INTRODUCTION

LexisNexis, the information solution provider company, has a vision to make a real contribution to society across Africa by providing customers with high-value, information-driven solutions that improve their effectiveness.

The 2009 financial year was challenging and the economic downturn impacted on certain sectors of the business in the second half. Notwithstanding these difficulties, the business, however, posted good results, with revenue increasing 8% and operating profit growth of 14%. The quality of earnings is reflected in the operating margin which improved to 32,8% from 31,1% despite the tighter operating environment.

THE BUSINESS MODEL

LexisNexis SA is a member of the LexisNexis group, a division of Reed Elsevier plc, which operates in 100 countries. Kagiso Media owns 50% of LexisNexis SA. It serves professional, business, academic and government customers and has successfully transformed itself from a publisher to an information solutions provider, extending its historic print publishing business under the Butterworths brand imprint to an information research business with content delivered via print, CD and online media. Of LexisNexis’ 2009 revenue base, 44% was generated from recurring revenue delivered from its subscription-based research solution products.

The company has also expanded its solution offerings with the formation of an end-to-end training and compliance business, focusing on safety, health, environment and labour with solutions extending from information, to consulting, training and electronic workflow.

LexisNexis’ risk management division offers two specific solution sets, namely background screening via Refcheck and an online public records business called DeedSearch. The company also has a fledgling practice management division.

THE MARKET

LexisNexis services 30 000 customers across all sectors of the market including professional (encompassing legal, accounting and financial services), corporate, government and academic markets. Although all sectors have been affected by the global economic malaise, LexisNexis continues to experience strong demand for research solutions throughout its market segments.

The compliance training solution division experienced tough trading conditions across the board.

In the risk management division, the slowdown in the pre-employment market in South Africa had a direct impact on the background screening Refcheck online solution.

PERFORMANCE

LexisNexis maintained its positive growth track record, with an 8% increase in revenue to R405m and a 14% increase in operating profit to R133m.

The business delivers its revenue from its diversified solution set, being research, compliance and training, risk management and practice management.

Research

Research solutions is the core revenue generator for LexisNexis, contributing 85% of the total revenue. It maintained its good growth trend, with revenue increasing by 12% to R345m in 2009. Its ongoing focus on driving new sales and migrating its customers from print and CD ROM solutions to online-supported solutions resulted in a 30% revenue growth, increasing its contribution from 10% to 12% of total revenue.

LexisNexis continued to enhance its value proposition with further investments in local and international content while improving the search engine technology underlying its online solutions. In addition the company launched its community legal site, Law24.com which is based on the latest web 2.0 technology. A number of additional initiatives based on the same technology platform are planned in 2010.

The local print publications continued to deliver double-digit growth. The academic university textbook division delivered an outstanding performance, growing by 24% as a result of its new editions and titles which were targeted at the commerce and legal faculties, as well as increased student numbers.

The Africa business delivered a flat performance for the year with the Nigerian market slowing significantly in the last quarter. However, this division continues to build on its content capability across the region and has a strong content development pipeline, including a government contract to consolidate and publish the Laws of The Gambia in 2010.

Compliance and training

Although the performance of this segment fell short of expectations with revenue slowing from 2008, LexisNexis has taken some decisive steps to position itself for future growth going forward with its solutions which span labour compliance; safety, health and environment compliance; and seminars to the government, corporate and professional customers.

The impact of the economic slowdown was more severe in the training and seminar segment. However, LexisNexis remains upbeat about its future potential and it has made significant investments to ensure the sustainable success of its training business. These include extending its expertise into the occupational hygiene and ergonomics segments through Ergosaf as well as investments in a hand-held mobile electronic occupational health and safety solution, MobiEasy.

Risk management

Risk management delivered a stable performance compared to 2008. Although the Refcheck pre-employment background screening business was directly affected by the slower employment market, it benefited from innovative solutions which were introduced during the year, including integration of the online Ideco criminal fingerprint checking solution into Refcheck and customer-specific integration of the Refcheck solution.

The public records, DeedSearch online solution, was directly affected by the downturn in the property sector.

Practice management

This recently formed service offering includes a document assembly software solution, Hot Docs, which is predominantly targeted at the legal professional market. LexisNexis has entered into a joint venture arrangement with a software house and will invest in enhancing its offering in 2010.

THE WAY FORWARD

In 2010 LexisNexis will focus on the continued migration of customers to the online research solution, upgrading its underlying online search technology and investing in content development technologies to improve business efficiencies. Further investments will be made in online web 2.0 technologies to develop specific solutions for academic, professional, corporate and government customers. The business will increase its customer interactions to ensure that it truly understands and delivers their needs. Expansion of the compliance solution offering and customer footprint has also been prioritised. The African continent presents good opportunities and LexisNexis will make further investments in existing and new content development opportunities across Africa.

Although the company anticipates that the market will remain tight in 2010, it is well placed to maintain its track record of revenue and profit growth.