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Underlying revenues declined 13 per cent in the first half at publishing and conferences group Informa , with growth in its publishing business mitigated by contractions in the events and training business. However, favourable currency movements due to sterling's weakness against the US dollar added £93.8m to the top-line, which helped revenues to edge up 1.4 per cent overall.
Advertising
Informa's publishing business, which accounts for two-thirds of group operating profits, has benefited from a high proportion of subscription-based revenues, with only 3 per cent of sales stemming from advertising. Excluding currency translation effects, the division's underlying revenues rose 1.4 per cent. The professional and commercial publishing units have maintained strong renewal rates that are 'in the high seventies', while the academic publishing business has managed to organically grow sales by 4 per cent.
The group's events and training business has been far more vulnerable in the downturn, with sponsorship revenues falling 5 per cent and delegate revenues slumping 31 per cent. While larger conferences remain more resilient, the smaller conferences and training events have not. In the light of tighter budgets, Informa has provided more webinars and virtual training sessions. Encouragingly, rebookings for events in 2010 are ahead of last year.
Meanwhile, the rights issue in May raised £242m, which has helped to alleviate Informa's debt concerns. Borrowings were also reduced by favourable currency movements and now stand at £984m, down from £1.34bn in January. Cost cuts are expected to deliver annualised savings of £20m in the full year, although these measures have cost £10.8m, which are reflected in these results.
Excluding restructuring and reorganisations costs of £15.8m and £69.7m of amortisation charges, first-half underlying pre-tax profits rose by 12 per cent to £118m, giving EPS of 16.2p. On the same basis, analysts at RBS Research have left full-year profit forecasts unchanged at £258m, giving adjusted EPS of 33.5p (33.9p in 2008).
INFORMA (INF) |
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|---|---|---|---|---|
| ORD PRICE: | 233p | MARKET VALUE: | £1.39bn | |
| TOUCH: | 233.25-235p | 12-MONTH HIGH: | 385p | LOW:118p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 206p* | NET DEBT: | 80% | |
| Half-year to 30 Jun |
Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008** | 628 | 60.0 | 9.22 | 5.13 |
| 2009 | 636 | 32.2 | 4.41 | 3.60 |
| % change | +1 | -46 | -52 | -29 |
Ex-div: 19 Aug Payment: 18 Sep *Includes intangible assets of £2.8bn, or 471p a share **Earnings and dividends per share restated to reflect the bonus element of the rights issue in May 2009 |
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Informa's minimal advertising exposure and high subscription and renewals rates separate it from peers. And with cost cuts to generate savings in the full year, these results are probably as bad as things get. The shares have inched up since we suggested buying them (229p, 1 July 2009) and remain attractive on seven times earnings forecasts. Buy.
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