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Informa losses surpass £1bn

The events business will treat 2021 as a “transition year”
Informa losses surpass £1bn
  • Informa targets broadly flat revenue and positive cashflow this year 
  • Further growth will depend on pace of recovery outside of mainland China 

As lockdown restrictions lift in the UK, the events industry looks like it could be staging a tentative recovery. The Brit awards confirmed that it will have an audience of 4,000 people at the O2 arena in London next month, making it the first major indoor, live music event in over a year. No one will need to socially distance or wear face masks inside, as part of the government ‘events research programme’. So not only is it going ahead, it might even look normal. 

There is a light at the end of the tunnel for events companies, then. Yet recuperating from a disastrous 2020 will not be easy: Informa (INF) revealed that it had taken a £593m impairment charge on its brands, a reflection of a foggy outlook for its physical events portfolio. Cancellations since March last year have pushed the company to a pre-tax loss of £1.14bn. 

As such, Informa is labelling 2021 as a “transition” period, during which it will focus on its subscriptions-led business and growth in B2B digital services, as well as a gradual return in physical events. It is targeting baseline revenues of at least £1.7bn, which would mark a small rise from last year’s sales (although still well below 2019’s £2.89bn), and hopes to remain cashflow positive throughout. 

Management flagged that any further revenue growth will depend on the pace and scale of return to physical conferences outside of mainland China. A similar story is playing out over at industry-peer Relx (REL). The company’s exhibitions business has managed to host 56 events so far this year, primarily in Japan and China. Yet it acknowledged that the outlook for 2021 was uncertain in Europe and the Americas, and that the pandemic would continue to affect its ability to hold in-person events. 

Analysts at Peel Hunt are relatively cautious on Informa, leaving their adjusted pre-tax forecast of £380m in 2021 unchanged. They warn that if the business was hoping that a later April result date would give more time for proof of a recovery, it looks like it will have to wait until the half-year point. The £1bn loss revealed this morning is not an encouraging headline figure - but Informa has managed to keep net debt within control, falling to £2bn from £2.7bn in 2019, supported by a capital raise last April. We think it still has a good shot at capturing upside. Hold.

INFORMA (INF)    
ORD PRICE:562pMARKET VALUE:£ 8.43bn
TOUCH:561.8-562.2p12-MONTH HIGH:627pLOW: 346p
DIVIDEND YIELD:NILPE RATIO:NA
NET ASSET VALUE:376p*NET DEBT:37%
Year to 31 DecTurnover (£bn)Pre-tax profit (£bn)Earnings per share (p)Dividend per share (p)
20161.350.1823.619.3
20171.760.2737.720.5
20182.370.2819.721.9
20192.890.3217.87.5
20201.66-1.14-73.4nil
% change-43-458-512-
Ex-div:na   
Payment:na   
*Includes intangible assets of £8.7bn or 578p a share

Last IC View: Hold, 382p, 21 Sep 2020