UPDATE 1-Reed Elsevier lifts share buyback after profits rise

Thu Jul 25, 2013 6:57am EDT

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By Sara Webb

AMSTERDAM, July 25 (Reuters) - Anglo-Dutch information group Reed Elsevier increased its share buyback programme and announced a bigger than expected interim dividend on Thursday as it continues to expand its electronic publishing and professional events businesses at a faster pace than print revenues decline.

Shares in Reed, which competes with Thomson Reuters and Dutch publisher Wolters Kluwer NV, were up 3 percent in London at 826 pence by 1032 GMT while the Amsterdam-listed shares were up 2.6 percent at 14.06 euros.

Erik Engstrom, chief executive, said the group would increase the size of this year's share buybacks by about 200 million pounds ($307 million) to a total of 600 million pounds, and announced an 11 percent increase in the interim dividend to 6.65 pence a share.

"With a strong balance sheet and strong cash flow characteristics, and average acquisition spend comfortably covered by free cash flow, we will take a pragmatic approach to ensuring that the value compounding within the business translates into shareholder value," Engstrom said.

"This backs our view that Reed is likely to become a more powerful returner of cash over the medium term as debt comes down," analysts from Liberum Capital said in a research note.

The company also reported better-than-expected first-half earnings on Thursday, thanks to stronger results across all its divisions, particularly its Risks Solutions division, which sells data and analytics to customers in insurance, business and government to help detect fraud and other risks.

"The operating momentum in our business remains positive as we enter the second half," Engstrom said, reiterating that he expects further revenue and earnings growth for the full year.

Underlying adjusted operating profit in the first six months of the year rose 6 percent to 870 million pounds, while underlying revenue rose 2 percent to 3.025 billion pounds.

It said the underlying growth rate was running at 3 percent which reflected continuing print revenue declines and 5 to 7 percent growth in revenues from its electronic and "face-to-face" - or exhibitions and conferences - businesses which together now account for 83 percent of the group's turnover.

Analysts polled by Reuters had forecast a first-half underlying adjusted operating profit of 853 million pounds and revenue of 3.09 billion pounds.

The owner of the LexisNexis legal database and Science Direct, the scientific article database, also publishes a range of trade magazines including New Scientist, Farmers' Weekly, Flight International, and Estates Gazette but has shifted as much of the business as possible online in recent years.

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