Informa (INF) H2 2018 earnings summary

Executive summary

• 2018 centered on combining with UBM, with the combination effective June 16; underlying revenue growth was 3.7%, accelerating from 3.4% in 2017.

• Integration advanced across brands, leadership, sales, pricing and scheduling; back-end systems integration is expected to continue through 2019 and 2020.

• The strategy prioritizes specialist, market-focused businesses, international reach and recurring or forward-booked revenue.

Financial highlights

• Reported revenue rose almost 35% to £2.4bn; adjusted operating profit increased 34% to £732m.

• Adjusted diluted EPS increased 7% to 49.2p; free cash flow rose 25.5% to £503m.

• Revenue growth bridge included 3.7% underlying growth, a 35% contribution from UBM, a 3.8% FX headwind and a 0.4% biennial-phasing impact.

• Interest expense was £82m; the effective tax rate fell to just under 18%, primarily due to U.S. tax-law changes.

Outlook and guidance

• 2019 ambition is for full-year underlying revenue growth above 3.5%; pro forma 2018 growth was ~3.4%.

• 2019 synergy benefit is targeted at £50m, with run-rate savings of £60m by end-2020 and £75m by end-2021.

• 2019 operating margin expectations were 31%–32%, reflecting synergies and the lower-margin full-year UBM contribution; longer-term margin guidance was not specified.

• Over 65% of revenue comes from forward-booked exhibition contracts, subscriptions and sponsorship contracts; 2019 effective tax-rate expectation is 19%.

• Fashion investment aims to address operational issues and restore growth; benefits are expected to become visible from 2020.