REG - Informa PLC - Market Update - GAP II delivering further momentum

InformaAnnouncement

19/07/2022 07:00

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RNS Number : 8914S  Informa PLC  19 July 2022

Informa PLC Press Release

19 July 2022

Growth, Expansion and Balance Sheet Strength

Growth Acceleration Plan II ("GAP II") delivering further momentum

Key Highlights

·    Full Year Guidance Reconfirmed: Underlying revenue growth of 40%+ to
be reported for H1 2022, reflecting continuing strength in Academic Markets,
strong return in Live & On-Demand Events and progressive growth in B2B
Digital Services; Full year expectations reaffirmed at the top-end of guidance
range, underpinned by strong forward visibility and commitments;

·    B2B Digital Services Expansion: Growth, margin and earnings enhancing
acquisition of Industry Dive (Specialist Content / Audience Development)
confirmed today for $389m in cash, further expanding growing B2B Digital
Services offering alongside NetLine (Content Syndication / Lead Generation)
and IIRIS (First Party Data);

·    Market and Geographic Expansion: Extension of partnership in the
growing Beauty & Personal Care market into 5+ new geographies; Expansion
of leading position in the Middle East through partnership agreement in Saudi
Arabia, following success of landmark Tech event, LEAP;

·    Increasing Portfolio Focus: Successful divestment of non-core fund
flow business EPFR confirmed today for $193m in cash, taking total value
realised from GAP II Portfolio Focus to over $2.4bn;

·   Balance Sheet Strength: Positive net cash position to be reported at H1
2022 compared to £1.9bn net debt 12 months ago;

·    Accelerating Shareholder Returns: Balance sheet strength and
confidence in forward growth sees ordinary dividends resume at H1 2022 at
c.40% of full year earnings, alongside a continuing share buyback programme of
£725m.

 

 Stephen A. Carter, Informa Group Chief Executive said:

 "Informa has delivered strong first-half revenues and growing profitability as
 we continue to deliver on our GAP II programme. Our improving performance
 enables us to embark on further market and geographic expansion, including the
 acquisition today of Industry Dive which further enhances our B2B Digital
 Services portfolio."

 He added:

 "Industry Dive, which like Informa, Champions the Specialist, has repurposed
 the traditional B2B publishing model for specialist markets in the digital
 age. It provides high quality digital content and business journalism to 13
 million decision makers through its 27 specialist Dives."

 He concluded:

 "In parallel, we are today confirming the divestment of non-core EPFR, taking
 total value realised through divestments to more than $2.4bn. Given these
 proceeds, our strengthening results and the resilience of our core B2B Markets
 and Academic Markets businesses, we will resume ordinary dividends, whilst
 supporting our increased share buyback programme."

 

 

Growth: Strong underlying revenue growth

Today we are pre-releasing preliminary figures for the six months to June 30
2022, which confirm strong growth in revenues, adjusted operating profit and
cashflows, and the return of ordinary dividends.

Informa will file its full set of Interim Results as a matter of record on 28
July 2022.

2022 Half-Year Results (Continuing and Discontinued Operations)

Trading through the first half of 2022 has been robust across Academic
Markets, B2B Markets and Informa Intelligence, with Group underlying revenue
growth for the six-month period expected to be more than 40% and underlying
adjusted operating profit growth over 120%. This is expected to produce Group
revenues of over £1,050m and Group adjusted operating profit of over £220m,
with adjusted Earnings per Share over 10p (all reflecting Continuing and
Discontinued Operations).

Our Academic Markets business, Taylor & Francis, is delivering consistent
growth in Pay to Read Subscriptions and Advanced Learning, and further strong
growth in Pay to Publish services, including in F1000 and across our broader
Open Research offering. This will see underlying revenue growth of 3% and
revenues of £255m+ in the first half of 2022, putting us firmly on track to
meet the full year target of 3%.

Within B2B Markets, our three businesses (Informa Markets, Informa Connect,
Informa Tech) all traded strongly in the first half, delivering 90%+
underlying revenue growth and revenues of £650m+. This includes further
double-digit growth in B2B Digital Services and a strong return in Live &
On-Demand Events with c220 brands delivered through the first half, attracting
28k Exhibitors and 1.1m Attendees.

Informa continues to deliver high levels of cash generation and, when combined
with the strong cash returns realised through GAP II Portfolio Focus, is
expected to result in a positive net cash position at the half-year. This
compares to net debt of £1.9bn 12 months ago.

Guidance re-confirmed at upper end of range

In June, we raised full year expectations for the Informa Group to the upper
end of the guidance range we provided at the 2021 Full Year Results in March
(Revenue of £2,150m-£2,250m and adjusted operating profit of £470m-£490m).

Today we are re-confirming this guidance, excluding any benefit from today's
acquisition of Industry Dive.

We continue to closely monitor macro trends (inflation, energy prices, cost of
living) and geo-political developments, however, forward visibility on
subscriptions in Taylor & Francis remain strong, as do forward bookings
for Live and On-Demand Events and forward commitments for specialist B2B
Digital Services.

Mainland China

Following the complete re-opening of markets in North America, the Middle
East, Europe and Latin America, and progressive re-opening in ASEAN, Mainland
China is also progressively reopening Province by Province and City by City,
with varying timelines through the second half of 2022.

Informa's B2B Live and On-Demand Events business in Mainland China is focused
on six key cities, Shanghai, Shenzhen, Guangzhou, Chengdu, Nanjing and
Hangzhou. Our first B2B Live Event ran in Guangzhou in July for the Food and
Hospitality market, and customer and exhibitor demand was strong. More
broadly, we are continuing to receive cash from customers for bookings and
good levels of flexibility on rescheduling dates and locations where
necessary.

We therefore have confidence this will lead to normalised trading in 2023, as
vaccine mandates and testing programmes progressively provide a more stable
trading environment. In 2022, we will remain flexible operationally and in
service delivery across Mainland China and adapt our short-term plans as
necessary.

The strength of outperformance we are seeing in Live & On-Demand Events
where markets are fully open and within our B2B Digital Services offering
provides a strong counterbalance to the short-term uncertainty in Mainland
China.

Combined with the continuing strong performance in Academic Markets, this
gives us confidence of meeting our guidance range for the year, even if the
Mainland China contribution is less than previously assumed.

Expansion: B2B Digital Services, Geographic and Market expansion

New Informa is focused on two markets, Academic Markets and B2B Markets. Today
the Group is announcing a series of agreements that strengthen our position in
key B2B markets and geographies, and expand our B2B Digital Service offering:

Digital Services Expansion: Acquisition of Industry Dive…Specialist B2B
Content & Lead Generation

A key focus of GAP II is the expansion in B2B Digital Services across the 30+
specialist markets we serve.

In the Summer of 2020, we began building our own customer data platform,
IIRIS. In December 2021, we added NetLine to our portfolio, which brought
capabilities in Audience Development and Lead Generation via Content
Syndication for Tech markets.

Today's acquisition of US business, Industry Dive (Specialist Content /
Audience Development) alongside IIRIS (First Party Data) and NetLine (Content
Syndication / Lead Generation), further expands our range of B2B Digital
Services, adding capabilities in Audience Development and Lead Generation
generated by high quality specialist digital content and business journalism.

Industry Dive's scalable platform for delivering specialist B2B content and
B2B audiences and data, has delivered consistent strong double-digit growth in
revenue and EBITDA over the preceding three years, with the potential for
further acceleration when combined with Informa's portfolio of B2B brands and
audiences.

Specialist B2B Content Creation and Audience Development

Industry Dive currently serves 24 specialist B2B markets via 27 specialist
content Dives, including BioPharma Dive, Construction Dive, Cybersecurity
Dive, Food Dive, Healthcare Dive, MedTech Dive, Waste Dive.

The business has more than 2.5m active subscribers and a total engaged
audience of c.13m. This audience is monetised through specialist Content
Marketing and targeted Lead Generation services for B2B brands looking to
reach specified buyers.

Operational Combination Benefits: Market expansion, Service expansion and
First Party data

Industry Dive brings a scalable, single proprietary technology platform, which
will enable us to expand our digital services capabilities and deliver content
led services to our B2B audiences.

This will expand the reach and quality of our first party customer data,
sitting alongside IIRIS.

Financial Combination Benefits: Growth, Margin and Cash Flow accretion

In 2022, Industry Dive is on track to deliver further strong growth, with
revenues expected to be c.$110m and EBITDA c.$34m. The initial cash
consideration being paid is $389m, equating to a pre-revenue synergy EBITDA
multiple of c.11.4x and a post revenue synergy multiple of c.10.5x.

The agreement includes a significant earn-up element, which is designed to
drive further growth acceleration, whilst de-risking any near-term macro
volatility.  If the earn-up growth acceleration plan is delivered in full, it
could see total consideration increase to $525m by 2024.

Excluding revenue synergies, the addition of Industry Dive is expected to
deliver a post-tax return on invested capital ahead of Informa's weighted
average cost of capital within two years. It is also expected to enhance
adjusted earnings per share by c.5% in the first full year post ownership, as
well as being enhancing to revenue growth, operating margin and cash flows.

We see significant opportunities for revenue synergies by combining Industry
Dive's platform, specialist content and B2B data with Informa's portfolio of
B2B Brands.

This includes the accelerated roll out of new Dives, increased engagement with
Informa's existing Live Events customers through content, the cross-selling of
specialist content marketing and lead generation services, and the roll out of
new Live & On Demand Events to established Dive communities.

 

Specialist B2B Market Expansion: The Beauty & Personal Care Market

Informa has a strong market position within the growing international B2B
Beauty & Personal Care market. Over the last decade, through a combination
of organic expansion, targeted additions and a series of partnership
agreements, the Group now owns or partners on leading B2B Beauty brands in
four countries in Asia, including China Beauty Expo, Cosmoprof Asia and Beyond
Beauty, as well developing its presence in the US through the Premiere
portfolio of beauty brands.

Today we are announcing an expansion in this growing specialist market, taking
these leading B2B Beauty brands to a number of new locations, including within
Mainland China and the Middle East, and strengthening our inbound/outbound
sales capabilities.

This sees us extend our existing partnership with BolognaFiere Group on
Comosprof Asia, which has already seen us establish joint operations in
Thailand and India. As part of this, we are investing €25m in the Group and
in partnership we are committing to open an International Sales Operation in
Bologna in Italy, which will strengthen our ability to cross-sell and
cross-promote our full portfolio of international Beauty brands.

Geographic Expansion: The Middle East

Informa has a market leading position in the Middle East, having built
significant businesses in the region, from our local headquarters in Dubai to
growing brands and operations within Bahrain, Qatar, Egypt and Turkey, amongst
others.

In February, Informa partnered with the SAFCSP Federation within Saudi Arabia
to establish a landmark new B2B brand for the Tech community, supporting its
ambition to establish itself as a key Tech hub.

LEAP was one of the largest ever new Tech event launches, attracting leading
Tech exhibitors and participants from around the world, with more than 100,000
visits to the event, firmly putting the country on the map as a destination
for technology investment and innovation.

Following the success of LEAP, we have now created a broader partnership to
apply a similar approach to other specialist markets of strategic importance
to the country's Vision 2030 plan, which seeks to diversify and expand its
economy and opportunities for its highly educated 30 million population.

The partnership combines investment, local commitment and coordination,
sponsorship and Informa's leading brands and expertise in convening markets to
create cutting-edge live and on-demand experiences.

It will see Informa bring some of its major B2B brands to the region over the
next five years, attracting international audiences and stimulating
significant growth and investment in a range of specialist markets, including
Healthcare & Life Sciences, Food & Hospitality, Aerospace &
Aviation, Industrial & Manufacturing, Pharma & Biotech, Real Estate
& Construction and Human Capital.

Balance Sheet Strength: Divestment programme exceeds $2.4bn

Our decision to focus on two markets and divest Informa Intelligence in an
efficient manner has created significant balance sheet strength and
flexibility, with the Group expected to be cash positive at the half year and,
on current course and speed, sub 1x net debt / EBITDA at year-end.

Successful Divestment of EPFR for $190m+

Following the sale of Pharma for £1.9bn, we now confirm an agreement to
divest our fund flow business, EPFR to Montagu for total cash consideration of
$193m.

In 2021, EPFR accounted for approximately 5% of Informa Intelligence's
reported divisional revenues of £348.3m and c.6% of reported adjusted
operating profit of £109.8m.

This agreement follows the divestment of Pharma Intelligence for £1.9bn,
taking total divestment value above our initial target of £2bn+ ($2.4bn+).

We expect to complete the Informa Intelligence review and all further
portfolio rationalisation by year-end.

 

Accelerating Shareholder Returns

£725m Share Buyback Programme

Following the divestment of EPFR, we are maintaining our share buyback
commitment at the recently increased level of £725m. To date, we have
acquired 56.3m shares in 2022, at an average share price of 571p, equating to
shareholder returns of £323m.

Based on current volumes, this programme is expected to take the Group into
the first half of 2023, at which point we will review our capital allocation
and mix of shareholder returns.

Resumption of ordinary dividends at H1

Ordinary dividends will resume at the time of the interim results at 3.0p per
share. This equates to a pay-out ratio of c.40% of full year adjusted
earnings, reflecting the strength of our balance sheet, our confidence in the
forward momentum and resilience of our cash flows and the success of the GAP
II Divestment Programme.

The payment date for the interim dividend will be Friday 9 September 2022
based on a record date of Friday 12 August 2022.

Divisional Leadership Update

As the Group divests its Informa Intelligence portfolio to focus on our two
leadership businesses, Academic Markets and B2B Markets, with a commitment to
expanding the range of attendant digital services in both businesses, we are
making some planned changes to divisional leadership.

Patrick Martell, the current Group Chief Operating Officer and Chief Executive
of Informa Intelligence, will take over as Chief Executive of Informa Markets
at the end of 2022, when his role with Informa Intelligence will end.

As Informa Markets further diversifies its B2B service offering and
strengthens its digital platform capabilities, Patrick will draw on his
experience and success in embedding effective data discipline and digital
product development within Informa Intelligence over the last seven years.

Charlie McCurdy, the current Chief Executive of Informa Markets, will step
down from this role at the end of 2022 and take up a position as Strategic
Advisor to Informa until the end of the GAP II period, supporting the
continuing development of Informa Markets digital and data services and other
GAP II priorities, as well as providing broader input and support on key
partnership relationships, and future growth opportunities.

This leadership change will follow a six-month handover period during which
time Charlie will focus on the delivery of the 2022 financial results and
continue to manage all decisions relating to 2022 outcomes.

Through this period, Patrick, who has significant knowledge of the Informa
Group and Informa Markets, having led the integration of Penton Information
Services as well as the growth, expansion and divestment of Informa
Intelligence, will undertake an in-depth programme of Colleague, Customer and
Partner engagement, whilst leading the 2023 budget process.

Stephen A. Carter, Informa Group Chief Executive said:

"On behalf of Informa, I would like to take this opportunity to thank Charlie
for his leadership of Informa Markets over the last seven years, during which
time the business has grown significantly in scale, reach and quality, and
look forward to his continuing contributions through to the end of GAP II. It
is a real privilege to count Charlie as a Colleague and fellow leader of the
Company."

Conference Call

Informa will host a conference call with management later today to discuss the
announcement. This is scheduled for 12.00pm BST and can be accessed via the
following dial-in details:

United Kingdom: +44 (0)330 165 3641

United States: +1 323 701 0170

Participant Code: 870673

 

 Enquiries
 Stephen A. Carter, Group Chief Executive                  +44 (0) 20 8052 0400
 Gareth Wright, Group Finance Director                     +44 (0) 20 8052 0400
 Richard Menzies-Gow, Director of IR & Communications      +44 (0) 20 8052 2787
 Tim Burt / Simon Duke - Teneo                             +44 (0) 20 7240 2486

Notes to Editors

About Industry Dive

Industry Dive is a leader in B2B audience development through high quality
specialist digital content and business journalism. Nearly 13m decision-makers
across 24 competitive industries rely on its exclusive insight and analysis
delivered through 27 digital publications.

Industry Dive has been owned by Falfurrias Capital Partners since 2019. In
2021, it reported revenue of $81.9m, statutory profit before tax of $4.1m and
gross assets of $149m.

For more information, visit www.industrydive.com (http://www.industrydive.com)
.

 

About EPFR (Emerging Portfolio Funds Research)

EPFR provides fund flows and asset allocation data to financial institutions
around the world. Tracking over 142,000 traditional and alternative funds
domiciled globally with more than $52.5 trillion in total assets, EPFR
delivers a complete picture of institutional and retail investor flows and
fund manager allocations driving global markets. Its market leading data
services include daily, weekly and monthly equity and fixed income fund flows
and monthly fund allocations by country, sector, and industry. In 2021, EPFR
global delivered revenues of £17.2m, statutory profit before tax of £5.7m
and gross assets of £43.6m.

 

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