Informa (INF) H2 2017 earnings summary

Executive summary

• 2017 marked the final year of the four-year Growth Acceleration Plan; revenue and adjusted earnings grew, cash flow strengthened, and dividends increased.

• All four divisions delivered underlying revenue growth; strategy remains focused on sustainable growth, scale, and investment in products, platforms, and customer services.

Financial highlights

• Reported revenue rose 30.7% to £1.76bn; underlying revenue growth accelerated to 3.4% from 1.6% in 2016.

• Adjusted operating profit increased 31.3% to £545m; adjusted diluted EPS rose 9.5% to 46.1p, reflecting trading, expansion, currency and a tax headwind.

• Free cash flow reached £400.9m, up ~30% and ahead of the £400m target; reported free cash flow yield was ~7.1%.

• The 6% dividend increase brought the dividend to 20.45p per share, covered ~2.25x by earnings.

Outlook and guidance

• 2018 target: underlying revenue growth north of 3.5%; the outlook envisaged another year of growth, with segment contributions expected to vary.

• Exhibitions expected to grow strongly, but at a lower headline rate than in 2017; Academic Publishing and KNN expected to be steady, with BI targeting further progressive growth.

• Near-term priority is sustainable revenue growth and reinvestment; accelerating operating profit ahead of revenue growth is not the primary focus.

• Penton gross cost savings expected to rise from ~$15m in 2017 to ~$22.5m in 2018; revenue initiatives include Market Maker expansion and SupplySide China launch in Guangzhou.

• Proposed UBM combination anticipated to complete in Q2 2018, subject to shareholder approval and antitrust filings; integration planning was underway.