Informa (INF) H2 2014 earnings summary

Executive summary

• 2014 delivered modest organic revenue growth, broadly maintained profit, adjusted EPS of 40.3p and strong cash generation amid currency headwinds and significant portfolio change.

• The Growth Acceleration Plan (GAP) reorganized operations into four divisions, prioritized investment and targeted acquisitions, and aims to improve growth and returns over time.

Financial highlights

• Adjusted earnings were 40.3p, up 0.5% YoY as reported and 4.5% excluding currency headwinds; the result was slightly ahead of consensus.

• Adjusted operating profit was £334m, with an operating margin of 29.5%, broadly flat YoY.

• Free cash flow reached £232m, up 12% YoY; cash conversion was 97%, broadly in line with 2013.

• Full-year dividend rose 2% to 19.3p per share, with dividend cover of 2.1x.

Outlook and guidance

• 2015 ambition: underlying adjusted earnings growth, improved cash flow and a higher dividend; no quantified earnings growth target was given.

• GAP costs are expected to reduce margin by 150–250 bps at peak; 2015 impact is toward the lower end, with full impact in 2016.

• Global Exhibitions organic growth is expected in the high single digits in 2015, below 2014's double-digit rate as biennial and quadrennial event benefits fall away.

• Business Intelligence targets halving its revenue decline rate by end-2015 and reaching a growth run rate by end-2016; deferred income was down 1% YoY at year-end.

• Knowledge & Networking was expected to return to a growth run rate by end-2015; its margin was expected to improve as focus shifts to core businesses.