRS 101
issued by the FRC in July 2015.
As permitted by FRS 101, the company has taken advantage of
the disclosure exemptions available under that standard in
relations to share based payments, financial instruments,
capital management, presentation of comparative information in
respect of certain assets, presentation of a cash flow statement,
standards not yet effective, impairment of assets and related
party transactions.
The parent company financial statements have been prepared on
the historical cost basis.
Unless otherwise stated, the financial statements are in millions
of euros.
The parent company financial statements and notes should
be read in conjunction with the Group consolidated financial
statements and notes presented on pages 119 to 167, which are
also presented as the RELX NV consolidated financial statements.
See the Basis of Preparation of the RELX Group consolidated
financial statements on page 124.
The parent company financial statements are prepared on a going
concern basis, as explained on page 180.
The RELX NV accounting policies under FRS 101 are set out below.
Investments
Fixed asset investments are stated at cost, less provision,
if appropriate, for any impairment in value. The fair value of the
award of share options and conditional shares over RELX NV
ordinary shares to employees of the Group are treated as a
capital contribution.
Other assets and liabilities are stated at historical cost, less
provision, if appropriate, for any impairment in value.
Financial statements and other information Notes to the parent company financial statements
183
Shares held in treasury
The amount of consideration paid, including directly attributable
costs, for shares repurchased is recognised as shares held in
treasury and presented as a deduction from total equity. Details of
share capital and shares held in treasury are set out in note 26 of
the Group consolidated financial statements.
Foreign exchange translation
Transactions entered into in foreign currencies are recorded at
the exchange rates applicable at the time of the transaction.
Taxation
Refer to note 10 on page 136 of the RELX Group consolidated
financial statements for the taxation accounting policies.
Notes to the parent company financial statements
1 Other payables
Other payables include €6m (2015: €5m) of the Group’s employee convertible debenture loans with a weighted average interest rate of
0.8% (2015: 1.25%). Depending on the conversion terms, the surrender of €200 par value debenture loans qualifies for 50 RELX NV
ordinary shares.
2 Parent company and consolidated financial statements
YEAR ENDED 31 DECEMBER
RELX NV parent company profit attributable to shareholders
RELX PLC parent company profit attributable to shareholders
Consolidated net profit attributable to parent companies shareholders
2016
€m
869
875
2015
€m
787
918
1,416
1,391
The difference between the parent company and consolidated profit and loss arises as the parent company profit and loss accounts
include dividends from RELX Group plc and other intra-group transactions (which are eliminated on a consolidated basis) whereas the
RELX Group consolidated net profit includes the consolidated net profit of the Group's subsidiaries and the Group's share of the results
of its joint ventures and associates.
AS AT 31 DECEMBER
RELX NV parent company shareholders’ funds
RELX PLC parent company shareholders' funds
Consolidated shareholders’ equity
2016
€m
4,318
3,641
2015
€m
4,218
4,235
2,714
2,916
The difference between the parent company and consolidated shareholders’ funds arise as the parent company shareholders’ funds
includes the investment in RELX Group plc held at cost less any provision for impairment, and other intra-group transactions, such
as intra-group funding, which eliminate on consolidation, whereas the consolidated equity includes the investment in subsidiaries
and the assets and liabilities (including external borrowings) of the Group as a whole.
3 Related party transactions
All transactions with joint ventures and the Group’s employees which are related parties of RELX NV, are reflected in these financial
statements. Joint ventures are set out in note 4.
Transactions with key management personnel including share based remuneration costs are set out in note 28 to the Group consolidated
financial statements and details of the directors’ remuneration are included in the Directors’ Remuneration Report on pages 81 to 104.
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184
RELX Group Annual reports and financial statements 2016
Notes to the parent company financial statements
4 Joint venture as at 31 December 2016
RELX Group plc
Incorporated and operating in Great Britain
1-3 Strand
London WC2N 5JR
RELX Group plc is a holding company for group financing activities and
operating businesses involved in scientific and medical, risk and business
analytics, legal markets and organisation of trade exhibitions
63,226 ordinary voting shares
15,487 non-voting E shares
21,287 non-voting R shares
Equivalent to a 47.1% equity interest and a
50% interest in the voting shares
50%
100%
–
Investments in joint ventures include equity instruments granted to the Group’s employees of €2m (2015: €2m)
% holding as at
31 December
5 Contingent liabilities
There are contingent liabilities in respect of borrowings of joint ventures guaranteed by RELX NV as follows:
Guaranteed jointly and severally with RELX PLC
2016
€m
5,432
2015
€m
5,027
Financial instruments disclosures in respect of the borrowings covered by the above guarantees are given in note 19 of the Group’s
consolidated financial statements.
6 Auditor’s remuneration
Information on the audit and non-audit fees paid by RELX Group to Ernst & Young Accountants LLP and its associates is set out in note 4 to
the Group’s consolidated financial statements.
7 Events after the balance sheet date
There were no subsequent events.
8 Approval of financial statements
The parent company financial statements were signed and authorised for issue by the Board of Directors on 22 February 2017.
A J Habgood
Chairman of the Board
N L Luff
Chief Financial Officer
Additional information (unaudited)
Profit allocation
The Articles of Association provide that distributions of dividend may only be made insofar as the company’s equity exceeds the
amount of the paid in capital, increased by the reserves which must be kept by virtue of the law and may be made in cash or in shares,
at the proposal of the Board. Distribution of dividends on ordinary shares shall be made in proportion to the nominal value of each share.
The Board may resolve what amount of dividend shall be paid on each ordinary share. Distribution of dividends on ordinary shares are
subject to approval at the General Meeting of Shareholders. Details of dividends proposed in relation to the financial year are in note 14
to the consolidated financial statements.
OVERVIEW OF PROFIT FOR THE YEAR AND DIVIDENDS PAID
Final dividend on ordinary shares for prior financial year
Interim dividend on ordinary shares for financial year
Surplus for the year
Total
2016
€m
281
118
470
869
2015
€m
283
114
390
787
2014
€m
249
100
188
537
Financial statements and other information
185
Other financial
information
In this section
186 Summary financial information in euros
187 Summary financial information in
US dollars
188 Reconciliation of adjusted to GAAP
measures
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186
RELX Group Annual reports and financial statements 2016
Summary financial information in euros
Basis of preparation
The Group’s consolidated financial information is presented in sterling. The summary financial information is a simple translation of
the Group’s consolidated financial statements into euros at the stated rates of exchange.
EXCHANGE RATES FOR TRANSLATION
Euro to sterling
Consolidated income statement
FOR THE YEAR ENDED 31 DECEMBER
Revenue
Operating profit
Profit before tax
Net profit attributable to parent companies’ shareholders
Adjusted operating profit
Adjusted profit before tax
Adjusted net profit attributable to parent companies’ shareholders
Adjusted earnings per ordinary share
Basic earnings per ordinary share
RELX PLC
RELX NV
Net dividend per ordinary share paid in the year
RELX PLC
RELX NV
Net dividend per ordinary share paid and proposed in relation to the financial year
RELX PLC
RELX NV
Consolidated statement of cash flows
FOR THE YEAR ENDED 31 DECEMBER
Net cash from operating activities
Net cash used in investing activities
Net cash used in financing activities
Increase/(decrease) in cash and cash equivalents
Movement in cash and cash equivalents
At start of year
Increase/(decrease) in cash and cash equivalents
Exchange translation differences
At end of year
Adjusted cash flow
Consolidated statement of financial position
AS AT 31 DECEMBER
Non-current assets
Current assets
Assets held for sale
Total assets
Current liabilities
Non-current liabilities
Liabilities associated with assets held for sale
Total liabilities
Net assets
Income statement
Statement of financial
position
2016
1.22
2015
1.38
2014
1.24
2016
1.17
2015
1.36
2016
€m
8,412
2,084
1,797
1,416
2,579
2,359
1,815
2015
€m
8,240
2,066
1,811
1,391
2,514
2,303
1,760
2014
€m
7,159
1,738
1,523
1,184
2,156
1,974
1,504
€0.880
€0.835
€0.698
€0.687
€0.687
€0.640
€0.682
€0.533
€0.568
€0.397
€0.410
€0.364
€0.400
€0.309
€0.341
€0.439
€0.423
€0.410
€0.403
€0.322
€0.383
2016
€m
2,052
(815)
(1,226)
11
166
11
13
190
2,460
2015
€m
1,942
(582)
(1,552)
(192)
356
(192)
2
166
2,363
2016
€m
12,835
2,746
7
15,588
6,206
6,617
6
12,829
2,759
2014
€m
1,707
(700)
(831)
176
158
176
22
356
2,061
2015
€m
12,591
2,600
21
15,212
5,680
6,558
12
12,250
2,962
Financial statements and other information Other financial information
187
Summary financial information in US dollars
Basis of preparation
The Group’s consolidated financial information is presented in sterling. The summary financial information is a simple translation of
the Group’s consolidated financial statements into US dollars at the stated rates of exchange. It does not represent a restatement under
US GAAP which would be different in some significant respects.
EXCHANGE RATES FOR TRANSLATION
US dollars to sterling
Consolidated income statement
FOR THE YEAR ENDED 31 DECEMBER
Revenue
Operating profit
Profit before tax
Net profit attributable to parent companies’ shareholders
Adjusted operating profit
Adjusted profit before tax
Adjusted net profit attributable to parent companies’ shareholders
Adjusted earnings per American Depositary Share (ADS)
Basic earnings per ADS
RELX PLC (Each ADS comprises one ordinary share)
RELX NV (Each ADS comprises one ordinary share)
Net dividend per ADS paid in the year
RELX PLC
RELX NV
Net dividend per ADS paid and proposed in relation to the financial year
RELX PLC
RELX NV
Consolidated statement of cash flows
FOR THE YEAR ENDED 31 DECEMBER
Net cash from operating activities
Net cash used in investing activities
Net cash used in financing activities
Increase/(decrease) in cash and cash equivalents
Movement in cash and cash equivalents
At start of year
Increase/(decrease) in cash and cash equivalents
Exchange translation differences
At end of year
Adjusted cash flow
Consolidated statement of financial position
AS AT 31 DECEMBER
Non-current assets
Current assets
Assets held for sale
Total assets
Current liabilities
Non-current liabilities
Liabilities associated with assets held for sale
Total liabilities
Net assets
Income statement
Statement of financial
position
2016
1.36
2015
1.53
2014
1.65
2016
1.23
2015
1.47
2016
US$m
9,377
2,323
2,003
1,579
2,875
2,630
2,024
$0.982
$0.766
$0.766
$0.443
$0.457
2015
US$m
9,136
2,290
2,007
1,542
2,788
2,554
1,951
$0.926
$0.710
$0.756
$0.404
$0.444
2014
US$m
9,525
2,313
2,028
1,576
2,869
2,627
2,001
$0.929
$0.710
$0.756
$0.412
$0.454
$0.489
$0.472
$0.437
$0.439
$0.429
$0.510
2016
US$m
2,287
(908)
(1,367)
12
179
12
8
199
2,742
2015
US$m
2,153
(646)
(1,720)
(213)
431
(213)
(39)
179
2,619
2016
US$m
13,493
2,887
7
16,387
6,524
6,957
6
13,487
2,900
2014
US$m
2,272
(932)
(1,106)
234
219
234
(22)
431
2,742
2015
US$m
13,609
2,811
22
16,442
6,139
7,088
13
13,240
3,202
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188
RELX Group Annual reports and financial statements 2016
Reconciliation of adjusted to GAAP measures
The Group uses adjusted figures, which are not defined by generally accepted accounting principles (“GAAP”) such as IFRS, as additional
performance measures. These measures are used by management, alongside the comparable GAAP measures, in evaluating the business
performance. The measures may not be comparable to similarly reported measures by other companies.
A reconciliation of non-GAAP measures to relevant GAAP measures is as follows:
YEAR ENDED 31 DECEMBER
Operating profit
Adjustments:
Amortisation of acquired intangible assets
Acquisition-related costs
Reclassification of tax in joint ventures
Reclassification of finance in joint ventures and associates
Adjusted operating profit
Profit before tax
Adjustments:
Amortisation of acquired intangible assets
Acquisition-related costs
Reclassification of tax in joint ventures
Net interest on net defined benefit schemes
Disposals and other non-operating items
Adjusted profit before tax
Tax charge
Adjustments:
Deferred tax movements on goodwill and acquired intangible assets
Tax on acquisition-related costs
Reclassification of tax in joint ventures
Tax on net interest on net defined benefit schemes
Tax on disposals and other non-operating items
Other deferred tax credits from intangible assets*
Adjusted tax charge
Net profit attributable to parent companies’ shareholders
Adjustments (post tax):
Amortisation of acquired intangible assets
Acquisition-related costs
Net interest on net defined benefit obligation
Disposals and other non-operating items
Other deferred tax credits from intangible assets*
Adjusted net profit attributable to parent companies’ shareholders
Cash generated from operations
Adjustments:
Dividends received from joint ventures and associates
Purchases of property, plant and equipment
Proceeds on disposals of property, plant, and equipment
Expenditure on internally developed intangible assets
Payments in relation to acquisition-related costs/other
Adjusted cash flow
* Movements on deferred tax liabilities arising on acquired intangible assets that do not qualify for tax amortisation.
2016
£m
1,708
346
51
10
(1)
2,114
2015
£m
1,497
296
35
(6)
–
1,822
1,473
1,312
346
51
10
14
40
1,934
296
35
(6)
21
11
1,669
(304)
(298)
18
(13)
(10)
(4)
(34)
(91)
(438)
15
(8)
6
(5)
(13)
(85)
(388)
1,161
1,008
364
38
10
6
(91)
1,488
311
27
16
(2)
(85)
1,275
2,236
1,882
44
(51)
1
(282)
68
2,016
57
(65)
1
(242)
79
1,712
Financial statements and other information
189
Shareholder
information
In this section
190 Shareholder information
192 Shareholder information and contacts
193 2017 financial calendar
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190
RELX Group Annual reports and financial statements 2016
Shareholder information
Annual Reports and Financial Statements 2016
The RELX Group Annual Reports and consolidated Financial
Statements for RELX PLC and RELX NV for the year ended
31 December 2016, and the Corporate Governance Statement
of RELX NV are available on the Group’s website, and from the
registered offices of the respective parent companies shown
on page 192. Additional financial information, including the interim
and full-year results announcements, trading updates and
presentations is also available on the Group’s website,
www.relx.com.
The consolidated financial statements set out in the Annual
Reports and Financial Statements are expressed in sterling, with
summary financial information expressed in euros and US
dollars. The financial statements of RELX PLC and RELX NV are
expressed in sterling and euros respectively.
Share price information
RELX PLC’s ordinary shares are traded on the London Stock
Exchange.
Trading symbol
ISIN
PLC
REL
GB00B2B0DG97
RELX NV’s ordinary shares are traded on the Euronext
Amsterdam Stock Exchange.
Trading symbol
ISIN
NV
REN
NL000614495
The RELX PLC and RELX NV ordinary shares are traded on the
New York Stock Exchange in the form of American Depositary
Shares (ADSs), evidenced by American Depositary Receipts
(ADRs).
Ratio to ordinary shares
Trading symbol
CUSIP code
PLC ADRs
1:1
RELX
NV ADRs
1:1
RENX
759530108
75955B102
The RELX PLC and RELX NV ordinary share prices and the ADR
prices may be obtained from the Group’s website, other online
sources and the financial pages of some newspapers.
FOR FURTHER INFORMATION VISIT THE ‘INVESTOR
CENTRE’ SECTION OF THE GROUP’S WEBSITE
WWW.RELX.COM/INVESTORCENTRE
Information for RELX PLC ordinary
shareholders
Shareholder services
The RELX PLC ordinary share register is administered by Equiniti
Limited. Equiniti provides a free online portal for shareholders at
www.shareview.co.uk. Shareview allows shareholders to monitor
the value of their shareholdings, view their dividend payments and
submit dividend mandate instructions. Shareholders can also
submit their proxy voting instructions ahead of company meetings,
as well as update their personal contact details. Shareview
Dealing provides a share purchase and sale facility. Equiniti’s
contact details are shown on page 192.
Electronic communications
While hard copy shareholder communications continue to be
available to those shareholders requesting them, in accordance
with the Companies Act 2006 and the Company's articles of
association, RELX PLC uses the Group’s website as the main
method of communicating with shareholders. By registering their
details online at Shareview, shareholders can be notified by email
when shareholder communications are published on the Group’s
website. Shareholders can also use the Shareview website to
appoint a proxy to vote on their behalf at shareholder meetings.
Shareholders who hold their RELX PLC shares through CREST
may appoint proxies for shareholder meetings through the CREST
electronic proxy appointment service by using the procedures
described in the CREST manual.
Dividend mandates
Shareholders are encouraged to have their dividends paid directly
into a UK bank or building society account. This method of payment
reduces the risk of delay or loss of dividend cheques in the post
and ensures the account is credited on the dividend payment date.
A dividend mandate form can be obtained online at
www.shareview.co.uk, or by contacting Equiniti at the address
shown on page 192.
Equiniti has established a service for overseas shareholders in
over 90 countries, which enables shareholders to have their
dividends automatically converted from sterling and paid directly
into their nominated bank account. Further details of this service,
and the fees applicable, are available at www.shareview.co.uk or
by contacting Equiniti at the address shown on page 192.
Dividend Reinvestment Plan
Shareholders can choose to reinvest their RELX PLC dividends by
purchasing further shares through the Dividend Reinvestment
Plan (DRIP) provided by Equiniti. Further information concerning
the DRIP facility, together with the terms and conditions and an
application form can be obtained online at www.shareview.co.uk/
dividends or by contacting Equiniti at the address shown on page
192.
Financial statements and other information Shareholder information
191
How to avoid share fraud and boiler room scams
The Financial Conduct Authority (FCA) has issued some guidance
on how to recognise and avoid investment fraud:
§ Legitimate firms authorised by the FCA are unlikely to contact
you unexpectedly with an offer to buy or sell shares.
§ If you receive an unsolicited phone call, do not get into a
conversation, note the name of the person and firm contacting
you and then end the call.
§ Check the Financial Services Register available at
www.fca.org.uk/register to see if the person and firm
contacting you is authorised by the FCA. If you wish to call
the person or firm back, only use the contact details listed
on the Register.
§ Call the FCA on 0800 111 6768 if the firm does not have any
contact details on the Register, or if you are told that they are
out of date.
§ Search the list of unauthorised firms to avoid at
www.fca.org.uk/consumers/scams.
§ If you do buy or sell shares through an unauthorised firm, you
will not have access to the Financial Ombudsman Service or the
Financial Services Compensation Scheme.
§ Consider obtaining independent financial and professional
advice before you hand over any money. If it sounds too good to
be true it probably is.
How to report a scam
If you are approached by fraudsters, please tell the FCA using the
share fraud reporting form at
www.fca.org.uk/consumers/scams, where you can find out more
about investment scams. You can also call the FCA Consumer
Helpline on 0800 111 6768.
If you have already paid money to share fraudsters, you should
contact Action Fraud on 0300 123 2040.
Share dealing service
A telephone and internet dealing service is available through
Equiniti, which provides a simple way for UK resident shareholders
to buy or sell RELX PLC shares. For telephone dealing call
0345 603 7037 between 8.30am and 5.30pm (UK time),
Monday to Friday, and for internet dealing log on to
www.shareview.co.uk/dealing. You will need your shareholder
account number shown on your dividend confirmation.
ShareGift
The Orr Mackintosh Foundation operates a charity share donation
scheme for shareholders with small parcels of shares whose value
makes it uneconomic to sell them. Details of the scheme can be
obtained from the ShareGift website at www.sharegift.org, or by
telephoning ShareGift on 020 7930 3737.
Sub-division of ordinary shares and share consolidation
On 28 July 1986, each RELX PLC ordinary share of £1 nominal value
was sub-divided into four ordinary shares of 25p each. On 2 May
1997, each 25p ordinary share was sub-divided into two ordinary
shares of 12.5p each. On 7 January 2008, the ordinary shares of
12.5p each were consolidated on the basis of 58 new ordinary
shares of 1451⁄116p nominal value for every 67 ordinary shares of
12.5p each held.
Capital gains tax
The mid-market price of RELX PLC’s £1 ordinary shares on
31 March 1982 was 282p. Adjusting for the sub-divisions and share
consolidation referred to above results in an equivalent mid-market
price of 40.72p for each existing ordinary share of 1451⁄116p
nominal value.
Warning to shareholders –
unsolicited investment advice
§ From time to time shareholders may receive unsolicited calls
from fraudsters.
§ Fraudsters use persuasive and high-pressure tactics to lure
investors into scams, sometimes known as boiler room scams.
§ They may offer to sell shares that turn out to be worthless or
non-existent, or to buy shares at an inflated price in return for
an upfront payment.
§ While high profits are promised, if you buy or sell shares in this
way you will probably lose your money.
§ 5,000 people contact the Financial Conduct Authority about
share fraud each year, with victims losing an average
of £20,000.
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RELX Group Annual reports and financial statements 2016
Shareholder information and contacts
Information for RELX NV ordinary
shareholders
Information for RELX PLC and RELX NV
ADR holders
Shareholder services
Enquiries from holders of RELX NV registered ordinary shares in
relation to share transfers, dividends, change of address and bank
accounts should be directed to the Company Secretary of
RELX NV, at the registered office address shown below.
ADR shareholder services
The RELX PLC and RELX NV ADR Depositary is Citibank NA.
Enquiries concerning RELX PLC and RELX NV ADRs should be
addressed to the ADR Depositary at the address shown below.
Dividends
Dividend payments on RELX PLC and RELX NV ADRs are
converted into US dollars by the ADR Depositary.
Annual Report on Form 20-F
The RELX Group Annual Report on Form 20-F is filed
electronically with the United States Securities and Exchange
Commission. A copy of the Form 20-F is available on the Group’s
website, or from the ADR Depositary at the address shown below.
Dividends
Dividends on RELX NV ordinary shares are declared and paid in
euros. Registered shareholders in RELX NV will receive dividends
from the company by transmission to the bank account which they
have notified to the Company. Dividends on shares in bearer form
are paid through the intermediary of a bank or broker.
Dividend Reinvestment Plan
By instructing their bank or intermediary, shareholders can
choose to reinvest their RELX NV dividends by purchasing further
shares through the Dividend Reinvestment Plan (DRIP) provided
by ABN AMRO Bank NV. Further information concerning the DRIP
facility can be obtained online at www.securitiesinfo.com.
Consolidation of ordinary shares
On 7 January 2008, the RELX NV ordinary shares of €0.06 each
were consolidated on the basis of 58 new ordinary shares of €0.07
each for every 67 ordinary shares of €0.06 each held.
Contacts
RELX PLC
Head Office and Registered Office
1-3 Strand
London WC2N 5JR
United Kingdom
Tel: +44 (0)20 7166 5500
Fax: +44 (0)20 7166 5799
Auditors
Ernst & Young LLP
1 More London Place
London
SE1 2AF
United Kingdom
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing BN99 6DA
West Sussex
United Kingdom
WWW.SHAREVIEW.CO.UK
Tel: 0371 384 2960 (UK callers)
Tel: +44 121 415 7047 (callers outside the UK)
RELX NV
Head Office and Registered Office
Radarweg 29
1043 NX Amsterdam
The Netherlands
Tel: +31 (0)20 485 2222
Fax: +31 (0)20 485 2032
Auditors
Ernst & Young Accountants LLP
Antonio Vivaldistraat 150
1083 HP Amsterdam
The Netherlands
Listing/paying agent
ABN AMRO Bank NV
Gustav Mahlerlaan 10
1082 PP Amsterdam
The Netherlands
WWW.SECURITIESINFO.COM
RELX PLC and RELX NV ADR Depositary
Citibank Depositary Receipt Services
PO Box 43077
Providence, RI 02940-3077
USA
WWW.CITI.COM/DR
Email: citibank@shareholders-online.com
Tel: +1 877 248 4327
+1 781 575 4555 (callers outside the US)
Financial statements and other information Shareholder information
193
2017 financial calendar
23 February Results announcement for the year ended 31 December 2016
19 April
19 April
Trading update issued in relation to the 2017 financial year
RELX NV Annual General Meeting – Sheraton Amsterdam Airport Hotel & Conference Center, Schiphol Boulevard 101,
1118 BG Amsterdam
RELX PLC Annual General Meeting – Millennium Hotel, Grosvenor Square, London W1K 2HP
Ex-dividend date – 2016 final dividend, RELX PLC and RELX NV ADRs
Ex-dividend date – 2016 final dividend, RELX PLC and RELX NV ordinary shares
Record date – 2016 final dividend, RELX PLC and RELX NV ordinary shares and ADRs
Payment date – 2016 final dividend, RELX PLC and RELX NV ordinary shares
Payment date – 2016 final dividend, RELX PLC and RELX NV ADRs
Interim results announcement for the six months to 30 June 2017
Ex-dividend date – 2017 interim dividend, RELX PLC and RELX NV ADRs
Ex-dividend date – 2017 interim dividend, RELX PLC and RELX NV ordinary shares
Record date – 2017 interim dividend, RELX PLC and RELX NV ordinary shares and ADRs
Payment date – 2017 interim dividend, RELX PLC and RELX NV ordinary shares
Payment date – 2017 interim dividend, RELX PLC and RELX NV ADRs
20 April
26 April
27 April
28 April
22 May
25 May
27 July
2 August
3 August
4 August
25 August
30 August
Dividend History
The following tables set out dividends paid (or proposed) in relation to the three financial years 2014–2016.
ORDINARY SHARES
Final dividend for 2016*
Interim dividend for 2016
Final dividend for 2015
Interim dividend for 2015
Final dividend for 2014
Interim dividend for 2014
pence per PLC ordinary share
€ per NV ordinary share
Payment date
25.70
10.25
22.30
7.40
19.00
7.00
0.301
0.122
0.288
0.115
0.285
0.098
22 May 2017
26 August 2016
20 May 2016
28 August 2015
22 May 2015
28 August 2014
* Proposed dividend, to be submitted for approval at the respective Annual General Meetings of RELX PLC and RELX NV in April 2017.
ADRs
Final dividend for 2016
Interim dividend for 2016
Final dividend for 2015
Interim dividend for 2015
Final dividend for 2014
Interim dividend for 2014
$ per PLC ADR
$ per NV ADR
Payment date
**
0.13452
0.32348
0.11356
0.29382
0.11600
**
0.13645
0.32247
0.12836
0.31338
0.12923
25 May 2017
31 August 2016
25 May 2016
2 September 2015
28 May 2015
4 September 2014
** Payment will be determined using the appropriate £/US$ and €/US$ exchange rate on 22 May 2017.
Notes:
The dividend rates shown for RELX NV ordinary shares and ADRs are gross dividend rates before the deduction of Dutch withholding tax.
The dividend rates for RELX NV ADRs have been adjusted to take account of the ADR ratio change to 1:1 (previously 1:2).
The dividend rates for RELX PLC ADRs have been adjusted to take account of the ADR ratio change to 1:1 (previously 1:4).
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RELX Group Annual reports and financial statements 2016
Financial statements and other information
195
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RELX Group Annual reports and financial statements 2016
Credits
Designed and produced by
mslgroup.co.uk
Board photography by
Douglas Fry, Piranha Photography
Printed by
Pureprint Group, ISO14001, FSC® certified and CarbonNeutral®
The 2016 Annual Reports and Financial Statements is printed
using paper containing a minimum of 75% recycled content,
of which 100% is de-inked post-consumer waste. All of the pulp
is bleached using an elemental chlorine free process (ECF).
Printed in the UK by Pureprint using their environmental printing
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www.relx.com
RELX Group and the RE symbol are trade marks of RELX Intellectual Properties SA, used under license.