FINANCIAL RESULTS HIGHLIGHTS
Reed Elsevier continued to make good progress against its strategic and financial priorities in 2014.
Revenue of £5,773m/€7,159m; underlying growth +3% excluding exhibition cycling: Had exhibition cycling been included underlying revenue growth would have been +4%. The overall underlying growth rate reflects continued growth in electronic and face to face revenues, which accounted for 82% of the total (2013: 81%) growing +5-7%, partially offset by continuing print revenue declines.
Adjusted operating profit of £1,739m/€2,156m; underlying growth +5%: The improvement in profitability reflects a combination of underlying revenue growth, process innovation and portfolio development. Reported operating profit, after amortisation of acquired intangible assets, was up +2% to £1,402m/+7% to €1,738m.
Interest and tax: Adjusted net interest expense was £30m/€27m lower at £147m/€182m reflecting the benefits of term debt refinancings and currency translation effects. The adjusted effective tax rate was unchanged at 23.5%.
Adjusted EPS: Constant currency growth +10%: 56.3p (54.0p) for Reed Elsevier PLC; €1.07 (€0.99) for Reed Elsevier NV.
Reported EPS: Reported EPS was 43.0p (48.8p) for Reed Elsevier PLC and €0.85 (€0.91) for Reed Elsevier NV, reflecting the absence in 2014 of a non-recurring deferred tax credit recognised in the prior year.
Proposed full year dividend: +6% to 26.0p for Reed Elsevier PLC; +16% to €0.589 for Reed Elsevier NV. The proposed average full year dividend growth rate is broadly in line with adjusted EPS growth at constant currency rates. The Reed Elsevier PLC and Reed Elsevier NV full year dividends are covered 2.2x and 1.8x by adjusted EPS respectively.
Net debt/EBITDA 2.3x on a pensions and lease adjusted basis (unadjusted 1.7x): Net debt was £3.5bn/€4.6bn on 31 December 2014. The adjusted cash flow conversion rate was 96%.
Organic development: In 2014 we continued to develop our global technology platforms across the business, launch new products and services in both existing and adjacent market segments, and extend our reach in high growth markets and geographies. Capital expenditure as a percentage of revenues remained at 5%.
Portfolio development: In 2014 we completed 27 small acquisitions of content, data and exhibition assets for a total consideration of £385m. We also completed the disposal of 17 assets for a total consideration of £74m.
Share buybacks: In 2014 we deployed £600m on share buybacks. In 2015, we intend to deploy a total of £500m on share buybacks, based on our strong balance sheet and cash flow. Both amounts exclude annual employee share plan purchases of around £35m. £100m of this year's total has already been completed, leaving a further £400m to be deployed by the end of the year.
