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Covid-19: Informa’s uninvited guest

Results for 2019 were broadly positive, with profits exceeding analysts’ expectations
March 10, 2020

Events-related businesses make up almost two-thirds of Informa’s (INF) revenues, so the spread of the coronavirus was always likely to have a detrimental impact on near-term trading – and perhaps beyond. It is in the process of rescheduling 45 large events to dates later in 2020, representing budgeted revenues of £350m, while 70 smaller events have also been rescheduled, representing revenues of £50m. Another 13 events have been cancelled outright in 2020 – with budgeted revenues of £25m. For events that have been rescheduled, localised or ‘virtualised’ this year, the group said that it would expect to incur some incremental investment in venue capacity, customer marketing and other duplicative cost. At this stage, it is not giving any market guidance for the current year.

589p

If you disregard the subsequent impact of the outbreak, trading through 2019 would have given cause for optimism, with a 3.5 per cent rise in underlying revenue combined with a 139 basis point increase in the adjusted operating margin. The group has reassigned revenues and it is difficult to imagine the group won't book a related cash impairment at the half-year mark, but at least free cash flow is heading in the right direction, up 44 per cent to £722m in 2019.

These results were ahead of Peel Hunt’s forecasts. But based on the broker's “very early estimates” – it reckons that adjusted pre-tax profits for 2020 could reduce by £100m or 12 per cent to about £700m.

INFORMA (INF)   
ORD PRICE:589pMARKET VALUE:£7.37bn
TOUCH:588-589p12-MONTH HIGH:901pLOW: 490p
DIVIDEND YIELD:4%PE RATIO:33
NET ASSET VALUE:451p*NET DEBT:46%**
Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20151.2122024.318.5
20161.3517823.619.3
20171.7626837.720.5
20182.3728219.721.9
20192.8931918.023.5
% change+22+13-9+7
Ex-div:18 Jun   
Payment:10 Jul   

*Includes intangible assets of £9.6bn, or 765p a share

**Includes lease liabilities of £317m