Informa (INF) H2 2016 earnings summary

Executive summary

• 2016 organic revenue growth was 1.6%; reported revenue rose 11%, aided by acquisitions and U.S. dollar strength.

• Adjusted operating profit increased 13.8%; adjusted earnings were 42.1p, up 6.6% YoY on a rights-issue-restated 2015 basis.

• Growth Acceleration Plan investment peaked in 2016; management cited product launches and capability improvements as supports for growth from 2017.

Financial highlights

• Adjusted operating profit margin rose 70 bps to 30.9%, supported by the increasing mix of higher-margin Global Exhibitions.

• Free cash flow was £306m, slightly higher YoY, despite almost £20m of additional CapEx investment.

• Full-year dividend increased 4.3% to 19.3p per share; dividend cover was 2.2x earnings.

• Return on capital employed was 9.2%, unchanged from 2015, despite peak plan investment and pension additions.

Outlook and guidance

• 2017 guidance targets growth in revenue, earnings, dividends and cash; free cash flow target exceeds £400m.

• 2017 adjusted tax rate expected at 21.5%, up from 18% in 2016; acquired tax losses partly mitigate cash tax impact.

• At least half of Penton’s £14m synergy target expected in 2017; 2017 Penton revenue expected to be broadly flat, perhaps slightly down.

• Post-plan ambition is for all divisions to be growing entering 2018; management described group organic growth potential as 2%–3%, without a specific timetable to exceed 3%.

• Ongoing CapEx expected at 3%–5% of revenue, focused particularly on IT infrastructure, platforms and product delivery in Academic Publishing and BI.