RELX PLC Annual Report and Financial Statements 2020
RELX is a global provider of information-based analytics and decision tools for professional and business customers.
We help researchers make new discoveries, doctors and nurses improve the lives of patients, and lawyers develop winning strategies. We prevent online fraud and money laundering, and help insurance companies evaluate and predict risk. Our events combine in-person and digital experiences to help customers learn about markets, source products and complete transactions.
In short, we enable our customers to make better decisions, get better results and be more productive.
Forward-looking statements
This Annual Report 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 risks and uncertainties that could cause actual results or outcomes of RELX PLC (together with its subsidiaries, "RELX", "we" or "our") to differ materially from those expressed in any forward-looking statement. We consider any statements that are not historical facts to be "forward-looking statements". The terms "outlook", "estimate", "forecast", "project", "plan", "intend", "expect", "should", "will", "believe", "trends" and similar expressions may indicate a forward-looking statement. Important factors that could cause actual results or outcomes to differ materially from estimates or forecasts contained in the forward-looking statements include, among others: current and future economic, political and market forces; the impact of the Covid-19 pandemic as well as other pandemics or epidemics; changes in law and legal interpretations affecting RELX intellectual property rights and internet communications; regulatory and other changes regarding the collection, transfer or use of third-party content and data; changes in the payment model for our products; demand for RELX products and services; competitive factors in the industries in which RELX operates; ability to realise the future anticipated benefits of acquisitions; significant failure or interruption of our systems; exhibitors' and attendees' ability and desire to attend face-to-face events and availability of event venues; compromises of our data security systems or other unauthorised access to our databases; 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 with the US Securities and Exchange Commission (SEC). You should not place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report. Except as may be required by law, we undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.
RELX Annual report and financial statements 2020
Contents
Get more information online
A PDF of the full Annual Report and further information about our businesses can be found online at our website:www.relx.com
124 | Independent auditors' report |
132 | Consolidated financial statements |
177 | RELX PLC annual report and financial statements |
186 | Summary financial information in euros |
187 | Summary financial information in US dollars |
188 | Reconciliation of adjusted to GAAP measures |
190 | Shareholder information |
IBC | 2021 financial calendar |
39 Corporate Responsibility overview
Overview*
2 2020 Financial highlights
3 Chair's statement
4 Chief Executive Officer's report
5 RELX business overview
Market segments*
14 Scientific, Technical & Medical
20 Risk
26 Legal
32 Exhibitions
Corporate Responsibility*Financial review*
54 Chief Financial Officer's report
60 Principal and emerging risks
Governance
66 Board Directors
68 RELX Senior Executives
70 Chair's introduction to corporate governance
71 Corporate governance review
90 Report of the Nominations Committee
93 Directors' remuneration report
115 Report of the Audit Committee
118 Directors' report
Financial statements and other information
* Comprises the Strategic Report in accordance with The (UK) Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013.
2020 Financial highlights
§ Our three largest business areas, Scientific, Technical & Medical, Risk and Legal, which together accounted for 95% of RELX revenue in 2020, reported combined revenue of £6,748m, up 2%, and adjusted operating profit of £2,245m, up 4%, for the year. All three business areas continued to deliver underlying revenue and adjusted operating profit growth.
§ Exhibitions, which accounted for 5% of revenue in 2020, has been impacted significantly by the Covid-19 pandemic, with revenue of £362m, down 71%, and an adjusted operating loss of £164m (£331m profit).
§ By format, electronic revenue across all divisions, representing 87% of the total, grew 4%. Print revenue, which represented 8% of the total, declined 14%, more steeply than in recent years, and face-to-face revenue, which represented around 5% of the total, was down by 73%.
RELX financial summary
REPORTED FIGURES
For the year ended 31 December
2020 £m
2019 £m
ChangeChange at constant currencies
Change underlying
Revenue
7,110 7,874 -10% -10%
-9%
Operating profit Profit before tax
1,525 2,101 -27%
1,483 1,847 -20%
Net profit attributable to RELX PLC shareholders Net margin
1,224 1,505 -19%
17.2% 19.1%
Net borrowings
6,898 6,191
Reported earnings per share Ordinary dividend per RELX PLC share
63.5p 77.4p -18%
47.0p 45.7p +3%
ADJUSTED FIGURES
For the year ended 31 December
2020 £m
2019 £m
ChangeChange at constant currencies
Change underlying
Operating profit Operating margin Profit before tax
2,076 2,491 -17% -18% -18%
29.2% 31.6%
1,916 2,200 -13% -15%
Net profit attributable to RELX PLC shareholders Net margin
1,543 1,808 -15% -16%
21.7% 23.0%
Cash flow
2,009 2,402 -16%
Cash flow conversion Return on invested capital Adjusted earnings per share
97% 96%
10.8% 13.6%
80.1p 93.0p -14% -15%
The shares of RELX PLC are traded on the London, Amsterdam and New York stock exchanges. RELX PLC and its subsidiaries, joint ventures and associates are together known as 'RELX'.
RELX 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. In 2020, we also excluded exceptional costs in the Exhibitions business. Reconciliations between the reported and adjusted figures are set out on page 188. Underlying growth rates are calculated at constant currencies, excluding the results of acquisitions until 12 months after purchase, and excluding the results of disposals and assets held for sale. Underlying revenue growth rates also exclude exhibition cycling.
Constant currency growth rates are based on 2019 full-year average and hedge exchange rates.
RELX Annual report and financial statements 2020
Chair's statement
Sir Anthony Habgood Chair
In a truly extraordinary year, RELX continued consistently to pursue its strategic priorities delivering another year of growth in revenue, profit and cash across our three largest business areas. We also continued to build on our strong ESG performance of recent years, making progress on many important metrics and maintaining or improving our key external rankings.
Our three largest business areas, which accounted for 95% of RELX's revenues in 2020, all continued to deliver underlying revenue and adjusted operating profit growth. However, the Exhibitions business, which accounted for 5% of revenue (16% in 2019) was significantly impacted by the Covid-19 pandemic. As a result, the group's underlying revenue fell 9%, with underlying adjusted operating profits down 18%. Adjusted earnings per share fell 14% to 80.1p.Reported earnings per share were 63.5p (77.4p).
Dividends
Earnings per share were impacted by Covid-19 related disruption which pushed our exhibitions business into loss. Nevertheless, we are proposing to increase our annual dividend to 47.0p reflecting our confidence in the outlook for the company. The long-term dividend policy remains unchanged.
Balance sheet
Net debt was £6.9bn at 31 December 2020, up from £6.2bn last year. Net debt/EBITDA including pensions and leases was 3.3x, compared with 2.5x in 2019 reflecting both higher net debt and lower EBITDA as a result of the Covid-19 impact on the profitability of our Exhibitions business. Capital expenditure represented 5% of revenues.
Share buybacks
As previously announced, the share buyback was suspended in April 2020 after £150m had been spent in the first four months of the year. The Board does not intend to resume the programme this year.
Chair Succession
I am extremely pleased that Paul Walker will, as we have already announced, be taking up the role of Chair on 1 March 2021. Last year we announced that after over ten years as Chair, I would retire from the board once a successor had been appointed. Paul has a strong record of value creation as a FTSE 100 Chair and Chief Executive, has a deep understanding of corporate governance, and brings extensive international experience in sectors relevant to RELX's business through both his executive and non-executive roles. I believe that he is an outstanding choice to guide the company forward to the next level. I welcome him to RELX and wish him the very best for the future.
The Board
In April 2020, Adrian Hennah, who had been on the board for nine years, stepped down as a non-executive director and as Chair of the Audit Committee, a role ably taken on by Suzanne Wood. In October, June Felix joined the board as a non-executive director. June is currently Chief Executive Officer of IG Group Holdings PLC, of which she was a Non-Executive Director (2015-2018) before being appointed as CEO. She has had prior roles at Verifone, Citibank, IBM and CertCo. She brings considerable relevant strategic and operational experience acquired from her current and previous roles including a deep understanding of the financial services sector, technology and healthcare. I would like to thank Adrian for his support and advice and am delighted June has joined the board.
Environment, Social and Governance
We have long believed there is no trade-off between pursuing the highest levels of corporate responsibility (CR) and excellent financial performance. We pursue both in tandem. The Board tracks annual and longer term CR objectives and, during the year, discussed related issues at regular intervals.
Our approach is borne out by increasing investor emphasis on Environmental, Social and Governance (ESG) criteria in their company assessments. They want to protect the value of their assets by investing in companies that are mitigating their ESG risks, while advancing sustainable opportunities.
In the year, RELX held a AAA MSCI ESG rating for a fifth consecutive year and was placed fourth in MSCI's UK ESG Leaders Index; was placed second in its industry sector in Sustainalytics ESG rankings and 21st overall among 13,000 companies assessed; came fourth in the Responsibility100 Index, a ranking of the FTSE 100 on performance against the UN Sustainable Development Goals; was one of 41 LEAD companies of the United Nations Global Compact among approximately 10,000 business signatories; and was selected for Bloomberg's 2020 Gender-Equality Index.
Our CR objectives for 2021 will ensure RELX continues to raise the bar on its performance (full details are available in the 2020 RELX Corporate Responsibility Report).
Finally, I would like to thank all of our employees around the world and everyone who has worked to make the Company successful.
I have every confidence that with your help and with its exceptionally talented leadership team, RELX will continue to grow and prosper in the years to come.
Anthony Habgood Chair
Chief Executive Officer's report
Erik Engstrom
Chief Executive Officer
Our three largest business areas,
With the decline in Exhibitions' revenues, group revenue was 9% lower on an underlying basis, adjusted operating profit declined by 18% underlying, and adjusted earnings per share declined by 15% at constant currency reflecting the fall in operating profits, offset by a lower interest charge.
The group remains highly cash generative and our priorities for use of cash are unchanged. The first of those priorities is organic investment in the business and that has continued at around 5% of revenues. Acquisition spend depends on the opportunities that arise: in 2020 we completed 11 acquisitions of content, data analytics and exhibition assets for a total consideration of £878m. We are proposing a full year dividend of 47.0p, up from 45.7p in the prior year. The share buyback was suspended in April 2020 after £150m had been spent in the first four months of the year.
The Board does not intend to resume the programme this year.
I would like to thank Sir Anthony Habgood for his exemplary leadership as Chair of RELX. For over a decade, he has expertly led the board, helped shape the strategic direction of the company, and provided constant and invaluable advice, support and guidance to me and the executive team. I would also like to welcome Paul Walker as our new Chair. I believe that he is uniquely positionedSTM, Risk and Legal, which together to chair RELX during the next stage of the company's development
accounted for 95% of RELX revenue in 2020, all continued to deliver underlying growth in revenue and in adjusted operating profit. Exhibitions, which accounted for 5% of revenue in 2020, has been impacted significantly by the Covid-19 pandemic.
2020 progress
Since the start of the Covid-19 pandemic our first priority has been the health and safety of our colleagues, our customers, and the wider community in which we operate, with Elsevier in particular supporting the scientific and medical response.
Early in the year we decided that it was important not to curtail investment in our three largest business areas to offset any potential shortfall in financial performance from Exhibitions. Accordingly, we continued to invest behind our strategic priorities, the organic development of increasingly sophisticated information-based analytics and decision tools that deliver enhanced value to our customers, and we continued to make targeted acquisitions that support our organic growth strategies.
Our three largest business areas, STM, Risk and Legal, which together accounted for 95% of RELX revenue in 2020, all continued to deliver underlying growth in revenue and in adjusted operating profit. Exhibitions, which accounted for 5% of revenue in 2020, was impacted significantly by the Covid-19 pandemic and we focused on continuing to serve our customers through the disruption caused by venue closures, whilst taking appropriate steps for the future of the business, accelerating the development of digital tools, and adjusting the ongoing operating cost structure.
and I look forward to working closely with him.
Corporate responsibility
Challenging global conditions in the wake of the coronavirus pandemic did not lessen our commitment to corporate responsibility (CR). We drew on our unique contributions as a business, which further the United Nations Sustainable Development Goals (SDGs), including advancing science and health, protection of society, furthering the rule of law, and fostering communities, to help address the crisis. We aggregated significantly expanded content sets on the free RELX SDG Resource Centre. This included Elsevier's COVID-19 Healthcare Hub with up-to-date evidence-based clinical practices covering symptom management, diagnosis, treatment and ongoing wellness. It also included the LexisNexis Covid-19 and the Global Media Landscape news tracker showcasing coronavirus articles and interactive charts in near real time.
In addition, we launched an SDG graphic for all 17 SDGs, compiled in The Power of Data to Advance the SDGs, a report available on the RELX SDG Resource Centre comparing research output by countries at all income levels to identify gaps and opportunities.
In the year, we also focused on the wellness of our people, training more mental health champions, and took tangible steps to increase a culture of inclusion, appointing diversity leads for our business areas and holding a second employee resource group conference that brought together 1500 colleagues virtually to share practical ideas on issues such as mentoring and allyship with participation from business unit CEOs to new hires.
Outlook
We expect each of our three largest business areas, STM, Risk and Legal, to deliver another year of underlying revenue and adjusted operating profit growth in 2021, similar to pre-Covid-19 trends. The timing and pace of recovery in Exhibitions remains uncertain.
Erik Engstrom
Chief Executive Officer
RELX Annual report and financial statements 2020
RELX business overview
Strategic direction
Our number one strategic priority continues to be the organic development of increasingly sophisticated information-based analytics and decision tools that deliver enhanced value to professional and business customers across the industries that we ser ve.
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.
We aim to build leading positions in long-term global growth markets and leverage our skills, assets and resources across RELX, both to build solutions for our customers and to pursue cost efficiencies.
We are systematically migrating all of our information solutions across RELX towards higher value-add decision tools, addingbroader data sets, 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 has led to more predictable revenues through a better asset mix and geographic balance; a higher growth profile as we expand in higher growth segments, exit from structurally challenged businesses, and gradually reduce the drag from print format declines; and improved returns by focusing on organic development with strong cash generation.
WHERE WE ARE GOING
HOW WE ARE GETTING THERE
IMPLICATIONS FOR BUSINESS PROFILE
§ Organic development: investment in transforming core business; build-out of new products
§ Portfolio reshaping: selective acquisitions; selective divestments
§ Leverage institutional skills, assets and resources across RELX
RELX is a global provider of information-based analytics and decision tools for professional and business customers. We leverage deep customer understanding to combine leading content and data sets with powerful global technology platforms to build sophisticated analytics and decision tools that deliver enhanced value to our customers.
These products are generally sold through dedicated sales forces direct to customers and are priced on a subscription or transactional basis, often under multi-year contracts. They are predominantly delivered in electronic and face-to-face formats, and, to a small extent, in print.
RELX business model
Our products often account for less than 1% of our customers' total cost base but can have a significant and positive impact on the economics of the remaining 99%. Our objective is to continue to enhance the value that we deliver to our customers and over time to grow our own total cost base below our rate of revenue growth on an underlying basis.
Key performance indicators
RELX's key performance indicators (KPIs) track progress against long-term priorities. At the group level, given the diverse nature of our end markets, we look at the continued migration of the business towards electronic delivery, the increasing introduction of electronic decision tools, group level financial metrics, and corporate responsibility and sustainability metrics. The executive directors' remuneration policy includes measures linked to the financial KPIs and may also include non-financials.
Financial KPIs
See pages 93 to 106 for details of the implementation of the policy in 2020 and 2021.
In addition, we track KPIs within each market segment, at the product level, relevant to the performance of the specific business units.
Significant group financial KPIs are set out below.
For non-financial KPIs a summary of the corporate responsibility and sustainability performance metrics and targets are set out on pages 39 to 52 in the Corporate Responsibility overview.
Percentages represent underlying growth | Percentages represent underlying growth | Percentages represent constant currency growth |
RETURN ON INVESTED CAPITAL | ADJUSTED CASH FLOW CONVERSION | DIVIDEND PER SHARE |
15% 13.0% 12.9% 13.2% 13.6% | 100 |
Revenue by category
RELX Annual report and financial statements 2020 | RELX business overview
Market segments
RELX serves customers in more than 180 countries and has offices in about 40 countries. It employs over 33,000 people, of whom almost half are in North America.
Segment position
Scientific, Technical & Medical provides information and analytics that help institutions and professionals progress science, advance healthcare and improve performance | Global #1 |
Risk provides customers with information-based analytics and decision tools that combine public and industry-specific content with advanced technology and algorithms to assist them in evaluating and predicting risk and enhancing operational efficiency | Key verticals #1 |
Legal provides legal, regulatory and business information and analytics that help customers increase their productivity, improve decision-making and achieve better outcomes | US #2 Outside US #1 or 2 |
Exhibitions is a leading global events business. It combines industry expertise with data and digital tools to help customers connect digitally and face-to-face, learn about markets, source products and complete transactions. In 2020, they did this at 169 face-to-face events in 22 countries, attracting more than 2.2m participants, as well as at 71 digital events | Global #2 |
Financial summary by market segment | ||||
Revenue | ||||
2020 | Change | 2020 | Change | |
£m | underlying | £m | underlying | |
Scientific, Technical & Medical | 2,692 | +1% | 1,021 | +1% |
Risk | 2,417 | +3% | 894 | +4% |
Legal | 1,639 | +1% | 330 | +7% |
Exhibitions | 362 | -69% | (164) | -149% |
Unallocated items | (5) | |||
7,110 |
Adjusted operating profit
-9%
2,076
-18%
RELX 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. In 2020, we also excluded exceptional costs in the Exhibitions business. Reconciliations between the reported and adjusted figures are set out on page 188. Underlying growth rates are calculated at constant currencies, excluding the results of acquisitions until 12 months after purchase, and excluding the results of disposals and assets held for sale. Underlying revenue growth rates also exclude exhibition cycling.
Constant currency growth rates are based on 2019 full-year average and hedge exchange rates.
REVENUE
£7,110m
5%
Scientific,
Technical & Medical
RiskLegalExhibitions
Harnessing technology across RELX
Around 9,000 technologists, half of whom are software engineers, work at RELX. Annually, the company spends $1.5bn on technology. The combination of our rich data assets, technology infrastructure and knowledge of how to use next generation technologies, such as machine learning and natural language processing, allows us to create effective solutions for our customers.
This project illustrates the power of the HPCC Systems platform and the Data Lake methodology to quickly extract valuable information and insight from readily available data. These metrics and visualisations were not developed in a vacuum. They are the result of an iterative methodology that layers knowledge upon knowledge to continuously extract deeper and deeper insights.
Roger Dev Senior Architect, LexisNexis Risk Solutions
Helping advance research and provide the public with powerful analytics on global Covid-19 trends
Using HPCC Systems Data Lake Technology, RELX created a Covid-19 Tracker to monitor and report the progress of the Covid-19 virus and provide better contextual understanding of the pandemic's evolution.
Using data from Johns Hopkins University (daily cases and deaths), the US Census Bureau (US population) and the UN DESA (world population), the tracker provides metrics and analysis for locations across the globe, with maps that drill down to country and regional levels, helping to understand how the virus is propagating.
The data is presented in a balanced, digestible form, using plain language, allowing individuals sufficient information and context to make reasonable decisions. For each location, the tracker includes a 'Hot Spot' module that identifies the worst outbreaks at any given time, infection rate trends, weekly statistics and commentaries. The animation controls show the progression of the virus in time and hence can help point to events that could have contributed to the rapid spread of the virus.
The HPCC Systems Covid-19 Tracker is a free resource and available to the public. It is used to advance research by partners at Oxford University and Florida Atlantic University.
Viewing data by region using the Covid-19 Tracker
The tracker runs on RELX's HPCC Systems Data Lake platform. The Data Lake is a collaboration environment for universities and researchers to access, share and process data assets that enhance the metrics for the project. This allows easy incorporation of new data sources and a rapid transition from development to production.
Providing comprehensive, quality data during a fast-developing pandemic is a challenge. Public data sites often present raw statistics but provide little context with which to understand what exactly is happening and how the pandemic is spreading.
The teams behind the tracker wanted to delve deeper and provide commentary that was actionable as well as drill down to the narrowest location possible in order to make projections. In addition to daily cases, daily deaths and testing, the model integrates data on transportation and tourism infrastructure, hospitalisation, socioeconomic indicators, flight schedules, people density and people movements.
30,000 +
over 30,000 unique visitors (as at November 2020)
RELX Annual report and financial statements 2020
+90%
Significant reduction in the fraud-to-sales ratio, with over 90% of users now rated as trusted, dramatically reducing potential friction on the customer experience
paysafecard online
LexisNexis ThreatMetrix helps paysafecard reduce fraud and friction for good customers
paysafecard is an online payment method that allows users to pay for goods and services securely and privately at a huge range of global online merchants in 50 markets. paysafecard vouchers are sold at more than 650,000 retail outlets, gas stations and grocery stores, providing a simple, prepaid alternative to online payments.
With a strong market position and a large customer base, paysafecard was a key target for fraudsters looking to exploit process and data loopholes, and test fraud defences. Fraudsters were using credentials stolen from high-profile data breaches to perpetrate payment fraud.
However, despite the need to address the payment threat from fraudsters, paysafecard also understands the potential impact on good customers. paysafecard enhanced its risk decisioning with new capabilities which enabled it to promote and reward positive, trusted behaviour while also detecting fraudulent payments in near real time.
Leveraging this trust, paysafecard could focus on reducing customer friction. False positives fell by approximately 70% while the business continued to grow. This led to happier customers while simultaneously reducing operational costs.
LexisNexis ThreatMetrix provided paysafecard with a layered defence solution, designed to enhance near real time fraud detection and risk-decisioning amidst a constantly evolving cybercrime landscape. Layering digital and physical identity intelligence with behavioural biometrics enabled paysafecard to detect high-risk and fraudulent payments, while recognising more transactions as trusted across the customer journey.
LexisNexis ThreatMetrix has delivered remarkable product developments that have aligned closely with our internal drive to reduce fraud without impacting good customers. Recently released behavioural biometrics capabilities have further enhanced our ability to identify clusters of fraudulent accounts, adding an extra layer of precision to our fraud detection.
Hany Razi
Head of Global Financial Crime Intelligence & Analytics Paysafe Group
Continuing to deliver for our customers
In what turns out to have been a truly extraordinary year the whole organisation rose to the challenge of maintaining high levels of customer service in hugely changed working conditions reflecting the quality and dedication of our staff around the world.
RELX Annual report and financial statements 2020
Read our stories on how we enable our customers to make better decisions, get better results and be more productive: relx.com/our-business/our-stories
Find out more about our colleagues at:
relx.com/careers/ meet-our-people
RELX Annual report and financial statements 2020
Market segments
In this section
14 Scientific, Technical & Medical
20 Risk
26 Legal
32 Exhibitions
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 and nurses improve the lives of patients, providing insight to find the right clinical answers.
§ We enhance the quality of scientific research output by organising the review, editing and dissemination of around 18% of the world's scientific articles
§ ScienceDirect, the world's largest platform dedicated to peer-reviewed primary scientific and medical research, hosts over 18m pieces of content from over 4,300 journals and over 42,000 e-books, and has over 18m monthly unique visitors
§ Scopus uniquely combines a comprehensive, curated abstract and citation database with enriched data and linked scholarly content, with over 81m records across 25,000 journals, sourced from more than 5,000 publishers
§ SciVal offers insights into the research performance of over 19,000 research institutions
§ ClinicalKey, the flagship clinical reference platform, is accessed in over 90 countries and territories, and by over 1,900 institutions in North America alone
§ Elsevier journals have at some point featured articles by 205 of 206 science and economics Nobel Prize winners since 2000
§ Elsevier's free Novel Coronavirus Information Centre saw over 200m downloads in 2020
Business overview
Scientific, Technical & Medical helps researchers and healthcare professionals advance science and improve health by facilitating insights and critical decision-making for customers across the global research and health ecosystems.
Elsevier is headquartered in Amsterdam, with further principal operations in Boston, New York, Philadelphia, St. Louis and Berkeley in North America, London, Oxford, Frankfurt, Munich, Madrid and Paris in Europe, Beijing, Chennai, Delhi, Singapore and Tokyo in Asia Pacific and Rio de Janeiro in South America.
It has 8,600 employees and serves customers in over 180 countries.
Revenues for the year ended 31 December 2020 were £2,692m, compared with £2,637m in 2019 and £2,538m in 2018. In 2020, 46% of revenue came from North America, 23% from Europe and the remaining 31% from the rest of the world. Subscription sales generated 76% of revenue, transactional sales 23% and advertising 1%.
Elsevier serves the needs of scientific, technical and medical markets by organising the review, editing and dissemination of primary research, reference and professional education content. Growing from its roots in publishing, Elsevier facilitates insights and critical decision-making for customers across the global research and health ecosystems.
Elsevier's customers are scientists, research leaders, librarians, medical researchers, doctors, nurses, allied health professionals and students, as well as hospitals, academic and research institutions, health insurers, managed healthcare organisations, research-intensive corporations and governments.
Elsevier services fall into four categories: Primary Research, Databases & Tools, Reference and Pharma & Life Science Promotion.
Primary Research accounts for around half of revenues. Elsevier serves the global scientific research community, publishing over 560,000 articles in 2020, 90% more than a decade ago. 2020 saw continued strong growth both in article submissions and usage, with over 2.5m articles submitted, up 26% and over 1.3bn articles consumed by researchers. Elsevier published over 81,000 Gold Open Access articles in 2020, a year on year growth rate of over 65%. In 2020, Elsevier launched 115 new journals of which over 90% were Gold Open Access, growing the Elsevier portfolio to 500 Gold Open Access journals.
Elsevier's portfolio of 2,650 journals is managed by more than 24,000 editors and many of its journals are the foremost publications in their field. They include flagship titles such as Cell Press and The Lancet family of journals. Elsevier's article output accounts for around 18% of global research output while garnering approximately 27% of citations, demonstrating Elsevier's commitment to delivering research quality significantly ahead of the industry average.
Research content is distributed and accessed via ScienceDirect, the world's largest platform dedicated to peer-reviewed primary scientific and medical research. Elsevier has continued to invest in ScienceDirect and integrate new remote access methods to provide researchers with the ability to easily use its tools when working from home, safe in the knowledge that they are doing so securely, and that their privacy and data are protected.
In Databases & Tools, Elsevier offers a suite of products for academic and corporate researchers. Significant products include Scopus, ClinicalKey and Reaxys. Scopus enables its users to quickly
find relevant and trusted research, identify experts and access reliable data, metrics and analytical tools to support confident decisions around research strategy. Reaxys is a chemistry research and education database with chemical substance, properties, reaction and medicinal chemistry data for both bench chemists and data scientists supporting drug discovery and chemical R&D in industries such as pharmaceuticals, chemicals and academic & government. During the year, Reaxys strengthened its content enrichment and analytics capabilities.
Elsevier serves academic and government research administrators and leaders through its Research Intelligence suite of products. SciVal is a decision support tool that helps institutions to establish, execute and evaluate research strategies by leveraging bibliometric data from Scopus and other data types such as patent citations and usage data. Elsevier expanded its leadership position in research institution benchmarking analytics through further investment in its SciVal Topic Prominence in Science. Big data technology takes into consideration nearly all of the articles available in Scopus since 1996 and clusters them into nearly 96,000 global, unique research topics based on citations patterns. Elsevier continues to expand and enhance the quality of indicators for research evaluation and impact assessment. With the 2019 CiteScore release, Elsevier introduced an improved calculation methodology, providing a more robust, fair and faster indicator of research impact.
Elsevier's flagship clinical reference platform, ClinicalKey, is accessed in over 90 countries and territories, and by over 1,900 institutions in North America alone. ClinicalKey is a clinical knowledge solution designed to help healthcare professionals and students find the most clinically relevant answers through a wide breadth and depth of trusted content across specialties. This includes Elsevier's vast collection of leading medical reference content, including over 550 clinical overviews that provide quick clinical answers and summaries, over 4.8m images and over 66,000 medical and surgical videos in a single, fully integrated site.
For healthcare professionals, Elsevier's clinical solutions include Interactive Patient Education and Care Planning. Elsevier's ClinicalPath provides clinical pathways delivering personalised, evidence-based oncology guidance at the point of care. ClinicalPath won the 2020 MedTech Breakthrough Award for Best Computerized Decision Support Solution for the second consecutive year.
In commercial healthcare, consumer, provider and medical claims data is used to deliver leading identity, fraud, compliance and health risk analytics solutions for payers, providers, pharmacies and life sciences organisations.
In medical education, Elsevier serves students of medicine, nursing and allied health professions in multiple formats including e-books and digital solutions. For example, Sherpath, an adaptive teaching and learning solution for nursing and health education, provides highly focused, personalised and adaptive learning paths at over 400 institutions, supporting more than 50,000 enrolments. During the year, we saw strong demand for remote solutions and we set up remote proctoring for over 550 nursing schools. Sherpath saw strong growth, and Complete Anatomy, our 3D anatomy platform saw activity levels double. ClinicalKey Student is used by more than 100,000 students in over 170 medical and 130 nursing schools.
In Reference, Elsevier is a global leader in providing authoritative and current professional reference content to scientific, technical and medical reference markets. Flagship titles include Gray's Anatomy, Nelson's Pediatrics and Netter's Atlas of Human Anatomy. Reference content is delivered in both electronic and print formats, with print books now accounting for less than 10% of Elsevier revenues.
Pharma & Life Science Promotion offers commercial marketing services to industry partners (pharmaceutical medicines, medical device and research technology) for their external use, building on Elsevier's trusted global content brands to connect and engage with doctors, nurses and other healthcare professionals who are influential decision makers.
Market opportunities
Scientific, technical and medical information markets have positive long-term growth characteristics. The importance of research and development to society, economic performance and competitive positioning is well understood by governments, academic institutions and corporations. This leads to 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 remains high, even in more difficult budgetary environments.
Strategic priorities
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 improved productivity and outcomes for customers; and continue to drive operational efficiency and effectiveness.
In the primary research market, Elsevier aims to deliver journal and article quality above the industry average at below average cost, leveraging the scale of our platform. We work directly with our customers to understand their objectives and help them reach their research goals in a way that is satisfactory from a content, service and economic perspective. Elsevier looks to enhance quality by building on its premium brands and grow article volume through new journal launches, the expansion of open access journals and growth from emerging markets; and to continue to broaden the range and quality of insights across research solutions with enhancements such as improved Open Access filtering capabilities, improved analytics capabilities for finding experts, integration of additional datasets for finding experts and institutional benchmarking.
In reference markets, Elsevier's priorities are to expand content coverage, improve the user experience and ensure consistent and seamless linking of content assets across products.
Similarly, in health, Elsevier is developing clinical decision support applications utilising cognitive technologies and large image and text content repositories. These applications embedded intechnology platforms will enhance the delivery of the right content, in the right care setting, to the right care providers. This will help health professionals perform their work better, make more accurate diagnoses, ensure appropriate care delivery and ultimately, save more lives.
In every market, Elsevier is applying advanced Machine Learning (ML) and Natural Language Processing techniques to help researchers, engineers and clinicians perform their work better. In 2020, Elsevier acquired SciBite , a semantic Artificial Intelligence company headquartered in Cambridge, UK, to help customers make faster, more effective R&D decisions, identifying key concepts such as drugs, proteins, companies, targets, and outcomes. Elsevier also acquired Authess, the Boston-based developer of an advanced performance-based competency assessment platform that evaluates how students solve complex, open-ended problems using ML models and data analytics. In December, Elsevier acquired Shadow Health, a Florida-based developer of virtual simulations in nursing and healthcare education.
Business model, distribution channels and competition
In Primary Research, 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 health institutions, individual practitioners and medical society members.
While paid subscriptions continue to be the primary distribution model, alternative payment models for the dissemination of research have evolved over the past 20 years. Elsevier has long invested in all business models to support the preferences of authors and research institutions. Author pays open access is one example, with over 1,900 of Elsevier's journals now offering the option of funding publication and distribution via a sponsored article fee. In addition, Elsevier now publishes 500 Gold Open Access titles.
Elsevier is a founding and driving partner of Research4Life, a United Nations partnership initiative, providing free or low-cost access to research for publicly funded institutions in the world's least resourced countries. Over 10,000 institutions in 125 countries are now participating. For some journals, advertising and promotional income represents a small proportion of revenues, predominantly from pharmaceutical companies in healthcare titles.
Alongside journals, Elsevier has also invested in other solutions to serve the needs of the research community. SSRN is an open access
online preprint community where researchers post early-stage research, prior to publication in academic journals. Mendeley data enables researchers to make their research data publicly available through an open research data repository, while Digital Commons helps academic libraries showcase and share their institutions' research via institutional repositories for greatest impact.
Digital solutions, such as ScienceDirect, Scopus and ClinicalKey, are generally sold direct to customers through a dedicated sales force based in offices around the world. Subscription agents facilitate the sales and administrative process for remaining
2020 financial performance
Revenue
Adjusted operating profit
2020 | 2019 | Underlying | Portfolio | Currency | Total |
£m | £m | growth | changes | effects | growth |
2,692 | 2,637 | +1% | 0% | +1% | +2% |
1,021 |
982
Continued modest underlying revenue growth in 2020
Underlying revenue growth was +1%. The reported revenue growth rate of +2% benefited from currency movements, including changes in hedge rates.
Electronic revenue saw good underlying growth of +3%, in line with the prior year. Print revenue, which was impacted by Covid-19 related distribution issues in the first half, declined at around twice the rate of recent years.
Underlying adjusted operating profit growth was +1%, in line with underlying revenue growth. The reported adjusted operating profit growth of +4% benefited from currency movements, including changes in hedge rates, which also drove the increase in margin.
In primary research we continued to enhance customer value by providing broader content sets, increasing the sophistication of our analytics, and evolving our technology platforms. We launched 115 new journals, of which over 100 were dedicated author pays open access titles which now total around 500. We continued to see exceptionally strong growth in article submissions, up by over 25% overall, over 20% for subscription journals and doubling for open access journals, driving increased market share in both segments. The customer environment varied by segment and geography, with good growth in many corporate segments globally. The academic institutional segment saw strong growth in some key Asian countries, but varying degrees of budget pressure in other geographies. Open access revenue growth continued to accelerate across all geographies.
In databases & tools and electronic reference, representing over a third of divisional revenue, we continued to drive goodprint journal sales. Reference and educational content is sold directly to institutions and individuals and accessed on Elsevier platforms, while printed books are sold through retailers, wholesalers and directly to end users.
Competition within science and medical reference content is generally on a title-by-title and product-by-product basis and is typically with learned societies and professional information providers, such as Springer Nature, Clarivate and Wolters Kluwer. Decision tools face similar competition, as well as from software companies and internal solutions developed by customers.
+1%
-1%
+4%
+4%growth through content development and enhanced machine learning and natural language processing based functionality, as well as an acceleration in migration to digital reference products. We have seen strong new sales in corporate life sciences, continued strong growth in the research management and health education segments, and an acceleration in growth in many of our clinical solutions. Our electronic healthcare education offering was further strengthened by the acquisition of Shadow Health, a provider of web-based simulation and clinical learning environments for nursing and healthcare students. Other recent acquisitions, including 3D4Medical in healthcare and SciBite in life sciences are performing well.
Print books, representing less than ten percent of divisional revenue, saw a significantly steeper decline than in recent years, primarily due to distribution disruption related to Covid-19. Print pharma promotion revenue also declined more steeply than in recent years.
In early 2020 Elsevier mobilised all of its research content, data analytics expertise, and clinical insights in support of the global response to the Covid-19 pandemic, providing researchers and healthcare professionals with free access to scientific and practical content, including over 50,000 articles downloaded over 200 million times to date.
2021 outlook
Trends in our customer markets may continue to vary somewhat by segment, but overall we expect another year of modest underlying revenue growth, with underlying adjusted operating profit growth slightly exceeding underlying revenue growth.
REVENUE
ADJUSTED OPERATING PROFIT
£m
Underlying growth +1%
2,637 | 2,692 | 982 | 1,021 |
2019 | 2020 | 2019 | 2020 |
Underlying growth +1%
£m
HESI:
Improving knowledge retention, increasing exam scores, and setting students up for career success as health professionals
98%
overall pass rate in May 2018, an improvement
of over 30 percentage points - 20 percentage
points over the national average
The health assessment HESI and fundamentals HESI are really the tenets of nursing. They're the basic building blocks and the students have to excel in those two areas. It's a big part of the NCLEX.
Dr Kathleen Kelley
Director of Undergraduate Nursing Education, Caldwell University
About HESI
HESI is a product suite of testing and test preparation solutions for nursing students that analyse and improve student performance, promote clinical judgement, and help students and the nursing programmes overall achieve even greater levels of success.
An outdoor lesson at Caldwell Campus
Caldwell University's Bachelor of Nursing Degree (BSN) programme provides an exceptional curriculum to prepare nurses for professional practice.
In 2019 Caldwell University's undergraduate nursing programme was named one of the top 10 nursing schools in New Jersey, with an impressive 95% of their 2019 graduates either working, enrolled in further education or serving in the military.
This success rate hasn't always been the case. Before 2015 when Caldwell University implemented Elsevier's HESI suite of products across its entire BSN curriculum, its National Council Licensure Examination (NCLEX) pass rates hovered under 60%. However, since incorporating HESI into its programme, it has seen exam scores rise into the high 90s. In May 2018 it achieved a 98% overall pass rate, 100% for BSN graduates and 94.7% for nursing as second degree. This represents an improvement of over 30 percentage points, 20 percentage points over the national average when compared with a pass rate for all candidates of 73%.
Under the leadership of Dr Kathleen Kelley, Director of Undergraduate Nursing Education, the faculty is now able to use HESI to test and analyse the data to make sure its programme outcomes are constantly adapted and on track to reach the highest possible pass rates.
HESI not only helps to prepare students to pass the critical NCLEX exam, but the data also help faculty understand how they can improve the programme by finding gaps in the curriculum based on students' performance. HESI, for example, was instrumental in identifying that knowledge retention was their biggest challenge, enabling faculty to prioritise and address the issue.
Having identified these gaps, the faculty was also able to use other tools from Elsevier to develop a remediation strategy. Retention activities were developed for students during term breaks to help students achieve better test outcomes. Caldwell's focus on high retention ensures students are set up for success both in terms of exams and in their future nursing careers.
The integration of Elsevier products throughout its curriculum also helps Caldwell see how it ranks compared with the national benchmark. With data from HESI exams, faculty continues to adapt its curriculum and shape its courses around the gaps that need to be addressed in student learning. By analysing the data from HESI exams, Caldwell continues to build on its students' success.
Risk
We combine data and analytics with deep industry expertise to help customers make better decisions and manage risk. We help detect and prevent online fraud and money laundering and deliver insight to insurance companies. We provide digital tools that help airlines and farmers improve their operations.
§ We do business with 95 out of the top 100 personal lines insurance companies; 76% of the Fortune 500; and seven of the world's top ten banks
§ The LexisNexis Digital Identity Network analyses more than 170m transactions daily and more than 55bn transactions annually
§ More than 200,000 websites and mobile applications implement the LexisNexis Digital Identity Network around the world
§ 89% of new US auto insurance policies issued to consumers in 2020 benefited from our products
§ Cirium provides services to: over 95% of the top 50 airline groups globally, which represents circa 80% of the world's airline passenger traffic; four out of five of the world's top five major search engines; and to NATS' (National Air Traffic Services) streamlined London Heathrow traffic management system (XMAN) which delivers 15,000 tonnes of C02 savings per year. The company also tracks 98% of flights globally in real-time
§ ICIS enables trading in the energy and chemicals sectors, and delivers data and intelligence on over 13,000 refinery units and 18,000 chemical plants
§ Over 200m farm acres (>80m hectares) are managed by Proagrica's geospatial technology
§ More than 7,500 federal, state and local government agencies use our solutions to prevent fraud and allow citizens faster access to digital-based services, maintain program integrity, reduce risk and fight crime
Business overview
Risk provides customers with information-based analytics and decision tools that combine public and industry-specific content with advanced technology and algorithms to assist them in evaluating and predicting risk and enhancing operational efficiency.
LexisNexis Risk Solutions, headquartered in Alpharetta, Georgia, has principal operations in California, Florida, Illinois, New York and Ohio in North America as well as London and Paris in Europe and Beijing and Singapore in Asia Pacific. It has about 9,700 employees and serves customers in more than 180 countries.
Revenues for the year ended 31 December 2020 were £2,417m, compared with £2,316m in 2019 and £2,117m in 2018. In 2020, 79% of revenue came from North America, 14% from Europe and the remaining 7% from the rest of the world. Subscription sales generated 39% of revenues and transactional sales 61%.
LexisNexis Risk Solutions comprises the following market-facing industry/sector groups: Business Services, Insurance Solutions, Data Services (including energy and chemicals, aviation, agriculture and human resources) and Government Solutions.
Business Services, representing nearly 45% of revenue, enables global financial transparency and inclusion by providing holistic and actionable insights for all risk and compliance segments. We address some of the greatest challenges facing businesses today, including identifying fraud rings, cybercrime, bribery and corruption, human trafficking, economic sanctions, global terrorism and abusive practices. We leverage machine learning (ML) and artificial intelligence (AI) in our solutions to provide customers greater insights, enabling better decisions and operational efficiencies with confidence.
Maximising penetration in our current markets across our customers' workflows and through international expansion are the primary drivers of Business Services' growth strategy.
In early 2020, LexisNexis Risk Solutions acquired ID Analytics and Emailage to complement existing credit risk and identity solutions. These strategic acquisitions expanded our digital identity intelligence and fraud prevention services, providing our customers an even more comprehensive view of consumers for predictive risk assessment.
In September 2020, Accuity, formerly part of Data Services, and Business Services merged to offer integrated offerings across KYC, financial crime screening and payment services. The merger further leverages and extends existing data and analytic capabilities to provide comprehensive risk management, compliance and payments solutions to customers around the world.
Insurance Solutions, representing nearly 40% of revenue, 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 data prefill solutions, which provide information on insureds directly into the insurance work stream for 89% of the insurance auto market and LexisNexis Current Carrier, which identifies insurance coverage details and any lapses in coverage.
The focus is on delivering innovative decision tools through a single point of access within an insurer's infrastructure.
RELX Annual report and financial statements 2020 | Risk
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. Insurance Solutions is advancing its strategy to drive more consistency and efficiency in claims through its solution suite, Claims Compass, with Claims Datafill providing data and decisions at first notice of loss and throughout the claim life cycle. LexisNexis Risk Classifier, which uses public and motor vehicle records and predictive modelling, is used by 40% of the top 25 life insurers to better understand risk and improve underwriting efficiency.
Insurance Solutions continues to make progress outside the US. In the UK, contributory solutions including No Claims Discount module, which automates verification of claims history and Policy Insights, a predictor of motor claims loss, are delivered through the LexisNexis Informed Quotes platform to provide real-time data in the quoting process. In China, Genilex is delivering key vehicle data to auto insurers and is looking to add more analytics solutions. In Brazil, Insurance Solutions is delivering telematics solutions, data and analytics to help motor insurers in underwriting.
LexisNexis Risk Solutions harnesses the power of data and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe
Global source of Independent Commodity Intelligence Services, connecting data, markets and customers to create a comprehensive, trusted view of global commodities markets
Leading provider of trusted and accurate data and analytics that transform how payments and compliance professionals manage accounts and transactions with confidence across the global financial ecosystem
Fraud and Identity Management Portfolio
By employing digital, physical, device and behavioural risk signals, we help organisations better assess consumers to prevent or investigate fraudulent transactions, improve operational efficiencies and protect accounts while minimising friction for trusted users
Data Services , representing just over 10% of revenue, provides indispensable business information, data, software and analytics solutions to professionals in many of the world's biggest industries. Our brands include: ICIS, an independent source of data and intelligence for the global chemical and energy markets; Cirium, an aviation and air travel data and analytics company for the wider travel industry; Proagrica, a provider of connectivity solutions, workflow tools and actionable insight for the global agriculture and animal health segment; XpertHR, a compliance and benchmarking business driving global HR topics from pay equality to compliance and HR policies; EG, which delivers data analytics, decision tools and high-value analysis and news for the UK's commercial real estate segment; and Nextens, a provider of workflow solutions, content and analytics for tax professionals.
Government Solutions, representing around 5% of revenue, has helped US agencies, especially during Covid-19, shift from identity verification to authentication. Front-end identity authentication is central to how the government dispenses hundreds of billions of dollars in entitlements, stimulus, benefits and contracts to people and businesses.
Aviation and air travel data and analytics for the world's airlines, airports, aircraft finance, manufacturers, tech giants and travel companies
Claims Compass
Data analytics suite with LexisNexis Claims Datafill and LexisNexis Police Records that improves the claims process from first notice of loss, triage, investigation and resolution through recovery
Risk Defense Platform
A fraud prevention and identity management platform that seamlessly delivers the broadest of solutions, including the latest in machine learning that adapts to ever changing fraud schemes, simplifying efforts to detect and prevent risks associated with the merging of digital and physical identities
Accurint® Virtual Crime Center
The only data sharing platform in the policing market used for analytics, crime analysis and investigations linking public records to national law enforcement data for a complete picture across jurisdictions
A global agricultural network, empowering customers to be better connected, to make more informed decisions, driving better decisions from seed, to field, to fork
Financial Crime Compliance Portfolio
The newly merged Accuity and the Business Services Group offers integrated solutions across KYC, financial crime screening and payments services, providing customers with comprehensive risk management and payment solutions. The combined organisation is one of the global market leaders in compliance risk solutions
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
Risk Intelligence Network
The Risk Intelligence Network provides government agencies with the first step of identity assessment across a number of services including benefits applications, claims filing and tax return filing. With a powerful combination of contributory systems and analytics, emerging threats can be identified before they have a significant impact
Our solution synthesises thousands of data sources and billions of relationships into modernised interfaces providing agencies immediate access to identity and authentication analytics. It creates near-frictionless identity verification and authentication for everything from unemployment insurance claims and remote government workforce access to matching of patient data, providing a snapshot in time for public health researchers.
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; tax and public benefits fraud; financial crime compliance; business risk; fraud and identity solutions; due diligence requirements surrounding customer enrolment; security and privacy considerations; and data and advanced analytics for the banking, energy and chemicals, aviation and human resources sectors.
In Business Services, mounting costs from fraud schemes, anti-money laundering programs, sanctions compliance, anti-bribery and corruption enforcement, consumer and business credit expansion, and heightened regulatory scrutiny continue to drive growth opportunities. Demand for compliance solutions in banking and financial services markets includes cross-border payments and trade finance.
Expansion of mobile and digital use cases continues to drive opportunity for solutions that incorporate global data and drive efficiency in risk decision-making. We expect increased regional and country level demand for data consortia and compliance utilities to continue.
In Insurance, growth is supported by customer experience advances in the auto, home, commercial 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 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, increased consumer interest in insurance and internet quoting and policy binding. We continue to expand our services to make it easier for consumers to transact with insurers throughout the policy life cycle. We are developing solutions that bridge insurers and automakers, utilising connectivity and data from connectedcars to empower consumers with a deeper understanding of their driving behaviour information. This driving intelligence, in combination with the Advanced Driver Assistance Systems, will ultimately play a role in how risks are assessed by the insurance industry. Our automaker relationships, representing 40% of new car sales in the US market, reflect vehicle data into insurer workflows and efficiencies within automakers' operations.
In Data Services, growth in the global energy and chemicals markets is led by changing trade patterns, a drive to embrace sustainability and demand for more sophisticated supply chain solutions. Aviation information markets are being driven by changes in air traffic and the number of aircraft transactions and the digital transformation of the airline industry. Growth in agriculture markets is being driven by adoption of technology and data solutions plus increasing supply chain connectivity.
With over 7,500 federal, state and local agencies using our services, Government Solutions continues its mission of preventing fraud, fighting crime, reducing risk and providing citizens with immediate access to digital-based services. The $2 trillion CARES Act exemplified the demand for online access to government services and highlighted the need for robust fraud prevention tools as criminals quickly tried to compromise these systems leveraging both online and mobile access technologies. This problem will become more pronounced and sophisticated as government spending rises. Data integrity and fraud prevention for businesses and people plays an increasingly important role in accessing government services and receiving entitlements as agencies begin to adopt private sector technologies. The level and timing of demand in this market is influenced by government funding and revenue considerations.
Strategic priorities
Our strategic goal is to help businesses and governments achieve better outcomes by offering greater insight into the risks and opportunities associated with individuals, businesses, devices, transactions and regulations. We assist customers by providing high quality data and decision tools to help them understand their markets, manage risks efficiently and control cost effectively. We enable this by focusing on: delivering innovative products; expanding the range of risk management solutions across adjacent markets; addressing international opportunities to meet local needs; further growing our data services businesses to continue strengthening our content, technology and analytical capabilities; and investing in sales and marketing.
RELX Annual report and financial statements 2020 | Risk
LexisNexis Risk Solutions has been developing AI and ML techniques for a number of years to generate the actionable insights that help our customers to make accurate, better informed and more timely decisions. The successful deployment of AI and ML techniques starts with a deep understanding of customer needs and leverages the breadth and depth of our data sets, coupled with the expertise and domain knowledge to discern which AI/ML algorithm to use, in what context, to solve our customers' business problems most effectively.
Business model, distribution channels and competition
We sell our products direct-to-client, typically on a subscription or transaction basis. Pricing is predominantly on a transactional basis in the Business Services and Insurance segments and
2020 financial performance
Revenue
Adjusted operating profit
2020 | 2019 | Underlying | Portfolio | Currency | Total |
£m | £m | growth | changes | effects | growth |
2,417 | 2,316 | +3% | +2% | -1% | +4% |
894 |
853
Strong fundamentals driving good underlying revenue growth in 2020 despite Covid-19 related disruption to some customer markets.
Underlying revenue growth was +3%. Revenue from acquisitions added two percentage points of growth, to give total growth at constant currencies of +5%. At reported currency rates revenue growth was +4%.
Transactional revenue, which represents around 60% of the divisional total, has continued to see improved growth rates in both Business Services and Insurance after a slowdown in March and April. Subscription revenue, which represents around 40% of the divisional total, remained resilient overall, albeit with some delays in new business closes and customer product implementations, and with end customer markets showing varying dynamics through the year. Outside the US, revenue continued to grow well.
Underlying adjusted operating profit growth of +4% was ahead of underlying revenue growth, with profit contribution from acquisitions taking total growth to +5%, at both constant and reported currency rates.
In Business Services, further development of analytics that help our customers to detect and prevent fraud and to manage risk continued to drive growth. Whilst recovery has been gradual in some areas such as credit risk, transactional revenue has already returned to double digit growth in several segments including fraud prevention. Digital identity solutions such as ThreatMetrixlargely on a subscription basis in Data Services and Government Solutions. We also utilise a robust partner distribution channel across the business to sell our products.
Principal competitors in the Business Services and Government Solutions segments include the major credit bureaus, which in many cases address various capabilities within each solution offering. In the insurance sector, our competitor Verisk sells data and analytics solutions to insurance carriers but largely addresses different activities to ours.
Data Services competes with a number of information providers on a service and title-by-title basis including S&P Global Platts, Thomson Reuters and IHS Markit as well as a number of niche and privately owned competitors.
+4%
+1%
0%
+5%continued to perform strongly throughout the Covid-19 pandemic, and were complemented by the first quarter acquisition of Emailage, a provider of email-based fraud prevention solutions.
In Insurance, we continued to drive growth through the roll-out of enhanced analytics, the extension of data sets, and by further expansion in adjacent verticals. Transactional volumes have continued to improve since the lows seen in March and April, with second half US shopping trends in line with recent years. Driving activity and claims volumes also continued to recover but remained slightly below pre-Covid-19 levels at the end of 2020.
In Data Services, growth was supported by solid subscriptions and the organic development of innovative new products and expansion of the range of decision tools. Covid-19 related restrictions have impacted our different customer industry segments to varying degrees, and we saw some impact on new subscription sales and delays in product implementations by some customers.
In Government, strong growth was driven by the continued development and roll out of new analytics products and services.
2021 outlook
We expect a year of strong underlying revenue growth, with the fundamentals of the majority of our customer markets in line with pre-Covid-19 trends. We expect underlying adjusted operating profit growth to broadly match underlying revenue growth.
REVENUE
ADJUSTED OPERATING PROFIT
£m
£m
Underlying growth +3%
2,417 | 853 | 894 | |
2,316 | |||
2019 | 2020 | 2019 | 2020 |
Underlying growth +4%
LexisNexis Risk Solutions:
Redefining the consumer insurance experience
<1 minute
Consumers can get renters and auto quotes in less than a minute and purchase in seven minutes
RELX Annual report and financial statements 2020 | Risk
The team at LexisNexis Risk Solutions has been instrumental in helping us meet our aggressive timeline to launch a new insurance concept within mere months and gain acceptance with consumers. The data we use helps Toggle understand our customers better so that we can design a great experience, offer the right products and execute on our vision to be the insurance innovation leader and "we get you" brand.
Stephanie Lloyd
Head of Toggle Insurance
About LexisNexis Risk Solutions
LexisNexis Risk Solutions provides data and analytics to help insurers automate critical business processes and deliver higher levels of customer experience.
Leveraging our vast data resources, including public and insurance contributory data, LexisNexis Risk Solutions drive 188m annual insurance purchase decisions across the entire policy lifecycle - from acquisition to renewal to claim.
San Francisco apartments
Toggle, a Farmers Company, launched in 2018 to serve the next-generation insurance consumer with a brand new renters policy, has since expanded to offer an auto insurance quoting experience reimagined for the tech-savvy buyer.
The Woodland Hills, California-based insuretech is now offering renters policies in 70% of the addressable US insurance market and still growing.
A start-up within a long-standing, trusted insurance brand, the team at Toggle was tasked with reimagining the insurance buying journey, providing consumers with affordable, portable and highly customisable solutions that fit their daily lives. The team utilises next-level technology and user experiences typical of top-tier technology companies and designs products and services around modern lifestyles, attitudes and behaviours.
Toggle is committed to providing customers with easy to understand descriptions and known dependencies, along with choice, more control and confidence in their insurance purchase decisions. To help deliver a frictionless quote and policy bind experience, Toggle harnessed the power of LexisNexis Risk Solutions data and advanced analytics from the beginning of the transaction to the end.
The process starts with identity authentication to confirm individuals are who they say they are. Customers are then empowered to choose what's best for them. Toggle's relatable approach helps reduce the complexity of price options and give the consumer clarity about what's covered by the policy, and LexisNexis' prefill solutions help customers validate the accuracy of their information, rather than fill out a long form.
Using an arsenal of data and advanced analytics such as past claims, driving violations and vehicle history to better understand risk, Toggle can offer consumers renters and auto quotes in less than a minute and complete the whole binding process in five to seven minutes. This can help meet the needs of today's time-starved consumer so they can quickly make informed insurance decisions.
Legal
We help lawyers win cases, manage their work more efficiently, serve their clients better and grow their practices. We assist corporations in better understanding their markets and preventing bribery and corruption within their supply chains. We partner with leading global associations and customers to help advance the Rule of Law across the world.
§ The LexisNexis legal and news database contains 128bn documents and records
§ On average, 1.7m new legal documents are added daily to the database from 69,000 sources, generating 129bn connections. In all, 32m legal documents are processed daily, on average
§ Nexis news and business content includes over 40,000 premium sources in 37 languages, covering more than 180 countries. It has data including 400m company profiles with a content archive that dates back 40 years
§ The LexisNexis database includes more than 259m court dockets and documents, over 140m patent documents, 2.79m State Trial Orders, and 1.29m Jury verdict and settlement documents
§ PatentSight's database includes objective ratings of the innovative strength (Patent Asset Index) of more than 104m patent documents from more than 100 countries
§ In 2020, Law360 produced over 50,000 news and analysis articles
§ Legal analytics tool Lex Machina has normalised over 64m counsel mentions and over 39m party mentions since 2016
§ LexisNexis is committed to advancing the Rule of Law through operations and solutions that provide transparency into the law in more than 160 countries
Business overview
Legal provides legal, regulatory and business information and analytics that help customers increase their productivity, improve decision-making and achieve better outcomes.
LexisNexis Legal & Professional is headquartered in New York and has further principal operations in Ohio, North Carolina and Toronto in North America, London and Paris in Europe, and cities in several other countries in Africa and Asia Pacific. It has 10,400 employees worldwide and serves customers in more than 160 countries.
Revenues for the year ended 31 December 2020 were £1,639m, compared with £1,652m in 2019 and £1,618m in 2018. In 2020, 68% of revenue came from North America, 21% from Europe and the remaining 11% from the rest of the world. Subscription sales generated 79% of revenue and transactional sales 21%.
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, decision tools and analytics help legal and business professionals make better informed decisions in the practice of law and in managing their businesses. The standard product for legal research and analytics is Lexis Advance, which provides statutes and case law together with analysis and expert commentaries from secondary sources, such as Matthew Bender. Lexis includes the leading citation service, Shepard's, which advises on the continuing relevance of case law precedents. In North America, LexisNexis also provides customers with news and business information, ranging from daily legal news from its Law 360 brand, to company filings, public records information, legal analytics tools, practical guidance, and efficiency solutions. LexisNexis also partners with law schools to provide services to students as part of their training.
LexisNexis continues to invest in and deploy advanced Machine Learning (ML) and Artificial Intelligence (AI) capabilities that help power Lexis and Lexis+. In 2020, LexisNexis introduced Lexis+, a premium solution that integrates previously standalone products while delivering a step-change in visual design for legal professionals. Lexis+ also deploys extensive use of ML and other advanced technologies to deliver new data-driven insights.
Lexis+ Answers, a service that semantically understands a user query and provides a starting point answer to legal research, was updated to leverage a new range of legal language ML models. LexisNexis also launched Brief Analysis, an AI-based legal document analytics solution that scans uploaded legal documents and recommends case law opinions to improve legal arguments.
LexisNexis continued to expand the reach of its decision tools and analytics. In 2020, LexisNexis expanded the analytics offering of Lex Machina with 11 new state courts, including modules covering Los Angeles and New York, bringing the total to 32 practice areas and courts; Context, with new analysis of Corporations to complement existing Judges, Courts and Expert Witness modules; Product Liability Navigator, a new workflow solution for product liability attorneys; and from Intelligize, a suite of new tools including Company Insights, a company competitive intelligence and investor relations workflow solution, and ML-supported SEC Comment Letters search.
RELX Annual report and financial statements 2020 | Legal
In 2020, LexisNexis continued to enrich Practical Guidance, the company's practical guidance and 'how to' service (previously Lexis Practice Advisor). The solution offers guidance on litigation and transaction legal topics, while also delivering legal forms, alternate clauses and checklists to accelerate drafting tasks. Practical Guidance also released Market Standards, an analytics tool that delivers insights into M&A deals by comparing and analysing publicly filed documents.
In 2020, LexisNexis continued collaboration with joint venture partner Knowable, a ML-enabled enterprise contracts intelligence platform. Knowable's ML-enabled legal text to data conversion processes are used to create structured data to power products such as the Market Standards solution. In the Intellectual Property analytics space, LexisNexis' proprietary Patent Asset Index, created by PatentSight, is used by corporations worldwide to manage and value their intellectual property portfolios. In 2020, PatentSight received ISO 270001 certification, the leading international standard for information security management systems, and continued to grow adoption in the US and Japan.
In Canada, LexisNexis enhanced Lexis Advance Quicklaw with new content and product features.
LexisNexis also supplies Legal Business Solutions to law firms and corporate legal departments. These enterprise software solutions include legal spend management, matter management and client engagement solutions.
In international markets outside North America, LexisNexis serves legal, corporate, government, accounting and academic markets in Europe, Africa and Asia Pacific with local and international legal, regulatory and business information. The most significant of these businesses are in the UK, France, Australia and South Africa.
In the UK, LexisNexis is a leading legal information provider offering an extensive collection of primary and secondary legislation, case law, expert commentary, practical guidance,and current awareness. In 2020, LexisNexis continued to grow its online revenues with regular feature releases following re-platforming in 2019. In Legal, a focus on improving the accessibility of case law and primary legislation has driven growth in the LexisLibrary product. LexisNexis UK also grew adoption of its practical guidance product LexisPSL and regulatory news offering MLex. LexisNexis UK increased its presence in productivity solutions through investment in proofreading tool LexisDraft and workflow automation software VisualFiles. In Tax, the business won new customers with its core TolleyLibrary and TolleyGuidance products.
In France, LexisNexis' main offering, Lexis360, is a leading integrated solution combining legal information, in-depth analysis with JurisClasseur content, and practical guidance. In 2020, LexisNexis enhanced the Lexis360 solution by improving user experience, content and product functionality.
In South Africa, LexisNexis launched Lexis Know Your Client, an electronic customer identification solution, and LexisSign, a digital signing platform.
In Austria, LexisNexis enhanced Lexis 360 leveraging its knowledge graph, and enriched Lexis ContractMaster with new contract and clause templates in Labor Law.
In the Middle East, LexisNexis upgraded Lexis Middle East Online with improved search relevancy and functionality.
In the Pacific region, LexisNexis continued its focus on providing authoritative local online content embedded in decision tools for legal professionals. In 2020, LexisNexis enhanced Lexis Advance with advanced data visualisations, including the introduction of Paragraph Filters for case citations and the launch of ASIC Analyser, a legal analytics dashboard focused on litigation involving a major Australian Corporate Regulator.
In Asia, LexisNexis China launched a new product, Lexis Practical Guidance - IP, a comprehensive legal practice database designed for Chinese Intellectual Property (IP) professionals, with content
support from top domestic and international legal experts. LexisNexis India launched eight practice area packages, including Labor & Employment Laws and Criminal Laws, on Lexis RED, a digital referencing tool that provides online and offline access to the legal library.
Supporting its Rule of Law mission, LexisNexis signed agreements to consolidate the authorised Laws of Nauru in partnership with the Ministry of Justice and Border Control of the Government of the Republic of Nauru, and the Laws of the Cook Islands in partnership with the Crown Solicitor's Office of the Cook Islands. LexisNexis Australia is also an official partner in a landmark inquiry led by the Australian Human Rights Commission into the challenges to human rights and freedoms presented by emerging technologies such as AI, social media, and big data. As part of this partnership LexisNexis contributed to the work of Expert Reference Group who led discussions around these important issues.
For the Myanmar Supreme Court, LexisNexis South East Asia signed an agreement with the International Commission of Jurists and the Danish Institute of Human Rights to help the Courts publish their commercial judgements online. LexisNexis South East Asia also delivered a roadmap for a Housing/Real Estate Information System for Yangon City to the Mayor of Yangon City to support fair, affordable housing policies.
In 2020, the Covid-19 pandemic brought many challenges and uncertainty. To help support customers during these unprecedented times, LexisNexis launched 190+ initiatives globally, including free resource kits, Covid-19 tracking tools, and relief programs.
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, along with decision support solutions 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 continued subdued environment in North America and Europe.
Strategic priorities
LexisNexis Legal & Professional's strategic goal is to enable better legal outcomes and be the leading provider of workflow and 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; incorporating advanced technologies including ML and Natural Language Processing; driving long-term international growth; and upgrading operational infrastructure, improving process efficiency and gradually improving margins.
In the US, LexisNexis is focused on the ongoing development of legal research and practice solutions that help lawyers make data-driven decisions. Over the coming years, progressive product introductions will combine advanced technologies, enriched content and sophisticated analytics to enable LexisNexis customers to make data-driven 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 development of additional practical guidance and analytics tools. Additionally, LexisNexis is focusing on the expansion of its activities in emerging markets.
LexisNexis is also continuing its mission to advance the rule of law around the world through the efforts of LexisNexis Rule of Law Foundation, a non-profit entity, which conducts projects globally to promote transparency of the law, access to legal remedy, equal treatment under the law, and independent judiciaries.
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 key competitors are Bloomberg and Factiva (News Corporation).
Significant international competitors include Thomson Reuters, Wolters Kluwer and Factiva.
RELX Annual report and financial statements 2020 | Legal
2020 financial performance
Revenue
Adjusted operating profit
330
+7%
-6%
-1%
0%
Continued modest underlying revenue growth in 2020
Underlying revenue growth was +1%. After portfolio changes total growth was 0% at constant currencies, with currency movements taking reported revenue growth to -1%.
Good growth in legal analytics drove electronic underlying revenue growth of +3%, in line with the prior year. Print revenue saw a low-double digit decline which was steeper than in recent years, particularly due to supply disruption and temporary customer office closures caused by Covid-19.
The continued release of broader data sets and application of machine learning and natural language processing technologies further enhanced our research products and market leading analytics. The integrated functionality offered by the newly launched Lexis+ has been well received in the market.
Underlying adjusted operating profit growth of +7% was ahead of underlying revenue growth reflecting continued efficiency gains. Portfolio effects reduced total growth in adjusted operating profit to +1% at constant currencies, and to 0% at reported currency rates, with margin improvement moderated by dilution from recent acquisitions and disposals.
The North American legal services market saw some Covid-19 related disruption in the early part of the pandemic, and our new sales dipped in March and April, but were running ahead of the prior year in the second half of 2020. Renewal rates held up well through the year.
2021 outlook
Trends in our major customer markets are stable, and we expect another year of modest underlying revenue growth, with underlying adjusted operating profit growth exceeding underlying revenue growth.
2020 | 2019 | Underlying | Portfolio | Currency | Total |
£m | £m | growth | changes | effects | growth |
1,639 | 1,652 | +1% | -1% | -1% | -1% |
330 |
REVENUE
ADJUSTED OPERATING PROFIT
£m
£m
Underlying growth +1%
1,652 | 1,639 | 330 | 330 |
2019 | 2020 | 2019 | 2020 |
Underlying growth +7%
LexisNexis PatentSight: increasing patent portfolio strength and patent income
47.2%
increased patent portfolio strength in IoT technologies since 2016; the only player showing a clear upwards quality development.
RELX Annual report and financial statements 2020 | Legal
LexisNexis PatentSight software features empirically validated quality metrics and the well-presented analytics create transparency in the ever-increasing mass of global patent applications. The software provides insights on where to focus, enables us to report on the development of our patent portfolio and benchmarks against competitors. With PatentSight and their support team, we make better informed investment decisions on our IP portfolio.
Beat Weibel
Chief IP Counsel, Siemens
About LexisNexis PatentSight
LexisNexis PatentSight provides patent analytics.
It is used by corporations, law firms and governmental institutions worldwide to stay ahead of the innovation curve and to uncover what their competitors are hatching long before they come to market.
IoT: Siemens best in class, Patent Quality Development based on selected technology fields:
Data Security, ML&AI, Robotics, Smart City, AM, Autonomous Driving, Blockchain
Data base: active only, patents only
Source: PatentSight, 2020-08-13
Siemens is a global powerhouse in the areas of electrification, automation and digitalisation. One of the world's largest producers of energy-efficient, resource-saving technologies, the organisation is a leading supplier of systems for power generation and transmission, building and transportation infrastructure, industrial automation as well as medical diagnosis.
Beat Weibel, Siemens' Chief Intellectual Property (IP) Counsel, always believed in quality over quantity. In 2013, when taking responsibility for Siemen's patent portfolio, Beat set out to change the group's intellectual property strategy from a volume-driven to a quality-driven approach. This new perspective was designed to yield a higher share of patents with tangible business outcomes while also delivering competitive insights to support strategic decision-making and stay ahead of the innovation curve.
PatentSight, a spin-off from WHU - Otto Beisheim School of Management, one of Germany's leading business schools, developed the Patent Asset Index (PAI), a metric that differentiates high value patents from low value patents. Beat Weibel decided to use the PatentSight software to support Siemens' strategic change.
First, Beat's team needed to have sufficient confidence in PatentSights' metrics and methodology before introducing them to the Siemens Board. They compared the PAI findings with Siemens' own high value patents and those of competitors and found a high percentage match. This allowed the IP team to validate the use of PatentSight's Patent Asset Index as a long-term, objective indicator for improved patent quality.
Managing IP based on quality metrics paid off. Siemens has achieved significant return on investment (ROI) on its IP portfolio with increased commercial utilisation of patents. Compared with other major software companies and Internet of Things (IoT) competitors, the PatentSight Asset Index shows Siemens is the only company to substantially and persistently increase its patent portfolio quality. The Siemens IP department has evolved into a strategic consulting unit supporting the entire business with quality-based innovation insights derived from LexisNexis PatentSight.
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Exhibitions
Our business leverages industry expertise, large data sets and technology to enable our customers to connect face-to-face or digitally and generate billions of dollars of revenues for the economic development of local markets and national economies around the world.
§ There are more than 400 events in the Reed Exhibitions portfolio
§ In spite of the restrictions caused by Covid-19, Reed Exhibitions ran 169 face-to-face events in 2020
§ In addition, Reed Exhibitions ran 71 online digital events which helped its customers find new products or suppliers, learn about their industry and be inspired
§ 43 industry sectors are served in 22 countries across the globe
§
In 2020 our digital events and products have been widely adopted and delivered value to our customers. 58 events offered proactive matchmaking to around 1.5m customers, across both face-to-face and digital events
Business overview
Exhibitions is a leading global events business. It combines industry expertise with data and digital tools to help customers connect digitally and face-to-face, learn about markets, source products and complete transactions. In spite of the impact of Covid-19, in 2020 it did this at 169 face-to-face events, attracting more than 2.2m participants, as well as at 71 digital events.
Reed Exhibitions has its headquarters in London and has further offices in Paris, Vienna, Düsseldorf, Moscow, Norwalk (Connecticut), Mexico City, São Paulo, Abu Dhabi, Beijing, Shanghai, Tokyo, Singapore and Sydney. Reed Exhibitions has 3,700 employees worldwide and its portfolio of events serves 43 industry sectors.
Revenues for the year ended 31 December 2020 were £362m compared with £1,269m in 2019 and £1,219m in 2018. In 2020, 12% of Reed Exhibitions' revenue came from North America, 23% from Europe and the remaining 65% from the rest of the world on an event location basis.
Reed Exhibitions rapidly increased the number and variety of digital events and products offered in 2020, continuing to provide valuable content and connections to customers, helping them to maintain their businesses. Digital products and events together generated some £44m of revenue.
Reed Exhibitions organises influential events in key markets focused on addressing the needs of the industry, 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, media, pharmaceuticals, real estate, recreation, security and safety, transport and travel.
Market opportunities
Reed Exhibitions is positioned for recovery in face-to-face events as the impact of the Covid-19 pandemic diminishes. This will occur in parallel with an increased use of digital tools, both standalone and as part of multi-channel events.
These events and digital tools are a key lever for industries and geographies to recover and grow.
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 and sector coverage allows it to effectively respond to changes in global trade and capture growth opportunities 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.
RELX Annual report and financial statements 2020 | Exhibitions
§ Digital initiatives: existing digital tools and services have been widely deployed and adopted to replace some of the value of the cancelled face-to-face events. New digital tools and virtual events have been rapidly developed and launched.
Strategic priorities
Reed Exhibitions' strategic goal is to deliver measurably higher value and improved outcomes to its customers. It is achieving this organically by focusing on understanding and responding to individual customers' needs and business objectives. While this strategic goal remains unchanged, its customers have been greatly impacted by the Covid-19 pandemic. The immediate aim is to support the commercial recovery and long-term growth of the industries it serves and countries in which it operates.
Reed Exhibitions has responded swiftly to the challenges of the pandemic to best meet future customer needs in the following ways:
§ Operational efficiency: a leaner and more nimble structure has been put in place, better able to respond to changing circumstances and customer needs.
§ Portfolio optimisation: the focus has been on events with good long term growth prospects while those events most affected by the Covid-19 pandemic and least likely to recover strongly have been cancelled permanently.
These responses, as well as optimising performance during 2020, provide a stronger platform for the recovery and longer term success of Reed Exhibitions.
Reed Exhibitions delivers a platform for industry communities to conduct business, network and learn through a range of market-leading events and digital tools in all major geographic markets and higher growth sectors, enabling exhibitors to target and reach new customers quickly and cost effectively.
Organic growth will be achieved by continuing to generate greater customer value by combining the best of face-to-face events with data and digital tools. Reed Exhibitions will continue to seek organic growth through launches. Launches will be tightly focused on industries and geographies that are recovering the strongest.
The new structure allows even more effective leveraging of its global reach and scale. Global technology platforms enable faster and more agile deployment of innovation.
Reed Exhibitions continues actively to shape its portfolio through a combination of new launches, strategic partnerships and selective acquisitions in faster growing sectors and geographies, as well as by withdrawing from markets and industries with lower long-term growth prospects.
Examples of successful digital and hybrid events:
§ Metaverse / PAX EGX
§ World Travel Market
§ China: Gift Fair
Reed Exhibitions is committed to continuously improving customer solutions and experience 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 increase customer value and satisfaction by proactively putting the right buyers and sellers together on the event floor. Increasingly, digital and multi-channel services such as active matchmaking are becoming a normal 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.
Business model, distribution channels and competition
In a normal year, 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 economic activity. 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, matchmaking and mobile apps.
Reed Exhibitions is one of the largest global event organisers in a fragmented industry, holding a global market share of less than 10%. Other international exhibition organisers include Informa, Clarion 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.
APM LOGO - Without Edition
ASIA PACIFIC MARITIME | ||
Machine tools and metalworking exhibition serving ASEAN | outh East Asia's one-stop market for themaritime community HORIZONTAL FORMAT | International exhibition of environmental equipment, technologies and services |
nnovations for smart sheet metal working | he East Coast's largest pop culture convention | International trade fair for the building industry |
The Middle East's meeting place for the ravel trade | atin America's exhibition for security products nd solutions | An international exhibition dedicated to comfort & living technology |
The North American jewellery industry's premier event | nternational perfumery and cosmetics xhibition | Japan's manufacturing industry trade event |
Australia's trade event for the retail industry | nternational Security Conference & Exhibition LONDON | China's electronics manufacturing trade shows mipcom |
nternational trade fair for the catering, restaurant and hotel trade | Premier global event for the travel industry | The world's entertainment content market |
The UK's meeting place for the book industry | China's business gifts & home fair | Japan's comprehensive exhibition for smart and renewable energy |
30
RELX Annual report and financial statements 2020 | Exhibitions
2020 financial performance
2020 £m
2019 £m
Underlying growthPortfolio changes
Currency effectsTotal growth
Revenue
Adjusted operating profit
362 (164)
1,269
-69%
-3%
+1%
-71%
331
-149%
-1%
0%
-150%
Face-to-face events significantly impacted by Covid-19 in 2020
Our schedule of physical events for 2020 was significantly impacted by Covid-19 related restrictions. The business had a good start to the year, but exhibition venues globally were closed by mid-March. Since then, no significant face-to-face events have taken place outside Asia. We have been able to hold physical events in China since June, and in Japan since August, as well as a small number of events in other countries during the second half of the year.
Action has been taken to reduce the cost structure of the business. We have reduced indirect costs by around a quarter versus 2019, creating a leaner, more agile organisation able to drive increased value to our customers through innovation and extension of digital tools and initiatives, and well prepared to hold physical events as venues become available in different locations around the world.
Whilst the disruption to our customers caused by Covid-19 has been significant, we have accelerated our rate of innovation and experimentation. The 169 physical events that took place in 2020 were supported with remote participation by both exhibitors and attendees, and incorporated a range of new digital initiatives. In addition we hosted around 70 fully virtual events across a range of industries and geographies. As well as generating revenue of up to around 20% of the equivalent physical event, these virtual events enable interaction among event participants over an extended time period and support the value of our brands.
We are managing our 2021 event schedule flexibly, with the majority of events outside of Japan and China currently scheduled for the second half of the year. All events remain subject to the risk of postponement or cancellation, primarily depending on local government policies on events and travel. Events that do take place are likely to experience some revenue attrition.
2021 Outlook
The evolving Covid-19 pandemic will continue to impact our ability to hold physical events, making the outlook for the year uncertain.
As a result of the curtailment of the physical event programme, revenue for the year was 71% below that of 2019. The gross profit from the events that were held was not sufficient to cover the overheads of the business and, as a result, an adjusted operating loss was incurred. The adjusted operating loss excludes exceptional costs of £183m, including £61m of costs relating to events that were cancelled, and £82m of one-off restructuring costs.
Challenging times call for innovative solutions, not least in the global property market, which has been impacted by Covid-19 in unprecedented ways.
Uniting the international real estate community around the twin goals of recovery and sustainability, MIPIM Paris Real Estate Week (14-17 September) enabled the industry to reconnect for the first time in 2020.
Reimagined as a hybrid event, the new format combined a safe physical gathering of over 1,100 senior real estate professionals, livestreamed across social media, with a sophisticated online platform, opening the content and meetings up to an additional 7,000 views by remote attendees from the world's property sector.
Headlining an outstanding line-up of over 120 speakers were Apple co-founder, Steve Wozniak, and former French President, Nicolas Sarkozy. At the heart of the event was Propel by MIPIM, two days of thought-leadership, networking and deal making, devoted to innovation and digital transformation in the property sector. This was followed by the first-ever MIPIM Urban Forum, where leading public and private sector voices shared their visions of the post-Covid city and the MIPIM Awards which honoured the world's most outstanding real estate projects.
Underpinning the physical event, and transforming its entire scope and reach, was the augmented digital platform. This enabled remote speakers to seamlessly join the live debates, and participants from all over the world to network with their peers, engage with the event's essential content both live and on-demand, generate new leads, and arrange one to one meetings. The platform, which remained open for a month after the event, had over 2,000 registrants, delivered over 9,600 personal recommendations and generated 727 meeting requests.
About MIPIM
MIPIM is the world's premier property market.
Established in Cannes in 1990, it brings together the global leaders of the real estate industry including investors, political institutions, property companies, advisors and city administrators who attend to discover new large-scale projects, hold one-to-one business meetings, and learn the latest market trends and insights. Sister event MIPIM Asia was launched in Hong Kong in 2006 and is now an established real estate event for Asia Pacific real estate professionals. 2017 and 2018 each saw the launch of a dedicated event devoted to technology for the property sector, Propel by MIPIM, in New York and Paris respectively. MIPIM's enhanced online marketplace supports its clients' business needs and is expected to further extend the brand's global reach and influence.
RELX Annual report and financial statements 2020 | Exhibitions
Combining a safe physical gathering (right) with a sophisticated online platform (left)
MIPIM Paris Real Estate Week was an innovative way of keeping the industry connected and informed at this difficult time. The opportunity to share expert insights and conduct critical business meetings physically and digitally was invaluable for Choose Paris Region and the future of the business of our companies.
Lionel Grotto
CEO Choose Paris Region
RELX Annual report and financial statements 2020
Corporate Responsibility
The Corporate Responsibility Report is an integral part of our Annual Report and Financial Statements. This section highlights progress on our 2020 corporate responsibility objectives. The full 2020 Corporate Responsibility Report is available atwww.relx.com/go/CRReportDetails of how the Board and its Directors have fulfilled these duties can be found throughout our 2020 Annual Report, and therefore the following sections have been incorporated by reference into this Section 172 Statement and, where necessary, the RELX 2020 Strategic Report:
Non-financial information statement RELX is required to comply with the reporting requirements of Sections 414CA and 414CB of the Companies Act 2006, which relate to non-financial information. The list below outlines for our stakeholders where this information can be found:
Business Model and Strategy 5-7 Corporate ResponsibilityReport Principal Risks Culture and Workforce Policies
39-52 60-64
Board decision-making Stakeholder Engagement
74-75 75-77 78-82
Reporting requirement:
The Board, and its Committees, have adapted their annual programmes and decision-making, to respond effectively and decisively to the challenges and impact of Covid-19, which evolved during the year. The Board's decision-making has been focused on supporting RELX's priority during the pandemic, which has been to protect the health of our employees, our customers and the wider community in which the Group operates, whilst continuing to operate our businesses, providing services to our customers, and protecting the interests of, and delivering value to, our stakeholders.
Directors' duties and Section 172 Statement
The Directors of RELX PLC - and those of all UK companies - must act in accordance with their duties under the Companies Act 2006 (the Act). These include a fundamental duty to promote the success of the Company for the benefit of its members as a whole. The Board of RELX PLC, and its individual members, consider that they have done so for the year ending 31 December 2020.
The Board recognises that relationships with RELX's key stakeholders, including its investors, employees, customers, suppliers and the communities in which we operate, are important in allowing the Group to achieve its business aims. Engagement with them takes place at all levels across RELX, and our size, the diversity of our business and global nature means that it can take many different forms. Much of it takes place at an operational level, and this is especially true in respect of our customers and suppliers, who we deal with in the ordinary course of business on a day-to-day basis. As set out from pages 78 to 82, the views of the Group's key stakeholders were considered in the Board's discussions, and reflected in the decisions that it made during the year.
Environmental matters | 50-52 |
Employees | 47-48 |
Social matters | 40-44, 46-50 |
Human rights | 40-50 |
Anti-corruption and | 42, 44-45, 47, |
anti-bribery matters | 50 |
Policies, due diligence | 44-45, 47-48, |
processes and outcomes | 50-51 |
Description and management | |
of principal and emerging | |
risks and impact | |
of business activity | 60-64 |
Description of | 5, 16-17, 23, |
business model | 28, 33 |
14, 20, 26, 32, | |
Non-financial metrics | 40-52 |
Corporate responsibility overview
We define corporate responsibility (CR) as the way we do business, working to increase our positive impact and reduce any negative effects of conducting our operations. It 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. We survey key stakeholders - shareholders, employees, governments, and the communities where we operate - on a biannual basis, and last in 2019, to help us identify our material CR issues and to set and test our CR objectives. The Board of Directors, senior management and our CR Forum oversee CR objectives and performance.
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
We are a signatory of the United Nations Global Compact (UNGC) and are dedicated to advancing the UN's Sustainable Development Goals (SDGs), which aim to end poverty, protect the planet and ensure prosperity for all people by 2030.
The Covid-19 pandemic did not alter our CR focus. As described in this section, we deployed our expertise in the fight against this global health crisis in numerous ways.
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. Among others, Elsevier makes a significant contribution to SDG 3 (Good Health And Well-Being), SDG 5 (Gender Equality) and SDG 10 (Reduced Inequalities). In 2020, Elsevier combined content, data and analytics to reveal the state of knowledge underpinning the global goals in a free report, available on the RELX SDG Resource Centre, The Power of Data to Advance the SDGs.
To broaden access to its content, Elsevier supports programmes where resources are often scarce. Among them is Research4Life, a partnership with UN agencies and over 180 publishers; we provide core and cutting-edge scientific information to researchers in 125 low- and middle-income countries. As a founding partner and leading contributor, Elsevier provides a quarter of the material available in Research4Life, encompassing approximately 4,000 journals and 27,500 e-books. In 2020, there were over 1.1m Research4Life downloads from ScienceDirect.
Elsevier serves the global scientific research community, publishing over 560,000 articles in 2020. At the start of the pandemic, Elsevier launched the Novel Coronavirus Information Centre, regularly updated with the latest medical and scientific information on Covid-19. Free to access, there are more than 53,000 articles, encompassing research on Covid-19 and related viruses, journal articles, chapters from handbooks, reference works and encyclopedias. There is also the free Covid-19 Healthcare Hub providing clinical resources and current evidence-based practices such as symptom management, diagnosis, treatment and recovery.
The Elsevier Foundation supports partnerships to advance inclusion and diversity in science, research in developing countries and global health. In 2020, the Foundation sponsored Epicentre's Medical Day in Niger's capital, Niamey, where researchers, public health specialists and government officials discussed best practice in the treatment and prevention of meningitis, malaria and malnutrition. The Foundation also launched two new partnerships supporting SDG 3: Latino Diabetes Community Scientists with the Sansum Diabetes Research Institute, working to reduce health literacy barriers with Latino adults with or at risk of diabetes, and the National League for Nursing/Elsevier's Historically Black Colleges and Universities (HBCUs) Innovation in Technology Excellence programme, using virtual simulation and other pioneering tools to drive teaching excellence in nursing education at US HBCUs.
Advancing the RELX SDG Resource Centre
In 2017, we launched the free RELX SDG Resource Centre to advance awareness, understanding and implementation of the UN's SDGs. In 2020, we increased the amount of content on the site by 57% from 2019. This included curated special issues to mark eight UN international days, such as World Environment Day, the International Day for the Elimination of Violence Against Women, World Mental Health Day and the International Day of Persons with Disabilities. We also published 17 RELX SDG Graphics on the state of knowledge underpinning all 17 of the global goals.
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RELX and the RE symboRl are traEdemarLks of XRELX Groaup plcn, useddunder lictenshe. e RE symbol are trademarks of RInternaEtional CLollaboraXtion (%) Group plc, used under license. Elsevier is a registered Etrademlarksof ElseeviervB.V. ©i2e020 RrELX Souircses: Scopaus® registered trademark of Elsevier B.V. © 2020 RELX Sources: Scopus®
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Editor-in-Chief of The Lancet; Monika Froehler, CEO of the Ban Ki-moon Centre for Global Citizens; Sandra Kerr, Director of Race Equality at Business in the Community; and Jo Youle, CEO of Missing People. By year end, the podcast had been downloaded by listeners around the world.
Switzerland
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The sixth RELX SDG Inspiration Day took place virtually on Wednesday 24 June 2020 and was hosted by Dr Shola Mos-Shogbamimu, a lawyer, political and women's rights activist, and founder of the publication, Women in Leadership. The keynote was delivered by African stateswoman, Graça Machel, co-founder of The Elders with her late husband Nelson Mandela, and a member of the UN Secretary-General's SDG Advocacy Group. 400 representatives from business, governments, investors, academia, non-profit organisations and civil society took part in engaging and collaborative sessions throughout the day.
and the sense of urgency
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1. Our unique contributions (continued)
To bridge the clinical practice gap in low-income countries, the Elsevier Foundation partnered with Amref Health Africa on the LEAP programme, scaling mobile learning for healthcare workers in Ethiopia, including urgent responses to the Covid-19 pandemic.
The Elsevier Foundation is focused on fostering greater diversity in healthcare. In the year, it forged a partnership with North Carolina Central University's JL Chambers Biomedical Biotechnology Research Institute's Implementation Science Fellowship Program to speed up the adoption of evidence-based interventions to address health disparities in black and ethnic minority communities.
In the year, Elsevier colleagues launched the SSRN Race & Social Inequity Hub with early-stage research on topics such as racial violence and social justice in the wake of global protests against systemic racism.
Risk
LexisNexis Risk Solutions' products and services align with SDG 16 (Peace, Justice And Strong Institutions) and SDG 10 (Reduced Inequalities), among others. For example, they help law enforcement keep communities safe and protect society by detecting and preventing fraud across a range of business sectors and at US federal, state and local government levels. In the year, LexisNexis Risk Solutions partnered with local police departments, including the Ventura and Santa Barbara, California Police Departments, to provide community crime maps with automated alerts notifying citizens of crimes in their area.
In response to the pandemic, LexisNexis Risk Solutions launched a free Covid-19 Data Resource Center combining data and analytics with content from other industry stakeholders, to create a US Covid-19 data set and interactive visualisations to identify at-risk populations and care capacity risks. There are heat maps and county-level risk rankings taking account of parameters such as areas where the population is 60 years or older with two or more high-risk Covid-19 comorbidities and areas of socioeconomic need that, if unaddressed, would be most likely to prevent optimal health outcomes.
LexisNexis Risk Solutions colleagues developed the ADAM programme in 2000 to help the National Center for Missing & Exploited Children (NCMEC) find missing children. ADAM distributes missing child alert posters to law enforcement, hospitals, libraries and businesses within specific geographic search areas. In the year, LexisNexis Risk Solutions and the NCMEC partnered with sports and entertainment platform ISM to further extend the reach of the programme through digital billboards. Missing children posters are now being displayed on digital signage located in select areas. 2020 marked the 20th anniversary of the ADAM programme and since its inception, nearly 190 missing children have been located and the programme has assisted in the recovery efforts of others. In the United Kingdom, Missing People is a key partner and LexisNexis Risk Solutions tools helped reconnect the missing with those searching for them. In the year, we began discussions with Missing People about creating a new automated alert system using ADAM functionality.
LexisNexis Risk Solutions is working to address a lending blind spot for those seeking to advance personal and professional objectives - such as purchasing a house or expanding a small business - who are unable to gain credit because of missing oroutdated negative information. In the year, Riskview widened financial inclusion for marginalised groups, including those without credit history, by providing alternative data sets not in traditional credit reports, such as home ownership, education status and professional licences.
The challenge of financial inclusion is often magnified in low-income countries given gaps in identity verification and credit risk assessment. LexisNexis Risk Solutions' ThreatMetrix, in partnership with fintech partners, is deriving alternative data that can be used to assess risk from consumers who use smartphones. In 2020, following a successful pilot in Mexico, a commercial initiative was launched, allowing the lenders involved to double their loan workflow and reduce defaults. Two new pilots were launched in Colombia.
Legal
LexisNexis Legal & Professional advances SDG 16 (Peace, Justice and Strong Institutions) through its products and services which promote the rule of law. Law360 and Lexis Practice Advisor made news coverage and practical guidance freely available to help lawmakers, and legal and other professionals, successfully navigate legal issues surrounding Covid-19. It also launched Covid-19 and the Global Media Landscape which provides insight into the way coronavirus is developing across global news in near real time.
In 2020, the LexisNexis Rule of Law Foundation held virtual events on building leadership and the Rule of Law during Covid-19 and contributed to a report on SDG 16 progress by the UN Development Programme and the Transparency, Accountability and Participation (TAP) Network. The Foundation also received its first US government grant as a partner in a project led by the International Legal Foundation to support the defence bar and legal aid in Indonesia.
In the year, the LexisNexis Digital Library platform won the American Association of Law Libraries 2020 New Product Award that advance law libraries access to legal information.
LexisNexis Legal & Professional partnered with the International Association of Lawyers in 2020 to provide access to justice in the Democratic Republic of Congo. Colleagues connected the organisation with the UK's International Law Book Facility which led to the dissemination of legal texts to a region in need of legal resources and more research tools.
Colleagues in the UK launched a Simplified Personal Independence Payment form, a digitised version of the UK Government's paper-based form for disability claims. The free tool, available to independent legal clinics and disability claimants, enhances the chance of receiving qualifying financial support.
We moved our Rule of Law Cafés online and held them in the UK and Singapore, and for the first time in South Africa and the Philippines, bringing together stakeholders - including customers, government, NGOs and law societies - to discuss opportunities to go beyond legal minimums to advance the rule of law.
Exhibitions
Reed Exhibitions' events strengthen communities and support the SDGs, including SDG 11 (Sustainable Cities and Communities).
In March 2020, Reed Exhibitions collaborated with the City of Vienna, Austria, to transform an exhibition venue in central Vienna into a field hospital with a 3,111 bed capacity. The temporary
hospital was designed for patients with less serious Covid-19 illness to save hospital beds for the most critical cases. With the help of suppliers, the first 880 cubicles were built in just three days.
In the year, IBTM World, the global event for the meetings, incentives, conferences and events industry, created an online resource hub, IBTM Connect, to help event professionals keep informed and connected during Covid-19.
Reed MIDEM used its 2020 MIPCOM global content market to deliver 'Change for Good', a programme exploring the positive influence the global television industry can have on a range of issues, from minimising environmental impact to fostering diversity and inclusion. The keynote speech, delivered by Melissa Fleming, UN Under-Secretary for Global Communications, showed that how we communicate about climate change influences mitigation efforts. Sky Group Chief Executive Jeremy Darroch received the inaugural MIP SDG Award for Climate Action and Protection of the Oceans, recognising Sky's Ocean Rescue campaign to reduce ocean plastic. In addition, MIPCOM Diversify TV Excellence Awards honoured the most compelling creators, characters and stories promoting diversity and inclusion on-screen. Among them were Documentary Japan, NHK, NHK Enterprises, and ABS-CBN for Jake and Charice about the challenges and triumphs of a transgender singer.
The Reed Exhibitions senior leadership team named one of its members as the CR liaison, and appointed a new sustainability lead, to continue addressing the environmental impacts of its business. In the year, Reed Exhibitions UK created a Sustainability Charter to align their sustainability efforts to the SDGs.
Across RELX
Recognising that across RELX we have products, services, tools and events that advance the UN's 17 SDGs, we created the free RELX SDG Resource Centre in 2017 to advance awareness, knowledge and implementation. In 2020, we increased the amount of content on the site by 57% from 2019. This included information in response to the challenge of Covid-19. We also curated special issues to mark eight UN international days, such as World Environment Day, World Mental Health Day, the International Day for the Elimination of Violence Against Women, and the International Day of Persons with Disabilities. Since 2017, we have made over 650 journal articles and book chapters free to access via the RELX SDG Resource Centre which would have otherwise cost approximately £1.5 million to make open access.
In the year, we published RELX SDG Graphics on all 17 SDGs showing the state of knowledge underpinning each of the global goals using data and insights from Elsevier's Scopus and SciVal. They identify quantity and quality of output, by which countries, and the extent of collaboration. A critical finding is that less than 2% of the output came from low income countries, those most affected by the challenges the SDGs seek to address.
We also launched our SDG Champions Network, inviting leaders from across RELX to support forward action on the SDGs. We created an SDG content area on HOME to raise awareness among employees globally, showcasing how we are contributing to the SDGs and to garner their involvement.
2020 marked the tenth year of the RELX Environmental Challenge, focused on providing improved and sustainable access to water and sanitation where it is presently at risk. The $50,000 first-prizewinner was CUBEX S.A.L, a Lebanese social enterprise whose mobile dewatering unit collects and treats sewage from septic systems in an ecologically safe and affordable way. The $25,000 second-prize winner was BlueTap, which has developed a 3D printed chlorine doser to improve access to high-quality drinking water in low-resource settings. The winners were announced at a free, virtual event celebrating ten years of the competition and exploring the next decade of water, sanitation and hygiene action. Winners received free access to ScienceDirect and for the first time in 2020, a feature on the second place winner was included in One Earth, a CellPress journal. We also invited past winners to join together for a 10th anniversary collaboration prize; CAWST, AIDFI and Sanergy will be working together to create a series of online training and outreach in order continue supporting water and sanitation networks and practitioners across Africa and Colombia throughout the global pandemic.
2020 OBJECTIVES
Achievement
Advance of science and health: Meaningful support to advance SDG3 (Good Health And Well-Being), including MSF/ Epicentre Medical Day in Niger; WaterFirst! Workshops; and skills training through Elsevier's Research without Borders |
|
Protection of society: Meaningful support of SDG 16 (Peace, Justice And Strong Institutions), including expansion of activities to find missing children and adults through US ADAM programme and UK Missing People |
|
Protection of society: Meaningful support of SDG 10 (Reduced Inequalities): Advance financial inclusion pilots to more countries | § Using LexisNexis alternative credit qualification sources, new pilots launched in Colombia to help more citizens gain access to credit § Pilot in Mexico becomes commercial initiative, supporting lenders to increase loan workflows and reduce defaults |
1. Our unique contributions (continued)
2020 OBJECTIVES
Promotion of the rule of law and access to justice: Meaningful support of SDG 16 (Peace, Justice And Strong Institutions), including expansion of Rule of Law Cafés to new locations including South Africa; development of new LexisNexis Rule of Law FoundationFostering communities: Meaningful support of SDG 11 (Sustainable Cities And Communities) by enhancing the sustainability of trade show events Create SDG Champions networkMore RELX SDG Graphics on the state of knowledge underpinning the SDGs
Increase RELX SDG Resource Centre content by 25%
Achievement
§ Rule of Law Cafés expanded to South Africa and The Philippines; also held in the UK and Singapore
§ Development of LexisNexis Rule of Law Foundation:
- Virtual events, including on the rule of law during Covid-19
- Contributed to United Nations (UN) Development Programme and Transparency, Accountability, and Participation Network report on SDG 16 progress
- First US government grant to partner on International Legal Foundation project to support legal aid and the defence bar in Indonesia
§ New Sustainability Charter launched by Reed Exhibitions UK
§
First Reed Exhibitions sustainability lead appointed
§ New SDG Champions Network created among over 100 CR-related networks, including Employee Resource Groups
§ SDG Hub created for all employees on RELX intranet
§ Content in employee communications and events on RELX and the SDGs
§
Graphic for all 17 SDGs published in September 2020 to mark five-year anniversary of the SDGs
§ Basis of free Elsevier report, The Power of Data to Advance the SDGs
§ Increase of 57% on 2019 including special releases for World Environment Day, International Day for the Elimination of Violence against Women, World Mental Health Day, and the International Day of Persons with Disabilities
2021 OBJECTIVES
§ Advance of science and health: Meaningful support of SDG 3 (Good Health And Well-being) and SDG 10 (Reduced Inequalities) to increase scientific knowledge, reduce health disparities and ensure equal access to health, including through a project with the Julius L. Chambers Biomedical Biotechnology Research Institute
§ Protection of society: Meaningful support of SDG 16 (Peace, Justice And Strong Institutions) by expanding reach of ADAM, LexisNexis Risk Solution's US missing children alert service, through new partnerships and mobile text alerts; help deliver new missing alert service for UK's Missing People
§ Protection of society: Meaningful support of SDG 10 (Reduced Inequalities) by expanding financial inclusion pilots in low-income countries; use of products and services to reduce online fraud and identity theft
§ Promotion of the rule of law and access to justice: Meaningful support of SDG 16 (Peace, Justice And Strong Institutions) through continued expansion of Rule of Law Cafes; LexisNexis Rule of Law Foundation efforts to eliminate racism in legal systems; and support for UN Global Compact initiatives to advance SDG 16
§ Fostering communities: Meaningful support of SDG 11 (Sustainable Cities And Communities) including a focus on zero carbon through key shows in alignment with COP 26; increased online show offerings to support exhibitors and attendees in the wake of Covid-19
§ Universal, sustainable access to information: Advance the SDGs by expanding free RELX SDG Resource Centre including by releasing six special releases; developing new partnerships; and holding a 2021 global SDG Inspiration Day
OUR 2030 VISION*
Use our products and expertise to advance the SDGs, among them:
§ SDG 3: Good Health and Well-being
§ SDG 10: Reduced Inequalities
§ SDG 13: Climate Action
§ SDG 16: Peace, Justice and Strong Institutions
Enrich the SDG Resource Centre to ensure essential content, tools and events on the SDGs are freely available to all
* 2030 is the deadline for the UN's Sustainable Development Goals; we aim to do our part towards their achievement.
2. Governance
Our Board recognises the importance of maintaining high standards of corporate governance, which underpins our ability to deliver consistent financial performance and value to our stakeholders. It is consistent with our wider RELX culture of acting with integrity in all that we do. The 2018 UK Corporate Governance Code (UK Code) applied to RELX PLC during the year. The Board continued to review the Company's compliance with the principles and provisions of the UK Code, focusing particularly on RELX's approach to engaging with its key stakeholders, particularly in light of the Covid-19 pandemic, alongside its ongoing review of RELX's culture, purpose, strategy and values.
RELX PLC is the sole parent company of the Group. It owns 100% of the shares in RELX Group plc which, in turn, holds all of the operating businesses, subsidiaries and financing activities of the Group. RELX PLC, its subsidiaries, associates and joint ventures are together known as RELX.
The shares of RELX PLC are traded through its primary listing on the London Stock Exchange and its secondary listing on Euronext Amsterdam, while its securities are also traded on the New York Stock Exchange under its American Depositary Share Programme. Accordingly, the Board has implemented standards of corporate governance and disclosure applicable to a UK incorporated company, with listings in London, Amsterdam and New York.
Information and documents detailing our governance procedures are available to stakeholders online atwww.relx.com. The
RELX financial statements are prepared in accordance with International Financial Reporting Standards.
The RELX Operating and Governance Principles provide a framework of processes, policies, and controls to manage risk. The RELX Code of Ethics and Business Conduct (the Code) sets the standards for behaviour for all employees of RELX. Among other key issues, the Code addresses 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 where legally permissible - and prohibits retaliation against anyone for reporting a violation they honestly believe may have occurred.
We maintain a comprehensive set of compliance policies and procedures in support of the Code reviewed at least annually to ensure they remain current and effective. Our policies and procedures help us comply with the law and conduct our business in an open, honest, ethical and principled way. They comprise part of our anti-bribery adequate procedures for compliance with applicable laws.
Employees receive mandatory training on the Code - both as new hires and regularly throughout their employment - on topics such as maintaining a respectful workplace, preventing bribery and anti-competitive behaviour, and protecting personal and company data. Mandatory periodic training covers key Code topics in depth and is supplemented by advanced in-person training for higher risk roles.
We offer employees a confidential reporting line, managed by an independent third party, accessible by telephone or online 24 hours a day, 365 days a year (as allowed under applicable law, employees may submit reports to the confidential line anonymously). 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 were ranked eighth out of 68 companies by Transparency International Netherlands (TI-NL) in its 2019 study of 'Effective Whistleblowing Frameworks' (released in May 2020).
We remained diligent in our ongoing efforts to comply with applicable bribery and sanctions laws and mitigate risks in these areas. Our anti-bribery and sanctions programme includes testing and monitoring of compliance with detailed, risk-based internal policies and procedures on topics such as doing business with government officials, gift and entertainment limits, gift registers, and complex sanctions requirements. Relationships with third parties and acquisition targets are evaluated for risk using questionnaires, references, detailed electronic searches, and 'Know Your Customer' screening tools. We monitor and assess the implementation of our anti-bribery and sanctions programmes by continually reviewing and updating our policiesand procedures; conducting periodic programmatic risk assessments, quality reviews and internal monitoring and audits of the programme's operational aspects. We also held Compliance Week activities with videos, emails, articles and a quiz.
As a signatory to the UNGC, we embed its principles, encompassing human rights, labour, environment and anti-corruption in key policies including our Code and our Supplier Code. During the year, we demonstrated leadership by maintaining our LEAD status, one of 41 companies among approximately 10,000 businessparticipants. We were part of the UNGC Expert Network and contributed to key UNGC SDG working groups on SDG 8, Decent Work in Global Supply Chains, and SDG 16, Peace, Justice and Strong Institutions. We served on the board of UNGC networks in the UK, where our global head of CR is Chair, and in the Netherlands. We produced an annual Communication on Progress report, required of signatories annually, where we attained the Advanced Level and also shared our expertise by speaking at UNGC programmes on issues such as inclusion and climate change, including during the UN Private Sector Forum.
The Code supports 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 to ensure we uphold human rights.
In 2020, we updated our Modern Slavery Act Statement, available from the RELX homepage, which states how we are working to avoid human trafficking and modern slavery in our direct operations and in our supply chain.
As a company focused on knowledge and analytics, each year we are in possession of large amounts of data. It is therefore incumbent on RELX to ensure that we provide our customers and our people with the highest levels of data privacy and security. We continually monitor our procedures and systems to meet this requirement, ensuring compliance with all relevant laws where we do business around the world. Dedicated privacy teams implement requirements for compliance with emerging data protection regulations. In the year, we completed our California Consumer Privacy Act (CCPA) compliance quality review, which focused on effectiveness of safeguards intended to mitigate the risk of non-compliance.
In 2020, we created a ransomware response policy, as well as playbooks to manage incidents at third-party suppliers. We implemented Advanced Threat Protection to detect and prevent executive impersonation, malicious links and attachments, with 10,000 threats a day blocked by our controls. In the year, we educated employees on protecting themselves against fraud during International Fraud Awareness Week and recognised Cyber Security Awareness Month with an Information Security Town Hall. We ran our third Great Phishing Challenge contest, giving employees the opportunity to detect suspicious emails, with more than 2,000 submissions.
In the year, Michael Breslin, Strategic Client Relations Director for federal law enforcement at LexisNexis Risk Solutions, was selected to serve on the newly established Cyber Investigations Advisory Board of the US secret service.
Globally, in 2020, RELX paid £496m 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 stakeholders and society at large. We have set out our approach to
Ten years of the RELX Environmental Challenge
Since 2011, the RELX Environmental Challenge has supported innovative solutions that improve sustainable access to safe water and sanitation where it is most at risk, advancing SDG 6 (Clean Water and Sanitation). The diversity of ideas, technologies and business models has been remarkable - from a social enterprise that uses the hydroenergy to pump water to high altitudes, and a system for harnessing ultraviolet light to purify water, to a new approach for emptying pit latrines safely and efficiently.
Thanks to the RELX Environmental Challenge, we will be able to attract strategic partners working in the development sector on improved sanitation, including additional investors to get us to the next stage of growth.
Marc Aoun
Founder and General Manager, CUBEX S.A.L
In 2020, a shortlist of seven projects was chosen from a record 170 applications from 44 countries. The $50,000 first-prize winner was CUBEX S.A.L, a Lebanese social enterprise whose mobile dewatering unit collects and treats sewage from septic systems in an ecologically safe and affordable way. The $25,000 second-prize winner was BlueTap, which has developed a 3D printed chlorine doser to improve access to high-quality drinking water in low-resource settings. Both winners received access to Science Direct, Elsevier's leading platform of peer-reviewed literature to help advance their research.
The winners were announced at a virtual event celebrating ten years of the competition and exploring the next decade of water, sanitation and hygiene action. Featured speakers included: inaugural first prize winner of the RELX Environmental Challenge (2011), Dr Arup K. SenGupta, Chemical Engineering Professor at Lehigh University and Co-Founder of Drinkwell; Cheryl Hicks, CEO and Executive Director of the Toilet Board Coalition; Valeri Labi, Director of Water, Sanitation and Hygiene at iDE Ghana and a RELX Environmental Challenge judge; and Tim Brewer, Research Practice Lead at Water Witness International.
In addition to the two annual prizes, three past RELX Environmental Challenge Winners, CAWST, AIDFI and Sanergy, won a $25,000 special Partnership Prize for a collaborative project to create online training and outreach to support water and sanitation networks and practitioners in Africa and Colombia in the wake of the Covid-19 pandemic.
$805,000
awarded to prize winners since 2011
Image caption (above):
The mobile de-watering unit designed by CUBEX S.A.L, 2020 RELX Environmental Challenge first prize winner
tax in our global tax strategy. This incorporates our Tax Principles along with additional disclosures about where we pay taxes and our broader contribution to society, available at:www.relx.com/ go/TaxPrinciples. We also progressed a project to make African tax law more transparent to both governments and citizens, and aim to move to the implementation phase in one or two pilot countries in 2021.
The Statement of Investment Principles for the Reed Elsevier UK pension scheme indicates that environmental, social or governance issues that may have a financial impact on the portfolio or a detrimental effect on the strength of the employer covenant, are taken into account when making investment decisions. CR issues are also relevant to other investment decisions we make.
2020 OBJECTIVES
Continue corporate security incident response preparedness; implement controls to increase resilience to user-based attacks, such as phishing and ransomware |
|
Assess and develop strategies to address compliance with emerging privacy regulation such as the California Consumer Privacy Act | § Dedicated privacy teams implemented requirements for compliance with emerging data protection regulations § Completed California Consumer Privacy Act compliance quality review, focussed on effectiveness of safeguards intended to mitigate non-compliance risk |
Continue to advance African tax law codification project; deploy proof of concept to shortlist of countries | § Worked with LexisNexis South Africa to identify pilot countries and relevant tax law |
Achievement
2021 OBJECTIVES
§ Security - SDG 16 (Peace, Justice And Strong Institutions): Continue to implement controls to increase resilience to user-based attacks such as phishing and ransomware; introduce a Great Phishing Challenge for internal and external stakeholders
§ Privacy - SDG 16 (Peace, Justice And Strong Institutions): Conduct a 2021 privacy quality review on compliance with EU and other requirements for cross-border data transfers
§ Responsible tax - SDG 16 (Peace, Justice And Strong Institutions): Continue to advance African tax law codification in pilot countries, working with LexisNexis South Africa and LexisNexis Rule of Law Foundation
OUR 2030 VISION
Continued progressive actions that advance excellence in corporate governance within our business and the marketplace
3. People
Our over 33,000 people are our strength. Our workforce is 51% female and 49% male, with an average length of service of 7.59 years. There were 43% female and 57% male managers, and 31% female and 69% male senior operational managers.
Senior leaders* All employees**
Board of Directors | 5 | 45% | 6 | 55% |
Senior leaders* | 181 | 31% | 408 | 69% |
All employees** | 16,942 | 51% | 16,278 | 49% |
Female
Male
* Senior leaders are defined as those with a management level of 17 and above, plus management level 16 executives who are up to three reporting lines from the CEO, with some level 5 exceptions.
**Full-time equivalent.
At year end 2020, women made up 45% of the members of the Board. The two executive directors on the Board are male. The Nominations Committee considers the knowledge, experience and background of individual Board directors.
Our Inclusion Council is composed of leaders from each area of our business to help us set and track our inclusion and diversity strategy, supported by an Inclusion Working Group with more than 250 participants.
In 2020, we undertook an in-depth analysis of our diversity data, reviewing attrition, promotion and new hire rates for gender, as well as race and ethnicity in the US and UK. We developed a new suite of inclusion goals in the year, including a goal to increase the percentage of women in management, senior leadership, and technology roles continually over time and to increase the racial and ethnic diversity of our workforce continually over time, with a focus on the US and UK where it is legally permissible to ask for and collect relevant data. To support these goals, we are introducing targeted initiatives for training, development and recruitment. We have established diversity dashboards to enable our leaders to easily monitor the trends in our data. For more details, see the 2020 RELX Corporate Responsibility Report.
RELX is a signatory to the Women's Empowerment Principles (WEPs), a UNGC and UN Women initiative to help companies empower women and promote gender equality. In 2020, RELX joined the UNGC's Target Gender Equality initiative to further implementation of the WEPs. We were also included in the Bloomberg Gender-Equality Index.
Our Employee Resource Groups (ERGs) grew to over 100 networks in the year, encompassing African Ancestry, gender balance, pride and disability, to facilitate support, mentoring and community involvement. In the year, our second ERG Conference, EmERGe, was held virtually over two days, with the first day open to all employees. Over 1,500 employees joined from 23 countries to share challenges, best practice and further action plans.
We comply with employee-related reporting requirements and, in 2020, our business units published UK gender pay gap reports as part of UK legislation. These can be found here:https://www.relx.com/corporate-responsibility/engaging-others/ policies-and-downloads/local-reporting-requirements. We invest in research to identify causes of pay differences and regularly evaluate our policies and processes to ensure they are aligned to our inclusion strategy. We commit to building a robust framework for monitoring pay equity across the enterprise and
have formally made these pledges as part of the UN's Equal Pay. In 2020, the Head of Reward introduced training on pay equity principles with leaders across the business and created a resource on our global HR information system on internal pay equity and why it matters to the business.
We operate a number of stock programmes for employees including options, restricted stock and performance stock units. For senior colleagues, these are based on annual allocations of stock - the vesting of which may be service-based or related to company performance. We also offer all employees stock programmes in which employees may elect to participate in certain markets, for example Sharesave in the UK. These incentive programmes are available to approximately 20% of our employees. Targets associated with CR performance are embedded within our annual incentive framework, including for the CEO and CFO, to progress our annual and multi-year CR objectives.
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. As a primarily office-based company, we also focus on 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 3 lost time incidents in the year.
However, in the year, given the global pandemic, a significant number of our people worked from home. We supported the creation of safe home workstations and also concentrated on wellness, with mindfulness webinars, virtual quizzes, online exercise, yoga classes and ideas for positive home working. Dedicated health and well-being programmes and resources are available to employees across all business areas and we maintain a network of more than 100 Well-being Champions. During 2020, we conducted remote mental health first aider training for more than 200 colleagues. We also gave staff an extra day off between July and August in acknowledgement of the challenges of the year and in appreciation for their good work.
2020 OBJECTIVES
Achievement
2020 OBJECTIVES
Map and expand Well-being Champions Network and train more mental health employee leads
Achievement
§ Champions mapped against business, locations and headcount
§ Remote mental health first aider training conducted with more than 200 trained
§ Headspace app made available to all employees; Elsevier launches Psychological Safety course
2021 OBJECTIVES
§ Inclusion - SDG 10 (Reduced Inequalities): Progress RELX inclusion goals through focused recruitment, training and development efforts
§ Pay equity - SDG 8 (Decent Work and Economic Growth): Continue living wage assessment in four countries
§ Well-being - SDG 3 (Good Health And Well-Being): Develop RELX mental health policy reflecting cross-business and external insights
OUR 2030 VISION
§ Continued high-performing and satisfied workforce through talent development, I&D and wellbeing; scale support for external human capital initiatives
4. Customers
Listening to our customers allows us to deepen our understanding of their needs and drive improvements. In the year, with input from the customer insight leads across our business, we mapped our customer satisfaction measures to establish a RELX-wide customer satisfaction metric. The results showed that in 2020, 84.4% of customers would recommend RELX businesses, compared to 82.3% in 2019. We included this metric in RELX's 2020 Dow Jones Sustainability Index submission, which contributed to a six-point increase year-on-year for customer satisfaction management; we achieved a score of 54 compared to an industry average of 25.
Introduce suite of 2020-2025 inclusion goals | § Goals formulated by the RELX Inclusion Council comprising Inclusion and Diversity leads for each business and other colleagues, with input from senior leaders |
Provide manager training on pay principles and equal pay |
|
In 2020, we launched the RELX SDG Customer Awards to recognise the exceptional efforts of our customers who share RELX's ambition to advance the SDGs. The customers were nominated by colleagues in each RELX business area and were judged by a panel of internal experts. The four winners were announced at the sixth RELX SDG Inspiration Day which took place virtually on Wednesday 24 June 2020. The winners were: the University of Southern Denmark, Aurora Universities Network and Auckland University nominated by Elsevier; Standard Chartered Bank, South Africa, nominated by LexisNexis Risk Solutions; Asian Development Bank, the Philippines, nominated by LexisNexis Legal & Professional; and Scottish Power UK nominated by Reed Exhibitions.
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 2020, members of the Accessibility Working Group logged over 150 accessibility projects and Elsevier's Global Books Digital Archive fulfilled more than 3,400 disability requests, 87% of them through AccessText.org, a service we helped establish. We also developed the Company Accessibility Maturity Model, a tool to define and measure the maturity and operating best practices of company accessibility endeavors.
In the year, we celebrated the second RELX Accessibility Leadership Awards to showcase employees who demonstrate exceptional leadership in advancing accessibility. The winner of the 2020 Leadership Award was Min Xiong, Global Head of Content User Experience at LexisNexis Legal & Professional. Michael Goddard, Senior Software Engineer at Elsevier, was awarded the Practitioner Award for his work to make Scopus one of the top accessibility rated products in the RELX suite, achieving the international standard's WCAG 2.0 AA rating.
2020 OBJECTIVES
Introduce SDG Customer Award at flagship annual RELX SDG Inspiration Day | § Awards presented during virtual 2020 SDG Inspiration Day to the University of Southern Denmark, Aurora Universities Network and Auckland University, Netherlands and New Zealand nominated by Elsevier; Standard Chartered Bank, South Africa nominated by LexisNexis Risk Solutions; the Asian Development Bank, the Philippines nominated by LexisNexis Risk Solutions; and Scottish Power, nominated by Reed Exhibitions |
Map customer feedback mechanisms across business areas | § Creation of RELX-wide customer satisfaction metric in conjunction with customer insight leads across RELX § Six-point increase year on year for customer satisfaction management portion of Dow Jones Sustainability Index (score of 54 vs industry average of 25) |
Develop framework for product accessibility self-audits | § Developed new Accessibility Maturity Model to measure maturity and operating best practices for product accessibility implementation across RELX |
Achievement
2021 OBJECTIVES
§
Customer engagement - SDG 17 (Partnerships For The Goals): Further engagement with customers on the SDGs
§ Quality - SDG 8 (Decent Work And Economic Growth): Create new internal customer quality assurance network
§
Accessibility - SDG 10 (Reduced Inequalities): Advance Accessibility Maturity Model across RELX
OUR 2030 VISION
Continue to expand customer base across our four business units through excellence in products and services, active listening and engagement, editorial and quality standards, and accessibility; a recognised advocate for ethical marketplace practice
5. Community
RELX 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. From the onset of the Covid-19 pandemic, colleagues from around the world came together tosupport their local and international communities. Staff have up to two days paid leave per year for their own community work. We donated £5.6m in cash (including through matching gifts) and the equivalent of £12m in products, services and staff time in 2020. Globally, 26% of employees were engaged in volunteering through RELX Cares. A network of over 230 RELX Cares Champions ensures the vibrancy of our community engagement.
In 2020, we raised an additional $41,000 to support global fundraising partner, Hope and Homes for Children (HHC), which aims to ensure children grow up in families rather than institutions. We extended our partnership, with a commitment to raise a minimum of $120,000 by 2022, to support their efforts in Moldova to integrate hearing-impaired children into mainstream education through speech therapy, quality hearing aids, support for parents and teacher training. Disability can be a reason children do not remain in a family setting in the country and there are three institutions for children with hearing impairments. Thus far, two children have successfully undergone cochlear implant surgery and the charity is supporting post-operation rehabilitation.
Each September, we hold RELX Cares Month to celebrate our community commitment. During the month, we held the tenth Recognising Those Who Care Awards to highlight exceptional contributors to the RELX Cares programme. This year we celebrated RELX employees who have shown an outstanding response to supporting their community in the wake of the Covid-19 pandemic. Two individuals and two teams won charity donations to their chosen causes. To mark the tenth anniversary of the programmes, we brought together previous winners who worked together on an alumni challenge, raising funds for an array of local and international projects that advance the RELX Cares Mission.
In 2020, the LexisNexis Rule of Law Foundation published and distributed a children's colouring book on the rule of law for 1,000 children in rural Liberia. We contributed 143,547 books to Book Aid International, Books for Africa and the Asia Foundation worth over $9 million. We also donated $25,000 to support the World Health Organisation's Solidarity Response Fund to further their efforts in fighting the pandemic.
2020 OBJECTIVES
Achievement
Progress new partnership with global fundraising partner Hope and Homes for Children | § Partnership extended to April 2022 with aim to raise $120,000; over one third raised by year-end § Facilitated conversations for HHC with the Elsevier Foundation, The Lancet Psychiatry and Reed Exhibition's Comic Con |
Develop RELX Cares Manager training | § Materials shared with RELX Learning and Development team, adapting for the manager offerings on Percipio |
Create RELX Cares module for staff induction across RELX | § Induction materials designed and shared for use in new hire inductions |
6. Supply chain
Given the importance of maintaining an ethical supply chain, we have a Socially Responsible Supplier (SRS) programme encompassing all our businesses, supported by colleagues with expertise in operations and procurement and a dedicated SRS Director from our global procurement function.
We have a comprehensive Supplier Code of Conduct (Supplier Code) available in 16 languages, which we ask suppliers to sign and display prominently in the workplace. It commits them to following applicable laws and best practice in areas such as human rights, labour and the environment. It also asks suppliers to require the same standards in their supply chains, including requesting subcontractors to enter into a written commitment to uphold the Supplier Code. The Supplier Code states that where local industry standards are higher than applicable legal requirements, we expect suppliers to meet the higher standards. Our SRS programme is a key aspect of our work to prevent modern slavery and human trafficking in our supply chain.
Through our SRS database, we track suppliers with whom we spend >$1m annually, suppliers identified as critical by the business, and those located in medium- and high-risk countries, as designated by Carnstone, with a spend of >$200K for a consecutive two-year period. Our supplier risk tool incorporates ten indicators, including human trafficking information from the US State Department and Environmental Performance Index results produced by Yale University and Columbia University in collaboration with the World Economic Forum.
The tracking list changes year-on-year based on the suppliers we engage to meet the needs of our business. In 2020, there were 412 suppliers on the SRS tracking list, of which 43 are operating in high-risk countries and 60 in medium-risk countries. At year end, 91% of suppliers on the tracking list were signatories to our Supplier Code. We continue to work with non-signatories to gain agreement to our Code, and/or assess whether they have equivalent standards in place, in order to ultimately decide whether to continue doing business with them. We have embedded the Supplier Code into our sourcing process, and have a total of 3,457 suppliers who have agreed to the Supplier Code in 2020, up from 3,202 in 2019.
We engage a specialist supply chain auditor who undertook 99 external audits on our behalf in 2020. The emergence of Covid-19 required an adjustment to our audit process. We increased the number of desktop audits to accommodate suppliers experiencing closures. We also implemented remote onsite audits. During a desktop audit, the supplier responds to an online questionnaire and uploads relevant supporting documents followed by a third-party auditor review.
The remote audits require a supplier representative wearing a video and audio source located in a light-weight harness to allow remote interaction with an external auditor. The auditor could then evaluate the facility, conduct interviews, and review the necessary documentation in real time, just as they would if conducting an in-person audit. During 2020, there were 25 onsite/remote onsite audits and 74 desktop audits.
Incidence of non-compliance triggers continuous improvement reports summarising audit results, with agreed remediation plans and submission dates.
We are committed to proactive engagement with suppliers to ensure our supply chain reflects the diversity of our communities. In the year, we continued to focus on our US supplier diversity programme. In 2020, 12.9% of our US spend was with diverse suppliers, up from 11.9% in 2019.
2020 OBJECTIVES
Increase the number of suppliers as Code signatories |
|
Continue using audits to ensure continuous improvement in supplier performance and compliance | § 99 audits completed § Reduced open onsite audit points by 46% over 2019 |
Continue to advance US Supplier Diversity and Inclusion programme | § 12.9% diversity spend (US rolling four quarters) |
Achievement
* Core suppliers are those that have appeared on the SRS tracking list for three or more years.
2021 OBJECTIVES
§ Responsible Supply Chain - SDG 8 (Decent Work And
Economic Growth): Increase number of suppliers as Code signatories; continue using audits to ensure continuous improvement in supplier performance and compliance
§
Supplier Diversity - SDG 10 (Reduced Inequalities): Advance Supplier Diversity and Inclusion programme
OUR 2030 VISION
Reduce supply chain risks related to human rights, labour, the environment and anti-bribery by ensuring adherence to our Supplier Code of Conduct through training, auditing and remediation; drive supply chain innovation, quality and efficiencies through a strong, diverse network of suppliers
7. Environment
The global pandemic, with the closure of our locations for much of the year, yielded a significant decrease in consumption levels across our environmental impact areas. In 2020, we reduced Scope 1 (direct) carbon emissions by 42% and our Scope 2 (location-based) emissions by 22% from 2019. In our own operations (including business travel), our emissions were net zero in 2020 through a combination of reduced emissions and the
RELX Annual report and financial statements 2020 | Corporate responsibility overview 51
purchase of renewable energy and renewable energy certificates, with the balance offset through Verified Carbon Standard (VCS) credits in a REDD+ carbon sequestration project. We also reduced total energy by 19%; water use by 35%; and waste sent to landfill from reporting locations by 68% in the year.
We had been on track to meet our 2010-2020 environmental targets - which reflect science-based methodology and input from stakeholders - before the start of the Covid-19 pandemic. Their achievement includes exceeding our goal to reduce our Scope 1 and 2 location-based carbon emissions by 40% with a 64% decrease, and surpassing a goal to cut energy and fuels by 30% with a 52% reduction. We reached our goal of purchasing renewable electricity equivalent to 100% of our global electricity consumption from renewable energy and renewable energy certificates and attained ISO 14001 certification for 55% of our business. Full performance data can be found in the 2020 Corporate Responsibility Report (www.relx.com/go/crreport).
Following engagement with a range of stakeholders - including our Environmental Champions led by the CFO, employee-led Green Teams and external networks - we are launching new environmental targets for the period 2020-2025 which include a science-based target to reduce carbon emissions by 46% in 2025 against a 2015 baseline.
RELX is one of the Mayor of London's London Business Climate Leaders committed to cutting pollution and emissions in excess of UK government thresholds. The goal is to help London, where we are headquartered, to become a zero carbon city by 2050. In the year, we received a B grade in CDP's climate change programme.
Our Environmental Standards programme sets benchmark performance and inspires green competition between offices. In 2020, 42 sites (61% of key locations) achieved five or more standards and attained green status. The RELX CFO wrote to all staff on World Environment Day, sharing our environmental priorities and recognising environmental achievements across the business.
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 47% of the total market and 62% in energy and fuels.
In support of this year's United Nations World Environment Day theme, Time for Nature, RELX and Elsevier released a special issue on biodiversity. This collection of more than 60 articles and book chapters from Elsevier publications was made freely available on the RELX SDG Resource Centre. We also prepared special issues for Earth Day and World Food Day.
We use our convening power to highlight environmental innovation. The €50,000 winner of Elsevier's 2020 Green and Sustainable Chemistry Challenge was Dr Diana Carolina Parada Quinayá, a Colombian chemical engineer and professor at the University of Engineering and Technology in Lima, Peru, for her proposal to use cocoa waste for green composites, the next generation of sustainable composite materials.
We continue to advance climate reporting in line with the recommendations of the Taskforce on Climate-related Financial Disclosure. In 2020, we further developed an additional climate-related scenario at 1.5 °C, considering the impact it might have onour business and future resilience. In the year ahead, we will be introducing an internal carbon price on business travel. Further details can be found in Appendix 4 in the 2020 Corporate Responsibility Report.
2020 OBJECTIVES
Achievement
Set new environment targets for 2020-2025 | § New targets set in consultation with internal and external stakeholders, including a science-based Scope 1 and Scope 2 carbon reduction target |
Purchase renewable electricity equal to 100% of global consumption | § 100% attained through green tariff purchases in Europe and green-e certified renewable energy certificates (RECs) in the United States |
Achieve ISO 14001 Environmental Management System (EMS) certification at 50% of the business by headcount | § Reached 55% of business by headcount § Certification occurred at locations in Australia, France and Ohio |
2020 ENVIRONMENTAL PERFORMANCE
Absolute performance
Totalenergy (MWh) 133,238 -19% 163,628
Scope 1 (direct emissions) tCO2e Scope 2 (indirect location-based emissions) tCO2e Scope 2 (market-based emissions) tCO2eWater (m3) Waste sent to landfill (t)* Production paper (t)
Intensity ratio
(per £m revenue)
2020 Variance 2019
0.64 -36% 1.00
7.47 -14% 8.67
1.52 -33% 2.25
18.74 -10% 20.78
30.36 -28% 42.15
0.02 -65% 0.07
5.10
Environmental data covers 12 months from December to November
* From reporting locations.
16% 4.39
The partial occupancy of our locations, due to Covid-19, through much of the year resulted in reductions across all reported metrics. We expect an increase in subsequent years as colleagues return to their offices, to bring us back in line with our historical reduction trend.
ENVIRONMENTAL TARGETS
Focus area
Targets 2020
2020 Performance
Reduce energy and fuel consumption by 30% against a 2010 baseline
Climate change Energy
Reduce Scope 1 and 2 location-based carbon emissions by 40% against a 2010 baseline
-64%
Purchase renewable electricity equivalent to 100% of RELX's global electricity consumption
-52% 100%Decrease total waste generated at reporting locations by 40% against a 2010 baseline 90% of waste from reporting locations to be diverted from landfill
Waste
-78% 93%
Production paper* Environmental
100% of RELX production papers, graded in PREPS, to be rated as 'known and responsible sources'
100%Management System Achieve ISO 14001 certification for 50% of the business by 2020
55%
* All paper we graded in 2020 - 92% of total production stock - was graded 3 or 5 stars (known and responsible sources).
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, Environmental data covers 12 months December to November. EY. Details on methodology and the assurance statement can be viewed in the 2020 Corporate Responsibility Report atwww.relx.com/go/CRReport.
NEW ENVIRONMENTAL TARGETS 2019
Focus area
Targets 2025
Performance
Reduce energy and fuel consumption by 30% against a 2015 baseline
Climate change Energy
Reduce Scope 1 and 2 location-based carbon emissions by 46% against a 2015 baseline
-26%
Continue to purchase renewable electricity equivalent to 100% of RELX's global electricity consumption
Waste Production paperDecrease waste sent to landfill from reporting locations to 35% below 2015 levels
100% of RELX production papers to be graded in PREPS as 'known and responsible sources' or certified to FSC or PEFC by 2025
-21% 96% -32% 96%
Environmental
42%
Management System Achieve Group ISO14001 certification across the business by 2025 100% of new office fit outs to achieve the RELX Sustainable Fit Out standard by 2025
New target
The above table shows performance against the new targets using 2019 figures - the latest year in which performance was not impacted by Covid-19.
2020 investor and other recognition |
onstituent of the Ethibel ustainability Index ncluded in Excellence Europe Excellence Global CDP
FTSE4Good Index Included in
|
E100 Member Dow Jones Sustainability Index Included in - Europe - World ISO 14001 - Certified STOXX Global ESG Leaders Indices - Included |
CPI Indices IncludedTortoise Responsibility100 Index - 4th out of 100 Workplace Pride Global Benchmark - Most Improved Private SectorBloomberg's Gender-Equality Index - Included MSCI ESG Ratings assessment AAA rating The use by RELX of any MSCI ESG RESEARCH LLC or its affiliates ("MSCI") data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation, or promotion of RELX by MSCI. MSCI SERVICES and data are the property of MSCI or its information providers, and are provided 'as-is' and without warranty. MSCI names and logos are trademarks or service marks of MSCI. |
The full 2020 Corporate Responsibility Report is available atwww.relx.com/go/CRReport
RELX Annual report and financial statements 2020
Financial review
In this section
54 Chief Financial Officer's report 60 Principal and emerging risks
Chief Financial Officer's report
Nick Luff
Chief Financial Officer
Our three largest business areas, STM, Risk and Legal, which together accounted for 95% of revenue in 2020, continued to deliver underlying revenue and adjusted operating profit growth. Exhibitions, which accounted for 5% of revenue in 2020, was
revenues, partially offset by print revenue declines which were steeper than in recent years. Exhibitions, which accounted for 5% of revenue in 2020, has been impacted significantly by Covid-19, with revenue of £362m (2019: £1,269m), down 71%. The reduction in Exhibitions revenue resulted in group revenue falling by 9% on an underlying basis.
Reported revenue, including the effects of exhibition cycling, portfolio changes and currency movements, was £7,110m (2019: £7,874m), down 10%, reflecting the decline in Exhibitions revenue.
The net impact of acquisitions and disposals increased revenue growth by 1%. The decline in revenues from cycling events in Exhibitions reduced group revenue by 2%. Currency movements had no net impact on revenue growth for the group as a whole.
Profit
For each of our three largest business areas, underlying adjusted operating profit grew in line with or ahead of revenue. Exhibitions recorded an adjusted operating loss of £164m (2019: £331m profit). In total, adjusted operating profit fell by 18% on an underlying basis. A charge of £183m in Exhibitions, primarily comprised of event cancellation costs and one-off restructuring costs has been treated as exceptional, and excluded from adjusted measures.
Acquisitions and disposals had no net impact on adjusted operating profit. Currency effects increased adjusted operating profit by 1%.
Total adjusted operating profit, including the impact of acquisitions and disposals and currency effects, was £2,076m (2019: £2,491m), a reduction of 17%.
Operating costs reduced by 8% on an underlying basis, reflecting the fall in Exhibitions activity, partly offset by increased spend on global technology platforms and on the launch of new products in other business areas. Total operating costs, including the impact of acquisitions, disposals and currency effects, decreased by 7%.
impacted significantly by Covid-19. The overall adjusted operating margin of 29.2% was 2.4 percentage
Revenue
Our three largest business areas STM, Risk and Legal, which together accounted for 95% of revenue in 2020, reported combined revenue of £6,748m (2019: £6,605m), up 2%. All three business areas continued to deliver underlying revenue growth. The underlying growth rate reflects growth in electronicpoints lower than in the prior year, reflecting the loss incurred in Exhibitions. On an underlying basis, including cycling effects, the margin fell by 2.7 percentage points. Acquisitions and disposals reduced the margin by 0.2 percentage points and currency effects increased the margin by 0.5 percentage points. Reported operating profit, after amortisation of acquired intangible assets, acquisition-related items and the exceptional charge in Exhibitions, was £1,525m (2019: £2,101m).
Reported figures Revenue Operating profit Profit before tax
Net profit attributable to RELX PLC shareholders Net margin
Net borrowings Earnings per share
Adjusted figures Operating profit Operating margin Profit before tax
Net profit attributable to RELX PLC shareholders Net margin
Cash flow
Cash flow conversion Return on invested capital Earnings per share
2020 £m
2019 £m
ChangeChange at constant currencies
7,110 7,874 -10% -10%
1,525 2,101 -27%
1,483 1,847 -20%
1,224 1,505 -19%
17.2% 19.1%
6,898 6,191
63.5p 77.4p -18%
Change underlying
-9%
2,076 2,491 -17% -18% -18%
29.2% 31.6%
1,916 2,200 -13% -15%
1,543 1,808 -15% -16%
21.7% 23.0%
2,009 2,402 -16%
97% 96%
10.8% 13.6%
80.1p 93.0p -14% -15%
RELX 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. In 2020, we also excluded exceptional costs in the Exhibitions business. Reconciliations between the reported and adjusted figures are set out on page 188. Underlying growth rates are calculated at constant currencies, excluding the results of acquisitions until 12 months after purchase, and excluding the results of disposals and assets held for sale. Underlying revenue growth rates also exclude exhibition cycling. Constant currency growth rates are based on 2019 full-year average and hedge exchange rates.
The amortisation charge in respect of acquired intangible assets, including the share of amortisation in joint ventures, increased to £376m (2019: £295m). This includes impairments of £65m in respect of acquired intangible assets in Legal and in Exhibitions. Acquisition-related items in the year included a gain of £76m from the revaluation of a put and call option arrangement relating to a non-controlling interest in a subsidiary within Legal, leading to a total credit of £12m (2019: £84m charge).
Adjusted interest expense was £160m (2019: £291m). The 2019 adjusted interest expense included a charge of £99m in respect of the early redemption of bonds that were due to be repaid in October 2022. Reported net finance costs were £172m (2019: £305m). This includes the net pension financing charge of £10m (2019: £12m).
Net pre-tax gain on disposals and other non-operating items were £130m (2019: £51m) mainly relating to disposal and revaluation gains in the Ventures portfolio.
Adjusted profit before tax was £1,916m (2019: £2,200), down 13%.
The reported profit before tax was £1,483m (2019:£1,847m).
The adjusted tax charge was £373m (2019: £388m). The 2020 charge includes the benefit of temporary relaxation of interest deductibility restrictions in the United States. The 2019 charge includes an £89m tax credit arising from the substantial resolution of certain prior year tax matters.
The adjusted effective tax rate was 19.5% (2019: 17.6%). This 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.
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.
ADJUSTED OPERATING PROFIT MARGIN
ADJUSTED CASH FLOW CONVERSION
30.7% | 31.1% | 31.3% | 31.6% | 96% | 96% | 96% | 96% | 97% | |
29.2% | |||||||||
2016 | 2017 | 2018 | 2019 | 2020 | 2016 | 2017 | 2018 | 2019 | 2020 |
The reported tax charge was £275m (2019: £338m), including tax associated with the exceptional charge in Exhibitions, amortisation of acquired intangible assets, disposals and other non-operating items.
The adjusted net profit attributable to RELX PLC shareholders of £1,543m (2019: £1,808m) was down 15%. Adjusted earnings per share was 14% lower at 80.1p (2019: 93.0p). At constant rates of exchange, adjusted earnings per share decreased by 15%. The reported net profit attributable to RELX PLC shareholders was £1,224m (2019: £1,505m). Reported earnings per share was 63.5p (2019: 77.4p).
Cash flows
Adjusted cash flow was £2,009m (2019: £2,402m), down 16% compared with the prior year and down 18% at constant currencies. The rate of conversion of adjusted operating profit to adjusted cash flow was 97% (2019: 96%).
CONVERSION OF ADJUSTED OPERATING PROFIT INTO CASH
YEAR TO 31 DECEMBER | 2020 | 2019 |
£m | £m | |
Adjusted operating profit | 2,076 | 2,491 |
Depreciation and amortisation of internally | ||
developed intangible assets* | 341 | 307 |
Depreciation of right-of-use assets | 88 | 82 |
Capital expenditure | (362) | (380) |
Repayment of lease principal (net)** | (87) | (85) |
Working capital and other items | (47) | (13) |
Adjusted cash flow | 2,009 | 2,402 |
Adjusted cash flow conversion | 97% | 96% |
* Excluding impairment charges that have already been excluded from adjusted operating profit.
** Excludes repayments and receipts in respect of disposal-related vacant property and is net of sublease receipts.
Capital expenditure was £362m (2019: £380m), including £319m (2019: £333m) in respect of capitalised development costs. This reflects sustained investment in new products and related infrastructure across the business. Depreciation and amortisation of internally developed intangible assets charged within adjusted operating profit was £341m (2019: £307m). Capital expenditure was 5.1% of revenue (2019: 4.8%) with the increase reflecting the reduction in revenue in Exhibitions. Depreciation and amortisation was 4.8% of revenue (2019: 3.9%). These percentages exclude depreciation of leased right-of-use assets of £88m (2019: £82m) and principal lease repayments under IFRS 16 of £87m
(2019: £85m).
Tax paid of £496m (2019: £464m) was higher than the current tax charge, reflecting the timing of cash tax payments against lower profits and the acceleration of instalment payments in the UK. Interest paid (net) was £172m (2019: £171m). The difference from adjusted interest expense primarily reflects the settlement of the interest cost for the early redemption of 2022 bonds for which the accounting charge was taken in 2019.
Of the exceptional costs in Exhibitions, £51m was paid in cash in 2020. Payments made in respect of acquisition-related items amounted to £67m (2019: £63m). Free cash flow before dividends was £1,223m (2019: £1,704m). Ordinary dividends paid to shareholders in the year, being the 2019 final and 2020 interim dividends, amounted to £880m (2019: £842m). Free cash flow after dividends was £343m (2019: £862m).
RECONCILIATION OF CASH GENERATED FROM OPERATIONS TO ADJUSTED CASH FLOW
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 Acquisition-related items Exceptional costs in Exhibitions Pension recovery payment Repayment of lease principal Proceeds from disposals of property, plant and equipment
Adjusted cash flow
FREE CASH FLOW
YEAR TO 31 DECEMBER
Adjusted cash flow Interest paid (net) Cash tax paid*
Exceptional costs in Exhibitions Acquisition-related items
Free cash flow before dividends Ordinary dividends
Free cash flow post dividends
2020 £m
2,264 2,724
31 34
(43) (47)
(319) (333)
67 63
51 45
(87) (85)
- 2,009
2 2,402
2020 £m
2,009 2,402
(172) (171)
(496) (464)
(51)
(67) (63)
1,223 1,704
(880) (842)
343
* Net of cash tax relief on exceptional costs and acquisition-related items and including cash tax impact of disposals.
2019 £m
- 44
2019 £m
-
862
Total consideration on acquisitions completed in the year was £878m (2019: £416m). Cash spent on acquisitions was £874m (2019: £437m), including deferred consideration of £5m (2019: £24m) on past acquisitions and spend on venture capital investments of £2m (2019: £8m). Total consideration for disposals of non-strategic assets was £15m (2019: £63m). Net cash inflow after timing differences and separation and transaction costs, and including realisation of venture capital investments, was £29m (2019: £48m). Share repurchases in 2020 were £150m (2019: £600m). In addition, the Employee Benefit Trust purchased shares of RELX PLC to meet future obligations in respect of share based remuneration totalling £37m (2019: £37m). Proceeds from the exercise of share options were £16m (2019: £29m).
RECONCILIATION OF NET DEBT YEAR-ON-YEAR
YEAR TO 31 DECEMBER
Net debt at 1 January
Free cash flow post dividends Net disposal proceeds Acquisition cash spend (including borrowings in acquired businesses) Share repurchases
Purchase of shares by the Employee
Benefit Trust
Other*
Currency translation
Movement in net debt Net debt at 31 December
2020 £m
2019 £m
(6,191)
(6,177)
343 862
29 48
(874) (437)
(150) (600)
(37) (37)
16 (121)
(34) 271
(707) (14)
(6,898) (6,191)
* Distributions to non-controlling interests, pension deficit payments, leases, share option exercise proceeds and, in 2019, impact of bond redemption.
Funding
Debt
Net borrowings at 31 December 2020 were £6,898m, an increase of £707m since 31 December 2019. Excluding currency translation effects, net borrowings increased by £673m. Expressed in US dollars, net borrowings at 31 December 2020 were $9,416m, an increase of $1,205m.
Gross borrowings of £7,123m (2019: £6,414m) are comprised of bank and bond borrowings of £6,848m (2019: £6,072m) and lease liabilities under IFRS 16 of £275m (2019: £342m). The fair value of related derivative net assets was £119m (2019: £52m), finance lease receivables totalled £18m (2019: £33m) and cash and cash equivalents totalled £88m (2019: £138m). In aggregate, these give the net borrowings figure of £6,898m (2019: £6,191m).
The effective interest rate on gross bank and bond borrowings was 2.1% in 2020. This was 2.4 percentage points lower than the prior year, reflecting primarily the one-off charge in 2019 relating to the early bond redemption and the benefit of refinancing historical bonds that had higher rates of interest combined with decreases in market interest rates. As at 31 December 2020, gross bank and bond borrowings had a weighted average life remaining of 5.4 years and a total of 65% of them were at fixed rates, after taking into account interest rate derivatives. The ratio of net debt (including leases and pensions) to EBITDA (adjusted earnings before interest, tax, depreciation and amortisation) was 3.3x (2019: 2.5x), calculated in US dollars. Excluding leases and pensions, the ratio was 2.9x (2019: 2.2x). The increase in these leverage ratios reflects the impact of Covid-19 on Exhibitions.
Liquidity
In March 2020, €2bn of euro denominated fixed rate term debt was issued, comprising: €700m with a coupon of 0% and a maturity of four years, €800m with a coupon of 0.5% and a maturity of eight years and €500m with a coupon of 0.875% and a maturity of 12 years. In May 2020, $750m of US dollar denominated fixed rate term debt was issued, with a coupon of 3% and a maturity of ten years. In January 2020, $950m of US term debt maturing in October 2022 was redeemed early, in accordance with early repayment options allowed by the terms of the bonds.
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. The Group has access to committed bank facilities aggregating $3.6bn, with over $2.9bnof these facilities maturing in 2023 or 2024. These facilities are undrawn. They include a covenant limiting the ratio of net debt to EBITDA to 3.75x, with RELX having the option once over the life of the facilities to increase this limit to 4.25x for a 12 month period (covering two consecutive semi-annual testing dates) following any acquisition. For the purposes of the covenant, net debt includes leases but excludes pensions. At 31 December 2020, measured on the basis used in the covenant test, the ratio of net debt to EBITDA was 2.8x.
Invested capital and returns
Net capital employed was £9,536m at 31 December 2020 (2019: £9,237m), an increase of £299m. The carrying value of goodwill and acquired intangible assets increased by £393m. An amount of £427m (2019: £245m) was capitalised in the year in respect of acquired intangible assets and £570m (2019: £257m) was recorded as goodwill. These additions were offset by amortisation and impairment of acquired intangible assets and by currency movements.
SUMMARY BALANCE SHEET
AS AT 31 DECEMBER | 2020 | 2019 |
£m | £m | |
Goodwill and acquired intangible assets* | 9,405 | 9,012 |
Internally developed intangible assets* | 1,244 | 1,264 |
Property, plant and equipment*, | ||
right-of-use assets* and investments | 740 | 695 |
Net pension obligations | (624) | (520) |
Working capital | (1,229) | (1,214) |
Net capital employed | 9,536 | 9,237 |
* Net of accumulated depreciation and amortisation. |
Development costs of £319m (2019: £333m) were capitalised within internally developed intangible assets, most notably investment in new products and related infrastructure across RELX.
Net pension obligations, i.e. pension obligations less pension assets, increased to £624m (2019: £520m). There was a net deficit of £354m (2019: £267m) in respect of funded schemes, which were on average 94% funded at the end of the year on an IFRS basis. The higher deficit mainly reflects lower discount rates in the UK, partly offset by increased asset returns.
The post-tax return on average invested capital in the year was 10.8% (2019: 13.6%). The decrease is due to the loss incurred in
Exhibitions, an increase in capital employed due to acquisitions, and a higher effective tax rate, partly offset by profit growth from the other business areas.
RETURN ON INVESTED CAPITAL
AS AT 31 DECEMBER | 2020 | 2019 |
£m | £m | |
Adjusted operating profit | 2,076 | 2,491 |
Tax at adjusted effective rate | (405) | (438) |
Adjusted effective tax rate | 19.5% | 17.6% |
Adjusted operating profit after tax | 1,671 | 2,053 |
Average invested capital* | 15,435 | 15,050 |
Return on invested capital | 10.8% | 13.6% |
* Average of invested capital at the beginning and the end of the year, retranslated at average exchange rates for the year. Invested capital is calculated as net capital employed, adjusted to add back accumulated amortization and impairment of acquired intangible assets and goodwill and to exclude the gross up to goodwill in respect of deferred tax, and to add back exceptional restructuring costs.
Reported earnings per share and dividends
Reported earnings per share Ordinary dividend per share
2020 £m
2019 £m
63.5p 47.0p
77.4p -18%
45.7p +3%The reported earnings per share was 63.5p (2019: 77.4p).
Change
The final dividend proposed by the Board is 33.4p per share. This gives total dividends for the year of 47.0p (2019: 45.7p), 3% higher than the prior year.
Dividend cover, being the number of times the total interim and proposed final dividends for the year is covered by the adjusted earnings per share, is 1.7x. The dividend policy of RELX PLC is, over the longer term, to grow dividends broadly in line with adjusted earnings per share, while targeting cover of at least two times.
During 2020, a total of 7.8m of RELX PLC shares were repurchased at an average price of 1,918p. Total consideration for these repurchases was £150m. A further 1.8m (2019: 2.2m) shares were purchased by the Employee Benefit Trust. As at 31 December 2020, total shares in issue, net of shares held in treasury and shares held by the Employee Benefit Trust, amounted to 1,926m.
Distributable reserves and parent company balance sheet
As at 31 December 2020, RELX PLC had distributable reserves of £6.9bn (2019:£6.8bn). In line with UK legislation, distributable reserves are derived from the non-consolidated RELX PLC balance sheet. The consolidated reserves reflect adjustments such as the amortisation of acquired intangible assets that are not taken into account when calculating distributable reserves.
The parent company balance sheet net assets are higher than those of the group due to the investment in RELX Group plc being carried at a value of £18bn which is not reflected on the consolidated balance sheet. The parent company balance sheet can be found on page 182. Further information on the distributable reserves can be found in the parent company financial statements on page 183.
Alternative performance measures
RELX 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 track more clearly the core operational performance of the Group by separating out items of income or expenditure relating to acquisitions, disposals and capital items, and by excluding the 2020 exceptional costs in Exhibitions, as described above. This provides our investors with a clear basis for assessing our ability to raise debt and invest in new business opportunities.
Management uses these financial measures, along with IFRS financial measures, in evaluating the operating performance of the Group as a whole and of 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 reconciliations of adjusted measures.
Accounting policies
The consolidated financial statements are prepared in accordance with International Financial Reporting Standards prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRS) adopted pursuant to Regulation (EC) No 1606/2002 as it applied in the European Union, following the accounting policies shown in the notes to the financial statements on pages 137 to 138. The accounting policies and estimates which require the most significant judgement relate to the valuation of goodwill and intangible assets, the capitalisation of development spend, taxation and accounting for defined benefit pension schemes.
Further detail is provided in the accounting policies on pages 137 to 138 and in the relevant notes to the accounts.
Tax principles
Taxation is an important issue for us and our stakeholders, including our shareholders, governments, customers, suppliers, employees and the global communities in which we operate. We have set out our approach to tax in our global tax strategy. This incorporates our Tax Principles along with additional disclosures around where we pay taxes and our broader contribution to society. This is all made publicly available on our website:www.relx.com/ go/taxprinciples. 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 arm's-length pricing with tax authorities to mitigate tax risks of significant cross-border operations. 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 Board of RELX PLC agrees policies for managing treasury risks. The key policies address security of funding requirements, the target fixed/floating interest rate exposure for debt and foreign currency hedging and place limits on counterparty exposures.
A more extensive summary of these policies is provided in note 18 to the financial statements on pages 162 to 167. Financial instruments are used to finance the RELX 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 RELX'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, RELX seeks to maintain cash flow conversion of 90% or higher and credit rating agency metrics that are consistent with a solid investment grade credit rating. These metrics, as defined by the rating agencies, include net debt to EBITDA, including and excluding pensions and leases, and various measures of cash flow as a percentage of net debt.
RELX uses the cash flow it generates to fund capital expenditure required to drive organic growth, to make selective acquisitions and to provide a growing dividend to shareholders, while retaining balance sheet strength to maintain access to cost-effective sources of borrowing. Share repurchases are undertaken to maintain an efficient balance sheet. Further detail on capital and liquidity management is provided on pages 162 and 163.
Climate change
At RELX, we recognise our responsibility to consider our impact on the environment, to address climate change and to respond to the impacts of climate change. The nature of RELX's business means that the environmental impact of our operations is relatively low. Through activities such as supporting scientific research, providing analysis of environmental law, pricing recyclable materials, and enabling customers to access our products electronically, we are in a position to make a positive contribution to climate change risks. Notwithstanding our low environmental impact, the directors have considered the risks associated with climate change. As noted in the principal risks section, we believe that the principal ways in which climate change could impact RELX is through disruption to operations caused by severe weather events, which are reflected in the Technology and Business Resilience risk. We continue to advance climate reporting in line with the recommendations of the Taskforce on Climate Related Financial Disclosure, with relevant data and metrics included in the corporate responsibility section of the annual report, supported by further detail in the corporate responsibility report. The key performance metrics for 2020 are discussed below.
Corporate responsibility
In 2020, we met the five year environmental targets we set in 2015, continuing a reduction trend accelerated by remote working due to the global pandemic. We purchased renewable electricity equivalent to 100% of our global electricity consumption through European green tariff and US Green-e certified renewable energy certificates. We reduced Scope 1 and Scope 2 (location-based) carbon emissions by 64% from a 2010 baseline and reduced our water consumption by 54% over the same period. In our own operations (including business travel), our emissions were net zero in 2020 through a combination of reduced emissions and the purchase of renewable energy and renewable energy certificates, with the balance offset through Verified Carbon Standard (VCS) credits in a REDD+ carbon sequestration project. We engaged with stakeholders on a new set of environmental targets for the period 2020-2025. This includes a science-based carbon target to reduce our Scope 1 and Scope 2 (location-based) emissions 46% by 2025 from a 2015 baseline. In the year ahead, we will introduce an internal carbon price on business travel.
Further, in 2020, in accordance with the Task Force on Climate-related Financial Disclosures, we considered our energy mix and spend in a review of our climate risks and opportunities. We also introduced consideration of a third scenario of a 1.5°C rise in global temperature from pre-industrial levels due to climate change, as presented in our 2020 Corporate Responsibility Report.
Our most important environmental impact is in the environmental knowledge we disseminate through our content, solutions and events. In support of Time for Nature, the theme of United Nations 2020 World Environment Day, we released more than 60 Elsevier articles and book chapters on the free RELX SDG Resource Centre; we also produced special issues on the site for Earth Day and World Food Day, among others. LexisNexis Risk Solutions added more geospatial data to its Map View tool, allowing insurance providers greater visibility on environmental risks. LexisNexis Legal & Professional published an update to Renewable Energy Law and Policy, covering the latest developments in the legal landscape, future trends and sample agreements for renewable energy transactions. Reed Exhibitions introduced a sustainability charter in the UK with a commitment to reduce the carbon intensity of its operations, working in partnership with venues, suppliers, exhibitors and delegates. In the year, we signed up to the Responsible Media Forum's Climate Pact with its two key commitments: setting a science-based carbon target and advancing climate change knowledge through our products and services.
Our Supplier Code of Conduct requires suppliers to meet the same high standards we set for ourselves. In 2020, 91% of our key suppliers were signatories to the Supplier Code. We continued work with a specialist supply chain auditor which undertook 99 external audits for us in 2020, including onsite audits, remote site audits, and desktop audits.
Nick Luff
Chief Financial Officer
Principal and emerging risks
RELX 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. The principal and emerging risks facing the business, which have been assessed by the Audit Committee and Board, including the risks and uncertainties relating to the Covid-19 pandemic, are described below. The directors confirm this process is robust and includes consideration of risks, including emerging risks, that could threaten RELX's business models, future performance, solvency, liquidity or reputation.
The directors have considered the risk of climate change to the business, including the positive contribution that RELX makes through activities such as supporting academic research, pricing recyclable materials, and enabling customers to access our products electronically. The principal way in which climate change could impact RELX is through disruption to operations caused by severe weather events, which are reflected in the 'technology and business resilience' risk below.
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 RELX business review. Our approach to the promotion of human rights, managing corporate responsibility, environmental and other non-financial risks is set out in the RELX business overview and the separate Corporate Responsibility Report.
Covid-19 pandemic
The impact of the Covid-19 pandemic on RELX's business will depend on a range of factors which we are not able to accurately predict. Those factors include the duration and scope of the pandemic, new information which may emerge concerning
EXTERNAL RISKS
Risk
Economy and market conditionsDescription and impact
the severity of the pandemic, the geographies impacted, changes in worldwide economic conditions, reductions in customer spending, disruptions and volatility in the global capital markets and the nature, severity and duration of measures adopted by governments to control the Covid-19 pandemic.
Our business performance and financial condition may be adversely affected by negative changes in general economic conditions. Further deteriorations in economic conditions, as a result of the Covid-19 pandemic or otherwise, could lead to a further or prolonged decline in customer demand for our products and services and negatively impact our business. Decline or volatility in customer demand for one or more of our products due to cost-cutting, reduced spending, reduced activity or delayed renewals by our customers may impact RELX's revenues and profits.
Containment measures that governments adopt or that we take, such as quarantines or other travel restrictions and site closures, may interfere with the ability of our employees, vendors and data suppliers to perform their respective responsibilities and obligations. In Exhibitions, the main exhibition venues in Europe and the US remain closed. We ran physical events in the second half of 2020 in venues that have reopened, but these may close again. The events that have run have typically been smaller than their prior editions.
Disruption and volatility in financial markets and capital markets may adversely impact RELX's access to financing or the terms of any such financing.
These factors have had an adverse impact on our business performance this year (in particular on our Exhibitions business segment) and could further adversely impact our business performance as well as having an adverse impact on our financial condition in future years. To the extent the Covid-19 pandemic adversely affects our business performance and financial results, it may also have the effect of heightening a number of the other risks described below.
Demand for our products and services may be adversely impacted by factors beyond our control, such as the economic environment in, and trading relations between, the United States, Europe and other major economies (including the evolution of the United Kingdom's trading relationship with the European Union), political uncertainties, acts of war and civil unrest as well as levels of government and private funding provided to academic and research institutions.
Mitigation
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 and recurring revenue basis, which are important to our customers' effectiveness and efficiency. We operate diversified businesses in terms of sectors, markets, customers, geographies and products and services. 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 continuously monitor economic and political developments to assess their impact on our strategy which is designed to mitigate these risks. In response to specific uncertainties, our businesses engage in scenario planning and develop contingency plans where relevant.
EXTERNAL RISKS
Risk
Intellectual property rightsData resources and data privacyPaid subscriptionsDescription and impact
Our products and services include and utilise intellectual property. 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 national legislative initiatives, as well as cross-border initiatives such as those from the European Commission 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.
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. The disruption or loss of data sources, either because of data privacy laws 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. Examples of data privacy laws relating to internet communications, privacy and data protection, e-commerce, information governance and use of public records, include the European Union's General Data Protection Regulation and the California Consumer Privacy Act, as well as evolving regulation in many jurisdictions where RELX operates.
Compromise of data privacy, through a failure of our cyber security measures (see 'cyber security' below), other data loss incidents or failure to comply with requirements for proper collection, storage and transmittal of data, by ourselves, or our third-party service providers, may damage our reputation and expose us to risk of loss, fines and penalties, litigation and increased regulation.
Our Scientific, Technical & 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.
Mitigation
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 intellectual property and, as appropriate, take legal action to challenge illegal content 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 have established data privacy principles, governance structures and control programmes designed to ensure data privacy requirements are met and which protect data and individuals' privacy across all jurisdictions where we operate. We have put in place and test response plans to manage incidents where data privacy might be compromised. We embed our data privacy principles in agreements with third parties.
We have assurance programmes to monitor compliance and conduct training and awareness programmes.
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. In particular, the number of articles we publish on an author pays, open access basis is growing rapidly. 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 develop our research systems to provide capabilities to manage different payment models. We ensure vigilance on plagiarism and the long-term preservation of research findings.
STRATEGIC RISKS
Risk
Customer acceptance of productsAcquisitionsDescription and impact
Our businesses are dependent on the continued demand by our customers for our products and services and the value placed on them. They operate in highly competitive and dynamic markets, and the means of delivery, customer demand for, 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, or to deliver enhanced value to our customers, could impact demand for our products and services and consequently adversely affect our revenue or the long-term returns from our investment in electronic product and platform initiatives.
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.
OPERATIONAL RISKS
Risk
Technology and business resilienceFace-to-face eventsDescription and impact
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, networks or supporting infrastructure experience a significant failure, interruption or security breach.
Face-to-face events are susceptible to economic cycles, communicable diseases, severe weather events and other natural disasters, terrorism and assignment of venues to alternative uses. Each or any of these may impact exhibitors' and visitors' desire and ability to travel in person to events and the availability of event venues. These factors each have the potential to reduce revenues, increase the costs of organising events and adversely affect cash flows and reputation.
Mitigation
We are focused on the needs and economics of our customers. We gain insights into our markets, evolving customers' needs, the potential application of new technologies and business models, and the actions of competitors and disrupters. 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. We leverage user centred design and development methods and customer analytics and invest in new and enhanced technologies to provide content and innovative solutions that help them achieve better outcomes and enhance productivity.
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.
Mitigation
We have established procedures for the protection of our businesses and technology assets. These include the development and testing of business continuity plans, including IT disaster recovery plans and back-up delivery systems, to reduce business disruption in the event of major technology or infrastructure failure, terrorism or adverse weather incidents.
We actively review our ability to host events considering the availability of venues and national and local regulations including those related to health, travel and security. Where regulations permit us to hold events, we take appropriate measures for the well being and safety of exhibitors, visitors and employees. The physical events being run are supported by enhanced digital services, including remote participation by both exhibitors and attendees. In addition, we are holding a number of standalone virtual events and are further developing and delivering complementary digital offerings in order to maintain our presence in the industry communities that we serve.
OPERATIONAL RISKS
Risk
Cyber securityDescription and impact
Our businesses maintain online databases and platforms delivering our products and services, which we rely on, and provide data to third parties, including customers and service providers. These databases and information are a target for compromise and face a risk of unauthorised access and use by unauthorised parties.
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, and our service providers and customers may likewise be unable to do so.
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, fines and penalties, litigation and increased regulation.
Supply chain
Our organisational and operational structures depend ondependencies outsourced and offshored functions, including use of cloud service providers. Poor performance, failure or breach of third-parties to whom we have outsourced activities could adversely affect our business performance, reputation and financial condition.
Talent
FINANCIAL RISKS
Risk
Pensions
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. Failure to recruit and develop talent regardless of gender, race or other characteristics could adversely affect our reputation and business performance.
Description and impact
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 US scheme is closed to future accruals. The UK scheme has been closed to new hires since 2010. The members who continue to accrue benefits now represent a small and reducing portion of the overall UK based workforce. The assets and obligations associated with these 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 funding requirements.
Mitigation
We have established security programmes with the aim of ensuring that data is protected, our business infrastructures continue to operate 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 technological 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, encryption and logging and monitoring. We provide regular training and communication initiatives to establish and maintain awareness of risks at all levels of our businesses. We have appropriate incident response plans to respond to threats and attacks. We maintain appropriate information security policies and contractual requirements for our businesses and run programmes monitoring the application of our data 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 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. Our Diversity and Inclusion Strategy creates a diverse workforce and environment that respects individuals and their contributions.
Mitigation
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.
FINANCIAL RISKS
Risk
Tax
TreasuryDescription and impact
Our businesses operate globally, and our profits are subject to taxation in many different jurisdictions and at differing tax rates. The Organisation for Economic Co-operation and Development (OECD) is continuing to explore changes to the way in which profits are allocated for tax purposes between jurisdictions and other reforms with a view to obtaining consensus in 2021. As a result of the OECD's work and other 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 PLC consolidated financial statements are expressed in pounds 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.
REPUTATIONAL RISKS
Risk EthicsDescription and impact
As a global provider of professional information solutions to the STM, risk, legal and exhibitions markets we, our employees and major suppliers are expected to adhere to high standards of integrity and ethical conduct, including those related to anti-bribery and anti-corruption, fraud, sanctions, competition and principled business conduct. A breach of generally accepted ethical business standards or applicable laws could adversely affect our business performance, reputation and financial condition.
Mitigation
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 58 we engage with tax authorities and international organisations. We continue to monitor further developments arising from the OECD process and consider potential impacts of proposals under various scenarios. The principles we adopt in our approach to tax matters can be found on our website atwww.relx.com/go/taxprinciples.
Our approach to capital structure and funding is 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 18 to the consolidated financial statements.
Mitigation
Our Code of Ethics and Business Conduct is provided to every employee and is supported by training and communication. It encompasses such topics as competing fairly, prohibiting corrupt business practice and fair employment practices and encouraging open and principled behaviour. We have well-established processes for monitoring, reporting and investigating instances of unethical conduct. Our major suppliers are required to adhere to our Supplier Code of Conduct.
The Strategic Report, as set out on pages 2 to 64, has been approved by the Board of RELX PLC.
By order of the Board | Registered Office |
Henry Udow | 1-3 Strand |
Company Secretary | London |
10 February 2021 | WC2N 5JR |
RELX Annual report and financial statements 2020
Governance
In this section
66 Board Directors
68 RELX Senior Executives
70 Chair's introduction to corporate governance
71 Corporate Governance Review
90 Report of the Nominations Committee
93 Directors' Remuneration Report
115 Report of the Audit Committee
118 Directors' Report
Board Directors
Executive Directors
Erik Engstrom (57)
Chief Executive Officer
Non-Executive Directors
Sir Anthony Habgood (74)
R N C
June Felix (64)
Chair
Non-Executive Director
A C
Appointed: Chief Executive Officer of RELX since November 2009. Joined as Chief Executive Officer of Elsevier in 2004.
Other appointments: Non-Executive Director of Smith & Nephew plc and Bonnier Group. Past appointments: Prior to joining 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: Chair of Preqin Holding Limited and Deputy Chair of RG Carter Holdings Limited.
Past appointments: Previously was Chair of the Court of the Bank of England, Whitbread plc, Bunzl plc, Mölnlycke Health Care Limited and Norwich Research Partners LLP 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. Education: Holds an MA in Economics from Cambridge University, an MS in Industrial Administration from Carnegie Mellon University and an Honorary Doctorate of Civil Law from the University of East Anglia. He is a visiting Fellow at Oxford University. Nationality: British
Appointed: October 2020
Other appointments: Chief Executive Officer of IG Group Holdings plc. Member of the Board of Advisers of the London Technology Club. Past appointments: Ser ved as a Non-Executive Director of IG Group Holdings plc from 2015 until the time of her appointment as Chief Executive Officer in October 2018. Previously she held various executive management positions at a number of large multinational businesses in Hong Kong, London and New York, including Verifone, IBM, Citibank and Chase Manhattan. Earlier in her career, June was a strategy consultant with Booz Allen Hamilton. Nationality: American
Nick Luff (53)
Chief Financial Officer
Appointed: September 2014
Other appointments: Non-Executive Director of Rolls-Royce Holdings 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 and Lloyds Banking Group plc.
Education: Has a degree in Mathematics from Oxford University and is a qualified UK Chartered Accountant.
Nationality: British
Wolfhart Hauser (71)
Non-Executive Director Senior Independent Director
R N C
Chair of the Remuneration Committee
Appointed: April 2013
Other appointments: Non-Executive Director of Associated British Foods plc. Past appointments: Chair of FirstGroup plc until July 2019. 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 ten 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
Charlotte Hogg (50)
Non-Executive Director
Appointed: December 2019
Other appointments: Executive Vice President and Chief Executive Officer for the European Region of Visa Inc. Executive Director of Visa Europe Limited. Non-Executive Director of NowTeach and a Director of Kettlethorpe Sport Horses Limited.
Past appointments: Chief Operating Officer at the Bank of England. Before that Head of Retail Banking for Santander UK, Managing Director UK and Ireland for Experian plc, and held senior roles at Morgan Stanley in New York and London.
Nationality: British, American and Irish
RELX Annual report and financial statements 2020 | Board Directors
R C
Marike van Lier Lels (61)
Non-Executive Director Workforce Engagement Director
Appointed: July 2015
Other appointments: Member of the
A N C
Supervisory Boards of NS (Dutch Railways), Dura Vermeer, Post NL and Innovation Quarter. Past appointments: Member of the Supervisory Boards of TKH Group NV, Royal Imtech NV, Maersk BV, KPN NV, USG People NV and Eneco Holding 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
Robert MacLeod (56)
R N C
Non-Executive Director
Appointed: April 2016
Other appointments: Appointed as Chief Executive of Johnson Matthey plc in June 2014 after five years as Group Finance Director. 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
Linda Sanford (68)
Non-Executive Director
Appointed: December 2012
Other appointments: An independent Director of Consolidated Edison, Inc, Pitney Bowes,
Inc and Interpublic Group of Companies, Inc. 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. A consultant to The Carlyle Group from 2015 to July 2018. 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
Andrew Sukawaty (65)
Non-Executive Director
Appointed: April 2019
Other appointments: Chair of Inmarsat and HG Capital USA.
A C
Past appointments: He was formerly the Senior Independent Director of Sky plc between 2013 and 2018. Previously he was Chair of Ziggo NV, Xyratex Group Ltd, and Telenet Group holdings NV, and deputy Chair of O2 plc. He also served as a Non-Executive Director of Telefonica Europe (following its acquisition of O2 plc) and Powerwave Technologies Inc, and additionally as Chief Executive of Inmarsat plc, Sprint Corp and NTL Group Ltd. Nationality: American
Suzanne Wood (60)
A C
Non-Executive Director
Appointed: September 2017
Other appointments: Senior Vice President and Chief Financial Officer of Vulcan Materials Company and Non-Executive Director of Ferguson plc.
Past appointments: Served as Group Finance Director of Ashtead Group plc from 2012 to 2018. Chief Financial Officer of Ashtead Group's largest subsidiary, Sunbelt Rentals Inc, from 2003 until 2012. Previously, she also served as Chief Financial Officer of two US publicly listed companies, Oakwood Homes Corporation and Tultex Corporation. Nationality: American
Board Committee membership key
A Audit Committee
R Remuneration Committee
N Nominations Committee
C Corporate Governance Committee
Committee Chair
RELX Senior Executives
Mark Kelsey
Chief Executive Officer Risk
Joined in 1983. Appointed to current position in 2012.
Kumsal Bayazit
Chief Executive Officer Scientific, Technical & Medical and Chair, RELX Technology ForumJoined in 2004. Appointed to current position in 2019.
Mike Walsh
Chief Executive Officer Legal
Joined in 2003. Appointed to current position in 2011.
Hugh M Jones IV
Chief Executive Officer Exhibitions
Joined in 2011. Appointed to current position in 2020.
Has held a number of senior positions across the Group over the past 30 years. Previously Chief Operating Officer and then Chief Executive Officer of Reed Business Information. Studied at Liverpool University and received his MBA from Bradford University.
Previously President, Exhibitions Europe, Chief Strategy Officer, RELX, and Executive Vice President of Global Strategy and Business Development for LexisNexis. 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.
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 Group Managing Director, Accuity, ICIS, Cirium, and EG within Risk. Prior to that was Chief Executive Officer, Accuity. Holds an MBA from the Ross School of Business at the University of Michigan and is a graduate of Yale University.
RELX Annual report and financial statements 2020 | RELX Senior Executives
Vijay Raghavan
Director, RELX Technology Forum and Chief Technology Officer, Risk
Henry Udow
Chief Legal Officer and Company Secretary
Jelena Sevo
Chief Strategy Officer
Youngsuk 'YS' Chi
Director of RELX Corporate Affairs and Chair, ElsevierJoined in 2002. Appointed to current position in 2019.
Joined in 2011. Appointed to current position at that time.
Joined in 2011. Appointed to current position in 2019.
Joined in 2005. Appointed to current position in 2011.
Previously Vice President of Technology, LexisNexis Insurance Solutions. Prior technology executive positions at ChoicePoint, Paragon Solutions, Primus Knowledge Solutions, and McKesson. Holds a bachelor's degree in electrical and electronics engineering from the Birla Institute of Technology and Science, Pilani, completed an advanced management program for executives at MIT Sloan School of Management, and is completing a master's degree in cybersecurity from the Georgia Institute of Technology.
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.
Previously Director of Tax Markets for LexisNexis UK. Prior to that, various senior management roles in LexisNexis and Elsevier. Previously a consultant at Bain & Co and Booz Allen Hamilton. Holds an MBA from Harvard Business School, a master's degree in law from Georgetown University and a degree in law from the University of Belgrade.
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.
Chair's introduction to corporate governance
The maintenance of high standards of corporate governance is consistent with our wider RELX culture of acting with integrity in all that we do.
Our governance framework
The Board believes that effective governance practices are fundamental in supporting RELX's ability to create, protect and ultimately deliver long-term shareholder value. The maintenance of high standards of corporate governance is consistent with our wider RELX culture of acting with integrity in all that we do. It also provides confidence to our many and varied stakeholders that the governance of the Group is appropriate for its size and profile as a listed company, helps to manage our risks and opportunities, ensures that our key stakeholders are appropriately considered in the decisions that we make, and improves our corporate reputation.
Covid-19
During 2020, one of the Board's key priorities was to respond to the challenges faced by RELX as a result of the Covid-19 pandemic, with a focus on ensuring the health and safety of our colleagues, our customers and the wider communities in which we operate, whilst continuing to operate our businesses, providing solutions and services to our customers and value for our stakeholders. The Board was frequently updated on the impact the pandemic was having on the financial performance of each business area. It also received frequent updates on the Group's balance sheet strength and liquidity, management of risks arising as a result of the pandemic, and how the pandemic was affecting the markets in which we operate and the customers we serve.
Stakeholder engagement
The Board remained focused throughout the year on the well-being of our workforce, many of whom had to operate in unfamiliar or challenging circumstances during the year. In furtherance of this, the Board was able to leverage existing workforce engagement processes and activities, which are set out in more detail on page 79. During the year, the Directors also placed particular emphasis on hearing the views of RELX's suppliers, and received related presentations from both our Head of Purchasing and Chief Strategy Officer. The Board continued to oversee our substantial corporate responsibility programme, and also maintained its focus on RELX's environmental, social and governance activities, reflecting the increasing prioritisation of this area by our stakeholders, including the wider investment community.
Board decision-making
The Board's significant decisions during the year, and its considerations in making them, are set out on pages 75 to 77. Those pages are incorporated into the Board's Section 172 Statement for 2020 set out on page 39, and therefore into the RELX Strategic Report. They explain how the Board's decision-making during the year has promoted the success of the Company having regard, amongst other things, to those matters set out in Section 172 of the Companies Act 2006.
UK Corporate Governance Code compliance
As a result of RELX PLC's premium listing on the London Stock Exchange, it is required to describe how, during the year, it has complied with the principles of the Code. Details of how we have done so are set out in this report and those of the Board Committees which follow. RELX is also required to report on whether it has chosen to comply with each of the provisions of the Code, or alternatively explain why it has chosen not to do so. For 2020, the Board deemed it to be in the interests of our stakeholders to comply with each of the provisions of the Code, with the exception of provision 19 (length of tenure of the Chair) and provision 38 (alignment of Executive Director pension rates with those available to the workforce). For an explanation of how Executive Director pension benefits are being aligned with those of the wider workforce, please see page 71.
With regard to Chair tenure, as previously announced, I will be stepping down from the Board on 1 March 2021, having served as Chair since June 2009, and Paul Walker will become Chair at that time. At the Board's request, I agreed to remain in the role for the whole of 2020, in order to ensure continuity of RELX Board and governance leadership at a time of significant business uncertainty due to the Covid-19 pandemic. In addition, travel and face-to-face meeting restrictions put in place in the UK as a result of the pandemic resulted in the succession process taking longer to implement than was originally anticipated.
Board changes and effectiveness
Following Adrian Hennah's departure in April, June Felix joined the Board as a Non-Executive Director in October, and has since become a member of our Audit and Corporate Governance Committees. She brings considerable relevant strategic and operational experience acquired from her current and previous executive roles, including a deep understanding of the financial services sector, technology and healthcare. She also brings strong international experience. Suzanne Wood was appointed as Chair of the Audit Committee, having served for nearly three years as a member.
As Chair, I am responsible for ensuring that the effectiveness of the Board, its Committees and each individual Director is evaluated annually. For 2020, the process was facilitated by an independent external evaluator, Lorna Parker. The outcome of the evaluation confirmed that the Board and Committees continue to operate effectively, and that all of our Directors continue to demonstrate commitment to their role. Further detail on the Board evaluation outcomes can be found on page 86.
Sir Anthony Habgood
Chair
10 February 2021
RELX Annual report and financial statements 2020
Corporate Governance Review
Overview
The shares of RELX PLC are traded through its primary listing on the London Stock Exchange and its secondary listing on Euronext Amsterdam, whilst its securities are also traded on the New York Stock Exchange under its American Depositary Share programme.
Corporate governance compliance statements
The 2018 UK Corporate Governance Code (the Code) applied to RELX PLC (the Company) during the year.
The Company has complied with the provisions of the Code throughout the year ended 31 December 2020, with the exception of provision 19 (length of tenure of the Chair) and provision 38 (alignment of executive director pension contribution rates with those available to the workforce). As previously announced, Sir Anthony Habgood will be stepping down from the Board on 1 March 2021 and Paul Walker will become Chair as of that date. For an explanation regarding the tenure of our Chair, please see page 70.
The value of pension benefits for current Executive Directors has decreased over the last several years, and continues to decrease. They will transition from their current arrangements to the level of pension benefits provided under the Company's regular defined contribution plans (currently capped at 11% in the UK) by the end of next year (2022), in line with the recommendations of the Investment Association. Notwithstanding provision 38 of the Code, the Board viewed it as appropriate that there be a phased transition of existing pension benefits for Executive Directors . The current Remuneration Policy, which was approved by shareholders at the 2020 Annual General Meeting (AGM) and applies for three years from the date of approval, includes a pension policy for any newly appointed Executive Directors which is aligned to the general workforce. The pension benefits received by the Executive Directors in 2020 were in line with the terms of the Directors' Remuneration Policy.
A description of how the Company has applied the main principles of the Code is set out on pages 71 to 117.
A copy of the Code can be found on the FRC website atwww.frc.org.uk
The Company and its Directors are required by the Code and UK Companies Act 2006 (the Act) to make certain statements and provide confirmations in relation to provisions contained within them. The locations of those statements are as follows:
§ Pages 5, 14 to 37, 60 to 64, and 71 to 73 for a description of how opportunities and risks to the future success of the business have been considered and addressed, the sustainability of RELX's business model and how its governance contributes towards the delivery of its strategy
§ Page 74 to 75 for an explanation of the Board's activities in assessing and monitoring RELX's culture
§ Page 47 to 48 for an explanation of RELX's approach to investing in and rewarding its workforce
§ Page 39 for RELX's Section 172 Statement and pages 75 to 82
for a description of the Board's principal decisions during the year and how the interests of RELX's key stakeholders and the matters set out in Section 172 of the Act were considered in Board discussions and decision-making
§ Page 60 to 64 for confirmation that the Directors have carried out a robust assessment of the emerging and principal risks facing RELX, including a description of its principal risks, what procedures are in place to identify emerging risks, and an explanation of how these are being managed or mitigated
§ Page 88 for confirmation that the Annual Report and Accounts is fair, balanced and understandable and provides the information necessary for shareholders to assess RELX's position and performance, business model and strategy
§ Page 89 for an explanation of how the Directors have assessed the prospects of RELX, taking into account its current position and its emerging and principal risks
§
Page 88 for the statement on the status of RELX as a going concern
Application of UK Corporate Governance Code Principles
Our governance framework
RELX has in place a corporate governance framework of processes, leadership bodies and supporting documentation to ensure that it is appropriately led, directed and controlled. It brings clarity to those who work for RELX, both in respect of what they are expected to deliver through the setting of strategic and financial objectives, and the values, standards and principles that they must act in accordance with in the course of delivering those objectives. It is also designed to safeguard and enhance long-term shareholder value, and to provide a foundation on which RELX can meet its strategic priorities. Our internal control and risk management arrangements, described on pages 86 to 87, are a central part of our governance framework.
The framework also helps our organisation to run efficiently by giving clear instructions on decision-making processes and authorities, allowing effective use of our resources whilst facilitating appropriate levels of oversight and involvement for the Board and its Committees. It exists to support our businesses as they grow and develop, and to ensure that decisions made by them are consistent with RELX's risk appetite, as set by the Board and implemented by senior management. It therefore reflects a number of considerations. These include the appropriate implementation of systems and processes which define the rights, responsibilities and accountabilities of individuals throughout RELX, compliance with statutory and regulatory requirements that apply to RELX, the protection of our reputation and meeting our own expectations to act with integrity in all we do. It also seeks to allow our four business area organisations to operate with the speed, agility and flexibility required to address the needs of their customers in a timely and responsive manner.
Our purpose, strategy, values and culture
Purpose
RELX is a global provider of information-based analytics and decision tools for professional and business customers. Our primary corporate purpose is to add value for our professional and business customers, enabling them to make better decisions, get better results and be more productive. Specifically, we are focused on helping our customers further science and health, prevent fraud, promote the rule of law and justice and bring together business communities to learn about markets, source products and complete transactions. In pursuing this purpose, we are mindful of a wide range of stakeholders, including, but not limited to, employees, customers, suppliers and business partners, and the communities in which we operate, as well as providing a return for shareholders that permits us to attract capital and further invest in the future.
Strategy
Our number one strategic priority is the organic development of increasingly sophisticated information-based analytics and decision tools that deliver enhanced value to professional business customers across the industries that we serve. We aim to achieve leading positions in long-term global growth markets and leverage our skills, assets and resources across RELX, both to build solutions for our customers and to pursue cost-efficiencies. We are systematically migrating all of our information solutions across RELX towards higher value-add decision tools, adding broader data sets, 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 business.
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. Apart from the impact of the Covid-19 pandemic, this strategy has led to more predictable revenues through a better asset mix and geographic balance; a higher growth profile as we expand in higher growth segments, exit from structurally challenged businesses, and gradually reduce the drag from print format declines; and improved returns by focusing on organic development with strong cash generation.
Values
We operate in an open, honest and principled way as outlined in our Code of Ethics and Business Conduct and require our suppliers to meet the same standards. We believe in doing the 'RIGHT' thing: Respecting each other, Incorporating ethics into all our actions, Growing our business with integrity, Holding ourselves and each other accountable, and taking the Time to ask questions and report concerns.
Culture
As an information-based analytics and decision tool provider, our corporate culture is fact based, data-driven and analytical. We are transparent and non-political in our decision-making. We prioritise corporate responsibility and value acting with integrity, benefiting from inclusiveness and diversity and being passionate about remaining focused on customer outcomes. Our culture encourages community engagement and environmental responsibility.
Board leadership
The RELX PLC Board is grateful to Sir Anthony Habgood, who will be stepping down from the Board on 1 March 2021, after over 11 years as Chair of the Board. The Board thanks him for the valuable leadership he has provided during a period which has seen significant shareholder value creation, growth and development for the organisation and recognition of RELX as a leader in Environmental, Social and Governance activities. He leaves RELX with the Board's very best wishes for the future.
The Board is responsible for promoting the long-term sustainable success of RELX, whilst seeking to add value for our key stakeholders. It has oversight of RELX's financial performance, its systems of risk management, internal control and corporate governance. It discharges its responsibilities through a programme of meetings, at which strategy-related issues are regularly discussed. The Board's strategy discussions are supported by a dedicated annual strategy review process, which holistically assesses RELX's strategic position and its key strategic options. The Board's annual agendas ensure that there is sufficient time to discuss and develop strategic proposals. The Board also routinely discusses potential opportunities for growth, informed by its review of RELX's products and markets, as well as through presentations it frequently receives from senior management leaders and RELX product specialists, during deep dives into individual business units or other areas which are regarded as being of strategic importance.
There is a clearly defined schedule of matters reserved for the Board's decision-making, through which it has sole authority to approve RELX's strategy and annual budget, ensuring that necessary resources are in place for RELX to meet its objectives. It also sets supporting financial and non-financial targets, approves RELX's purpose and values and satisfies itself that our culture is aligned with these. Also reserved for the Board's decision-making are other matters which are deemed material to either the delivery of strategy, or RELX's future financial performance. These include the approval of material acquisitions, major capital expenditure and investment, RELX's financial statements and its dividend policy.
The Board periodically reviews and approves RELX's Operating and Governance Principles document, which clearly stipulates the relationship between risk, internal policies and control procedures as they apply across RELX and serves as a first reference point for management. Our control procedures follow the three lines of defence model as set out on page 87.
Our Committees support the Board in delivering RELX's strategy. The work of the Remuneration Committee ensures that our executive and senior management teams are appropriately incentivised to deliver RELX's strategic objectives, and also that we can retain our best talent to deliver these. Our Nominations Committee regularly reviews the composition of the Board and the Committees, ensuring that they have the right balance of skills to set an effective strategy, and provide appropriate levels of constructive challenge and oversight of management in implementing its delivery. It also oversees that there is a healthy and diverse pipeline of talent in place for those positions deemed critical to the delivery of RELX's strategic objectives.
The Audit Committee, through reports from management, internal audit and the external auditor, provides independent assurance that business processes which underpin the delivery of our strategy operate as intended, are fit for purpose, and generate reliable management information. This ensures that decisions made by the Board in respect of strategy are taken on the basis of correct information and assumptions. The Audit Committee also reviews the process by which risks to the delivery of strategy are continuously monitored, assessed and mitigated.
The Board also has a major role in setting RELX's values through its approval of our Code of Ethics and Business Conduct, and ensuring that these support and are aligned with delivery of the approved strategy. It considers the Company's key stakeholders in its decision-making, as set out on pages 78 to 82, and ensures that RELX's workforce policies and practices support its long-term sustainable success.
Board induction and development
The Chair and Company Secretary are responsible for ensuring that an effective induction programme takes place for all new Directors. Following appointment and as required, all Directors receive a full, formal and tailored induction, which is designed to meet individual requirements based on knowledge and experience. During the year, Charlotte Hogg (appointed in December 2019) and June Felix (appointed in October 2020) took part in induction programmes. They were provided with a comprehensive briefing pack which covered a broad range of topics, and included information on RELX's businesses, as well as historical board papers and minutes. Both Ms Hogg and Ms Felix met with a number of senior managers from key corporate functions and each of RELX's business areas, to assist in developing an in-depth understanding of our operations.
The induction processes were adapted to reflect the restrictions in place throughout the year as a result of Covid-19. This involved excluding visits to the offices of RELX's main business areas, which would otherwise have taken place as part of the programme.
It is important for the Directors to regularly refresh and update their skills and knowledge to help them discharge their responsibilities effectively. The Board's annual programme contains activities designed to provide the Directors with opportunities to keep up to date with developments in key business areas, including several deep dive business reviews and onsite visits to our main office locations, when possible.
Directors' external commitments
Each Director's external commitments are monitored on an ongoing basis to ensure that they have sufficient time to devote to their role at RELX. Following a review by the Nominations Committee, the Board has noted the changes in external appointments of each Director during the year and does not perceive these to have any impact on their independence or responsibilities to the Company.
When receiving recommendations from the Nominations Committee for the appointment of any new Non-Executive Director, the Board always takes into account other demands on a potential Director's time. The Non-Executive Director letter of appointment sets out the expected time commitment required by the Company from Non-Executive Directors.
Directors' conflicts of interest
The Company's Articles of Association allow the Board to review and authorise situations where a Director has an interest that conflicts, or may possibly conflict, with those of RELX, and further to impose any conditions on that authorisation. The Board has in place formal procedures to appropriately manage any actual or potential conflicts of interest identified.
Board Committees
The governance framework also enables the Board to delegate a number of other responsibilities to its principal Committees, allowing it time to focus on key matters. The responsibilities are set out within the Terms of Reference for each Committee, which can be found on our website atwww.relx.com.
The membership and activities of the Committees are described on pages 83, and 90 to 117.
Delegated authorities
There are additionally a number of approved delegated authorities in place from the Board to the Chief Executive Officer and other Senior Executives which relate principally to the day-to-day management of the business. The Senior Executive team supports the Chief Executive Officer in the performance of his duties. Further delegated authorities and rules are applicable to each business area.
Board Committees
The structure of the Board's main Committees and a summary of their key responsibilities are set out below. All of the Committees have written Terms of Reference, which are available on our website,www.relx.com.
Board Committees are principally supported by the Chief Executive Officer, Chief Financial Officer, Chief Legal Officer and Company Secretary, and the Chief Human Resources Officer, although senior managers within the Group are invited to attend meetings where appropriate. The Board's annual programme and the agendas for the Committees are prepared by their respective Chairs with support from the Company Secretary.
Audit Committee Responsible for the oversight of financial reporting, risk management and internal control policies, and the effectiveness of the internal and external audit processes. The Committee comprises only independent Non-Executive Directors. Report of the Audit Committee page 115 | Remuneration Committee Responsible for approving the Remuneration Policy for, and setting the remuneration of, the Group's Executive Directors, the Chair, and Senior Executives below Board level. The Committee comprises only Non-Executive Directors. Directors' Remuneration Report page 93 | Nominations Committee Responsible for keeping under review the composition of the Board and its Committees; the recruitment of new Directors; ensuring orderly succession plans for both the Board and senior management; and overseeing the Board evaluation, and reporting on inclusion and diversity. The Committee comprises only Non-Executive Directors. Report of the Nominations Committee page 90 | Corporate Governance Committee Responsible for developing and recommending corporate governance principles to the Board; reviewing ongoing developments and best practice in corporate governance, and monitoring the structure and operation of the Board Committees. The Committee comprises only Non-Executive Directors. |
Culture and workforce policies
Our culture
Following its review of RELX's culture, the Board was able to satisfy itself that this supported and was aligned with our purpose, strategy and values. A summary of each can be found on page 72. As part of its assessment process, the Board reviewed the results of employee surveys completed across the Company's business areas during the year. The results of the surveys provided an employee assessment and perspective on RELX's culture, its approach to inclusion and diversity and provided feedback on RELX's response to the challenges faced by employees in the course of their work as a result of Covid-19.
The Board was provided with employee Net Promoter Scores from additional surveys completed by our four business areas, which it discussed with the executive management of those areas. Following its review, the Board noted and acknowledged that whilst RELX standards and values are defined on a group-wide basis, culture across its business areas and geographies will, of course, vary to some degree.
Our Code of Ethics and Business Conduct provides clear direction towards achieving a positive culture across RELX and reminds ouremployees of the policies, procedures, values and behaviours that shape our culture and the way we conduct our business. It is kept under review by the Board, and approved by it on a triennial basis. The Board is periodically updated by RELX's Chief Compliance Officer on breaches of our Code of Ethics and Business Conduct. It receives reports on the volume, type and circumstances surrounding substantiated violations, actions taken and lessons learnt.
The Board, through the work of the Audit Committee, also received updates on the compliance programmes designed to ensure that our workforce understands and acts in accordance with RELX's defined values and standards, and on related employee training participation in areas which support RELX's culture of integrity, our Do The Right Thing programme and dedicated Compliance Week, and our systems which allow our workforce to raise concerns confidentially or anonymously.
The Head of Internal Audit and Risk Management regularly presents to the Audit Committee on the results of internal audits across our business areas, providing the Board with an insight into culture both across the Group, and within individual business areas.
The Board also received a presentation from the Chief Human Resources Officer, which highlighted the role of the Code of Ethics and Business Conduct in contributing to RELX's culture, and summarised the metrics that assist the Board in assessing RELX's culture, including voluntary and involuntary employee turnover, levels of employee engagement, and demographics by age, gender, tenure and ethnicity (where data is available, representing 60% of our employees). It also received detailed feedback from RELX's Workforce Engagement Director on employee views and perspectives regarding how RELX operates, including its activities and culture. Further details on the Workforce Engagement programme and its outcomes can be found on page 79.
Workforce policies and practices
During the year, the Board reviewed RELX's policies, practices, objectives and activities related to recruitment, training and development, promotion and performance management in order to ensure that these supported, encouraged and incentivised our workforce to adhere to and operate in accordance with RELX's values.
The Board also continued to place a significant focus on RELX's approach to inclusion and diversity, and received a detailed update from the Chief Human Resources Officer on RELX's agenda in this area. The Board approved the RELX Inclusion and Diversity Policy early in the year, which highlights the importance of inclusion and diversity to RELX's future. The Board understands that RELX needs the contributions of people from a wide range of backgrounds, with different experiences and ideas to achieve real innovation for our customers around the world. The Board also reviewed RELX's diversity-related activities, and 2021 objectives within areas such as inclusion and diversity, governance, inclusive leadership training, disability inclusion, pay equity and gender balance.
An explanation of the Company's approach to investing in and rewarding its workforce can be found within the Corporate Responsibility Report on page 47 to 48.
Board decision-making
The Directors of RELX PLC - and those of all UK companies - must act in accordance with their duties under the Act. These include a fundamental duty to promote the success of the Company for the benefit of its members as a whole.
The information which follows on pages 75 to 82 describes how, in performing their duties during the year, the Directors have had regard to the matters set out in Section 172(1) (a) to (f) of the Act. This section is incorporated by reference into the RELX 2020 Section 172 Statement on page 39 of the Strategic Report.
Long-term decision-making (s.172)
The Board delegates day-to-day management and decision-making to its senior management team, but it maintains oversight of the Company's performance, and reserves to itself specific matters for approval, including significant new business initiatives, and major acquisitions and disposals. Through regular updates on business objectives, initiatives and progress, the Board monitors that management is acting in accordance with agreed strategy. There are processes in place to ensure that the Board receives all relevant information at the right time, and the annual programme is designed to assist in enhancing the Board's understanding of RELX's business. As a result of the economic uncertainty created by Covid-19, there has been a significant Board focus on safeguarding RELX's long-term viability, and to ensure that it identifies and mitigates against principal and emerging risks arising from the pandemic which could prevent the successful execution of our strategy.
In 2020, the Board:
§ received frequent presentations on RELX's businesses from the business area CEOs, which included review and discussion concerning actual performance through the year and estimated full-year outturns incorporating a range of assumptions concerning the possible short-, medium- and long-term impact of Covid-19 on business conditions and the wider global economy
§ through ongoing discussion with the business leaders and the Chief Strategy Officer, determined strategic priorities for a three-year period, and the development of robust supporting operating plans. A two-day Strategy Review was held in September 2020 to debate and determine a three-year strategy plan for 2021-2023
§ considered RELX's principal and emerging risks, with a particular focus given to how these changed or had their risk profile impacted by Covid-19. As a result, the specific risks associated with face-to-face events were recognised as a separate principal risk, as shown on page 62. Separate to the impact of Covid-19, the customer demand for our products and market disruption risks were merged into a single risk, reflecting their close existing interrelationship
§ given the importance to our business of holding and protecting information and data, reviewed RELX's systems and processes in place to mitigate against data protection and cyber security risk. The Board and the Audit Committee received presentations from the Group Head of Information Assurance and Data Protection, including on how risk in this area was being impacted by Covid-19 (such as, for example, by the Group's employees, customers and suppliers working from home)
§ conducted comprehensive reviews of the Group's invested capital and capital structure. This embraced financial performance, our acquisitions history and prospects, net debt, target returns, credit ratings and forecasts, and financial market conditions. As a result, the Board took measures to adjust existing treasury policies and constitutional borrowing limits, to reflect the current size and scale of RELX's operations, the strengthening of the euro and the dollar against sterling in recent years, and the need for RELX to ensure that it had ample liquidity and access to debt capital markets moving forward as a result of the economic uncertainty caused by Covid-19. As a result, the Board approved an increase in the Group's limit for the amount of term debt maturing in any 12-month period from $1.5bn to $2.0bn, and as approved by shareholders at the Company's General Meeting in May 2020, a borrowing limit specified in RELX PLC's Articles of Association was increased from £8bn to £12bn
§
carefully considered a range of scenarios in assessing the impact of the Covid-19 pandemic on business performance, and following a review of financial sensitivity reverse stress-testing, budgets and capital allocation forecasts, considered RELX's Going Concern Statement (as set out on page 88) and Viability Statement (as set out on page 89). The Board took action to ensure that appropriate and cost-effective financial instruments were in place to meet the long-term funding requirements of the Group, as well as to maintain substantial financial covenant headroom across a range of scenarios covering the short- and medium-term impact of Covid-19. The Board approved the issuance of €2bn of fixed rate term debt in March 2020 and $750m of fixed rate term debt in May 2020. Consideration of variable market conditions and uncertainty related to Covid-19, forecasted future business performance, projected investor subscription demand and the Group's levels of net debt were all factors considered as part of the Board's decision-making relating to the amount, timing, form and issuing currency for these debt issuances
§ considered and approved acquisition and disposal proposals. In doing so, the Board carefully examined the strategic rationale of proposals and the value forecasted to be added to RELX by them over a defined future period. It also conducted an annual acquisition review process in which historical acquisitions are reviewed including their financial performance and strategic value
§ considered Board succession planning and the resultant impact on Committee memberships. Through reports from the Nominations Committee, the Board monitored the search process for two Board positions during the year, and approved the appointment of Paul Walker and June Felix as Chair and Non-Executive Director, respectively
§ through the work of the Remuneration Committee reviewed remuneration for the Executive Directors and business leaders, to ensure that both short- and longer term incentives are aligned with Company and stakeholder interests, and Company values and culture. The Board also received updates on internal talent reviews, career progression plans and management succession plans, which contribute towards building leadership capabilities and solid succession pipelines
§ reviewed our group-wide Inclusion and Diversity Policy, and monitored its implementation. Through the work of the Workforce Engagement Director, the Board also received updates on workforce engagement activities globally, which aim to further develop a motivated and aligned workforce. For more details, please see page 92
§ made the decision to suspend the Group's share buyback programme, following the completion of £150m of buybacks by late April 2020. This decision was taken in light of the uncertain business environment created by Covid-19, and was reviewed by the Board throughout the year
Reputation for high standards of business conduct (s.172)
The Board is responsible for developing a corporate culture across RELX which promotes integrity and transparency, and encourages the behaviours we expect from our people. It has established comprehensive systems of corporate governance, and approves policies and procedures which promote corporate responsibility and ethical behaviour.
In 2020, the Board:
§ received and endorsed a comprehensive report from the Group Head of Corporate Responsibility outlining activities throughout RELX, designed to progress our unique contributions to society, strengthen governance and compliance, advance customer relationships, ensure an ethical supply chain and reach environmental targets.
The Board approved RELX's annual Corporate Responsibility Report, and directed that continuing focus be given by management to RELX's environmental, social and governance objectives and activities, and ongoing developments around the Task Force on Climate-related Financial Disclosures
§ approved the Company's Modern Slavery Act Statement describing the steps it had taken to ensure that slavery and human trafficking were not taking place in the context of business carried out in 2020
§ approved, as part of the 2020 Annual Report and Accounts process, statements describing how the Company had applied the principles of the Code during the year
§ considered and approved our RELX Tax Principles that support our culture of acting with integrity in all that we do
§ approved, as appropriate, actual and potential Director's conflicts of interest
§ received a presentation from the Chief Compliance Officer on the process in place through which RELX employees can confidentially (and anonymously should they so choose) submit concerns to the Company. These include, but are not limited to, breaches of the Code of Ethics and Business Conduct
Acting fairly as between members of the Company (s.172)
The Board aims to understand the views of its shareholders and always to act in their best interests.
In 2020, the Board:
§ approved a range of activities designed to enhance value for all shareholders. Notwithstanding the impact of Covid-19, after considering various scenarios and factors, including trading conditions, balance sheet strength, short- and medium-term liquidity, cash flow requirements and feedback from investors on dividend expectations, the Board declared an unchanged interim dividend of 13.6p per share, and an increased final dividend for 2020 of 33.4p per share
§ carefully considered and determined to hold the 2020 AGM as a closed meeting, to adhere to the guidance of the UK government and to protect the health and safety of shareholders and our employees. The meeting was held on 23 April 2020 with the minimum quorum of two attendees, with voting being conducted by proxy. Recognising the importance of the opportunity for shareholders to directly interact with Directors, a post-AGM audiocast was organised, in which the Chair, Sir Anthony Habgood, responded to questions submitted to the Company by shareholders in advance of the AGM
§ received regular investor relations updates and feedback from investors through direct engagements. For more details please see Investors section on page 78
Stakeholder engagement
During the year, the Board considered our key stakeholders as a specific agenda item, and concluded that our list of key stakeholders remains unchanged from 2019, as set out below. It also confirmed that it had adequate visibility of the views of key stakeholders and considered these in its decision-making. Further detail on the nature and results of RELX's engagement with its key stakeholders is included throughout our 2020 Corporate Responsibility Report.
Stakeholder: Investors
Why effective engagement is important:
Engagement with our investors helps them to understand our strategy, performance and governance arrangements, and to make informed and effective investment decisions concerning RELX. It also makes clear our prioritisation of the long-term in our decision-making and focus on delivery of consistent financial performance. Our investors provide us with input and feedback concerning the development and implementation of our strategy, and we consider their views when making investment decisions.
Principal forms of engagement with our investors in 2020, the outcomes of this engagement, how this is fed back to the Board, and how it impacted Board decision-making in 2020:
Engagement with our investors is undertaken by the Chair, the Senior Independent Director, Chief Executive Officer, Chief Financial Officer, Head of Investor Relations and the Director of Corporate Responsibility, as well as through our dedicated Investor Relations, Corporate Responsibility and Treasury teams. The Board receives regular updates on these interactions, which include key issues raised by investors, and discussions and outcomes from the completion of investor roadshows and ad hoc meetings with institutional shareholders on significant issues and our recent and proposed activities. The Board also receives an update on investor relations as a standing item at its meetings which includes: the Group's share price performance, its total shareholder return performance and a review of analyst comments made in response to our scheduled results releases. RELX's material communications to its investors, such as its trading results and updates, other regulatory announcements, our Annual Report and Accounts and Notice of AGM must be reviewed and approved by the Board under our corporate governance framework. As an alternative to direct interactions at the AGM, the Board encouraged shareholders to submit questions prior to it taking place. A number of questions were received and answered during the Chair's audiocast on the day of the meeting.
Our engagement processes confirmed that RELX's strategic and financial priorities are well understood by investors. They generally appreciate the consistency of RELX's strategy, and our focus on the organic development of information-based analytics and decision tools that deliver enhanced value to our professional and business customers. The Board considered this when approving the RELX three-year strategy plan for 2021-2023, which leaves our strategic focus (as set out on page 72), and our priority use of cash generated by the Group, broadly unchanged. The Board also reviewed investor views on strategy when approving investment decisions, including those relating to new or emerging technologies, or acquisitions which were completed in 2020. Our investors' focus has been on the impact of Covid-19 in four key areas: the resilience of our business model and any long-term impact of Covid-19; the in-year and future performance of our businesses; ensuring that RELX has sufficient liquidity and balance sheet strength to be viable over the long-term; and shareholder returns through our interim and final dividends, and our share buyback programme. Our investors vary substantially in their reasons for investing in RELX and in their appetite for risk. The Board considered these differing interests in its decision-making during the year.
The Group's response to investor interest regarding the performance of our businesses was considered and addressed by the Board in its approval of our full-year and interim results announcements, and quarterly updates to the market. These highlighted the resilience of our Scientific, Technical & Medical (STM), Risk and Legal businesses, which held up well in the face of the pandemic, with good growth in electronic revenues, whilst acknowledging the significant current and future disruption faced by our Exhibitions business as a result of Covid-19 and associated restrictions put in place at a local level. In respect of our shareholder returns, the Board considered a range of investor and analyst views, balancing the impact of returns against stakeholder interests in other key RELX financial metrics. As a result of its deliberations, the Board declared an 2020 interim dividend of 13.6p per share (unchanged from the 2019 interim dividend rate), a final dividend of 33.4p per share, and suspended the Group's share buyback programme, having completed £150m of the £400m initially approved at the beginning of 2020.
Similarly, in making the decision to issue debt securities in the first half of the year, the Board considered investor views and risk appetite relating to the Group's viability, security of funding, liquidity and balance sheet strength. As a result, all of the Group's debt security issuances were issued or put in place in the first half of 2020, giving the Group ample liquidity and balance sheet strength, and providing further comfort to the Directors when approving the Group's 2020 Going Concern and Viability Statements.
The Board has also considered the views of the wider investment community when approving areas of focus for RELX's environmental, social and governance activities, including actions that RELX can take to mitigate against the impact of climate change. It also considered RELX's approach to compliance with the requirements of the Task Force on Climate-Related Financial Disclosures as a standalone agenda item for the first time in 2020.
Stakeholder: Employees
Why effective engagement is important:
Our people are essential to our future growth, and our aim to successfully build long-term leading positions in global growth markets. We continue to invest substantial time and effort to employ and retain employees who are passionate about our markets and have up-to-date knowledge and world-class expertise in our key functional areas. An inability to recruit, motivate and retain skilled employees and management could adversely affect our business performance, as we compete globally and across business sectors for talented management and skilled individuals, particularly those with technology and data analytics capabilities. Talent is set out as a RELX principal risk on page 63. Our mitigation of this risk is partly achieved through actively seeking feedback from employees, understanding their key challenges and concerns, and where we can, working with them to address these.
Principal forms of engagement with our employees in 2020, the outcomes of this engagement, how this is fed back to the Board, and how it impacted Board decision-making in 2020:
Engagement with employees at all levels takes place as a result of the management structure embedded throughout RELX, with employee feedback then cascaded up through management levels, and significant issues relayed to the Board by the Executive Directors and the RELX business area CEOs.
Engagement also takes place with our workforce on behalf of the Board and the Company through our Workforce Engagement Director, Chief Human Resources Officer (CHRO) and Senior HR Leadership Team. The Workforce Engagement Director and the CHRO provided three scheduled updates to the Board on engagement processes, findings and outcomes. Marike van Lier Lels was appointed as the Workforce Engagement Director in January 2019, due to her previous experience in this area as a director responsible for employee representation in the Netherlands, and her balance of independence and knowledge of the Group, having joined the Board as a Non-Executive Director of RELX PLC in 2015. She continued in the role in 2020, supported by the CHRO. She met with European, US and Asia-Pacific workforce representatives and employee panels, as well as the RELX HR Leadership Team including Business HR Leaders, Heads of Talent and Heads of Recruitment, who updated her on various employee engagement initiatives and other workforce-related activities. Engagement activities with the workforce were initially scheduled to be face-to-face, but as a result of the pandemic, these were changed to virtual meetings. In order to facilitate some of these meetings, recognising the additional challenges of engaging virtually, online questionnaires were sent to employees in advance (including questions concerning support received during the pandemic, flexible working, career development, and inclusion and diversity), with aggregated anonymised responses shared with the Workforce Engagement Director and the relevant employee group to generate points for discussion and ensure the views of all participants could be heard. The changes to the Executive Directors' remuneration policy were also discussed during these engagements and positively received.
Feedback is used as part of Board and management decision-making. The impact of the pandemic was the main topic raised by employees in 2020. Feedback on how RELX had dealt with the pandemic, with specific regard to employees, was strongly positive. Although the vast majority of employees were able to work from home, this was challenging for a number of them. This finding was also highlighted in surveys conducted during the year. In response, RELX continued to make significant additional online support resources available, covering areas such as stress management, mental well-being, business continuity, remote working guidance, and physical fitness. Feedback from employees on working from home and flexible working more generally is being taken into account in policies that are being developed, and will be reviewed by the Board in 2021. Responding to the increasing desire for employees to have greater opportunities to work across RELX, a cross-RELX career framework is currently being developed and process designed to improve the visibility of internal opportunities globally. In response to employee feedback regarding initiatives that create an inclusive and diverse workplace, recruitment practices and processes have been implemented which encourage and recognise the involvement of Employee Resource Groups in referring candidates from their networks. This will assist in increasing the diversity of our candidate pipelines.
Each of RELX's principal business areas conducted regular pulse surveys during the year. Business area leaders presented the results of these surveys, along with further detail on employee engagement levels, Net Promoter Scores and on how they were supporting employees during the pandemic (including facilitating the switch to working remotely). Employee surveys conducted across all business areas indicated that a very high level of respondents felt that they could use initiative and judgement when carrying out their work, are passionate about work, feel supported towards fulfilling their personal or family responsibilities, feel included in their team and consider that their daily work contributes significantly to RELX's purpose. The surveys also showed improvement in Net Promoter Scores, satisfaction, commitment, motivation and advocacy. The Board reviewed an update on workforce policies and practices, summarising information on employee demographics by location, gender, tenure, age, ethnicity where data is available (representing 60% of our employees), turnover, inclusion and diversity activities in 2020 and goals for 2021, recruitment activities in 2020 and goals for 2021, talent development activities, and remuneration. As a regular item on its agendas, the Board received group-wide communications to employees, and an update from the Chief Compliance Officer on reports submitted by employees, in confidence, on potential breaches of RELX-approved policies or procedures.
Stakeholder: Customers
Why effective engagement is important:
Our goal is to help customers make better decisions, get better results and be more productive. We can only do this by leveraging a deep understanding of their needs and views to create innovative solutions, which combine content and data with analytics and technology in global platforms. Collaborating closely with our customers allows us to understand where and how we can improve the quality of services and products which we provide them with, and ensures that we make accurate and targeted investment decisions (such as for developing new or emerging technologies or complementing our existing capabilities through acquisition activity). Customer acceptance of products is set out as a principal risk on page 62. Regular engagement with our customers has also remained extremely important at a time when many have been affected, to varying degrees, by Covid-19.
Principal forms of engagement with our customers in 2020, the outcomes of this engagement, how this is fed back to the Board, and how it impacted Board decision-making in 2020:
Our engagement with customers during the year took place mainly at an operational level within our business areas through face-to-face (where local law permitted this) and virtual meetings, customer training and workshops, ongoing dialogue through our dedicated sales and operations teams, customer relationship managers, and in respect of material customer issues, through our business area senior management teams. The Board received a number of online presentations during the year from customer-facing employees which detailed the nature of our customer engagement and the actions taken by the business areas as a result. In particular in 2020, the Board received regular reports from senior management on the impact of Covid-19 on key customers, including analysis by sector and geography, and their current and anticipated future demand for our products and services. The Board also received feedback concerning the resilience of the markets that we operate in over the short-term and, where relevant, the likelihood and rate of their recovery over the longer term. In addition, the Board reviewed customer survey data, Net Promoter Scores and customer usage volumes across our business areas.
There were few Board decisions made during the year which were not directly or indirectly linked to the future needs of our customers, or which resulted from their past and present demand for our products. Engagement with our customers confirmed that there is significant disparity in the extent to which they have been affected by Covid-19. The engagement feedback provided has assisted the Board in maintaining its understanding of customer and market trends, issues and likely future needs, and how these can be addressed. It was considered as part of Board strategy-related discussions during the year, and resulted in our strategic objectives remaining unchanged, as part of the Board's approval of the three-year strategy plan for 2021-2023. Feedback from our customers also helped the Board and management to assess at what pace and in which areas RELX should build out new products and services, and where it should look to expand into higher growth adjacencies and geographies over varying time horizons. Customer demand impacts our financial performance, and was also considered by the Board in setting appropriate financial targets for 2021, assessing the amount of investment required for RELX to be able to meet its customers' current and future needs, and for RELX to grow its customer base and market share across its business areas. It also helped management and the Board to recognise and identify areas requiring cost rationalisation.
Customer-related views, behaviours and profiles also assisted management and the Board in considering selected acquisitions of targeted data sets, analytics and assets in high-growth markets that support high-growth strategies, and which are natural additions to our existing businesses. As a result of these reviews, areas were identified in which potential acquisitions could supplement our customer offerings in certain sectors. Whilst a number of acquisitions and disposals were completed without requiring Board approval due to the level of consideration being paid or received for the target, the Board approved four significant acquisitions which completed in 2020. The first of these was SciBite, a provider of big data analytics for the pharmaceutical and healthcare industries, which will help our customers make faster, more effective research and development-based decisions through access to advanced text and data intelligence solutions. It also approved the acquisition of Shadow Health, a developer of virtual simulations in nursing and healthcare education, extending our extensive portfolio of digital health solutions available to our customers. The Board also approved acquisitions to complement our existing fraud prevention services within our Risk business. These included ID Analytics, a provider of credit and fraud risk solutions, and Emailage, a provider of email-based fraud prevention solutions.
Stakeholder: Suppliers
Why effective engagement is important:
RELX has a diverse supply chain with suppliers located in over 150 countries across multiple categories.
Our content suppliers are critically important to our business, as they provide scientific and medical content, legal information and risk-related data and analytics content which is used as part of our customer offering, mainly by our STM, Legal and Risk businesses. They include authors, editors, content reviewers and product designers. An inability to source sufficient volume or quality of products/services from these suppliers, including as a result of insufficient dialogue or collaboration with them, may impact customer acceptance of products (which is set out as a RELX principal strategic risk on page 62).
Our non-content suppliers represent more typical vendor-type relationships, such as IT software and cloud service providers, or third parties to whom we have outsourced support function activities. Poor performance, failure or breach of their contractual obligations by them could impact our ability to provide services to our customers, or result in other issues adversely impacting our business performance, reputation and financial condition.
Collaboration and two-way dialogue with our suppliers helps ensure that we are able to maintain and improve the quality of products and services we provide to our customers. Effective engagement also underpins our ability to maintain an ethical supply chain, giving us visibility of our suppliers' commitment to good practices, transparency and openness.
Supply chain dependencies and ethics are set out as RELX principal risks on pages 63 and 64. Through engagement it is important that we can make clear the needs and expectations of our customers, listen to and understand the suggestions and concerns of our suppliers, collaborate with them, and help them to achieve standards and behaviours that will build confidence and trust with RELX and its customers.
Principal forms of engagement with our suppliers in 2020, the outcomes of this engagement, how this is fed back to the Board, and how it impacted Board decision-making in 2020:
Engagement with our content suppliers takes place principally through the relevant business area to which the content is provided. Content supplier feedback is collected through direct relationships and regular business reviews, including from authors and editors, and Net Promoter Scores. This feedback was presented to the Board as part of updates by our business area leaders, who have responsibility for these relationships and the contribution that they make towards implementing our strategy, and also our Chief Strategy Officer as part of a specific Board agenda item related to content suppliers. The Board incorporated feedback from our content suppliers when discussing and approving our three-year strategy plan, as well as considering and assessing investment decisions, and mitigations in place for our principal risks of customer acceptance of products and supply chain dependencies.
In order to help our suppliers maintain an ethical supply chain, we engage with them through our Socially Responsible Supplier (SRS) programme, which encompasses all of our businesses and is supported by colleagues with expertise in operations and procurement, and a dedicated SRS Director from our Global Procurement Function. Our Supplier Code of Conduct is made available to each supplier and translated into 16 languages for use on a global basis. As a result of continuing engagement, 99% of our core suppliers are now signatories to our Supplier Code of Conduct. A specialist supply chain auditor helps provide independent assurance to both RELX and its suppliers that the standards and values which we have both agreed at the beginning of our contractual relationship, are being met. Where this is not the case, RELX assists our suppliers in developing remediation plans for implementation to help develop compliance in required areas. Our suppliers are then given the opportunity post-audit, through the completion of a survey, to provide feedback on whether they believed the audit was effective, fair and how, in their view, it could be improved. The high-level results of related audits were reviewed by the Board, showing that no 'zero tolerance' high-risk findings remained open for remediation as at the end of 2020.
Engagement with our suppliers also informed the Board's discussions relating to our ethics principal risk, and assessment of the processes in place to mitigate against this. Feedback from suppliers generally indicated that our supply chain audits assisted them in reviewing their existing practices, and ensuring that these were fit for purpose. The Board's review of the SRS programme helped it to understand and assess the adequacy of the controls in place to ensure an ethical supply chain and also informed its decision to approve the Group's 2020 Modern Slavery Act Statement.
During the year, we created and implemented a new programme to obtain feedback from our suppliers on dealing with RELX as their customer or commercial counter party. Over 80 respondents completed a survey on dealing with RELX, covering a wide range of areas such as payment timeliness, communication, technology infrastructure, feedback, collaboration, vision and innovation. RELX scored particularly well across areas such as payment timeliness, responsiveness, communication and collaboration, with room for improvement in areas such as project management and order effectiveness. The Board agreed that the programme be continued and expanded in 2021, with management committing to address areas where lower scores had been received. RELX has also engaged with its suppliers during the year as part of a programme focused on supplier resiliency.
Stakeholder: Community
Why effective engagement is important:
Our focus on community includes those where we, our customers and suppliers work around the world, as well as the communities we serve, including in science, academia, risk, law and many other fields. We prioritise positive dialogue with our community stakeholders; they collectively provide our 'licence to operate'. Our efforts are informed by our commitment to the United Nations Global Compact and its ten principles focused on human rights, labour, the environment and anti-corruption - all issues with wide societal impact.
Principal forms of engagement with the community in 2020, the outcomes of this engagement, how this is fed back to the Board, and how it impacted Board decision-making in 2020:
We contribute to our communities through our unique contributions to society (see pages 40 to 44), and through a comprehensive global community programme, RELX Cares. The RELX Cares mission is education for disadvantaged young people that aligns with our unique contributions including promoting science and health, protection of society, the rule of law and access to justice and fostering communities. RELX Cares promotes employee volunteering and each year staff have two days paid leave in order to undertake community work. A network of over 230 RELX Cares Champions across the Group ensures the vibrancy of this community engagement. In the wake of Covid-19, our people worked primarily from home, with limited opportunities for in-person, communal volunteer activities. In spite of this, responding to the pandemic was a key concentration and 26% of employees volunteered in the year, contributing 6,821 days in company time.
RELX Cares also features philanthropic giving. Given the challenge facing charities in an unprecedented year, we decided to suspend our usual funding application process. Instead, RELX Cares Champions allocated its budget to charities we funded in 2019 and 2018, allowing them to use the grants to aid their sustainability, including funds for both operational and project costs.
In accordance with the Business for Societal Impact model, we monitor the short- and long-term benefit of our community engagement. To increase transparency and awareness, we ask beneficiaries to report on their progress, sharing feedback on a RELX Cares section of our corporate internet. In addition, we survey RELX Cares volunteers to understand the impact of the programme on their personal development and how it affects the way they feel about working at RELX.
Another cornerstone of our community engagement is information provision. In 2020, this included making scientific articles, data and news, useful in the fight against coronavirus, freely available and aggregated on the RELX SDG Resource Centre. These included Elsevier's Novel Coronavirus Centre with the latest medical and scientific information on Covid-19; LexisNexis Risk Solutions' data set and interactive visualisations that provide insights on vulnerable populations and care capacity risks; and LexisNexis Legal and Professional's coronavirus global media and news tracker with interactive charts. RELX also contributed to the World Health Organization's Solidarity Response Fund and worked with Global Citizen to support the organisation's major televised and live-stream event, One World: Together At Home.
Elsevier is a founding partner and leading contributor to Research4Life, providing a quarter of the material available. In 2020, there were over 1.1m Research4Life downloads from ScienceDirect, benefitting researchers in low- and middle-income countries. In the year, the Elsevier Foundation worked to improve access to healthcare and science in vulnerable communities and the LexisNexis Rule of Law Foundation supported projects that advance access to justice. LexisNexis Risk Solutions advanced pilots using its tools to help qualified citizens gain access to credit in Mexico and Colombia.
Responsibility for updating the Board on community engagement sits with the Chief Executive Officer. He is supported in this activity by the Group Head of Corporate Responsibility who in 2020 provided comprehensive feedback on RELX Cares and other activities to the Board, including key metrics, objectives and outcomes. Board feedback and support for community engagement shapes the direction of the programme and future plans which include evaluating the impact of the pandemic on volunteering and new ways to promote distance volunteering.
Attendance at meetings of the Board and Board Committees
The table below shows the attendance of Directors at meetings of the Board and its Committees during the year. Attendance is expressed as the number of meetings attended out of the number eligible to be attended.
CorporateDirector
Committee appointments
Board (1)AuditRemunerationNominationsGovernance
Anthony Habgood (Chair)
R N C
8/8
Erik Engstrom
Nick Luff
- -
8/8
8/8
Wolfhart Hauser
R N C
8/8
Adrian Hennah (2)
A N C
3/3
Marike van Lier Lels (3)
A N C
8/8
- - - - 2/2 3/3
4/4
7/7
6/6
- - 4/4
- -
- -
7/7
6/6
Robert MacLeod
Linda Sanford
R N C R C
8/8
8/8
Andrew Sukawaty
A C
8/8
Suzanne Wood (4)
A C
8/8
- - 5/5 5/5
- - 4/4 4/4
2/2
2/2
7/7
6/6
7/7
6/6
-
6/6
Charlotte Hogg (5)
7/8
June Felix (6)
A C
2/2
- 1/1
- - - -
- 6/6
- 6/6
- 5/6
- 1/1
Board Committee membership key
A Audit
R Remuneration
N Nominations
C Corporate Governance
Committee Chair
(1) In addition to the seven scheduled meetings and one ad hoc meeting held on 7 April 2020, serving Directors also attended two full-day strategy and business review meetings.
(2) Mr Hennah stepped down as a member of the Board on 23 April 2020. Mr Hennah also stepped down as a member of the Audit, Nominations and Corporate Governance Committees at that time.
(3) Ms van Lier Lels was appointed as a member of the Audit Committee on 23 April 2020.
(4) Ms Wood was appointed as the Chair of the Audit Committee with effect from 23 April 2020.
(5) Ms Hogg was unable to attend the February Board and Committee meetings due to prior commitments already in place at the time she was appointed as a Director in December 2019.
(6) Ms Felix was appointed to the Board and as a member of the Corporate Governance Committee on 15 October 2020. Ms Felix was also appointed as a member of the Audit Committee with effect from 1 November 2020.
Division of responsibilities
Key roles of the Directors
Chair
§
Provides leadership of the Board, and is responsible for its overall effectiveness in directing the Company
§ Ensures that all Directors are sufficiently apprised of matters to make informed judgements, through the provision of accurate, timely and clear information
§ Promotes high standards of corporate governance, demonstrates objective judgement and promotes a Board culture of openness and debate
§ Sets the agenda and chairs meetings of the Board
§ Chairs the Nominations and Corporate Governance Committees
§ Facilitates constructive Board relations and the effective contribution of all of the Directors
§ Ensures effective dialogue with shareholders
§ Ensures the performance of the Board, its Committees and individual Directors is assessed annually
§ Ensures effective induction and development of Directors
Chief Executive Officer
§ Day-to-day management of the Group, within the delegated authority limits set by the Board
§ Develops the Group's strategy for consideration and approval by the Board
§ Ensures that the decisions of the Board are implemented
§ Informs and advises the Chair and Nominations Committee on executive succession planning
§ Leads communication with shareholders
§ Promotes and conducts the affairs of the Company with the highest standards of integrity, probity and corporate governance
Chair and Chief Executive Officer
Chief Financial Officer
§
Day-to-day management of the Group's financial affairs
§ Responsible for the Group's financial planning, reporting and analysis
§ 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 Board's annual assessment of the performance of the Chair
§ Available to meet with shareholders on matters where usual channels are deemed inappropriate
§ Deputises for the Chair, as necessary
§ Serves as a sounding board for the Chair and acts as an intermediary between the other Directors, when necessary
Non-Executive Directors
§ Bring an external perspective, and 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 the Group's strategy
§ Serve as members of Board Committees and chair the Audit and Remuneration Committees
There is a clear separation of the roles of the Chair, who leads the Board, and the Chief Executive Officer, who is responsible for the day-to-day management of the Group, which are set out in writing and included above. The table above also illustrates the key responsibilities of the other Directors. This division of responsibilities, in addition to the matters reserved for the Board, Terms of Reference for each Board Committee and delegated authorities in place from the Board to the Chief Executive Officer and other Senior Executives which relate to the day-to-day management of the business, ensures that there are appropriate controls in place to prevent any individual from having unfettered powers of decision.
Composition, succession and evaluation
Board appointment procedure
The Company has in place a rigorous procedure for the appointment of new Directors to the Board. This involves the preparation of a search specification by the Nominations Committee and the engagement of an external search firm to identify and propose candidates based on that specification. Any candidates will be interviewed by a number of Board members, including the Chair and the Chief Executive Officer, and additionally the Chief Legal Officer and Company Secretary. The candidates are considered in detail by the Nominations Committee, and a recommendation made to the Board regarding any Director appointment. The Board then has a further opportunity to discuss, and if deemed fit, approve the appointment.
The Board may appoint Directors (subject to a maximum upper limit) to fill a vacancy at any time, although any Director so appointed shall only hold office until the following AGM of the Company, at which his or her election shall be voted upon by shareholders. Directors are then required to seek re-election by shareholders at each AGM of the Company. The Notice of Meeting for the 2021 AGM will set out information on the Directors standing for election or re-election, including their biographies, skills and key contributions, as required by the Code.
As a general rule, letters of appointment for Non-Executive Directors provide that, subject to annual re-election by shareholders, individuals will serve for an initial period of three years, and are typically expected to be available to serve
Balance of our Board as at 31 December 2020
for a second three-year period. If invited to do so, they may also serve for a third period of three years. The notice period applicable to the Non-Executive Directors is one month.
Board composition
As at the date of this Annual Report, the Board was made up of the Chair, two Executive Directors and eight other Non-Executive Directors, who bring a wide range of skills, experience, industry expertise and professional knowledge to their roles. A summary of the diversity of the gender, length of tenure and nationality of the Board is shown below. The Nominations Committee considers these as important factors when reviewing the composition of the Board and its Committees, which it does on an ongoing basis. It has concluded that the current composition of the Board remains appropriate, and allows it to discharge its duties to the Company and govern the Group effectively.
Board and Committee changes in 2020
Having served on the Board for nine years, Adrian Hennah stepped down as a Non-Executive Director at the conclusion of the Company's AGM in April 2020. The Company has previously announced that Paul Walker will succeed Sir Anthony Habgood as RELX Chair with effect from 1 March 2021.
A Non-Executive Director was appointed during the year. June Felix joined the Board as a Non-Executive Director in October and currently serves on the Audit and Corporate Governance Committees.
Board Committee membership throughout 2020 is set out in the table on page 83.
Board skills and expertise
The Board collectively has a diverse range of skills, including in the following areas:
§ Corporate governance for listed companies
§ Corporate strategy and organisation
§ Operational experience in the Group's product markets
§ Executive board member and leadership experience in large international listed companies
§ Corporate responsibility, human resources management and executive remuneration
§
Financial expertiseFor further information on the skills of each individual Director, please see pages 8 to 10 of the Notice of Meeting for our 2021 AGM.
Board information and support
All Directors have complete and timely access to the information required to discharge their responsibilities fully and effectively.
They have access to the services of the Company Secretary, who is responsible for the accurate and timely flow of information to the Board, advising the Board on all corporate governance matters, and ensuring that all Board procedures are followed correctly. 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 Company's expense.
Each of the Directors is expected to attend all meetings of the Board and Committees of which they are a member. However, 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 Chair 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 Board, its Committees and members to be an important aspect of corporate governance. The Board undertakes an annual evaluation of its own effectiveness and performance, and that of its Committees and individual Directors. In 2020, the evaluation process was externally facilitated by Lorna Parker, an independent external consultant, supported by the Company Secretary. Ms Parker has no other connections with the Company, and was given full access to the Board and Committee papers for the relevant period.
The evaluation consisted of a questionnaire completed by all Directors, one-to-one interviews, and a presentation of the final report and facilitation of a discussion around key findings and action points at a subsequent Board meeting. Key areas explored include the Board's role in and review of: strategy development; risk management; stakeholder engagement (including the Board's understanding and visibility of the views of the Group's stakeholders and incorporation of them into its decision-making process); talent development; and setting and monitoring the Group's culture and values. The review also covered areas such as Board dynamics; Board composition, succession planning and engagement; and the overall effectiveness of the Board and its Committees.
Conclusions of the 2020 evaluation
The evaluation confirmed that, overall, the Board and each of its Committees continue to function effectively, and that an excellent Board dynamic between members underpins this effectiveness. There is relevant diversity of experience, expertise, thinking, gender and nationality amongst Board members. There was a high degree of comfort concerning the process by which Board decisions are made, with recommendations being supported by well-prepared papers, and final decisions taking account of questions and input from the Non-Executive Directors. Each Director believes that his/her views are considered, and that members of the Board value each other's contributions. The Board's meeting time is appropriately balanced between business issues and governance, and agendas for its meetings in 2020 had been tailored to respond to the challenges of Covid-19.
There continued to be alignment between Directors around the key areas of focus for the Board including: ensuring good governance; managing leadership succession at the appropriate time; probing and refining the Group's strategic thinking, especially in a post-Covid-19 context; driving and supporting the Executives in further improved performance; and, particularly in the near-term, ensuring a successful Chair transition.
All Directors commended the Chair for his effective leadership style, deep knowledge of RELX and its businesses, careful preparation before meetings, and the significant role that he plays in ensuring effective debate and dialogue both within and outside meetings and ensuring constructive relationships and communications between Board members.
Following its request (which arose from the 2019 Board evaluation process) that it be given further visibility of the views of the Group's suppliers, the Board confirmed that this request had been appropriately addressed, and that Directors had been given good levels of visibility of the views, actions and concerns of all of the Group's major stakeholders during the year, including how they had been affected by the Covid-19 pandemic. The feedback received by and communicated from the Board's Workforce Engagement Director was particularly helpful to the Board in understanding the ongoing challenges faced by the Group's employees. The Board directed that its ongoing focus on inclusion and diversity, the Group's culture and RELX's environmental, social and governance programme should be maintained in 2021, alongside comprehensive discussions on emerging technologies in the sectors within which RELX operates. The Board noted that, depending on the continuing impact of the pandemic during 2021, it would need to keep under review the balance of time devoted to short-term financial performance reviews, longer term strategic issues and individual business unit deep dive reviews during the year.
Audit, risk and internal control
Internal control and risk management
RELX 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. Details of the principal risks facing the Group and how these are mitigated are set out on pages 60 to 64.
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, RELX has adopted the three lines of defence assurance model as set out below.
Note: In addition to RELX's internal controls, RELX is also audited externally. The report of the external auditor has been included from pages 124 to 131.
The Board has in place a schedule of matters reserved for its decision-making. The Board is responsible for the system of risk management and internal control of RELX and has implemented an ongoing process for identifying, assessing, monitoring and managing the principal and emerging risks faced by its businesses. This process was in place throughout the year ended 31 December 2020, and up to the date of approval of the Annual Report and Financial Statements 2020. The Board monitors these systems of internal control and risk management and annually carries out a review of their effectiveness.
RELX has an established framework of procedures and internal control, with which the management of each business is required to comply. RELX 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 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 of Ethics also outlines confidential procedures enabling employees to report any concerns about compliance, or about the Group's financial reporting practice. The Code of Ethics is available on our website atwww.relx.com.
Each business area has identified and evaluated its principal and emerging risks, the controls in place to manage those risks and the levels of residual risk accepted. Risk management and controlprocedures 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.
Principal and emerging risks facing RELX 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 aim to ensure that RELX 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 and regulatory matters, are managed by legal directors in the businesses.
The risk assessment included consideration of emerging risks and risk appetite. RELX defines emerging risks as new or changing risks which are highly uncertain in terms of defining impact or likelihood and are more usually external to RELX. In line with the Code, the risk assessment identifies and considers the likelihood and impact of emerging risks on our business models, future performance, solvency, liquidity or reputation. The assessment also considers the need for mitigation of emerging risks. Risk appetite (defined as RELX's willingness to take on risk) is based on an assessment of the level of residual risk, taking account of inherent risk and mitigation efforts. The assessment is rated, in relation to RELX'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 RELX 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 RELX's strategic objectives, values and stakeholder interests and if shareholder returns could be increased.
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. These reports are summarised and, as part of the annual review of effectiveness, submitted to the Audit Committee. The Chair 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 Committee and Board reviewed the effectiveness of the systems of internal control and risk management during the 2020 financial year. 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 Board has 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 throughout the year. In accordance with the Code, the Board has also considered the Group's long-term viability, following a robust and thorough assessment of its principal and emerging risks. The resulting Viability Statement is set out on page 89.
weivrevOstnemges tekraM
Responsibilities in respect of financial statements
The Directors are required to prepare financial statements as at the end of each financial period, in accordance with applicable laws and regulations, which give a true and fair view of the state of affairs, and of the profit or loss, of the Company and its 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 consolidated financial statements, which are the responsibility of the Directors of the Company, are prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRS) adopted pursuant to Regulation (EC) No 1606/2002 as it applies to the European Union and as issued by the International Accounting Standards Board (IASB), following the accounting policies shown in the notes to the financial statements on pages 137 to 138. Having taken into account all of the matters considered by the Board and brought to the attention of the Board, the Directors are satisfied that 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 Group's position and performance, business model and strategy.
Going concern
The Directors have adopted the going concern basis in preparing these accounts after assessing the principal risks and the potential impact of Covid-19 on the business over the 18 months to 30 June 2022 and during the longer period over which the Group's viability has been assessed, as described below. Management forecasts reflect a range of downside scenarios including the Exhibitions business continuing to be impacted by Covid-19 related restrictions throughout 2021 with only gradual recovery in the following years. The scenarios considered include no events being held in Europe and North America until 2022. For the 18 month period to 30 June 2022, even in the most severe downside scenario, the Group will have substantial liquidity headroom on its existing facilities and is expected to remain well within the limit of 3.75x (this limit can be flexed to 4.25x in certain circumstances) on the one financial covenant in its revolving credit facility agreements (being the ratio of net debt, excluding pensions, to EBITDA). The Directors believe that the Group is well-positioned to manage its business risks and that adequate resources exist for the Group to continue in operational existence for the foreseeable future. They therefore consider it is appropriate to adopt the going concern basis in preparing the 2020 financial statements.
A commentary on the Group's cash flows, financial position and liquidity for the year ended 31 December 2020 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 in the period to 30 June 2022 can be repaid in full. 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 162 to 167. The principal risks facing the Group are set out on pages 60 to 64.
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 the Company certify in the Annual Report 2020 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 Committee 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 Annual Report 2020 on Form 20-F their conclusions about the effectiveness of the disclosure controls and procedures
§ designed internal controls over financial reporting, or caused such internal control over financial reporting to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting
A Disclosure Committee, comprising the Company Secretary 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 the Company to certify in the Annual Report 2020 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 Annual Report 2020 on Form 20-F.
Viability statement
Viability statement
The UK Corporate Governance Code requires Directors to assess the viability of the Group over an appropriate period of time. The Directors have made the assessment that given the Group's financial and operational positions, a viability period of three years, aligned with the Group's annual strategy plan, is suitable to assess the risks outlined on pages 60 to 64 as well as the uncertainty regarding the duration and ultimate impact of the Covid-19 pandemic.
Assessing the Group's prospects
The Group develops information-based analytics and decision tools for professional and business customers in the STM, Risk, Legal and Exhibitions sectors. The market segments section describes each area's business model, strategic priorities, market opportunities and competition, showing how the Group is positioned to create value for shareholders over the longer term.
The Group's prospects are assessed annually through the strategic planning process which includes a review of assumptions made and an assessment of each business area's longer term plan. The resulting three-year strategy plan forms the basis for Group and divisional targets and in-year budgets. Objectives are set with consideration given to the economic and regulatory environment, and to customer trends, as well as incorporating risks and opportunities. The most recent three-year strategy business plan was agreed by the Directors in September 2020 and updated in February 2021. 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 more immediate risks facing the business within the three-year strategy planning period, they also cover the risks described in the principal risks section on pages 60-64. Finally, during 2020 the Directors received regular updates from management on liquidity, covenant compliance and credit rating considerations.
Covid-19
Throughout the Covid-19 pandemic, the Group's three largest business areas, STM, Risk and Legal, have been able to maintain operational capability and have seen good growth in electronic revenues. For the most part, the challenges faced by some segments of these businesses have been offset by opportunities in other areas and growth in the base business, supported by a high percentage of subscription revenue. However, the Group's Exhibitions business, which accounted for 5% of Group revenue in 2020 (16% in 2019) is experiencing a high level of disruption from the impact of the pandemic. Whilst events have been running in Asia, including events in China since June and in Japan since September, the Group has not been able to operate any large events in Europe or North America since March 2020.
The Group has modelled a number of adverse scenarios, mostly impacting the events business, including a scenario in which events in Europe and North America do not resume until 2022 and that the subsequent recovery of the business is much slower than expected. Under all of these scenarios, it is assumed the events business does not return to pre-Covid-19 levels of revenue and profitability until after the strategy planning period ends in 2023.
Assessing the Group's viability
The three-year strategy plan for our businesses includes management's assessment of the anticipated operational risks affecting the business. With the Board acknowledging that in a Covid-19 environment there is more uncertainty around these plans, multiple scenarios were modelled through the process. Management then considered the viability of the business assuming the most pessimistic recovery scenario for Exhibitions, the simultaneous occurrence of multiple principal risks, for example those relating to cyber security and paid subscriptions, and the closure of the debt capital markets preventing the refinancing of scheduled liabilities. It is assumed that the Group's principal revolving credit facility will be refinanced prior to its maturity in 2023. The resulting analysis, which assumed share buybacks are suspended but dividends and acquisition activity continued uninterrupted at their current or historical average levels, determined that the Group would remain in a strong liquidity position, with substantial available facilities at all times, and the revolving credit facility leverage covenant would remain well within its limit of 3.75x (with the ability to flex this limit to 4.25x in certain circumstances providing additional headroom). This overall strong position reflects the benefits of actions taken by management in 2020 that have strengthened the Group's liquidity position, including:
§ issuing approximately $3.0bn of fixed rate term debt which reduced outstanding short-term debt, increased liquidity and extended the debt maturity profile, with only $0.7bn of term debt maturing before March 2023
§ extending the $1.22bn tranche of its revolving credit facility from 2022 to 2023 (the $1.71bn tranche matures in 2024)
§ entering into a $0.6bn two-year liquidity facility on terms similar to the revolving credit facility
§ suspending the Group's share buyback programme in April
While the impact of the Covid-19 pandemic on the events business is significant, the remainder of the Group continues to perform well and the outlook for these businesses is positive. We remain focused on successfully pursuing our strategic priority of organically developing increasingly sophisticated information-based analytics and decision tools that deliver enhanced value to our customers, supplemented by selective acquisitions that support our organic growth. We believe the combination of compelling structural opportunities combined with an appropriate capital structure will continue to drive increasing long-term value.
Based on this assessment and the scenario modelling that shows substantial liquidity and covenant compliance even with continued disruption to the events business for several years, the simultaneous occurrence of multiple principal risks and the closure of the debt capital markets, 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.
Report of the Nominations Committee
This report has been prepared by the Nominations Committee and has been approved by the Board.
Membership
The Committee comprises only Non-Executive Directors. The members of the Committee who served during the year were:
§ Sir Anthony Habgood (Chair of the Committee)
§ Adrian Hennah (until 23 April 2020)
§ Wolfhart Hauser
§ Robert MacLeod
§ Marike van Lier Lels
Responsibilities
The principal purpose of the Committee is to provide assistance to the Board by identifying individuals qualified to become Directors and recommending to the Board the appointment of such individuals.
The role and responsibilities of the Committee are set out in written Terms of Reference and are available on the company's website atwww.relx.com. These include:
§ to keep under review the size and composition of the Board ensuring that it maintains an appropriate balance of skills, experience, knowledge and diversity
§ reviewing the external commitments of each Director to ensure that he/she has sufficient time to devote to their role at REL X
§ to ensure that plans are in place for orderly Board and senior management succession and to oversee a diverse pipeline for such succession
§ to agree the specification for the recruitment of new Directors
§ to procure the recruitment of new Directors
§ to recommend to the Board the appointment of candidates as RELX PLC Directors
§ to recommend Directors to serve on the Committees of the Board and to recommend members to serve as the Chair of those Committees
§ to make recommendations to the Board in relation to the re-appointment of any Non-Executive Director at the conclusion of his/her specified term of office and the election or re-election of Directors following a review of the performance of individual directors from the Board evaluation process
§ reviewing the Board's and Group's Diversity Policy, including their effectiveness
§ to review and make recommendations to the Board on the authorisation of Directors' conflicts of interest, including any terms to be imposed in relation to a Director's conflict of interest
Activities of the Committee
During the year, the Committee held seven meetings.
The Committee's main areas of focus were:
§ the succession process for the role of Chair, including the announcement of Mr Paul Walker to succeed Sir Anthony as Chair effective 1 March 2021
§ the appointment of June Felix as an independent Non-Executive Director
§ the re-appointment of Suzanne Wood at the conclusion of her specified term of office
§ the impact on Board composition and balance, and Board Committee membership, resulting from the retirement of Adrian Hennah as a Non-Executive Director
§ a review of the composition of the Audit Committee resulting in the following changes: the appointments of Marike van Lier Lels and June Felix as members of the Audit Committee, and Suzanne Wood being appointed as Chair of that Committee, having served for nearly three years as a member
§ a review of RELX's approach to inclusion and diversity across the Group, including progress made against objectives set out in our Inclusion and Diversity Policy
§ succession planning for Board and senior management roles
§ ongoing review of Directors' actual and potential conflicts of interest and the recommendation to the Board of the suitability of Directors' external non-executive director appointments
§ to recommend the appointment of Lorna Parker, an independent external consultant, to undertake the external Board evaluation for the financial year ended 31 December 2020
§ a review of the Committee's Terms of Reference
§ reviewing this report and recommending to the Board its inclusion in the 2020 Annual Report and Accounts
Role of the Nominations Committee
The Nominations Committee is responsible for making recommendations to the Board on the structure, size and composition of the Board and its Committees and succession planning for the Directors and other senior executives. As part of the role, the Committee aims to ensure that the Board, its Committees and RELX's senior executives have the correct balance of skills, knowledge and experience to effectively lead the Group both now, and over the longer term, and that associated processes are in place to ensure that this is the case as the Group grows and develops over time. This is achieved through effective succession planning and talent development, and an understanding of the changing competencies required to support the Company's strategy, purpose, culture and values.
RELX Annual report and financial statements 2020 | Report of the Nominations Committee
The Committee engaged Russell Reynolds (which has no other connection to RELX) to carry out the search for new Non-Executive Directors. As part of that process, the Committee considered the existing skills and experience of the Board, the desired skillset required of an additional Non-Executive Director, and anticipated changes of Board membership over the short- to medium-term, based on the requirements of the UK Corporate Governance Code (the Code). Based on those attributes the Committee prepared a specification for a Non-Executive Director role. The Committee reviewed a list of candidate profiles and, following an interview process, recommended to the Board that June Felix be appointed as an independent Non-Executive Director. Her appointment to the Board became effective as of 15 October 2020, and shortly thereafter, she was appointed as a member of the Audit Committee, with effect from 1 November 2020. Ms Felix brings with her considerable relevant strategic and operational experience from her current and previous roles, including a deep understanding of the financial services, technology and healthcare sectors. Her extensive and wide-ranging experience will ensure that a fresh perspective and approach will be brought to Board discussions, as well as the independence of thought and vision that a new appointment to the Board generally brings.
Non-Executive Director appointment
During the recruitment process, the Committee followed a formal, rigorous and transparent assessment of all potential candidates and considered potential conflicts of interest prior to making recommendations to the Board. The Committee will continue to regularly review and make recommendations to refresh the Board where appropriate.
Chair succession
A key area of focus for the Committee during 2020 was the planned succession of Sir Anthony Habgood as RELX Chair. It was announced in February 2020 that, following more than 11 years of service in the role, he would step down as Chair of RELX. Whilst, the Company has been non-compliant with provision 19 of the Code with respect to the Chair's tenure during the year, the Board believes that this approach has been in the best interests of the Company's stakeholders. Sir Anthony's continued tenure ensured continuity of RELX Board and governance leadership at a time of significant business uncertainty due to the Covid-19 pandemic. In addition, travel and face-to-face meeting restrictions put in place in the UK as a result of Covid-19 resulted in the succession process taking longer to implement than originally anticipated. At the request of the Board, Sir Anthony agreed to remain in the role until 1 March 2021.
As part of the succession process, the Committee, led by the Senior Independent Director for this purpose, engaged Russell Reynolds to assist in the search for a new Chair. The Committee prepared a specification for the role of Chair which included; demonstrable leadership characteristics required to lead the RELX Board through the next stage of the Group's growth and development, relevant experience, international outlook and a commitment to RELX's purpose and corporate responsibility, along with numerous other attributes.
The Committee ensured that the Chair recruitment process was conducted in line with our Board Diversity Policy and included a gender-balanced list of candidates from diverse backgrounds for the Committee to consider. Shortlisted candidates were interviewed and the final candidate was interviewed by allCommittee members (apart from the Chair, who did not participate in the formal recruitment process for his successor). Upon the recommendation of the Committee, Paul Walker was appointed as Chair of the RELX Board and will commence his role on 1 March 2021. Mr Walker is an experienced publicly listed company Chair, with a strong background as an executive and non-executive director of several listed companies. He has a deep understanding of corporate governance matters and brings extensive international experience in sectors relevant to RELX's businesses. It is anticipated that he will Chair the Committee upon his appointment as a Director.
As part of its consideration of shortlisted candidates for both the Chair and additional Non-Executive Directors, the Committee considered each candidate's existing portfolio of commitments to ensure that any individual taken forward for further consideration would have sufficient time to devote to any RELX Board role.
As part of the Committee's search process, it also considers any particular areas of expertise or experience which would make an individual suitable to serve on any of RELX's Board Committees.
Changes to the Committees
A small number of changes have also been made to the membership of Board Committees during the year, reflecting Board changes and the ongoing review of Committee membership. These changes are set out on pages 83 and 85.
Board and Committee succession planning and composition When reviewing Board composition, the Committee considers (amongst other things) overall length of service and the need for membership to be regularly refreshed, as well as remaining cognisant of RELX's Board Diversity Policy. All appointments to the RELX Board and each of its Committees are based primarily on merit and the suitability of an individual for any given role. As illustrated by the changes in Board and Committee membership during the year, the Committee continued to focus on succession planning. It continues to keep under review, on an ongoing basis, the structure, size and composition of the Board and its Committees, making recommendations to the Board as appropriate. Effective succession planning contributes to the delivery of the Group's strategy by ensuring the desired mix of skills and experience of Board members now and in the future. Succession planning for the Board was discussed in every Committee meeting in 2020, emphasising its importance and the Committee's focus on this area.
Executive and management succession planning
The Board is also committed to recognising and nurturing talent within the executive and management levels across the Group. This manifested itself in two principal ways during the year. Firstly, the Board completed its RELX Talent Management review, as part of which it received a presentation from the Chief Human Resources Officer on the first three tiers of management across RELX. Additionally, the Committee considered the overall depth of the executive talent pipeline. In accordance with its Terms of Reference, the remit of the Committee included monitoring and reviewing succession planning for senior management positions within RELX. It received a detailed presentation from the Chief Executive Officer on succession plans for senior management,
including broad views on potential timings and implications for diversity in those positions. It satisfied itself that appropriate succession planning arrangements were in place for the orderly succession to senior management positions, supported by a diverse pipeline for such succession.
Board Diversity Policy
The Committee monitors and reviews the progress made against the Board's Diversity policy, which stresses that the Board's composition should be designed to advance the Group's strategy for all of its stakeholders, and that the benefits of all aspects of diversity should be considered including, but not limited to, gender and ethnicity. As part of Board discussions, recognition was given to the benefits of greater diversity, social and cognitive personal strengths throughout the organisation including the Board itself.
The policy requires that when searches for an appointment to the Board are conducted by the Company or by external search firms, they will identify and present a gender-balanced list of diverse and qualified potential candidates. The Board Diversity Policy was applied and considered by the Committee during the Board searches it conducted during 2020. The wider results of the application of the policy can be found within the 'Balance of our Board' section set out on page 85.
Independence of the Non-Executive Directors
During 2020, the Committee considered the independence of existing Non-Executive Directors, and whether a Director's length of service had in any way impacted his or her ability to remain independent in character and judgement in performing his or her duties. The Board considers all of the Non-Executive Directors (other than the Chair whose independence was not assessed, but who was independent on appointment) to be independent of management and free from any business or other relationship which could materially interfere with their ability to exercise independent judgement.
Group Inclusion and Diversity Policy
The Group Inclusion and Diversity Policy, reviewed during the year, aims to create a positive environment where employees feel valued regardless of their gender, national origin, ethnicity, religion, sexual orientation and/or identity, age or disability status. It advances our strategy by ensuring the engagement of all our people; fosters innovation by harnessing the collective strength of their diverse backgrounds and experiences to generate innovative products and solutions that drive value for our customers; and helps us attract employees who are important to our future.
To advance the Policy's commitment to provide "fair and equitable opportunities" through "ongoing review of recruitment, talent development, promotion and reward " in the year, we ensured each business had an inclusion lead and established a network to improve the sourcing, attraction and hiring of talent from underrepresented groups. We introduced a new career and mobility process through our global HR system so that every employee could identify areas of current strength and future development; and we asked each person as part of their annual performance assessment to state how they had helped foster a collaborative environment of inclusion, trust and respect necessary for higher team performance. We also work closely with our recruiters to ensure diverse candidate slates for open roles.
We met our 2020 corporate responsibility objectives including to provide manager training on pay principles and equal pay with training for leaders on our pay equity tools, controls and strategy for ensuring pay equity in the near and long-term. We also provided information on pay equity to all employees on our global intranet.
We advanced our Employee Resource Groups (ERG) which allow employees to champion aspects of diversity such as gender, LGBTQ+, race and ethnicity, and disability, and in the year, we held an ERG conference attended by 1500 employees. In addition, the RELX Inclusion Council - comprised of colleagues from human resources, corporate responsibility and strategy, among others - developed a suite of 2020-2025 inclusion goals. They include a commitment to create minimum global standards in areas such as flexible working and parental leave, and a commitment to disclosing inclusion metrics. In 2020, we created a real time inclusion and diversity data dashboard, continued our mentoring programmes for women in tech and senior women talent, and provided training for employees on critical issues such as unconscious bias, courageous conversations, psychological safety, and avoiding harassment. We also joined the Women's Empowerment Principles Target Gender Equality initiative; signed the Race at Work Charter; and joined the Valuable 500, which promotes workplace disability inclusion.
As at the first quarter of 2021, the Group's senior management team and direct reports comprised 69% male and 31% female.
RELX Annual report and financial statements 2020
Directors' Remuneration Report
The Directors' Remuneration Report has been prepared by the Remuneration Committee (the Committee) in accordance with the UK Corporate Governance Code, the UK Listing Rules and Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, as amended (the UK Regulations). The Report was approved by the Board.
Introduction
2020 presented a number of unique challenges for our employees and our business. Our first priority has been the health and safety of our colleagues, our customers and the wider community in which we operate. We increased our engagement with our employees since the Covid-19 pandemic started, introducing programmes to promote well-being, understanding how they were adapting to the new ways of working resulting from the pandemic and how best to support them. The Board is pleased to see that feedback received from employees, including from numerous employee opinion surveys, indicate they feel well supported and that their engagement, satisfaction and motivation remained high during the year. I am also very proud of the societal contributions RELX has made during the pandemic. Notably, Elsevier is providing free access to a broad suite of tools for biomedical and scientific researchers working on coronavirus, we have continued our involvement in sustainable development with the Sustainable Development Goals Inspiration Day and various initiatives our employees are supporting, through our RELX Cares programme.
Despite the challenges of the operating environment during much of 2020, we continued to execute well against our strategic priorities. Our three largest business areas, STM, Risk and Legal, which together accounted for 84% of revenue and 87% of adjusted operating profit in 2019, continued to deliver underlying revenue and adjusted operating profit growth. Exhibitions, which accounted for 16% of revenue and 13% of adjusted operating profit in 2019, was impacted significantly by Covid-19 since early in 2020, with government imposed restrictions preventing most events from taking place in Europe and the Americas.
Early in the year as the pandemic took hold, the Committee and the Board took the decision that the three largest business areas should continue to be managed in accordance with our strategy of consistent growth and should not curtail investments or take other actions in an effort to mitigate the impact the Covid-19 pandemic might have on Exhibitions or, as a result, the Company as a whole. The Committee therefore decided at that time to separate the performance of RELX excluding Exhibitions from the performance of Exhibitions for purposes of the Annual Incentive Plan (AIP) for the Executive Directors and other Corporate employees participating in the AIP (with employees in business areas continuing to be incentivised based on the performance of their respective business area), assigning a weight of 85% in the AIP for RELX excluding Exhibitions and 15% for Exhibitions, reflecting their approximate weight in revenue and profit terms in 2019. The Committee also set a cap on the payout on the financial measures of the AIP of 85% of target in the event Exhibitions did not meet threshold performance on its financial measures. The Committee, however, decided not to amend the targets for the AIP. Targets that applied to the 2018-2020 cycle of the Long-Term Incentive Plan (LTIP) were also not amended. No discretion has been applied to the formulaic outcome which was calculated in line with the methodology set out in our 2017 Remuneration report.
Our commitment to improving our environmental, social and governance (ESG) performance remains undiminished and we continue to be recognised by external rating organisations for work in this area. RELX maintains its AAA ESG rating with MSCI for the fifth consecutive year and is fourth in the Responsibility 100 Index of FTSE 100 companies measured against the United Nations Sustainable Development Goals. Sustainalytics ranked us second in our sector and 21st among 13,000 companies for our ESG performance and RELX has been included in the European and World Dow Jones Sustainability Indices.
The strong financial position of the Company has allowed it to continue to operate in a normal commercial way, without utilising elective government support schemes, and to maintain unchanged dividend payments to shareholders.
2020 outcomes
Largely as a result of the impact of the Covid-19 pandemic on the Exhibitions business during 2020, the overall remuneration of Executive Directors is significantly lower than prior years.
Our three largest business areas continued to perform well and grew underlying revenue and adjusted operating profit and maintained strong cash conversion in 2020 despite the pandemic. However, Exhibitions was significantly impacted by the pandemic from early in the year, resulting in no AIP payouts in respect of the financial measure portions relating to Exhibitions. Details of our targets and overall AIP achievements for the year are shown on page 96. Two-thirds of the amount earned will be paid in cash to the Executive Directors in March 2021 and the remaining one-third is deferred into RELX shares which will be released in Q1 2024.
Despite the strong performance of the business in 2018 and 2019 and of our three largest business areas in 2020, the 2018-2020 cycle of the LTIP vested at just 6% of maximum, primarily due to the impact of the pandemic in 2020 on Exhibitions. Our TSR outperformed the FTSE 100 in 2020, as it has done for each of the last ten years.
In determining the level of payout under the annual and the multi-year incentives, the Committee took into account RELX's overall business performance and value created for shareholders and other relevant factors, such as the Company's response to the pandemic with respect to employees, its ability to continue to meet customer needs and its contribution to the scientific and medical community's response to the pandemic. In its assessment, the Committee concluded that the outcomes were appropriate taking into account the exceptional circumstances of 2020, and chose not to exercise any discretion.
As was the case in 2020, the Committee will ensure that the AIP in 2021 is consistent with the Board's determination that the three largest business areas continue to be managed in line with their own strategies for consistent growth, without incentives to curtail investments or take other actions in an effort to mitigate the Covid-10 pandemic's effects on Exhibitions. The Committee will also review the 2019-2021 and 2020-2022 LTIP cycles to ensure that management has an appropriate incentive during the next one and two year periods to continue to drive performance in line with our strategy of consistent long-term growth in each of our business segments and that the outcomes for those two LTIP cycles appropriately and fairly reflect the performance of the business and its segments, after taking into account the impact of Covid-19.
Broader employee considerations
In 2020, the Committee reviewed information on workforce remuneration and related policies, including:
§ key statistics on the composition of the RELX workforce such as location, gender, age and length of service;
§ pay philosophy and the evolution of our pay practices, including pay equity processes;
§ annual salary increase guidelines globally;
§ details of the pension plan arrangements in our top five countries by number of employees;
§ participation data on annual incentives (sales and non-sales) and share plans;
§ Employee Opinion Survey responses and outcomes of pulse surveys conducted during the year, notably during the pandemic, to assess employees' well-being and monitor the Company's culture.
When determining the remuneration for Executive Directors and Senior Executives, the Committee considers business and individual performance as well as other factors including broader employee reward.
The Committee is satisfied that the overall remuneration for Executive Directors is appropriate and fair having considered external and internal relativities.
The Committee is satisfied that the incentive schemes drive the desired behaviours to support the Company's purpose, values and strategy. Our designated Non-Executive Director responsible for workforce engagement, Marike van Lier Lels, met with employee representatives from Europe, US and Asia Pacific during 2020 in order to understand a wide range of employee views. She reported back to the Board and the feedback and insights gathered formed part of the Board's discussions and decision-making. Further information on the workforce engagement process is provided in the Governance section on page 79. As part of this process, the changes to the Executive Directors' Remuneration Policy and how executive remuneration aligns with wider pay policy were explained.
Remuneration Policy and implementation
An updated Remuneration Policy was approved by shareholders at the 23 April 2020 Annual General Meeting with 93.4% votes in favour. I would like to express again my gratitude for the feedback received during the engagement as we were developing the policy and for the high level of support for the new policy. The remuneration policy, which applies for three years from the conclusion of the 2020 AGM, as approved by shareholders, is set out on pages 108 to 114 of this report. The first awards under the new policy will be granted in the first quarter of 2021. The 2020 awards are subject to the policy approved by shareholders at the 2017 Annual General Meetings which can be found atwww.relx.comor on pages 84 to 90 of the 2016 Annual Reports and Financial Statements.
Shareholders will be invited to vote (by way of an advisory vote) on the 2020 Annual Remuneration Report at the 2021 AGM.
Implementation of Remuneration Policy in 2021
In line with increases for the wider employee population, and consistent with the 2021 salary increase guidelines for UK-based employees, the Committee has approved 2021 salary increases for the Executive Directors of 2.5%.
As outlined in the 2019 report, the main changes for 2021 are summarised below. See further details on page 106.
§
The value of pension benefits for the CEO and CFO has decreased over the last several years, prior to the new UK Corporate Governance Code coming into force and will continue to do so, so that the value of their pension benefits will be aligned with the regular defined contribution plans (currently capped at 11% in the UK) by the end of 2022. The CEO is a member of a legacy defined benefit scheme and pays increasing participation fees (30% in 2021) and will cease to accrue further benefits under this scheme at the end of 2022. The CFO's cash in lieu of pension is reduced to 18% of base salary for 2021 and will continue to decrease until the end of 2022. Further details can be found on page 100.
§ The Annual Incentive Plan (AIP) payout at target performance is reduced from 150% to 135% of base salary. The maximum remains at 200% of base salary. The proportion of AIP deferred into shares for three years increases from one-third to 50% of the AIP earned.
Alignment of incentives with strategy
Our long-term strategic priority is unchanged: the organic development of increasingly sophisticated information-based analytics and decision tools that deliver enhanced value to our customers, supplemented by selective acquisitions of targeted data, analytics and exhibition assets that support our organic growth strategies.
The performance measures in the incentive plans align with the strategy and the financial key performance indicators on page 6 of the annual report, by focusing on sustained earnings growth, return on invested capital and shareholder returns in the LTIP. The AIP is based on revenue, profit, cash flow and sustainability metrics and focuses on annual objectives and milestones and creates a platform for sustainable future performance.
The Committee also considers broader performance factors when determining payouts.
The performance measures are based on adjusted figures as they provide relevant information in assessing the Company's performance, position and cash flows and we believe they track the core operational performance of RELX and how it contributes to shareholder value creation. The Annual Report includes a reconciliation of adjusted measures to IFRS measures.
Wolfhart Hauser
Chair, Remuneration Committee
Annual Remuneration Report
Single Total Figure of Remuneration - Executive Directors (audited)
£'000
(a) | (b) | (c) | (d) | (e) | (f) | |||
£'000 | Salary | Benefits(1) | Annual incentive Deferred Cash Shares(2) | Share based awards(3) | Pension(4) | Total | Total fixed remuneration(5) | Total variable remuneration(5) |
Erik Engstrom Nick Luff 2020 2019 2020 2019 | 1,280 1,249 754 735 | 84 86 15 15 |
| 399 5,558 196 2,781 | 536 539 151 186 | 3,951 9,346 2,088 4,841 | 1,900 1,874 919 936 | 2,051 7,472 1,168 3,905 |
(1) Benefits are typically comprised of a car allowance, private medical/dental insurance and the cost of tax return preparation.
(2) One-third of the 2019 and 2020 AIP is paid in shares deferred for three years. Dividend equivalents accrue on these shares.
(3) The 2020 figures reflect the vesting of the 2018-2020 cycle of the LTIP. As the LTIP vests after the approval date of this Report, the average share prices and exchange rates for the last quarter of 2020 have been used to arrive at an estimated figure in respect of these awards, in line with the methodology prescribed by the Regulations.
The estimated figures for 2019 disclosed in last year's Report have been restated to reflect the actual amount of the 2017-2019 cycles of BIP, ESOS and LTIP vested and the actual share prices and exchange rates, which increased the 2019 disclosed figure by £664k for the CEO and by £331k for the CFO. The vesting percentages were determined on 14 February 2020 and were in line with those disclosed on pages 102 and 103 of the 2019 Remuneration Report.
For Erik Engstrom, the amount that directly reflects share price appreciation is £2.2m for 2019 and £51k for 2020. For Nick Luff, these numbers are £1.1m for 2019 and £25k for 2020 .
Some figures and subtotals add up to different amounts than the totals due to rounding.
The awards are due to vest in February 2021 and the 2020 figures will be restated in next year's report to reflect actual values at vesting.
No discretion was applied by the Remuneration Committee in determining the vesting outcome percentages.
(4) The pension figure for Erik Engstrom reflects his current membership of the UK legacy defined benefit pension scheme and has been calculated in accordance with the prescribed methodology set out in the Regulations. This figure does not represent a contribution by the Company. In 2020, the Company contributed £52,862 to the funded portion of his defined benefit pension plan. The remainder of his accrued pension is an unfunded liability of the Company.
In 2020, the CEO contributed a total of £331,100 (slightly over 25% of his pensionable earnings) by way of Total Plan Fees, up from £246,353 (20% of pensionable earnings) in 2019. The pension figures for 2020 and 2019 in the table are reduced by these Total Plan Fees. For details of Mr Engstrom's accrued pension as at 31 December 2020, and further information on his pension reduction in 2021 and the coming years, see page 100.
Nick Luff receives a cash allowance in lieu of pension which reduced from 25% of salary to 20% of salary effective 1 January 2020. For details on the reduction of the CFO's allowance in 2021 and the coming years, see page 100.
(5) Total fixed remuneration includes base salary, benefits and pension. Total variable remuneration includes annual incentive and share based awards.
The total remuneration for Directors is set out in note 26 to the consolidated financial statements on page 173.
2020 Annual Incentive
Early in the year as the pandemic started to take hold, the Committee considered that whilst the AIP targets for each business would remain unchanged, it was important that the three largest business areas continued to be managed consistently with their own best business interests and strategy for consistent growth, without incentives to curtail investments or take other actions in an effort to mitigate the Covid-19 pandemic's effects on Exhibitions. The Committee determined to separate the performance of RELX excluding Exhibitions from the performance of Exhibitions in the AIP, assigning a weight of 85% for RELX excluding Exhibitions and 15% for Exhibitions, reflecting their respective weight in revenue and profit in 2019. The Committee also determined to set a cap on the payout on financial measures at 85% of target in case Exhibitions did not meet threshold performance.
Set out below is a summary of performance against each financial and non-financial measure and the resulting payout for 2020:
Performance measure
Relative weighting % at target
Revenue
RELX excl Exhibitions
Exhibitions
Revenue - Total
25.5% 4.5% 30.0%
Adjusted net profit after tax
RELX excl Exhibitions
Exhibitions
Adj net profit after tax - Total Cash flow
25.5% 4.5% 30.0%
RELX excl Exhibitions
Exhibitions
Cash flow - Total
Financial measures
25.5% 4.5% 30.0% 90.0%
Impact of cap on payout (2)
Non-financial measures Total
10% 100%
Total AIP payout as % of salaryCash 100%
Deferred Shares 50%
Total 150%
Erik Engstrom | Nick Luff | |
Weighted | Weighted | |
Payout | Payout | |
% of target | % of target | |
15.6% | 15.6% | |
0% | 0% | |
15.6% | 15.6% | |
29.1% | 29.1% | |
0% | 0% | |
29.1% | 29.1% | |
38.3% | 38.3% | |
0% | 0% | |
38.3% | 38.3% | |
82.9% | 82.9% | |
76.5% | 76.5% | |
A detailed description of the non-financial measures and achievement | ||
against those is set out on the next page. | 9.5% | 9.5% |
86.0% | 86.0% | |
86.0% | 86.0% | |
43.0% | 43.0% | |
129.0% | 129.0% |
Maximum
Financial targets (1)ThresholdTarget
AchievementAchievement % vs targetPayout % vs target
6,512 1,264
6,928 1,345
7,275 6,748
1,412 362
97.4% 0%
61.0% 0% 51.9%
1,553 258
1,652 274
1,734 288
1,675 (132)
101.4% 0%
114.0% 0% 96.9%
1,965 296
2,090 315
2,195 331
2,222 (213)
106.3% 0%
150.0% 0% 127.5% 92.1% 85.0%
(1) On an equivalent basis (at actual exchange rates and after the net impact of acquisitions and disposals completed)
(2) When targets were set, a cap on payout versus target for financial measures was set at 85% if Exhibitions fell below threshold performance.
Some figures add up to different amounts than the totals due to rounding.
The Cash AIP (£1,100,873 for the CEO and £648,269 for the CFO) will be paid in Q1 2021 and the Deferred Shares (with a current value of £550,436 in the case of the CEO and £324,134 in the case of the CFO) will be released in Q1 2024. The release of Deferred Shares is not subject to any further performance conditions but is subject to malus and claw-back.
Non-financial measures
Relative weighting
Non-financial measures % at target Achievement
Environment 2.5%Energy usePaper usage and waste
Socially responsible suppliers
TotalTarget met with 55% of the business achieved ISO 14001 Environmental Management System certification and 61% of key locations achieving five or more RELX Environmental Standards § Achieve ISO 14001 Environmental Management System certification for 50% of the business (by headcount) by the end of 2020 (42% in 2019).
§ Increase key locations achieving five or more REL X Environmental Standards to at least 60% (56% in 2019).
2.5%Target met with reduction of carbon emissions of 64%, reduction of energy and
fuel consumption of 52% and renewable electricity purchase increased to 100%.
§ Reduce Scope 1 (direct) and Scope 2 (location-based) carbon emissions by 55%
against a 2010 baseline (52% in 2019).
§ Reduce energy and fuel consumption by 43% against a 2010 baseline (41% in 2019).
§ Purchase renewable electricity equivalent to 100% of RELX's global electricity
consumption (96% in 2019).
2.5%This target has been met with a reduction of 78% in waste generated, 93% of waste diverted from landfill and 100% of papers rated as "known and responsible sources".
§ Decrease total waste generated at reporting locations by 68% against a 2010 baseline (66% in 2019).
§ 90% of waste from reporting locations to be diverted from landfill (85% in 2019).
§ Maintain 100% of RELX production papers, graded in PREPS, to be rated as 'known and responsible sources'.
2.5%This target has been met with 3,457 signatories, 99 audits of suppliers completed and spend with diverse suppliers at 12.9%
§ Increase the number of suppliers as Code signatories to 3,300 (3,202 in 2019).
§ Increase number of independent external audits of suppliers to 96 (93 in 2019), including increasing the number of second tier audits.
§ Continue to advance the US Supplier Diversity and Inclusion programme by maintaining spend with diverse suppliers at 11.9% (11.9% in 2019), notwithstanding existing small suppliers being acquired by larger companies.
10%
Erik EngstromNick LuffPayout % of targetPayout % of target
2.5%
2.5%
2.0%
2.0%
2.5%
2.5%
2.5%
2.5%
9.5%
9.5%
2018-2020 LTIP
Set out below is a summary of performance against each measure of the LTIP cycle 1 January 2018-31 December 2020. As highlighted earlier, the targets remained unchanged from when these were set at the beginning of 2018.
Performance measure
Weighting
TSR over the three-year performance period(2)
20%
upper quartile 100%Average growth in adjusted EPS over the three-year performance period (3)
40%
11% p.a. and above 100%ROIC in the third year of the performance period (3)
40%
14.4% and above 100%Total vesting percentage:
below median 0%
Performance range and | Achievement against the | Resulting vesting |
vesting levels set at grant (1) | performance range | percentage |
between median and | 30.2% | |
upper quartile of the | ||
UK and European groups | ||
and below median of the | ||
US peer group | ||
below threshold | 0% | |
below threshold | 0% | |
6.0% |
median 25%
below 5% p.a. 0%
5% p.a. 25%
6% p.a. 50%
7% p.a. 65%
8% p.a. 75%
9% p.a. 85%
10% p.a. 92.5%below 12.0% 0%
12.0% 25%
12.4% 50%
12.8% 65%
13.2% 75%
13.6% 85%
14.0% 92.5%
(1) Calculated on a straight-line basis for performance between the points.
(2) In respect of the euro TSR comparator group, RELX NV shares were, subsequent to the merger of RELX NV into RELX PLC, replaced with Euronext Amsterdam listed RELX PLC shares priced in euros and, in respect of the US dollar TSR comparator group, RELX NV ADRs were, subsequent to the merger, replaced with RELX PLC ADRs.
(3) Growth in adjusted EPS at constant currencies and ROIC are calculated as set out in the Chief Financial Officer's report on pages 54 to 59 and note 10 to the consolidated financial statements on page 152, with adjustments made to remove the effect on ROIC of changes in exchange rates, pension deficits and accounting standards over the three-year performance period.
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Relx plc published this content on 18 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 February 2021 09:09:08 UTC.
