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RELX finds market hard to please as it simplifies corporate structure

RELX NV shareholders will receive one RELX PLC share in exchange for each RELX NV share held. The group's shares will be listed in London, Amsterdam and New York

RELX
Recent share price weakness is a buying opportunity, according to Liberum

Anglo-Dutch information provider RELX Group PLC (LON:REL) said it is confident of delivering another year of underlying growth in revenue and adjusted operating profit.

The company formerly known as Reed Elsevier announced a further simplification of its corporate structure in which it will abandon its current dual parent holding company structure for a single parent one.

READ: Diverse opinions on RELX ahead of results this week, with an Investec 'buy' just in favour

There will be no changes to the locations, activities or staffing levels of RELX Group or its four business areas. Elsevier, the global science, technical & medical business, will continue to be headquartered in Amsterdam and the RELX Group headquarters will remain in London, with no changes to operations or staffing levels.

Dividends will be declared in sterling with an option for payment in euros.

Talking of which, the company announced in its results for 2017 that the full-year dividend for RELX PLC would rise 10% to 39.4p while for RELX NV it would increase 6% to €0.448.

Underlying revenue growth in the year was 4%, with the group posting full-year revenue of £7.36bn, up 7% in actual terms from £6.90bn.

Adjusted profit before tax rose 10% to £2.12bn from £1.93bn the year before.

"RELX Group continued to execute well on its strategic priorities in 2017,” declared Sir Anthony Habgood, the chairman of RELX.

“Adjusted earnings per share in constant currencies grew +7%, and +12% and +5% in sterling and euros respectively,” he noted.

READ: RELX Group reports continued underlying revenue growth, reaffirms full year outlook

The chief executive officer, Erik Engstrom, said the change in corporate structure would have no impact on the group’s strategy.

“Our number one priority remains the organic development of increasingly sophisticated information-based analytics and decision tools that deliver enhanced value to our customers,” Engstrom said.

“We believe that the systematic evolution of our business has driven an improvement in our business profile and the quality of our earnings, with more predictable revenues, a higher growth profile, and improving returns," he added.

Liberum said the results were in line and, together with the usual guidance comments, should reassure the market.

“RELX shares have been the worst performer of the major European media names YTD [year-to-date] and we view this as unwarranted given the quality of the assets and the solidity of the company. We therefore see the weakness as a buying opportunity,” the broker said.

Numis Securities said RELX is “a relatively safe place to hide in the sector” but feels the shares are currently fairly priced.

The broker had predicted revenues of £7.44bn, which was a bit above the £7.36bn RELX announced, but underlying growth of 45 was as expected.

The 39.4p dividend was 0.6p more generous than Numis has been anticipating.

“In terms of numbers we do not expect to change underlying assumptions, though do need to update for currency, the recent acquisition and the US tax change, with a net small downside risk to 2018,” the broker revealed.

Numis has a target price of 1,550p for RELX. After initially rising on the results, RELX’s shares were down 3.7% at 1,403p in mid-morning trade.

Quick facts: RELX PLC

Price: 1879 GBX

LSE:REL
Market: LSE
Market Cap: £36.43 billion
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