TIDMINF
RNS Number : 5482Y
Informa PLC
06 March 2017
Press Release
6 March 2017
Informa PLC
Results for 12 Months to 31 December 2016
Year of Investment and Delivery as Growth Acceleration Plan
produces third consecutive year of growth in Revenue, Adjusted
Earnings, Free Cashflow and Dividends
Key FINANCIAL highlights
-- Higher Revenue Growth: +11.0% to GBP1,345.7m (2015: GBP1,212.2m), +1.6% organic
-- Increased Adjusted Operating Profit growth: +13.8% to GBP416.1m (2015: GBP365.6m)
-- Improving Adjusted Diluted Earnings per Share growth: +6.6% to 42.1p (2015: 39.5p*)
-- Enhanced Dividend: up 4.3% to 19.3p (2015: 18.5p*)
-- Consistent Free Cash Flow: GBP305.7m (2015: GBP303.4m)
-- Robust Balance Sheet: Net debt/EBITDA 2.6x (2015: 2.2x) including GBP1.2bn Penton addition
-- Lower Statutory Operating Profit: GBP198.8m (2015: GBP236.5m)
London: Informa (LSE: INF.L), the International Business
Intelligence, Exhibitions, Events and Academic Publishing Group,
today published its results for the 12 months to 31 December 2016,
reporting an improved operating performance and continued progress
with the 2014-2017 Growth Acceleration Plan ("GAP"), supported by
strong returns from acquisitions and favourable currency
trends.
Stephen A. Carter, Group Chief Executive, said: "2016 was a
steady and strong year for the Group, where the business grew on
all key financial measures, whilst expanding significantly in the
US and investing substantially in its products. This sets Informa
up well for further progress in 2017."
He added: "The current year will be characterised by Accelerated
Change as we combine the newly-acquired Penton business with
Informa, and as we complete planned GAP investments, reap the
benefits of our international scale and continue to strengthen
capabilities across the Group."
-- Increased Balance and Breadth through the 2014-2017 Growth Acceleration Plan:
o Investment: Three quarters of the way through GAP and organic
growth investment starting to deliver, with 30+ enhanced products
coming on stream through 2017/18;
o Penton Information Services: Integration on track, with
Discovery and Delivery phases nearing completion; Patrick Martell
relocated to the US to maximise synergy opportunity and ensure
smooth combination with Informa;
o International expansion: Four-year programme of targeted
organic and inorganic expansion in the US in key verticals
including Construction and Real Estate (Hanley Wood Exhibitions,
WWETT), Health & Nutrition (Virgo, Penton), Agriculture
(Penton), Life Sciences (FIME), Pop Culture (Dallas Comicon) and
International Yachting (YPI); Producing strong results, both
operationally and through Dollar strength, with the US now
representing over 50% of Group revenue on a pro-forma basis and US
Dollar/US Dollar-pegged revenues accounting for over 65%;
o Portfolio mix: Proportion of recurring and predictable revenue
from subscriptions and exhibitions expected to be more than 55% in
2017;
o Balance and Breadth: Proactive repositioning towards higher
growth and margin businesses will see Global Exhibitions and
Academic Publishing accounting for circa 70% of Group profit in
2017, with Business Intelligence around 20% and Knowledge &
Networking less than 10%;
o Portfolio Management: Further operational focus at Knowledge
& Networking with strategic review of five remaining domestic
conference businesses in Australia, Brazil, Germany, Singapore and
Switzerland.
-- Continued operational and financial momentum:
o Global Exhibitions: Strong organic revenue growth of +8.7% and
reported revenue growth of 16.9%, reflecting increased scale,
international breadth and strengthened vertical market
positions;
o Business Intelligence: Positive organic revenue growth of
+1.1% and reported revenue growth of 4.8%, with subscription focus,
strengthened customer relationships, and investment in products and
platforms;
o Academic Publishing: Organic revenue growth of +0.3% and
strong reported growth of +9.6%, despite ongoing softness in the US
book market, reflecting Journals strength, Upper Level Academic
focus, currency and strong returns from acquisitions.
o Knowledge & Networking: Progress in Branded Events offset
by ongoing volatility in the remaining domestic spot conference
businesses to produce a -4.1% organic revenue decline and -0.5%
reported revenue decline; following previous portfolio
restructuring in other domestic conference businesses in
Scandinavia, the Netherlands and Russia, next stage of review now
underway.
Stephen A. Carter, Group Chief Executive, concluded: "We saw
clear and strong growth in Global Exhibitions and Business
Intelligence, alongside a consistent performance in Academic
Publishing, despite continued softness in US books. In Knowledge
& Networking, we continue our programme to increase focus on
Branded Events within the key verticals of Finance, Life Sciences
and TMT, whilst confirming today a strategic review of our five
remaining domestic conference businesses."
Financial Highlights
2016 2015 Actual Organic(1)
GBPm GBPm % %
-------------------------------------------------------- ----------- ---------- -------- -------------
Revenue 1,345.7 1,212.2 11.0 1.6
Statutory Operating profit 198.8 236.5
Adjusted operating profit(2) 416.1 365.6 13.8 0.0
Adjusted operating margin (%)(2) 30.9 30.2
Operating cash flow(3) 393.9 377.7
Statutory Profit before tax 178.3 219.7
Adjusted profit before tax(2) 376.5 339.7 10.8
Statutory Profit for the year 173.5 172.7
Statutory Diluted earnings per share (p) 23.6 24.3
Adjusted diluted earnings per share (p)(2) 42.1 39.5 6.6
Dividend per share (p) 19.3 18.5 4.3
Free cash flow(3) 305.7 303.4
Net debt 1,485.4 895.3
-------------------------------------------------------- ----------- ---------- -------- -------------
(1) In this document organic refers to results adjusted for material acquisitions, disposals
and the effects of changes in foreign currency rates.
(2) In this document we refer to adjusted and statutory results. Adjusted results are prepared
to provide a useful alternative measure to explain the Group's underlying business performance.
Adjusted results exclude adjusting items as set out in the Income Statement.
(3) Operating cash flow, Free cash flow and Net debt are as calculated in the Financial Review.
Divisional Highlights*
2016 2015 Actual Organic(1)
GBPm GBPm % %
-------------------------------------------- -------- ------ ------- -----------
Global Exhibitions
Revenue 306.9 262.5 16.9 8.7
Statutory Operating Profit 53.3 67.0
Adjusted Operating Profit 119.0 98.0 21.4 13.5
Adjusted Operating Margin (%) 38.8 37.3
-------------------------------------------- -------- ------ ------- -----------
Business Intelligence
Revenue 290.0 276.8 4.8 1.1
Statutory Operating Profit 45.8 42.1
Adjusted Operating Profit 65.7 63.2 4.0 (3.2)
Adjusted Operating Margin (%) 22.7 22.8
-------------------------------------------- -------- ------ ------- -----------
Academic Publishing
Revenue 490.4 447.4 9.6 0.3
Statutory Operating Profit 135.0 116.3
Adjusted Operating Profit 187.2 164.8 13.6 (2.1)
Adjusted Operating Margin (%) 38.2 36.8
-------------------------------------------- -------- ------ ------- -----------
Knowledge & Networking
Revenue 224.4 225.5 (0.5) (4.1)
Statutory Operating Profit (6.7) 11.1
Adjusted Operating Profit 37.4 39.6 (5.6) (19.4)
Adjusted Operating Margin (%) 16.7 17.6
-------------------------------------------- -------- ------ ------- -----------
Enquiries
Informa PLC
Stephen A. Carter, Group Chief Executive +44 (0) 20 7017 5771
Gareth Wright, Group Finance Director +44 (0) 20 7017 7096
Richard Menzies-Gow, Director of Investor Relations +44 (0) 20 3377 3445
Teneo Strategy
Tim Burt / Ben Ullmann +44 (0) 20 7240 2486
------------------------------------------------------ ----------------------------
Analysts and investors
There will be a presentation to analysts at 9.30am on 6 March
2017 at Bank of America Merrill Lynch Financial Centre, 2 King
Edward Street, London, EC1A 1HQ. A simultaneous webcast of the
analysts' presentation will be available via the Company's website
(www.informa.com).
*Penton is reported as a separate segment in the 2016 results
and not included in Divisional financials
Trading Outlook
The macro and geo-political environment remains uncertain and in
2017 the combination of new leadership in the US, Brexit
negotiations in the UK and political elections in mainland Europe
suggest the backdrop is likely to remain volatile. Within this
context, our strategy to expand internationally, increase our
recurring and predictable revenues and build portfolio scale gives
us more resilience, with increased Balance and Breadth across the
Group.
2017 - A Year of Accelerated Change
Our key priority in 2017 is the successful delivery of the
2014-2017 Growth Acceleration Plan ("GAP"), whilst we ensure a
smooth and effective combination of Penton Information Services
with Informa. We are targeting GBP14m of net annualised synergies
in 2018 and expect to realise at least half of this figure in 2017.
It will, thus, be a year of Accelerated Change, as we look to reap
the benefits of our increased scale and to position ourselves to
create further value and opportunities for our customers.
The addition of Penton, our continued focus on improving
operational fitness and the progressive delivery of enhanced
products and platforms through our GAP investments should allow us
to deliver a fourth consecutive year of growth in revenue, profit,
earnings and cashflow in 2017, which will leave us well placed to
fulfil our GAP ambitions as we enter 2018.
global exhibitions
The Exhibitions Market remains attractive and growing,
reflecting the increasing value attributed to direct, face-to-face
customer interaction. Our strategy to expand our portfolio
internationally and build a position in the US is helping us to
consistently grow at or ahead of this market.
The addition of Penton and, more recently YPI, adds a further 35
strong Brands (taking the total to around 200) and increases our
focused scale and international breadth in core verticals. This is
most notable in Health & Nutrition, Agriculture and
International Yachting, complementing our existing strength in
Construction and Real Estate, Life Sciences and Beauty. Our
increased scale creates opportunities for cross marketing and
geo-cloning, as well as in general contracting and ancillary
revenue, and should ensure another year of strong organic growth in
2017.
business intelligence
Over the past three years, we have restructured and refocused
our Business Intelligence Division to become more customer and
market oriented. This renewed focus and more commercial approach
has delivered steady improvement in subscription renewals, and
combined with early benefits from GAP investment in our intelligent
products, this translated into positive organic growth in 2016.
The delivery of additional new products and upgraded platforms
should help expand our audience and maintain subscription momentum.
This will be complemented by the addition of Penton assets, which
strengthen and expand our vertical positions, and enhance our
Marketing Solutions capabilities. This takes us into 2017 off a
full year of organic growth and with positive momentum, positioning
us for further acceleration in the year ahead.
Academic Publishing
The outlook for our Academic Publishing Division remains
positive, underpinned by the ongoing strength of our Journals
business, which continues to grow consistently, with high renewal
rates and strong levels of cash generation. The US book market is
expected to remain soft, which will continue to impact growth in
our Books business, albeit our focus on the Upper Level Academic
segment provides some protection, differentiating us from
peers.
These qualities, combined with ongoing investment in content and
platforms and a continued focus on operating efficiencies give us
confidence we can deliver continuing organic growth in 2017, with
robust margins and further strong cash flow.
knowledge & networking
Our long-term programme of simplification and operational
improvement within the Knowledge & Networking Division will
continue in 2017 with the strategic review of our five remaining
domestic conference businesses. This reflects our commitment to
increase the focus on repeatable, Branded events within our three
core markets of Life Sciences, Global Finance and TMT.
A streamlined portfolio should be more predictable and less
volatile. When combined with ongoing investment in our digital
platforms and specialist content, this positions us as a leading
knowledge provider to specialist communities and networks within
our core verticals. This should put us in a strong position to
return the business to growth by the end of the GAP programme.
Operational Review
In 2016, the focus was on Investment and Delivery, as we
prioritised the Disciplined Delivery of the 2014-2017 Growth
Acceleration Plan ("GAP") in its third year. We also increased the
level of investment, both internally in the many organic
initiatives underway and also externally, as we continued to pursue
our programme of international expansion and scale.
GAP Investment programme enters the delivery phase
Our organic investment programme remains a key element of GAP,
with GBP70m to GBP90m being invested across the group over a
three-year period. It was the peak year of investment in 2016, with
total capital expenditure of around GBP52m including 30 different
GAP initiatives. Elements of some projects have now gone live and
are starting to reap benefits in terms of expanded audiences and
customer renewals. This momentum will build over the next 18 months
as the rollout of enhanced customer platforms and new or upgraded
products accelerates, underpinning our accelerated growth
ambitions.
Examples of initiatives that have already gone live include:
Division Project Objective Benefits
-------------- ---------------- --------------------- ------------------------------
Business Pharma Content expansion, Expanded team of analysts,
Intelligence Insight product enhancement epidemiologists and
and improved editors, with 44 updated
user experience disease indications
for Datamonitor and 16 new indications
Healthcare included in primary
research database. New
forecasting tool launched.
Immediate improvement
in renewals and revenue
trend.
-------------- ---------------- --------------------- ------------------------------
Business AgriBusiness New capability IEG Vantage already
Intelligence Intelligence and improved online with progressive
Platform customer rollout of other products.
experience Cloud-based Agri data
through development store, real-time updates,
of Intelligence digital delivery, search
platform capability and online
tools. Immediate improvement
in rolling renewal rates
and good adoption of
new features.
-------------- ---------------- --------------------- ------------------------------
Knowledge Digital Improved CORE platform launched
& Networking Transformation customer and >150 events now
experience live, process and people
through launch changes complete with
of year round, significant improvement
content-rich in digital marketing
engagement capability. Still early
platform in the rollout but where
for core live, online conversion
TMT, Life rates have tripled with
Sciences 40% more time spent
and Finance online, higher retention
verticals and improved efficiency.
-------------- ---------------- --------------------- ------------------------------
Academic Digital Single platform Core technology upgrade
Publishing Content for Upper implemented and more
Management Level Academic granular content tagging
Platform content, well underway with full
improved rollout towards end
discoverability 2017. Cogent OA and
and customer Taylor & Francis Online
insight already re-launched
as fully responsive,
dynamic web-platforms.
-------------- ---------------- --------------------- ------------------------------
Global Digital Establish Upgraded web platform,
Exhibitions platform community-based, enhanced capabilities
and delivery year-round in marketing automation,
customer data, CMS, analytics
engagement and campaign management.
model through Full launch through
enhanced 2017 with events cycle.
digital and Events already on the
marketing platform seeing increased
capabilities efficiency and improved
customer insights and
marketing leads.
-------------- ---------------- --------------------- ------------------------------
As we move out of the GAP investment period, each Division is
transitioning to business-as-usual investments, using similar
principles of governance and reporting. We actively encourage all
our teams to consistently reinvest in product development and
technology improvements to maintain competitive advantage and
differentiate from peers. We expect the level of ongoing annual
investment in the business to be in the range of 3-5% of revenue,
depending on the future evolution of our portfolio mix.
Enterprise Resource Platform for growth and scale
A good example of our ongoing commitment to investment is a
project to upgrade our group-wide Enterprise Resource Platform
("ERP"). As we continually strive to improve operational fitness
across what is a much broader and bigger Group and prepare for the
next phase of acceleration, now is the time to build an ERP
foundation that gives us the capabilities to provide efficient and
effective shared services at scale.
Increased portfolio focus in Knowledge & Networking
When we launched GAP, the Knowledge & Networking Division
was created to bring together all our disparate conference, confex,
other content-driven events and training businesses. This allowed
us to simplify its operating model and make changes to its
management structure, beginning the process of running it as a
single business to better leverage our scale and customer
relationships.
As part of this restructuring, we started to shift the business
away from its historical roots as a domestic conference business,
dependent on identifying topical subject areas for one-off events
and growing through volume expansion. At its peak, Informa was
running over 12,000 events a year under this format.
The growth of digital content on the internet and access to
specialists through social media has undermined the value of this
traditional model, lowering barriers to entry, increasing
volatility and putting pressure on revenue. As a result, we have
been steadily refocusing the business on its Branded events in key
market verticals, which are larger, repeatable events with strong
Brands within the specialist communities they serve, typically the
annual networking forum for that industry.
Over the last few years, the Group has progressively exited from
its historical European domestic conference businesses through the
sale of operations in Denmark, Italy, the Netherlands, Russia,
Spain and Sweden. In 2017, we plan to review our five remaining
domestic conference businesses in Australia, Brazil, Germany,
Singapore and Switzerland. In aggregate these businesses run over
400 events annually, generating revenue of close to GBP50m but with
an operating margin that is dilutive to the wider Division.
Our Branded events are focused on areas offering long-term
growth and returns. Combined with our investment in complementary
digital community platforms, they position the business as a
critical knowledge partner within our three core end markets of
Life Sciences, Global Finance and TMT.
As we further increase the focus of the Knowledge &
Networking Division and grow the size and scale of Global
Exhibitions and Business Intelligence, we naturally lower our
exposure to delegate-driven conferences and further improve the
quality of Group earnings.
Balance and breadth through international expansion and
scale
Our international expansion strategy continued through 2016 with
the addition of several businesses in key verticals such as TMT
(Light Reading) and Sustainability & Waste (Water &
Wastewater Equipment, Treatment & Transport Show).
In November we announced the addition of Penton Information
Services for GBP1.2bn, a leading US-based Exhibitions and
Professional Information Services Group. This significantly
strengthens our Global Exhibitions and Business Intelligence
Divisions, consolidating our position in key verticals and further
expanding our reach and scale in the important US market. More
recently, we also added YPI for GBP106m, a leading US-based
Exhibitions business in the attractive and growing International
Yachting vertical.
One of the attractions of Penton and YPI is the increased
Balance and Breadth they give us across our portfolio, making us
more resilient with a broader set of growth drivers:
-- At a Divisional level, they leave us more balanced, with our
highest growth and highest margin business, Global Exhibitions,
becoming our largest Division approaching 40% of Group profit on a
pro-forma basis, slightly more than Academic Publishing, with
Business Intelligence at around 20% and Knowledge & Networking
less than 10%;
-- At a vertical level, they further strengthen our position in
Health & Nutrition, Agriculture, International Yachting, TMT
and Infrastructure, whilst also broadening our exposure through
established scale positions in Design & Manufacturing, Aviation
and Transport;
-- By region, they give us significant scale in the US, with
over 50% of revenue now generated here (over 65% if we include
countries with currencies pegged to the US dollar), leaving the UAE
at around 6%, with the UK & Europe and the Rest of the World
both around 20%;
-- By revenue type, we now generate more than 55% of revenue
from recurring or predictable Subscriptions and Exhibitions
revenue.
Penton integration on track
We are taking a measured approach to the combination of Penton
with Informa to ensure we maintain operating momentum throughout.
Since completion on 2 November, we have been in a period of
Discovery and Delivery. We have spent time further understanding
the opportunities available through a combination with Informa,
whilst also ensuring Penton delivered on its 2016 targets and
started 2017 positively in what is a key trading period for both
businesses. In the short period under our ownership in 2016, Penton
contributed revenue of GBP34.0m and adjusted operating profit of
GBP6.8m, reflecting what is a relatively quiet period for trading
in November and December, with no major events taking place.
Patrick Martell, the Chief Executive of the Business
Intelligence Division and CEO of Penton, has relocated to the US to
lead the integration team and ensure we maximise the synergies
available from combining the two businesses. We are confident of
meeting our target of at least GBP14m annualised net operating
synergies by 2018, mainly from the removal of duplicate costs and
improved scale efficiencies. To date, we have already realised over
GBP4m of savings on an annual run-rate basis, giving us confidence
we can deliver at least half the GBP14m total in 2017.
We are also starting to identify revenue opportunities and while
these generally have a longer lead time, there are some obvious
cross marketing initiatives within Global Exhibitions that we are
starting to pursue, notably within Health & Nutrition as we
combine the strengths of the Vitafoods, Supplyside and New Hope
Network Brands. Similarly, within Business Intelligence, we are
already working on plans to utilise Penton's marketing services
capability and apply it more broadly across the Group.
In order to facilitate a smooth integration into the Business
Intelligence Division, we recently updated its organisational
structure, expanding the Maritime vertical to include
Transportation (including Aviation Week) and adding a sixth
vertical, Industry & Infrastructure. As part of this change, we
have also put greater operational focus, autonomy and
accountability into the vertical teams, moving closer to the Penton
structure. This ensures we are more market oriented, customer
centric and focused on delivering growth as we look to reap the
full benefits of recent GAP and acquisition investments.
The response of Penton's staff has been very positive to date,
with strong enthusiasm to be part of a larger Group committed to
long-term investment in the Exhibitions and Information Services
sector.
Strong cash generation, higher dividends and a robust balance
sheet
The conversion of profits into cash remains a key focus of our
GAP Funding strategy, ensuring we retain strong liquidity to meet
financing commitments and reinvest into the business.
In 2016, we reported another year of strong operating cash
conversion at 95% and an increase in free cash flow to GBP305.7m.
This was despite a number of one-off factors, as highlighted at the
half year stage:
-- An increase in net capital expenditure of c.GBP20m
year-on-year in the peak year of GAP investment;
-- Timing issues within Academic Publishing, primarily a prior
year benefit in relation to the subscription agent, SWETS;
-- Cash tax payments of GBP43.3m, up GBP12.6m year-on-year,
reflecting a more normalised cash tax rate after a one-off
reduction in 2015 from our US expansion programme;
-- Currency movements and the impact of longer term debt financing on cash interest costs.
Free cash flow was GBP305.7m in 2016, marginally higher than
last year due to lower restructuring costs and a small contribution
from Penton for the period under ownership. On a pro-forma basis,
we expect annual free cash flow to be closer to GBP400m, reflecting
equally strong cash characteristics at Penton due to its similarly
high proportion of subscription and forward-booked revenue.
This strong cash performance, aligned with continued progress on
GAP and positive operating momentum, led the Board to increase the
Dividend per Share by 4.3% to 19.3p, slightly above our GAP annual
dividend growth commitment.
Net debt finished the year at GBP1,485m, with the step-up from
2015 wholly accounted for by the acquisition of Penton and the
impact of currency on our US dollar-denominated debt. This left our
net debt to EBITDA ratio at 2.6 times at year end, in line with the
guidance provided at the time of the Penton deal. Over the course
of 2017, our strong cash generation will bring leverage back down
comfortably within our target range of 2.0 to 2.5 times, leaving us
ongoing flexibility for further infill acquisitions should
attractive opportunities arise.
In December, we took the opportunity to refinance part of the
short-term Acquisition Facility arranged as part of the Penton
deal, through the issue of $500m US private placement notes in
three tranches. This reduced our market risk and extended our debt
maturity at an attractive weighted average coupon of 3.6%. This
gives us visibility at a time when the yield curve is steepening,
with no material refinancing now required until 2020.
Divisional Trading Review*
The Group delivered further improvement in its trading
performance during 2016, the peak year of GAP investment. Reported
revenue grew +11.0% to GBP1,345.7m and adjusted operating profit
was +13.8% at GBP416.1m. Organic revenue growth was +1.6%, an
improvement from the +1.0% reported in 2015. Strong returns from
acquisitions and the benefit of US Dollar strength on our expanded
US revenue base helped boost reported revenue and profit. Organic
operating profit was flat, reflecting underlying cost inflation and
the impact of GAP investments.
Penton Information Services was acquired and consolidated from 2
November 2016. It is not included in financials for the four
Operating Divisions in 2016 but will be incorporated from 2017. In
the 2016 financial year it contributed GBP34.0m revenue and GBP6.8m
adjusted operating profit, representing less than 1% of the Group
on both measures.
The commentary below includes statutory and adjusted measures.
We believe adjusted operating profit is a useful additional measure
in monitoring Divisional trading performance.
Global exhibitions
2016 2015 Actual Organic
-------------------------------
GBPm GBPm % %
------------------------------- ------ ------ ------- --------
Revenue 306.9 262.5 16.9 8.7
Statutory Operating Profit 53.3 67.0
Adjusted Operating Profit 119.0 98.0 21.4 13.5
Adjusted Operating Margin (%) 38.8 37.3
------------------------------- ------ ------ ------- --------
The Global Exhibitions Division organises transaction-oriented
Exhibitions and trade shows, providing buyers and sellers across
different industries and communities with a powerful platform to
meet face to face, build relationships and conduct business.
Informa has around 200 Exhibitions, serving a number of core
verticals, including Agriculture, Beauty, Construction & Real
Estate and Health & Nutrition.
In 2016, Global Exhibitions represented 22.8% of Group Revenues
and 28.6% of Adjusted Profit.
Our strategy to internationalise and scale the Global
Exhibitions Division continued to pay off in 2016, with another
strong year of growth. The Top 20 events in the portfolio continued
to perform well across key verticals, with further good growth
recorded in Life Sciences (Arab Health), Construction & Real
Estate (World of Concrete) Beauty & Aesthetics (China Beauty,
Anti-Aging World Congress), Health & Nutrition (Vitafoods,
SupplySide West), and Pop Culture (FanExpo).
The acquisition of Penton in November added around 30 leading
exhibitions Brands to the portfolio, strengthening our position in
key verticals including Agriculture and Health & Nutrition. It
also adds further scale and predictability in the key US market and
confirmed our position as the challenger operator, the third
largest globally.
As we build scale and breadth we continue to invest in our
Market Maker strategy. This saw us upgrade our web estate and
invest in data capabilities in 2016, laying the foundations for
more effective digital marketing and wider opportunities to
monetise our customer relationships outside of the exhibition.
Business intelligence
2016 2015 Actual Organic
-------------------------------------
GBPm GBPm % %
------------------------------------- ------ ------ ------- --------
Revenue 290.0 276.8 4.8 1.1
Statutory Operating Profit / (loss) 45.8 42.1
Adjusted Operating Profit 65.7 63.2 4.0 -3.2
Adjusted Operating Margin (%) 22.7 22.8
------------------------------------- ------ ------ ------- --------
The Business Intelligence Division provides specialist data,
intelligence and insight to businesses, helping them make better
decisions, gain competitive advantage and enhance return on
investment. It has a portfolio of more than 100 digital
subscription products, providing critical intelligence to niche
communities within five core industry verticals: Pharma, Finance,
Maritime, TMT, and Agribusiness.
In 2016, Business Intelligence represented 21.6% of Group
Revenue and 15.8% of Adjusted Profit.
Our programme of operational fitness and simplification in the
Business Intelligence Division continued to deliver results, with
the business recording positive organic revenue growth in 2016 for
the first time in five years. This reflects a steady recovery in
value renewal rates towards 90% and progressive improvement in
annualised contract values as the focus on subscriptions, increased
customer engagement and better account management, combined with
early benefits from GAP investments, started to deliver
benefits.
*Penton is reported as a separate segment in the 2016 results
and not included in Divisional financials
Alongside this programme of operational improvement, the team
stepped up the pace of its GAP investments in a wide array of
product and platform initiatives, ranging from expanded content
sets, to improved data collection, marketing automation tools and
enhanced delivery platforms. The customer outputs from some of
these initiatives started to go live towards the end of the year
and this progressive rollout will be key to maintaining growth
momentum in 2017.
Academic publishing
2016 2015 Actual Organic
-------------------------------
GBPm GBPm % %
------------------------------- ------ ------ ------- --------
Revenue 490.4 447.4 9.6 0.3
Statutory Operating Profit 135.0 116.3
Adjusted Operating Profit 187.2 164.8 13.6 -2.1
Adjusted Operating Margin (%) 38.2 36.8
------------------------------- ------ ------ ------- --------
The Academic Publishing Division publishes specialist books and
journals. Operating as the Taylor & Francis Group, it is
recognised internationally as one of the world's leading Upper
Level academic publishers through its five main imprints: Taylor
& Francis, Routledge, CRC Press, Garland Science and Cogent OA.
It has a portfolio of around 130,000 book titles and more than
2,500 journals available in both print and digital formats, across
subject areas within Humanities and Social Sciences, and Science,
Technology and Medicine.
In 2016, Academic Publishing represented 36.4% of Group Revenue
and 45.0% of Adjusted Profit.
The Academic Publishing Division traded solidly through the
year, with consistent good growth in Journals balanced by continued
softness in Books, particularly in the US. This underperformance
was concentrated in the Lower Level textbook segment, where we only
have a limited exposure, representing around 10-15% of Books
revenue. It was impacted by a combination of market factors
including weak student enrolments, flat budgets, supply chain
disruption, cross-border purchasing and book rentals.
Our focus remained on further improving operational fitness
whilst continuing to invest in the depth of our specialist content,
product innovation and our broader technology capabilities. This
saw us consolidate our Books operations into a single business,
improving efficiency and increasing our flexibility to meet
evolving customer needs. We also made good progress with our
divisional GAP initiatives, which are largely focused on increasing
content discoverability, improving customer analytics and
developing our range of author services.
Knowledge and networking
2016 2015 Actual Organic
-------------------------------
GBPm GBPm % %
------------------------------- ------ ------ ------- --------
Revenue 224.4 225.5 -0.5 -4.1
Statutory Operating Profit (6.7) 11.1
Adjusted Operating Profit 37.4 39.6 -5.6 -19.4
Adjusted Operating Margin (%) 16.7 17.6
------------------------------- ------ ------ ------- --------
The Knowledge & Networking Division is the Group's Community
Content, Connectivity and Data business, incorporating its
training, learning, conference, advisory and congress businesses.
It organises content-driven events and programmes that provide a
platform for communities to meet, network and share knowledge. It
runs over 1,600 conferences and training events each year globally,
covering a range of subject areas, but with a particular focus on
Life Sciences, TMT and Finance.
In 2016, Knowledge & Networking represented 16.7% of Group
Revenue and 9.0% of Adjusted Profit.
Our strategy to simplify, focus and rationalise Knowledge &
Networking continued in 2016. We ran more than 1,600 events in
total during the year, down from around 3,000 three years ago and
over 12,000 in 2007. This shift illustrates our increasing focus on
larger Branded annual events in the three core verticals of Life
Sciences, Finance and TMT, and continued shift away from small,
one-off domestic conferences. The next stage of this transition is
underway with the review of our five remaining domestic conference
businesses in 2017. To put this in context, while divisional
organic revenue growth was lower than expected in 2016 at -4.1%,
the Top 20 events in the portfolio in aggregate grew around 8%.
To support our focus on Branded events, we continued to invest,
through GAP, in strengthening our digital presence and expanding
our specialist content within our three key verticals of Finance,
Life Sciences and TMT. This is improving our digital marketing
capability, helping to improve audience reach and deepening our
relationship with the sub-communities we are targeting.
Financial Review
We regard the Knowledge & Information markets as an
attractive destination for growth and expansion opportunities,
revenue mix, geographic reach, operating margins and cash
conversion. Over the last three years, as part of the Growth
Acceleration Plan we have been focused on making the most of these
opportunities. A particular focus has been on financial discipline
and maximising our cash generation to give the Group stability and
the flexibility to fund ongoing operations, pay a growing dividend
and consistently reinvest for growth.
In 2016, Informa reported another consistent financial
performance, producing a third consecutive year of growth in
Revenue, Adjusted Profit, Earnings, Free Cash Flow and Dividends.
This was combined with further progress in implementing the
2014-2017 Growth Acceleration Plan. As part of this, we continued
to expand and scale internationally, most notably through the
addition of Penton Information Services in November for
GBP1.2bn.
Reported and organic revenue growth improved to 11.0% and 1.6%
respectively, reflecting good underlying operational progress,
combined with favourable currency movements and strong returns from
acquisitions. This translated into 13.8% growth in adjusted
Operating Profit and 6.6% adjusted EPS growth. Reported operating
profit and EPS were GBP198.8m and 23.6p, principally reflecting
Adjusted Operating Profit, acquisition-related items, amortisation
and impairment.
In 2016, our operating cash conversion remained strong at 95%,
ensuring further growth in free cash flow to GBP305.7m.
We added a number of businesses to the Group in 2016,
culminating in the addition of Penton towards the end of the year.
In line with our balanced approach to financing through GAP, we
used a mixture of debt and equity to fund this acquisition, raising
GBP715m through a fully subscribed rights issue.
The combination of our strong cash generation and balanced
approach to funding allowed us to end the year with a strong
balance sheet, with net debt to EBITDA at 2.6 times, just outside
our target range of 2.0 times to 2.5 times. In December, we took
the opportunity to refinance the majority of the short-term $675m
Acquisition Facility agreed on the Penton acquisition in the US
Private Placement market, raising $500m at attractive rates and an
average term of over nine years. This provides long-term visibility
and certainty and locks in an attractive rate before the yield
curve potentially steepens.
The Group's approach to tax remains unchanged. We recognise that
taxes help provide vital services and infrastructure that companies
in turn rely on, and so commit to pay our taxes in full and on
time, in compliance with the letter and intent of the laws of
countries in which we operate. We actively engage and co-operate
with tax authorities and use available legal tax incentives to
optimise Shareholder returns.
Informa's financial obligations to its pension schemes remain
limited relative to the size of the Group and low compared to many
listed peers. We have two UK defined benefit pension schemes, which
are closed to future accruals and require no cash contributions
during 2017 to reduce scheme deficits. Penton's defined benefit
schemes are of a similar scale to Informa's, are also closed to
future accrual and have no contributions expected for 2017.
The Group enters 2017, the final year of the Growth Acceleration
Plan, as a larger Group with increased Balance and Breadth
following the addition of Penton, giving us more stability and
resilience and greater visibility and predictability of revenue.
This puts us in a good position to deliver on our GAP ambition to
deliver growth in all four Operating Divisions as we enter 2018
and, combined with our strong balance sheet, to continue to create
value for Shareholders.
INCOME STATEMENT
Our strategy of growth and scale led to a strong increase in
Group revenue in 2016, up 11.0% to GBP1,345.7m, including a 1.6%
increase on an organic basis. This converted to Adjusted Operating
Profit of GBP416.1m, some 13.8% higher than the prior year and
unchanged on an organic basis. This reflects that it was the peak
year of investment for GAP, with both higher operating expenditure
and increased depreciation from capital expenditure impacting the
cost base.
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
Results Items Results Results Items Results
2016 2016 2016 2015 2015 2015
GBPm GBPm GBPm GBPm GBPm GBPm
----------------- --------------- --------------- -------------- --------------- --------------- ---------------
Revenue 1,345.7 - 1,345.7 1,212.2 - 1,212.2
Operating
Profit/(loss) 416.1 (217.3) 198.8 365.6 (129.1) 236.5
(Loss)/profit on
disposal of
subsidiaries
and other
operations - (39.8) (39.8) - 9.1 9.1
Net finance
costs (39.6) 58.9 19.3 (25.9) - (25.9)
----------------- --------------- --------------- -------------- --------------- --------------- ---------------
Profit/(loss)
before tax 376.5 (198.2) 178.3 339.7 (120.0) 219.7
Tax
(charge)/credit (68.0) 63.2 (4.8) (60.2) 13.2 (47.0)
----------------- --------------- --------------- -------------- --------------- --------------- ---------------
Profit/(loss)
for the year 308.5 (135.0) 173.5 279.5 (106.8) 172.7
----------------- --------------- --------------- -------------- --------------- --------------- ---------------
Operating Profit
Margin 30.9% 30.2%
----------------- --------------- --------------- -------------- --------------- --------------- ---------------
Revenue and Adjusted Operating Profit
Our programme of investment and growth is steadily delivering
improved performance, with reported revenue growth of 11.0% and
organic revenue growth at 1.6% in 2016, the latter up from 1.0% in
2015. Our performance was strongest in the Global Exhibitions
Division, with reported growth of 16.9% and organic growth of 8.7%,
reflecting continued strong growth across our Top 20 exhibitions as
we reaped the benefits of increased scale and strong vertical
market positions. Business Intelligence delivered reported growth
of 4.8% and organic growth of 1.1%, reversing six years of organic
decline, as the benefits of actions taken to increase the focus on
subscriptions and customer management started to pay off. Reported
growth of 9.6% and organic growth of 0.3% in Academic Publishing
reflected a combination of robust trading in the Journals business,
strong returns from acquisitions, currency benefits and some
continued softness in the Books business, particularly in the US
market. In Knowledge & Networking, trading was mixed with good
progress in our Branded Events portfolio offset by continued
weakness in our regional conference businesses, leading to a -0.5%
decline and -4.1% decline on an organic basis.
AP BI GE K&N Penton Total
31 December 2016 GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ------- -------- ------ -------- ------- --------
Revenue 490.4 290.0 306.9 224.4 34.0 1,345.7
Reported growth 9.6% 4.8% 16.9% (0.5)% - 11.0%
Organic growth 0.3% 1.1% 8.7% (4.1)% - 1.6%
Adjusted Operating Profit 187.2 65.7 119.0 37.4 6.8 416.1
Reported growth 13.6% 4.0% 21.4% (5.6)% - 13.8%
Organic growth (2.1)% (3.2)% 13.5% (19.4)% - 0.0%
---------------------------- ------- -------- ------ -------- ------- --------
Statutory Operating profit 135.0 45.8 53.3 (6.7) (28.6) 198.8
---------------------------- ------- -------- ------ -------- ------- --------
31 December 2015
---------------------------- ------- -------- ------ -------- ------- --------
Revenue 447.4 276.8 262.5 225.5 - 1,212.2
Reported Growth 9.4% (1.7)% 31.1% (8.4)% - 6.6%
Organic Growth 1.6% (1.9)% 10.5% (4.2)% - 1.0%
---------------------------- ------- -------- ------ -------- ------- --------
Adjusted Operating Profit 164.8 63.2 98.0 39.6 - 365.6
Reported Growth 9.9% (16.0)% 45.6% (4.6)% - 9.5%
Organic Growth 2.2% (15.6)% 11.1% 3.7% - 0.1%
---------------------------- ------- -------- ------ -------- ------- --------
Statutory Operating Profit 116.3 42.1 67.0 11.1 - 236.5
---------------------------- ------- -------- ------ -------- ------- --------
Group Operating Profit was 13.8% higher year-on-year on a
reported basis, benefiting from currency and acquisitions, and flat
on an organic basis, reflecting the impact of GAP investment.
Within the Divisions, Global Exhibitions delivered strong operating
profit growth, consistent with its revenue performance, whilst
Academic Publishing, Business Intelligence and Knowledge &
Networking reported an organic decline in operating profit.
The Adjusted Operating Profit Margin grew by 70 basis points
from 30.2% to 30.9%, largely reflecting the higher level of growth
of the higher margin Global Exhibition Division.
Further commentary on divisional financials is provided in the
Divisional Trading Review.
Measurements and adjustments
In addition to the statutory results, Adjusted Results are
prepared for Adjusted Operating Profit and Adjusted Diluted
Earnings Per Share as the Board consider these to be the most
appropriate way to measure the Group's underlying performance in a
way that is comparable to the prior year. This is in line with
similar adjusted measures used by our peer companies and therefore
facilitates comparisons. Adjusted Results exclude the Adjusting
Items outlined in the next section.
Organic measures of revenue and Adjusted Operating Profit refer
to measures of growth where reported amounts are adjusted to remove
material acquisitions and disposals and to eliminate the effect of
changes in foreign currency exchange rates. However, organic
measures are not currently adjusted to exclude the effect of events
phasing, such as for biennial or triennial events.
Growth in 2016 can be analysed as follows:
2015 Organic growth Acquisitions and Currency growth Reported 2016
GBPm disposals growth GBPm
-------------------------- -------- --------------- ------------------------ ---------------- --------- --------
Revenue 1,212.2 1.6% 1.2% 8.2% 11.0% 1,345.7
Adjusted Operating Profit 365.6 0.0% 3.4% 10.4% 13.8% 416.1
-------------------------- -------- --------------- ------------------------ ---------------- --------- --------
ADJUSTING ITEMS
The Adjusting Items below have been excluded from Adjusted
Results. The total charge against Operating Profit for Adjusting
Items was GBP217.3m in 2016 (2015: GBP129.1m) with the major
element comprising amortisation of acquired intangible assets and
impairment of goodwill and intangibles.
2016 2015
GBPm GBPm
---------------------------------------------------------------- ------- -------
Intangible asset amortisation1 116.7 99.5
Impairment of goodwill and intangibles 67.7 13.9
Acquisition and integration costs 33.1 2.3
Restructuring and reorganisation costs 7.2 13.7
Re-measurement of contingent consideration (7.4) (0.3)
Adjusting Items in Operating Profit 217.3 129.1
Loss/(profit) on disposal of subsidiaries and other operations 39.8 (9.1)
Gain on acquisition-related foreign exchange hedge (58.9) -
---------------------------------------------------------------- ------- -------
Adjusting Items in profit before tax 198.2 120.0
Tax related to Adjusting Items (63.2) (13.2)
---------------------------------------------------------------- ------- -------
Adjusting Items in profit for the year 135.0 106.8
---------------------------------------------------------------- ------- -------
(1) Intangible asset amortisation is in respect of acquired
intangibles and excludes amortisation of software and product
development
The Group's proactive and targeted acquisition programme led to
an increase in intangible asset amortisation arising from acquired
intangibles to GBP116.7m. This comprised GBP49.5m for amortisation
of book lists and journal titles, GBP17.9m for database content and
GBP49.3m related to exhibitions and conferences. Intangible asset
amortisation arising from software assets and product development
is not treated as an Adjusting Item and so is included within the
calculation of Adjusted Operating Profit.
Our strategy to increase operational focus and manage our
portfolio more proactively, combined with some trading weakness in
individual markets, led to an impairment of goodwill and
intangibles of GBP67.7m. This mainly related to the domestic
conference businesses in the Knowledge & Networking Division,
some of which have since been put under review, including Germany
and Australia, as well as an impairment in some historically
acquired businesses in Brazil in the Global Exhibitions
Division.
Acquisition and integration costs are the one-off costs
associated with acquiring and integrating individual acquisitions.
In 2016, this included GBP28.6m related to the Penton
acquisition.
The implementation of GAP led to further Restructuring and
Reorganisation costs through 2016, totalling GBP7.2m. This mainly
related to the consolidation of our Books operations into a single
global business within Academic Publishing and the ongoing
rationalisation programme in the Knowledge & Networking
Division.
At the Half Year stage we wrote down the loan note related to
the sale of our Corporate Training businesses in 2013, reflecting
the underperformance of the business post-sale and, hence, low
likelihood of repayment. This has been reflected in the full year
results too, with a full impairment recognised of GBP39.9m. This is
balanced by a GBP4.0m gain due to the part-recovery of a different
loan note relating to Robbins Gioia, which was sold separately to
the other training businesses.
Following these results, the Group has no further exposure to
either the Performance Improvement or Robbins Gioia businesses.
There were also GBP3.9m of losses in aggregate from a number of
other small business disposals.
In line with our GAP approach to funding, on announcement of the
Penton acquisition, we entered into a forward foreign exchange
contract to hedge our exposure to US Dollar and Sterling
fluctuations on the GBP701.5m proceeds of the Rights Issue, which
would part-fund the US Dollar denominated consideration. Over the
course of the period between announcement and completion of the
deal, Sterling weakened significantly and this led to a gain on the
hedge of GBP58.9m.
The following table provides a breakdown of the Adjusted Items
by Division:
AP BI GE K&N Penton Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------------- ------ ------ ------ ------ --------- ------
Statutory Operating Profit 135.0 45.8 53.3 (6.7) (28.6) 198.8
Add back:
Intangible asset amortisation1 48.2 18.0 33.9 9.8 6.8 116.7
Impairment of goodwill and intangibles - - 31.1 36.6 - 67.7
Acquisition and integration costs 0.4 0.1 3.0 1.0 28.6 33.1
Restructuring and reorganisation costs 3.6 1.8 0.1 1.7 - 7.2
Re-measurement of contingent consideration - - (2.4) (5.0) - (7.4)
Adjusted Operating Profit 187.2 65.7 119.0 37.4 6.8 416.1
-------------------------------------------- ------ ------ ------ ------ --------- ------
1 Intangible asset amortisation is in respect of acquired
intangibles, and excludes amortisation of software and product
development
ADJUSTED Net Finance Costs
Adjusted net finance costs, which consist principally of
interest costs on our US Private Placement loan notes and bank
borrowings, net of interest receivable, increased by GBP13.7m to
GBP39.6m in 2016. The increase reflects three factors, in broadly
equal measures:
-- A higher average cost of financing, following the full year
impact from new US Private Placement loan notes issued in the prior
year. These provide long-term financial visibility but at a more
expensive rate than bank borrowings;
-- The strengthening of the US Dollar, which increases the cost
of Group borrowings, as the vast majority is US Dollar denominated,
providing a natural hedge to our US Dollar earnings;
-- Lower interest receivable, reflecting the write-down of loan
notes related to the sale of the Performance Improvement businesses
in 2013, and the consequent loss of accrued interest
receivable.
Taxation
Informa's effective tax rate is sensitive to the blend of tax
rates and profits in the Group's various jurisdictions, some with
lower corporate tax rates than the UK. In 2016, our adjusted
effective rate of tax was 18.1% (2015: 17.7%).
Approach to Tax
We view the taxes we pay as part of the economic benefit we
create for societies in which we operate, and believe that a fair
and effective tax system is in the interests of tax-payers and
society at large. We support the adoption of international best
practices and governance standards, and aim to comply with tax laws
and regulations everywhere we do business. As such, we have open
and constructive working relationships with tax authorities
worldwide. Our approach balances the interests of our stakeholders
including shareholders, governments, employees and the communities
in which we operate.
Tax Contribution
The Group's Total Tax Contribution ("TTC"), which is made up of
all material taxes paid out of profits and other material taxes
generated by our businesses, was GBP183.2m in 2016 (2015:
GBP154.7m). The UK element of our TTC was GBP77.2m (2015:
GBP79.9m). The increase in worldwide TTC was due to an increase in
corporation tax payments, particularly in the US and higher
employment taxes, both paid out of profits and by employees. The
small decrease in UK TTC reflects higher VAT refunds arising from
increased investments in Growth Acceleration Plan systems in the
UK, partly offset by higher employment taxes.
Tax Expense
The Group tax charge on statutory Profit Before Tax ("PBT") was
2.7% (2015: 21.4%). The statutory rate for 2016 was affected by tax
deductions arising from the write-off of loan notes relating to the
historical sale of the Performance Improvement business, and
crystallisation of tax deductions on prior year write-offs of loan
notes relating to the historical sale of Robbins Gioia.
The rate has also been affected by a non-cash credit arising
from the recognition of a deferred tax asset in respect of certain
non-UK intangibles. In 2015, the statutory effective tax rate
reported was affected by impairment charges that were not
deductible for tax purposes.
The acquisition of Penton towards the end of 2016 has not had a
significant impact on either the statutory or adjusted effective
tax rate, as the Adjusted Operating Profit generated since
acquisition has been largely offset by interest deductions and
amortisation of goodwill available for tax purposes.
The Group benefits from tax efficient internal financing
structures. Certain structures, with a tax benefit of approximately
GBP8m in 2016, are affected by changes to UK tax legislation,
introduced from 1 January 2017, with no further benefit available
from that date.
Tax Payments
During 2016, the Group paid GBP43.3m (2015: GBP30.7m) of
Corporation and similar taxes on profits, including approximately
GBP24.2m (2014: GBP23.4.m) of UK Corporation Tax. In 2015,
Corporation Tax payments benefited from a one-off reduction in US
tax payments arising from the treatment of the Hanley Wood
Exhibitions acquisition for US tax purposes.
In 2017, tax payments will be affected by a number of one-off
items:
-- US Tax payments will be substantially reduced by tax
deductions available from the write-off of loans in 2016 and prior
years, including deductions on elements of these write-offs
previously provided for in earlier years. These deductions will
also reduce cash tax outflows in the US in 2018.
-- UK Tax payments will increase to include tax of approximately
GBP11.8m due on the foreign exchange gain realised on the deal
contingent forward. The net impact of these items is an offset
against increasing tax payments on underlying profits.
These one-off items are treated as Adjusting Items in the
Financial Statements and have no impact on the tax rate on Adjusted
Profits. UK tax payments will also increase due to the change in
treatment of certain internal financing structures as previously
noted, with the GBP8m increase in payments phased-in equally over
2017 and 2018.
US cash taxes due for 2017 will also be reduced through US tax
losses acquired with Penton. At the end of 2016 the deferred tax
asset for US tax losses stood at GBP90.6m, which is expected to be
utilised within five years. The recognition of a deferred tax asset
on acquisition mean that the cash savings arising from the losses
do not reduce the Adjusted Tax Rate.
The reconciliation of the adjusted tax charge to cash taxes paid
is as follows:
2016 2015
GBPm GBPm
----------------------------------------------------------------------------------------- ------- --------
Tax charge on Adjusted PBT per Consolidated Income Statement 68.0 60.2
Deferred taxes (8.0) (13.2)
Current tax deductions in respect of Adjusting Items (35.7) (14.6)
Taxes paid in relation to earlier years less 2016 (2015) taxes payable in later periods 18.6 (2.0)
Withholding and other tax payments 0.4 0.3
----------------------------------------------------------------------------------------- ------- --------
Income taxes paid per Consolidated Cash Flow Statement 43.3 30.7
----------------------------------------------------------------------------------------- ------- --------
The tax charge on Adjusted Profits is stated after the benefit
of goodwill amortisation for tax purposes in the US and similar
amounts elsewhere. There are GBP19.5m (2015: GBP11.5m) of current
tax deductions which are taken on the amortisation of intangible
assets. These continue to be treated as Adjusting Items and are
included in the current tax deductions in respect of Adjusting
Items noted above.
Earnings PER SHARE
Following the acquisition of Penton Information Services and
corresponding GBP715m Rights Issue, the 2015 Basic and Diluted EPS
figures have been restated to reflect the bonus factor (from 26.4p
to 24.3p). In 2016, statutory earnings attributable to equity
holders were GBP171.6m, translating into Basic and Diluted EPS of
23.6p.
Similarly, the 2015 Adjusted Diluted EPS of 39.5p has been
restated to reflect the bonus element of the 2016 rights issue
(from 42.9p to 39.5p).
In 2016, Adjusted Diluted EPS was 42.1p, 6.6% ahead of 2015
(2015: 39.5p), reflecting the 13.8% increase in Adjusted profit,
partly offset by the increased charges for interest and tax and the
increase in the average number of shares. The increased average
number of shares reflects a combination of the Penton Rights Issue,
comprising 162.2m additional shares, and the equity issued to the
Penton vendors, comprising 12.8m additional shares. These
additional shares are included for the period post completion of
the acquisition on 2 November, resulting in an average diluted
share count of 727.8m. In the absence of any further equity issues,
the full year impact of these additional shares will push the
average diluted share count to around 825m in 2017.
2016 2015
GBPm GBPm
--------------------------------------------------------------- ------ ------
Adjusted profit for the year 308.5 279.5
Non-controlling interests (1.9) (1.3)
--------------------------------------------------------------- ------ ------
Adjusted earnings 306.6 278.2
--------------------------------------------------------------- ------ ------
Weighted average number of shares used in diluted EPS (m) (1) 727.8 704.6
--------------------------------------------------------------- ------ ------
Adjusted diluted EPS (pence) 42.1p 39.5p
--------------------------------------------------------------- ------ ------
(1) 2015 number of shares restated for bonus element of 2016
rights issue
TRANSLATION IMPACT
Given our stated strategy of international expansion and
purposeful shift to add businesses in North America, there has been
a conscious increase in exposure to US Dollar revenues and costs.
In 2016 the Group received approximately 59% (2015: 55%) of its
revenues and incurred approximately 48% (2015: 43%) of its costs in
US Dollars or currencies pegged to US Dollar. Each 1 cent movement
in the USD to GBP exchange rate had a circa GBP6.5m (2015: GBP4.4m)
impact on revenue and a circa GBP2.9m (2015: GBP2.0m) impact on
Adjusted Operating Profit and a circa 0.27p (2015: 0.23p) impact on
Adjusted diluted EPS.
The average exchange rate of the US Dollar to Sterling reduced
11.3% in the year.
Average rate Closing rate
2016 2015 2016 2015
----- --------- --------- --------- ---------
USD 1.36 1.53 1.23 1.48
----- --------- --------- --------- ---------
For the purpose of measuring Informa's leverage and assessing
debt covenants, both Profit and Net Debt are translated using the
average rate of exchange throughout the relevant period.
CASH FLOW
Cash flow generation remains a priority for the Group, providing
the funds and flexibility for future investment. The following
table shows the Adjusted Operating Profit and Free Cash Flow
reconciled to movements in Net Debt. Free Cash Flow is a key
financial measure of how much cash the business generates from
operations and is stated before cash flows relating to acquisitions
and disposals, dividends and any new equity issuance.
Our focus on cash generation across the Group led to another
year of strong cash conversion in 2016, with Operating Cash Flow of
GBP393.9m equating to 95% of Adjusted Operating Profit (2015:
103%). This was slightly lower than the previous year's conversion
rate, reflecting higher capital expenditure in the peak year for
GAP investment and reduced working capital inflow.
Net capital expenditure was GBP52.0m. The working capital inflow
of GBP5.5m compares to an inflow of GBP23.9 in 2015, with the
reduction principally due to the prior year benefit of the receipt
of a delayed payment of GBP15m from a subscription agent to the
Academic Publishing Division.
Lower restructuring and reorganisation costs in the year helped
offset higher interest and tax payments to produce Free Cash Flow
of GBP305.7m, slightly higher than the level recorded in 2015.
Net Interest increased in line with the Income Statement Finance
Costs and cash spend on debt arrangement fees. Tax payments
increased by GBP12.6m as the prior year benefitted from the one-off
reduction arising from the treatment of the Hanley Wood Exhibitions
acquisition for US tax purposes.
2016 2015
GBPm GBPm
------------------------------------------------------- ---------- --------
Adjusted Operating Profit 416.1 365.6
Depreciation of property and equipment 6.5 6.1
Software and product development amortisation 14.6 12.8
Share-based payments 3.9 2.6
Loss on disposal of other assets 0.1 0.1
Adjusted share of joint venture and associate results (0.8) 0.1
------------------------------------------------------- ---------- --------
Adjusted EBITDA 440.4 387.3
Net capital expenditure (52.0) (33.5)
Working capital movement 5.5 23.9
------------------------------------------------------- ---------- --------
Operating Cash Flow 393.9 377.7
Restructuring and reorganisation (9.9) (16.9)
Net interest (35.0) (26.7)
Taxation (43.3) (30.7)
------------------------------------------------------- ---------- --------
Free Cash Flow (1) 305.7 303.4
Acquisitions and disposals (1,313.1) (151.4)
Equity Rights Issue net proceeds 701.5 -
Dividends paid to shareholders (134.5) (126.5)
Other shares acquired (1.0) (0.4)
------------------------------------------------------- ---------- --------
Net Funds Flow (441.4) 25.1
Non-cash movements (2.7) (1.2)
Foreign exchange (146.0) (43.0)
Net debt at 1 January (895.3) (876.2)
------------------------------------------------------- ---------- --------
Net Debt at 31 December (1,485.4) (895.3)
------------------------------------------------------- ---------- --------
The following table reconciles Net Cash Inflow from Operating
Activities with Free Cash Flow, as shown in the Consolidated Cash
Flow Statement:
2016 2015
GBPm GBPm
------------------------------------------------ ------- -------
Net cash inflow from operating activities 336.3 333.9
Purchase of property and equipment (4.6) (7.2)
Proceeds on disposal of property and equipment 0.6 0.4
Purchase of intangible software assets (36.5) (23.2)
Product development costs additions (11.5) (3.5)
Net capital expenditure (52.0) (33.5)
Interest received 0.6 0.7
Acquisition and integration costs paid 20.8 2.3
------------------------------------------------ ------- -------
Free Cash Flow (1) 305.7 303.4
------------------------------------------------ ------- -------
(1) Free Cash Flow ("FCF") excludes amounts paid in respect of
acquisitions and integration costs. 2015 FCF as reported included
GBP2.3m of amounts paid which have been reclassified to
Acquisitions and Disposals above.
corporate development
The Group continued to pursue its disciplined and targeted
acquisition strategy during 2016, adding several businesses to the
portfolio, including Penton Information Services. Total net spend
on additions and disposals was GBP1,313.1m (2015: GBP151.4m), which
included acquisition expenditure of GBP1,348.7m (2015: GBP162.0m),
acquisition and integration costs of GBP20.8m, disposal outflow of
GBP2.5m (2015: inflow of GBP12.9m) and a GBP58.9m interest gain
relating to the Penton consideration hedge. Acquisitions included
GBP54.5m (2015: GBP93.2m) of expenditure on other intangible assets
and GBP1,294.2m (2015: GBP68.8m) on the addition of subsidiaries
net of cash acquired.
As part of our disciplined approach, potential acquisition
opportunities are assessed on a case-by-case basis against a broad
set of financial and strategic criteria. This includes delivering
returns in excess of the Group's weighted average cost of capital
and being accretive to earnings in the first full year of
ownership. For some selective acquisitions, the Group will take a
longer-term view on these metrics, to allow time for full
integration of the acquired business, coupled with additional
investment to maximise long-term returns.
The principal acquisitions made during 2016 are detailed
below:
Acquired businesses / other intangible asset Division 2016 2015
acquisitions Net cash paid Net cash paid
GBPm GBPm
-------------------------------------------------------- -------------------------- --------------- ---------------
Acquisition of subsidiaries net of cash acquired:
Penton Information Services Penton 1,218.8 -
Light Reading Knowledge & Networking 44.3 -
WS Maney & Son Limited Academic Publishing - 21.3
Ashgate Publishing Academic Publishing - 19.1
Other 31.1 28.4
------------------------------------------------------------------------------------ --------------- ---------------
1,294.2 68.8
Other intangible asset acquisitions: 54.5 93.2
Total net cash paid on acquisition of subsidiaries and other intangible asset
acquisitions 1,348.7 162.0
------------------------------------------------------------------------------------ --------------- ---------------
Addition of Penton Information Services
The net cash consideration for Penton Information Services at
closing, using an exchange rate of 1.22, was GBP1,218.8m
($1,482.5m), comprising GBP1,240.2m ($1,508.6m) of cash
consideration paid to the vendors at closing date, less cash
acquired of GBP21.4m ($26.1m). Total consideration at closing,
using an exchange rate of 1.22, was GBP1,334.0m ($1,622.7m),
consisting of GBP1,240.2m ($1,508.6m) of consideration settled in
cash, a deferred closing price refund of GBP6.6m ($8.0m), GBP82.2m
($100.0m) of share consideration and deferred consideration with a
fair value of GBP18.2m ($22.1m), payable in October 2018 for
anticipated future tax benefits.
The provisional value of identifiable net assets of GBP500.2m
included cash of GBP21.4m, intangible assets of GBP648.2m and
deferred tax liabilities of GBP114.7m, with a goodwill balance of
GBP833.8m. Acquisition costs charged to Operating Profit (included
in Adjusting Items in the Consolidated Income Statement) for the
year ended 31 December 2016 amounted to GBP26.2m for advisor and
related external fees.
equity rights issue and Consideration shares
In order to retain a stable and flexible balance sheet, we
funded the addition of Penton Information Services through a
mixture of debt and equity. The 1-for-4 Rights Issue raised net
cash of GBP701.5m, and led to the issue of 162,234,656 ordinary
shares of 0.1p each on 11 October 2016. The shares were issued at
GBP4.41 each and raised gross proceeds of GBP715.5m (GBP701.5m net
proceeds after expenses of GBP14.0m). Trading in the new shares
commenced on 26 October 2016.
As part of the Penton consideration, the Group also issued
12,829,146 ordinary shares ("Consideration Shares") to the vendors
on 2 November 2016, comprising MidOcean Partners, Wasserstein &
Co and certain Penton senior management.
DIVIDS
In 2016, Dividends paid were GBP134.5m (2015: GBP126.5m)
consisting of dividends paid to external shareholders of GBP131.9m
and dividends paid to non-controlling interests of GBP2.6m.
The Group's dividend policy aims to achieve a balance between
sufficiently rewarding shareholders and retaining the financial
strength and flexibility to allow the Group to consistently invest
and pursue growth. The Group have made a specific commitment
through the period of GAP to increase the dividend consistently
each year, initially set at a minimum of 2% per annum and raised in
February 2016 to a minimum of 4% per annum.
As outlined in the Operational Review, the Board has proposed a
4.3% increase in the Dividend Per Share for 2016. The proposed
final dividend is 13.04p per share (2015: 12.47p per share restated
for the bonus factor) representing a 4.6% increase. Subject to
shareholder approval at the AGM, the final dividend will be paid on
2 June 2017 to ordinary shareholders registered as at the close of
business on 28 April 2017. This will result in total dividends for
the year of 19.3p per share (2015: 18.5p per share restated for the
bonus factor). The growth in earnings in 2016 means dividend cover
against adjusted earnings was 2.0 times (2015: 2.1 times).
Net Debt
A key element of GAP is the focus on maintaining a strong
balance sheet and flexible funding mix, providing long-term
visibility and liquidity. During 2016 we took a number of steps to
further strengthen our cash management and financing structure.
The group used a mixture of debt and equity to fund the Penton
acquisition in November. An equity Rights Issue raised net funds of
GBP701.5m, while the Group also entered into a new Acquisition
Facility providing GBP548.6m (USD 675.0m) for up to 30 months'
duration and a GBP150.0m 2-year term facility agreement, with
availability to December 2017.
Shortly after completion of the acquisition, we decided to take
advantage of liquidity and attractive rates in the market to pay
down the majority of this Acquisition Facility by issuing USD 500m
of new US Private Placement loan notes on 25 January 2017, with a
maturity of six years (USD 55m), eight years (USD 80m) and ten
years (USD 365m).
Net Debt 31 December 2016 31 December 31 December
Pro-forma(1) 2016 2015
GBPm GBPm GBPm
--------------------------------------------- ----------------- ------------ ------------
Cash at bank and in hand (49.6) (49.6) (34.3)
Bank overdraft 9.4 9.4 2.0
Loans receivable (0.2) (0.2) (0.3)
Private placement loan notes 1,088.6 682.2 574.6
Private placement fees (1.5) (1.5) (1.6)
Bank borrowings - revolving credit facility 300.2 300.2 359.1
Bank borrowings - acquisition facility 142.2 548.6 -
Bank loan fees (3.7) (3.7) (4.2)
Net debt 1,485.4 1,485.4 895.3
--------------------------------------------- ----------------- ------------ ------------
(1) Pro-forma 2016 represents the net debt adjustment of
GBP406.4m for the private placement loan notes issued on 25 January
2017 applied to part repay the acquisition facility.
Net debt increased by GBP590.1m in 2016, driven primarily by the
additional debt to fund the Penton acquisition, together with a
GBP146.0m (2015: GBP43.0m) foreign exchange impact from US Dollar
strengthening.
Committed funding 31 December 2016 31 December 31 December
Pro-forma(1) 2016 2015
GBPm GBPm GBPm
---------------------------------------------- ------------------ ------------ ------------
Private Placements 1,088.6 682.2 574.6
Bank borrowings - revolving credit facility 900.0 900.0 900.0
Bank borrowings - acquisition facility 142.2 548.6 -
Banks borrowings - term facilities agreement 150.0 150.0 -
Committed funding 2,280.8 2,280.8 1,474.6
----------------------------------------------- ----------------- ------------ ------------
(1) Pro-forma 2016 represents the net debt adjustment of
GBP406.4m for the private placement loan notes issued on 25 January
2017 applied to part repay the acquisition facility.
As at 31 December 2016, our US Private Placement loan notes were
valued at GBP682.2m (31 December 2015: GBP574.6m) and range in
maturity from December 2017 to October 2025. The average maturity
length is 4.2 years (2015: 5.5 years).
As at 31 December 2016 the Revolving Credit Facility was
GBP300.2m drawn down, the acquisition facility was fully drawn down
(GBP548.6m) and the term facilities agreement was not drawn at
all.
The principal financial covenant ratios under the US Private
Placement and Revolving Credit Facility are for a maximum net debt
to EBITDA ratio of 3.5 times and a minimum EBITDA interest cover
ratio of 4.0 times, tested semi-annually. At 31 December 2016 both
financial covenants were achieved. The ratio of net debt to EBITDA
was 2.6 times (at 31 December 2015: 2.2 times) calculated as per
our facility agreements (using average exchange rates and adjusted
for a full year's trading for 2016 acquisitions). The ratio of
EBITDA to net interest payable was 11.0 times (at 31 December 2015:
14.9 times).
PORTFOLIO MANAGEMENT
As part of GAP, we continually reassess the mix and focus of the
Group. This ensures we allocate capital efficiently to areas where
potential returns are greatest. In 2016, this led to the disposal
of certain small non-core businesses in Knowledge and Networking
and Academic Publishing. It has also led to the strategic review of
our five remaining domestic conference businesses.
The combination of this proactive Portfolio Management strategy
and the overall drive to improve operational fitness through GAP,
enabled us to maintain a consistent Return on Capital Employed
(ROCE) in 2016, at 9.2% (2015: 9.2%), despite this being the peak
year of GAP investment.
pensions
When considering the Group's cash flows and financial position,
it should be noted that the Group's financial obligations to its
pension schemes remain relatively small compared with the size of
the Group. Net pension liabilities at 31 December 2016 were
GBP38.0m (2015: GBP4.0m), with the increase reflecting two
factors:
-- Lower corporate bond yields reduced the discount rate on our
UK schemes from 3.8% in 2015 to 2.6% in 2016, increasing the
pension deficit by GBP30.7m.
-- The addition of Penton's defined benefit pension liabilities
post acquisition, which totalled GBP16.0m as at 31 December
2016
There were no cash contributions required towards reducing
scheme deficits in 2016. All schemes are closed to future accrual
and there are no contributions expected for 2017 although the UK
schemes are subject to triennial actuarial valuations this year.
The Penton schemes are actuarially re-valued each year and the most
recent valuation at December 2016 did not show any contribution
requirements.
new ACCOUNTING standards and audit tender
The critical accounting judgements made in preparing the
financial statements relate to judgements over the impairment of
assets, identification of intangible assets acquired in business
combinations, recoverability of long term receivables, taxation
provisions and the presentation of Adjusted Results.
The two key new standards are IFRS 15 Revenue from customer
contracts and IFRS 16 leases. IFRS 15 Revenue from customer
contracts is effective for the 2018 financial year and our initial
assessment is that the Group does not expect there to be any
material change to the Income Statement or Balance Sheet of the
Group. Full disclosure of the final assessment of the impact will
be provided in the Annual Report for the year ending 31 December
2017. IFRS 16 Leases is effective for the 2019 financial year and
the Group is in the process of assessing the impact of this new
standard.
In the first half of 2016 the Audit Committee undertook a
competitive tender process for the role of external auditor.
Following recommendation by the Audit Committee, the Board approved
the appointment of Deloitte LLP on 10 June 2016. The reappointment
of Deloitte LLP for the 2017 financial year will be subject to
shareholder approval at the AGM in May 2017. An audit tender for
the external audit will next be required for the year ended 31
December 2024.
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2016
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
---------------------------------------- ------
results items results results items results
2016 2016 2016 2015 2015 2015
Notes GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------------- ------ --------- ---------- ---------- --------- ---------- ----------
Continuing operations
Revenue 1,345.7 - 1,345.7 1,212.2 - 1,212.2
Net operating expenses 5 (930.4) (217.3) (1,147.7) (846.5) (129.1) (975.6)
Operating profit/(loss) before joint
ventures and associate 415.3 (217.3) 198.0 365.7 (129.1) 236.6
Share of results of joint ventures and
associate 0.8 - 0.8 (0.1) - (0.1)
---------------------------------------- ------ --------- ---------- ---------- --------- ---------- ----------
Operating profit/(loss) 416.1 (217.3) 198.8 365.6 (129.1) 236.5
(Loss)/profit on disposal of
subsidiaries and operations 16 - (39.8) (39.8) - 9.1 9.1
Investment income 7 0.6 58.9 59.5 4.7 - 4.7
Finance costs 8 (40.2) - (40.2) (30.6) - (30.6)
---------------------------------------- ------ --------- ---------- ---------- --------- ---------- ----------
Profit/(loss) before tax 376.5 (198.2) 178.3 339.7 (120.0) 219.7
Tax (charge)/credit 9 (68.0) 63.2 (4.8) (60.2) 13.2 (47.0)
---------------------------------------- ------ --------- ---------- ---------- --------- ---------- ----------
Profit/(loss) for the year 308.5 (135.0) 173.5 279.5 (106.8) 172.7
---------------------------------------- ------ --------- ---------- ---------- --------- ---------- ----------
Attributable to:
- Equity holders of the Company 306.6 (135.0) 171.6 278.2 (106.8) 171.4
- Non-controlling interests 1.9 - 1.9 1.3 - 1.3
---------------------------------------- ------ --------- ---------- ---------- --------- ---------- ----------
Earnings per share
- Basic (p) (1) 11 42.2 23.6 39.5 24.3
- Diluted (p) (1) 11 42.1 23.6 39.5 24.3
---------------------------------------- ------ --------- ---------- ---------- --------- ---------- ----------
(1) 2015 earnings per share amounts restated to reflect
adjustments associated with the rights issue (see Note 11).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2016
2016 2015
--------------------------------------------------------------------------
GBPm GBPm
-------------------------------------------------------------------------- -------- --------
Profit for the year 173.5 172.7
Items that will not be reclassified subsequently to profit or loss:
Actuarial (loss)/gain on Defined Benefit Pension Schemes (14.3) 6.0
Tax relating to items that will not be reclassified to profit or loss 2.0 (1.2)
--------------------------------------------------------------------------- -------- --------
Total items that will not be reclassified subsequently to profit or loss (12.3) 4.8
Items that may be reclassified subsequently to profit or loss:
Exchange gain on translation of foreign operations 270.3 30.1
Exchange loss on net investment hedge debt (162.2) (44.7)
Total items that may be reclassified subsequently to profit or loss 108.1 (14.6)
Other comprehensive income/(expense) for the year 95.8 (9.8)
--------------------------------------------------------------------------- -------- --------
Total comprehensive income for the year 269.3 162.9
--------------------------------------------------------------------------- -------- --------
Total comprehensive income attributable to:
- Equity holders of the Company 267.6 161.6
- Non-controlling interests 1.7 1.3
--------------------------------------------------------------------------- -------- --------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2016
Share
Share premium Translation Other Retained Non-controlling Total
capital account reserve reserves earnings Total(1) interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ --------- --------- ------------ ---------- --------- --------- ---------------- ----------
At 1 January 2015 0.6 204.0 (19.6) (1,653.5) 2,698.7 1,230.2 1.5 1,231.7
Profit for the
year - - - - 171.4 171.4 1.3 172.7
Exchange loss on
net investment
hedge debt - - (44.7) - - (44.7) - (44.7)
Exchange gain on
translation of
foreign
operations - - 30.1 - - 30.1 - 30.1
Actuarial gain on
defined benefit
pension schemes - - - - 6.0 6.0 - 6.0
Tax relating to
components of
other
comprehensive
income - - - - (1.2) (1.2) - (1.2)
------------------ --------- --------- ------------ ---------- --------- --------- ---------------- ----------
Total
comprehensive
expense/(income)
for the year - - (14.6) - 176.2 161.6 1.3 162.9
Dividends to
shareholders
(Note 10) - - - - (126.1) (126.1) - (126.1)
Dividends to
Non-controlling
interests - - - - - - (0.5) (0.5)
Share award
expense - - - 2.6 - 2.6 - 2.6
Purchase of
subsidiary from
non-controlling
interests - - - - (1.9) (1.9) (0.2) (2.1)
Own shares
purchased (0.4) - (0.4) - (0.4)
Transfer of
vested LTIPs - - - (1.5) 1.5 - - -
------------------ --------- --------- ------------ ---------- --------- --------- ---------------- ----------
At 1 January 2016 0.6 204.0 (34.2) (1,652.8) 2,748.4 1,266.0 2.1 1,268.1
Profit for the
year - - - - 171.6 171.6 1.9 173.5
Exchange gain on
translation of
foreign
operations - - 270.5 - - 270.5 (0.2) 270.3
Exchange loss on
net investment
hedge debt - - (162.2) - - (162.2) - (162.2)
Actuarial loss on
defined benefit
pension schemes - - - - (14.3) (14.3) - (14.3)
Tax relating to
components of
other
comprehensive
income - - - - 2.0 2.0 - 2.0
------------------ --------- --------- ------------ ---------- --------- --------- ---------------- ----------
Total
comprehensive
income for the
year - - 108.3 - 159.3 267.6 1.7 269.3
Dividends to
shareholders
(Note 10) - - - - (131.9) (131.9) - (131.9)
Dividends to
Non-controlling
interests - - - - - - (2.6) (2.6)
Shares issued 0.2 701.3 - 82.2 - 783.7 - 783.7
Share award
expense - - - 3.9 - 3.9 - 3.9
Own shares
purchased - - - (1.0) - (1.0) - (1.0)
Transfer of
vested LTIPs - - - (1.6) 1.6 - - -
Put Option on
acquisition of
Non-controlling
interests - - - (1.5) - (1.5) - (1.5)
------------------ --------- --------- ------------ ---------- --------- --------- ---------------- ----------
At 31 December
2016 0.8 905.3 74.1 (1,570.8) 2,777.4 2,186.8 1.2 2,188.0
------------------ --------- --------- ------------ ---------- --------- --------- ---------------- ----------
(1) Total attributable to equity holders of the parent
CONSOLIDATED BALANCE SHEET
As at 31 December 2016
2016 2015(1)
----------------------------------------------------- ------
Notes GBPm GBPm
----------------------------------------------------- ------ ---------- ----------
Non-current assets
Goodwill 2,724.4 1,708.1
Other intangible assets 1,755.0 968.2
Property and equipment 24.1 17.3
Investments in joint ventures and associate 1.5 0.1
Investments 1.8 1.4
Deferred tax assets 13.0 0.6
Other receivables 0.5 36.2
4,520.3 2,731.9
----------------------------------------------------- ------ ---------- ----------
Current assets
Inventory 52.4 46.0
Trade and other receivables 358.1 243.4
Current tax asset 31.1 4.2
Cash at bank and in hand 49.6 34.3
----------------------------------------------------- ------ ---------- ----------
491.2 327.9
----------------------------------------------------- ------ ---------- ----------
Total assets 5,011.5 3,059.8
----------------------------------------------------- ------ ---------- ----------
Current liabilities
Borrowings 12 (174.9) (2.0)
Current tax liabilities (30.3) (30.4)
Provisions (34.4) (24.0)
Trade and other payables (246.5) (207.9)
Deferred income (561.5) (385.7)
----------------------------------------------------- ------ ---------- ----------
(1,047.6) (650.0)
----------------------------------------------------- ------ ---------- ----------
Non-current liabilities
Borrowings 12 (1,360.3) (927.9)
Deferred tax liabilities (329.9) (183.3)
Retirement benefit obligation (38.0) (4.0)
Provisions (11.8) (21.0)
Non-current tax liabilities (8.3) -
Trade and other payables (27.6) (5.5)
----------------------------------------------------- ------ ---------- ----------
(1,775.9) (1,141.7)
----------------------------------------------------- ------ ---------- ----------
Total liabilities (2,823.5) (1,791.7)
----------------------------------------------------- ------ ---------- ----------
Net assets 2,188.0 1,268.1
----------------------------------------------------- ------ ---------- ----------
Equity
Share capital 13 0.8 0.6
Share premium account 905.3 204.0
Translation reserve 74.1 (34.2)
Other reserves (1,570.8) (1,652.8)
Retained earnings 2,777.4 2,748.4
----------------------------------------------------- ------ ---------- ----------
Equity attributable to equity holders of the parent 2,186.8 1,266.0
Non-controlling interest 1.2 2.1
----------------------------------------------------- ------ ---------- ----------
Total equity 2,188.0 1,268.1
----------------------------------------------------- ------ ---------- ----------
(1) Restated for re-measurement of prior year valuation (see
note 13)
These financial statements were approved by the Board of
Directors on 5 March 2017.
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2016
2016 2015
GBPm GBPm
------------------------------------------------------------------------------ ---------- --------
Operating activities
Cash generated by operations 415.2 392.0
Income taxes paid (43.3) (30.7)
Interest paid (35.6) (27.4)
------------------------------------------------------------------------------- ---------- --------
Net cash inflow from operating activities 336.3 333.9
------------------------------------------------------------------------------- ---------- --------
Investing activities
Interest received 0.6 0.7
Purchase of property and equipment (4.6) (7.2)
Proceeds on disposal of property and equipment 0.6 0.4
Purchase of intangible software assets (36.5) (23.2)
Product development costs additions (11.5) (3.5)
Purchase of intangibles related to titles, Brands and customer relationships (54.5) (92.5)
Proceeds on disposal of other intangible assets - 0.1
Acquisition of subsidiaries and operations, net of cash acquired (1,294.2) (68.8)
Cash (outflow)/inflow on disposal of subsidiaries and operations (4.1) 12.8
Disposal of other intangible assets 1.6 -
Purchase of investment - (0.7)
------------------------------------------------------------------------------- ---------- --------
Net cash outflow from investing activities (1,402.6) (181.9)
------------------------------------------------------------------------------- ---------- --------
Financing activities
Dividends paid to shareholders (131.9) (126.0)
Dividends paid to non-controlling interests (2.6) (0.5)
Proceeds from settlement of acquisition-related derivative forward contract 58.9 -
Repayment of loans (1,455.9) (928.9)
New loan advances 1,888.9 812.0
Repayment of private placement borrowings - (73.3)
New private placement borrowings - 166.5
Borrowing fees paid (2.1) (1.1)
Cash inflow/(outflow) on issue of other loans 0.2 (0.3)
Rights Issue net proceeds 701.5 -
Cash outflow from the purchase of share capital (1.0) (0.4)
------------------------------------------------------------------------------- ---------- --------
Net cash inflow/(outflow) from financing activities 1,056.0 (152.0)
------------------------------------------------------------------------------- ---------- --------
Net decrease in cash and cash equivalents (10.3) -
Effect of foreign exchange rate changes 18.2 (3.0)
Cash and cash equivalents at beginning of the year 32.3 35.3
------------------------------------------------------------------------------- ---------- --------
Cash and cash equivalents at end of the year 40.2 32.3
------------------------------------------------------------------------------- ---------- --------
RECONCILIATION OF MOVEMENT IN NET DEBT
For the year ended 31 December 2016
2016 2015
-----------------------------------------------------
GBPm GBPm
----------------------------------------------------- ---------- --------
Decrease in cash and cash equivalents in the year (10.3) 0.0
Cash flows from (draw-down)/repayment of borrowings (431.1) 25.1
------------------------------------------------------ ---------- --------
Change in net debt resulting from cash flows (441.4) 25.1
Other non-cash movements including foreign exchange (148.7) (44.2)
------------------------------------------------------ ---------- --------
Movement in net debt in the year (590.1) (19.1)
Net debt at beginning of the year (895.3) (876.2)
------------------------------------------------------ ---------- --------
Net debt at end of the year (1,485.4) (895.3)
------------------------------------------------------ ---------- --------
NOTES TO THE FULL YEAR RESULTS
For the year ended 31 December 2016
1 General information
Informa PLC (the Company) is a company incorporated in the
United Kingdom under the Companies Act 2006 and is listed on the
London Stock Exchange. The Company is a public company limited by
shares and is registered in England and Wales with registration
number 08860726. The address of the registered office is 5 Howick
Place, London, SW1P 1WG. The Consolidated Financial Statements as
at 31 December 2016 and for year then ended comprise those of the
Company and its subsidiaries and its interests in joint ventures
and associate (together referred to as the Group).
These financial statements are presented in pounds sterling
("GBP"), the functional currency of the parent company, Informa
PLC.
2 Basis of preparation
The financial information for the year ended 31 December 2016
does not constitute the statutory financial statements for that
year, but is derived from those financial statements. While the
financial information in these Full Year Results has been prepared
in accordance with International Financial Reporting Standards
(IFRS), these results do not in isolation contain sufficient
information to comply with IFRS. Those financial statements have
not yet been delivered to the Registrar of Companies, but include
the auditor's report which was unqualified and did not contain a
statement under Section 498 (2) or (3) of the Companies Act
2006.
The Directors have, at the time of approving the Consolidated
Financial Statements, a reasonable expectation that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to adopt
the going concern basis of accounting in preparing the Consolidated
Financial Statements.
3 RESTATEMENT
The results for the year ended 31 December 2015 have been
restated for the finalisation of the valuation of the separately
identifiable tangible and intangible assets and liabilities of the
Ashgate Publishing Limited acquisition that completed on 16 July
2015. This resulted in the Consolidated Balance Sheet at 31
December 2015 being adjusted for the recognition of additional
receivables of GBP0.5m, inventory of GBP1.0m and a reduction to
goodwill of GBP1.5m. The Consolidated Income Statement for the year
ended 31 December 2015 was not impacted by this restatement.
The impact of the prior year restatements on the previously
reported Consolidated Balance Sheet is summarised as follows:
As at 31 December 2015
---------------------------------------------
Previously reported Adjustments Restated
GBPm GBPm GBPm
----------------------------- -------------------- ------------ ---------
Goodwill 1,709.6 (1.5) 1,708.1
Non-current assets 2,733.4 (1.5) 2,731.9
Inventory 45.0 1.0 46.0
Trade and other receivables 242.9 0.5 243.4
------------------------------ -------------------- ------------ ---------
Current assets 326.4 1.5 327.9
------------------------------ -------------------- ------------ ---------
Total assets 3,059.8 - 3,059.8
------------------------------ -------------------- ------------ ---------
Net assets 1,268.1 - 1,268.1
------------------------------ -------------------- ------------ ---------
In addition to the above, Earnings per share for the year ended
31 December 2015 has been restated to reflect the adjustment
required for the bonus element of the 2016 rights issue associated
with the Penton acquisition. This resulted in Reported Basic and
Diluted Earnings per Share being restated from 26.4p to 24.3p and
Adjusted Basic and Diluted Earnings per Share from 42.9p to 39.5p
per share.
4 Business Segments
The Group has identified reportable segments based on financial
information used by the Executive Directors in allocating resources
and making strategic decisions. We consider the Chief Operating
Decision Maker to be the Executive Directors.
The Group's five (2015: four) identified reporting segments
under IFRS 8 Operating Segments are as follows:
Academic Publishing
The Academic Publishing Division provides books and journals,
both in print and electronic formats, primarily for academic and
research users, in the subject areas of Humanities & Social
Sciences, and Science, Technology & Medicine. It operates as
Taylor & Francis with other imprints including Routledge, CRC
Press, Garland Science and Cogent OA.
Business Intelligence
The Business Intelligence Division provides specialist
data-driven intelligence and insight to professionals in niche
communities. The digital subscription products consist of rich
datasets and valuable insight, across the Agricultural, Financial,
Maritime, Pharmaceutical, and Technology, Media and Telecoms
sectors.
Global Exhibitions
The Global Exhibitions Division is an international exhibitions
organiser. It operates business to business exhibitions and trade
shows, as well as a number of consumer events, enabling specialist
communities to meet face-to-face, and conduct business.
Knowledge & Networking
The Knowledge & Networking Division provides conferences and
training courses globally. It creates and connects communities
based on the sharing of insights and learning, providing attendees
with the opportunity to meet, network and share knowledge.
Penton Information Services
Penton is the US-based Exhibitions and Professional Information
Services business that was acquired on 2 November 2016. The Penton
business lines will be incorporated into the business segments of
Business Intelligence, Global Exhibitions and Knowledge &
Networking in 2017 and for 2016 in the post-acquisition period it
has been operated and reported as a separate Division.
Segment Revenue and Results
The Group's primary internal Income Statement performance
measure for Business Segments is Revenue and Adjusted Operating
Profit. A reconciliation of Adjusted Operating Profit to Statutory
Operating and Profit Before Tax is provided below:
Segment revenue and results
Period ending 31 December 2016
Knowledge & Penton
Academic Business Global Networking Information
Publishing Intelligence Exhibitions Services Total
-----------------
GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ---------------- ---------------- ----------------- ---------------- ---------------- --------
Revenue 490.4 290.0 306.9 224.4 34.0 1,345.7
----------------- ---------------- ---------------- ----------------- ---------------- ---------------- --------
Adjusted
operating
profit before
Joint ventures
and associate 187.2 65.7 118.2 37.4 6.8 415.3
Share of
Adjusted
results of
joint ventures
and associate - - 0.8 - - 0.8
----------------- ---------------- ---------------- ----------------- ---------------- ---------------- --------
Adjusted
operating
profit 187.2 65.7 119.0 37.4 6.8 416.1
Intangible asset
amortisation(1) (48.2) (18.0) (33.9) (9.8) (6.8) (116.7)
Impairment (Note
6) - - (31.1) (36.6) - (67.7)
Acquisition and
integration
costs (Note 6) (0.4) (0.1) (3.0) (1.0) (28.6) (33.1)
Restructuring
and
reorganisation
costs (Note 6) (3.6) (1.8) (0.1) (1.7) - (7.2)
Subsequent
re-measurement
of contingent
consideration
(Note 6) - - 2.4 5.0 - 7.4
----------------- ---------------- ---------------- ----------------- ---------------- ---------------- --------
Operating
profit/(loss) 135.0 45.8 53.3 (6.7) (28.6) 198.8
Loss on disposal
of businesses
(Note 16) (39.8)
Investment
income (Note 7) 59.5
Finance costs
(Note 8) (40.2)
----------------- ---------------- ---------------- ----------------- ---------------- ---------------- --------
Profit before
tax 178.3
----------------- ---------------- ---------------- ----------------- ---------------- ---------------- --------
(1) Excludes acquired intangible product development and
software amortisation.
Period ending 31 December 2015
Business Knowledge &
Academic Publishing Intelligence Global Exhibitions Networking Total
---------------------
GBPm GBPm GBPm GBPm GBPm
--------------------- -------------------- -------------------- ------------------- -------------------- --------
Revenue 447.4 276.8 262.5 225.5 1,212.2
--------------------- -------------------- -------------------- ------------------- -------------------- --------
Adjusted operating
profit before Joint
ventures 164.8 63.2 98.1 39.6 365.7
Share of Adjusted
results of joint
ventures - - (0.1) - (0.1)
--------------------- -------------------- -------------------- ------------------- -------------------- --------
Adjusted operating
profit 164.8 63.2 98.0 39.6 365.6
Intangible asset
amortisation(1) (44.4) (16.1) (28.7) (10.3) (99.5)
Impairment (Note 6) - (1.1) - (12.8) (13.9)
Acquisition and
integration costs
(Note 6) (0.8) - (1.4) (0.1) (2.3)
Restructuring and
reorganisation
costs (Note 6) (3.3) (3.7) (1.4) (5.3) (13.7)
Subsequent
re-measurement of
contingent
consideration (Note
6) - (0.2) 0.5 - 0.3
--------------------- -------------------- -------------------- ------------------- -------------------- --------
Operating profit 116.3 42.1 67.0 11.1 236.5
Profit on disposal
of businesses (Note
16) 9.1
Investment income
(Note 7) 4.7
Finance costs (Note
8) (30.6)
--------------------- -------------------- -------------------- ------------------- -------------------- --------
Profit before tax 219.7
--------------------- -------------------- -------------------- ------------------- -------------------- --------
(1) Excludes acquired intangible product development and
software amortisation.
Adjusted operating result by operating segment is the measure
reported to the Executive Directors for the purpose of resource
allocation and assessment of segment performance. Finance costs and
investment income are not allocated to segments, as this type of
activity is driven by the central treasury function, which manages
the cash positions of the Group.
Segment assets
2016 2015
-----------------------------
GBPm GBPm
----------------------------- -------- --------
Academic Publishing 1,201.2 1,114.4
Business Intelligence 835.1 761.7
Global Exhibitions 872.8 718.6
Knowledge & Networking 458.1 374.3
Penton Information Services 1,509.7 -
----------------------------- -------- --------
Total segment assets 4,876.9 2,969.0
Unallocated assets 134.6 90.8
----------------------------- -------- --------
Total assets 5,011.5 3,059.8
----------------------------- -------- --------
For the purpose of monitoring segment performance and allocating
resources between segments, the Group monitors the tangible,
intangible and financial assets attributable to each segment. All
assets are allocated to reportable segments except for certain
centrally held balances, including some intangible software assets
relating to group infrastructure, balances receivable from
businesses sold and taxation (current and deferred). Assets used
jointly by reportable segments are allocated on the basis of the
revenues earned by individual reportable segment.
The Group's revenues from its major products and services were
as follows:
2016 2015
-----------------------------------
GBPm GBPm
----------------------------------- -------- --------
Academic Publishing
Subscriptions 243.1 216.4
Unit sales 247.3 231.0
Total Academic Publishing 490.4 447.4
----------------------------------- -------- --------
Business Intelligence
Subscriptions 258.4 244.9
Unit sales 22.6 23.0
Advertising 9.0 8.9
----------------------------------- -------- --------
Total Business Intelligence 290.0 276.8
----------------------------------- -------- --------
Global Exhibitions
Exhibitor 233.7 199.2
Attendee 37.5 33.1
Sponsorship 28.6 23.3
Advertising 7.1 6.9
----------------------------------- -------- --------
Total Global Exhibitions 306.9 262.5
----------------------------------- -------- --------
Knowledge & Networking
Exhibitor 41.4 42.5
Attendee 113.8 123.5
Sponsorship 62.7 53.7
Advertising 6.5 5.8
----------------------------------- -------- --------
Total Knowledge & Networking 224.4 225.5
----------------------------------- -------- --------
Penton Information Services
Subscription 5.9 -
Exhibitor 1.2 -
Attendee 0.6 -
Sponsorship 1.3 -
Advertising & Marketing Services 25.0 -
----------------------------------- -------- --------
Total Penton Information Services 34.0 -
----------------------------------- -------- --------
Total Revenue 1,345.7 1,212.2
----------------------------------- -------- --------
Geographical information
The Group's revenue by location of customer and information
about its segment assets by geographical location are detailed
below:
Revenue Segment assets
------------------ ------------------
2016 2015 2016 2015
GBPm GBPm GBPm GBPm
-------------------- -------- -------- -------- --------
UK 145.8 143.1 1,296.9 1,229.7
North America 624.7 511.5 3,340.0 1,495.9
Continental Europe 213.5 215.5 79.0 54.7
Rest of World 361.7 342.1 295.6 279.5
-------------------- -------- -------- -------- --------
1,345.7 1,212.2 5,011.5 3,059.8
-------------------- -------- -------- -------- --------
No individual customer amounts to more than 10% of the Group's
revenue in either 2016 or 2015.
5 Operating profit
Operating profit has been arrived at after
charging/(crediting):
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
Results items results results items results
2016 2016 2016 2015 2015 2015
Notes GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------------- ------ --------- ---------- ---------- --------- ---------- ----------
Cost of sales(1) 415.3 - 415.3 377.6 - 377.6
Staff costs (excluding redundancy
costs) 372.5 - 372.5 333.6 - 333.6
Amortisation of other intangible assets 6 14.6 116.7 131.3 12.8 99.5 112.3
Impairment - Goodwill 6 - 65.8 65.8 - 13.9 13.9
Impairment - Intangibles 6 - 1.9 1.9 - - -
Depreciation 6.5 - 6.5 6.1 - 6.1
Acquisition and integration related
costs 6 - 33.1 33.1 - 2.3 2.3
Restructuring and reorganisation costs 6 - 7.2 7.2 - 13.7 13.7
Subsequent re-measurement of contingent
consideration 6 - (7.4) (7.4) - (0.3) (0.3)
Operating lease expense
- Land and buildings 22.9 - 22.9 18.1 - 18.1
- Other 1.0 - 1.0 1.3 - 1.3
Net foreign exchange loss 1.3 - 1.3 1.9 - 1.9
Auditor's remuneration for audit
services (see below) 1.8 - 1.8 1.3 - 1.3
Other operating expenses 94.5 - 94.5 93.8 - 93.8
---------------------------------------- ------ --------- ---------- ---------- --------- ---------- ----------
Total net operating expenses before
joint ventures and associate 930.4 217.3 1,147.7 846.5 129.1 975.6
---------------------------------------- ------ --------- ---------- ---------- --------- ---------- ----------
(1) Cost of sales includes GBP47.6m (2015: GBP45.9m) for
inventory recognised as an expense including pre-publication
amortisation
6 Adjusting items
The following charges/(credits) are presented as adjusting
items:
2016 2015
GBPm GBPm
---------------------------------------------------------- ------- -------
Intangible amortisation and impairment
Intangible asset amortisation 116.7 99.5
Impairment - Goodwill 65.8 13.9
Impairment - Other intangible assets 1.9 -
Acquisition and integration costs 33.1 2.3
Restructuring and reorganisation costs
Redundancy costs 6.0 11.4
Reorganisation costs (0.4) 0.4
Vacant property costs 1.6 1.9
Subsequent re-measurement of contingent consideration (7.4) (0.3)
----------------------------------------------------------- ------- -------
Adjusting items in operating profit 217.3 129.1
Loss/(profit) on disposal of subsidiaries and operations 39.8 (9.1)
Investment income (58.9) -
---------------------------------------------------------- ------- -------
Adjusting items in profit before tax 198.2 120.0
Tax related to adjusting items (63.2) (13.2)
----------------------------------------------------------- ------- -------
Adjusting items in profit for the year 135.0 106.8
----------------------------------------------------------- ------- -------
The principal adjustments made are in respect of:
-- Intangible asset amortisation - the amortisation charge in
respect of intangible assets acquired through business combinations
or the acquisition of trade and assets is excluded from adjusted
results as they do not relate to underlying trading;
-- Impairment - the Group tests for impairment on an annual
basis or more frequently when an indicator exists. Impairment
charges are individually disclosed and are excluded from adjusted
results as they do not relate to underlying trading;
-- Acquisition and integration costs - the costs incurred by the
Group in acquiring and integrating share and asset acquisitions.
Acquisition costs totalled GBP30.0m, with GBP26.2m relating to the
Penton acquisition; and integration costs totalled GBP3.1m;
-- Redundancy, reorganisation and vacant property costs - these
are mainly related to the consolidation of our Books operations
into a single global business within Academic Publishing and the
ongoing rationalisation programme in the Knowledge & Networking
Division, changing the operating model to align with the Group's
revised strategy, the "Growth Acceleration Plan";
-- Subsequent re-measurement of contingent consideration is
recognised in the period as a charge or credit to the Consolidated
Income Statement unless these qualify as measurement period
adjustments arising within one year from the acquisition date. They
are excluded from adjusted results as they do not relate to
underlying trading;
-- Loss/(profit) on disposal of subsidiaries and operations -
this relates to a GBP3.9m loss on disposal for the fair value of
consideration less the net assets/(liabilities) disposed, and costs
directly attributable with disposals, together with a GBP35.9m net
charge from the impairment (GBP39.9m) and a recovery (GBP4.0m) of
loan notes receivable arising from business disposals completed in
prior years;
-- Investment income of GBP58.9m relates to the gain on a deal
contingent forward financial derivative contract associated with
the Penton acquisition has been disclosed as an adjusting item as
it is non-recurring in nature, further details are provided in Note
7; and
-- The tax related to adjusting items is the tax effect of the items above.
7 Investment Income
2016 2015
----------------------------------------------------------------------------------
GBPm GBPm
---------------------------------------------------------------------------------- ----- -----
Loans and receivables:
Interest income on bank deposits 0.6 0.7
Interest income on non-current receivables - 4.0
Fair value gain on financial instruments through the income statement 58.9 -
---------------------------------------------------------------------------------- ----- -----
59.5 4.7
---------------------------------------------------------------------------------- ----- -----
The fair value gain on financial instruments in 2016 of GBP58.9m
represents the gain on maturity from the deal contingent forward
contract related to the acquisition of the Penton business. The
contract was taken out at the acquisition announcement date of 14
September 2016 and gave the Group the right to swap the expected
sterling net proceeds from the equity rights issue of GBP701.5m
into US dollars with a maturity date set at the acquisition closing
date. This one-off gain has been shown as an adjusting item in the
Consolidated Income Statement.
8 Finance costs
2016 2015
-----------------------------------------------------------------------
GBPm GBPm
----------------------------------------------------------------------- ----- -----
Interest expense on financial liabilities measured at amortised cost 39.5 30.1
Interest cost on pension scheme liabilities 0.2 0.3
------------------------------------------------------------------------ ----- -----
Total interest expense 39.7 30.4
Fair value loss on financial instruments through the income statement 0.5 0.2
40.2 30.6
----------------------------------------------------------------------- ----- -----
9 Taxation
The tax charge comprises:
2016 2015
----------------------------------------------------
GBPm GBPm
---------------------------------------------------- ------- -----
Current tax:
UK 34.1 19.3
USA (20.0) 6.3
UAE & Monaco - 1.0
Rest of world 10.2 6.0
----------------------------------------------------- ------- -----
Current year 24.3 32.6
Deferred tax:
Current year (15.3) 14.4
Credit arising from UK corporation tax rate change (4.2) -
Total tax charge on profit on ordinary activities 4.8 47.0
----------------------------------------------------- ------- -----
The tax on adjusting items within the Consolidated Income
Statement relates to the following:
Gross Tax Gross Tax
------------------------------------------------------------------------------
2016 2016 2015 2015
GBPm GBPm GBPm GBPm
------------------------------------------------------------------------------ -------- ------- -------- ------
Amortisation of other intangible assets (116.7) 41.3 (99.5) 17.7
Deferred tax credit arising from revised treatment of certain non-UK
intangible assets - 12.1 - -
Benefit of US goodwill amortisation for tax purposes only - (10.0) - (7.4)
Impairment (67.7) - (13.9) -
Redundancy and restructuring costs (7.2) 1.9 (13.7) 2.6
Acquisition and integration costs (33.1) 4.5 (2.3) 0.5
Subsequent re-measurement of contingent consideration 7.4 (0.6) 0.3 (0.2)
(Loss)/profit on disposal of businesses (39.8) 21.5 9.1 -
Deferred tax credit on intangible assets arising from UK corporation tax rate
change - 4.3 - -
Investment income 58.9 (11.8) - -
------------------------------------------------------------------------------- -------- ------- -------- ------
(198.2) 63.2 (120.0) 13.2
------------------------------------------------------------------------------ -------- ------- -------- ------
During 2016, the treatment of certain non-UK intangible assets
has been reviewed, and a deferred tax asset has been established in
relation to the unamortised tax base of these intangible assets. As
there is no corresponding accounting amortisation of these assets,
the benefits of tax deductions for amortisation of the tax base are
reflected in the adjusted tax charge, and the creation of the
deferred tax asset is treated as an adjusting item.
The current and deferred tax is calculated on the estimated
assessable profit for the year. Taxation is calculated on each
jurisdiction based on the prevailing rates of that
jurisdiction.
The total tax charge/(credit) for the year can be reconciled to
the accounting profit as follows:
2016 2015
---------------- --------------
GBPm % GBPm %
----------------------------------------------------------------- ------- ------- ------ ------
Profit before tax 178.3 219.7
----------------------------------------------------------------- ------- ------- ------ ------
Tax charge at effective UK statutory rate of 20% (2015: 20.25%) 35.7 20.0 44.5 20.2
Non-deductible impairments 16.3 9.1 2.9 1.3
Other non-deductible expenses & similar items 2.1 1.2 (2.2) (1.0)
Profits taxed at different rates (17.5) (9.8) 7.6 3.5
Adjustments for prior years (4.7) (2.7) (3.0) (1.3)
Adjustments to deferred tax on intangible assets (18.4) (10.2) 9.9 4.5
Acquisitions and disposals related (1.7) (1.0) (2.7) (1.2)
Benefits from financing structures (9.1) (5.1) (8.2) (3.8)
Tax incentives and foreign tax credits (4.0) (2.2) (3.4) (1.5)
Losses in certain jurisdictions that have not been recognised 5.5 3.1 1.6 0.7
Deferred tax credit arising from UK corporation tax rate change 0.6 0.3 - -
----------------------------------------------------------------- ------- ------- ------ ------
Tax charge and effective rate for the year 4.8 2.7 47.0 21.4
----------------------------------------------------------------- ------- ------- ------ ------
In addition to the income tax charge to the Consolidated Income
Statement, a tax credit of GBP2.0m (2015: charge of GBP1.2m) has
been recognised directly in the Consolidated Statement of
Comprehensive Income during the year.
10 Dividends
2016(1) 2016 2015(1) 2015
------------------------------------------------------------------------------
Per share GBPm Per Share GBPm
------------------------------------------------------------------------------ ---------- ------ ---------- ------
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2014 (previously stated 12.90p) - - 11.88 83.6
Interim dividend for the year ended 31 December 2015 of (previously stated
6.55p) - - 6.03 42.5
Final dividend for the year ended 31 December 2015 (previously stated 13.55p) 12.47 87.8 - -
Interim dividend for the year ended 31 December 2016 (previously stated
6.80p) 6.26 44.1 - -
------------------------------------------------------------------------------ ---------- ------ ---------- ------
18.73 131.9 17.91 126.1
------------------------------------------------------------------------------ ---------- ------ ---------- ------
Proposed final dividend for the year ended 31 December 2016 and 2015 13.04 107.5 12.47 87.8
------------------------------------------------------------------------------ ---------- ------ ---------- ------
(1) Dividend per Share restatement for bonus element of 2016
rights issue.
As at 31 December 2016 GBP0.1m (2015: GBP0.1m) of dividends are
still to be paid. As at 31 December 2016 the shares held by the EST
of 616,187 (2015: 737,272) ordinary shares of 0.1 pence each,
waived their rights to receive dividends.
11 Earnings per share
Earnings per share figures for 2015 have been restated from
previously reported figures to take into account the impact of the
Rights Issue in line with IAS 33 Earnings per Share.
Basic
The basic earnings per share calculation is based on a profit
attributable to equity shareholders of the parent of GBP171.6m
(2015: GBP171.4m profit). This profit on ordinary activities after
taxation is divided by the weighted average number of shares in
issue (less those shares held by the EST and ShareMatch), which is
725,629,255 (2015: restated amount 704,067,024).
Diluted
The diluted earnings per share calculation is based on the basic
earnings per share calculation above except that the weighted
average number of shares includes all potentially dilutive options
granted by the reporting date as if those options had been
exercised on the first day of the accounting period or the date of
the grant, if later, giving a weighted average of 727,826,695
(2015: restated amount 704,563,017).
The table below sets out the adjustment in respect of dilutive
potential ordinary shares with the 2015 amounts restated to reflect
the adjustments associated with the Rights Issue:
2016 2015(1)
---------------------------------------------------------------------- ------------ ------------
Weighted average number of shares used in basic earnings per share 725,629,255 704,067,024
Potentially dilutive ordinary shares 2,197,440 495,993
---------------------------------------------------------------------- ------------ ------------
Weighted average number of shares used in diluted earnings per share 727,826,695 704,563,017
---------------------------------------------------------------------- ------------ ------------
(1) Restated for bonus element of 2016 rights issue
Earnings per share
In addition to basic EPS adjusted diluted earnings per share
calculations have been provided as this is useful additional
information on the underlying performance. Earnings are based on
profits attributable to equity shareholders and adjusted to exclude
items that in the opinion of the Directors would distort underlying
results with these items detailed in Note 6.
Earnings per share: Earnings Per share amount Earnings Per share amount
2016 2016 2015 2015
----------------------------------------------------------
GBPm Pence GBPm Pence(1)
---------------------------------------------------------- --------- ----------------- --------- -----------------
Profit for the year 173.5 172.7
Non-controlling interests (1.9) (1.3)
---------------------------------------------------------- --------- ----------------- --------- -----------------
Earnings for the purpose of Statutory Basic EPS /
Statutory Diluted EPS 171.6 23.6 171.4 24.3
---------------------------------------------------------- --------- ----------------- --------- -----------------
(1) Restated for bonus element of 2016 rights issue (Earnings per share and Diluted earnings
per share previously reported 26.4p).
Adjusted Earnings per share: Earnings Per share amount Earnings Per share amount
2016 2016 2015 2015
GBPm Pence GBPm Pence(1)
---------------------------------------------------------- --------- ----------------- --------- -----------------
Earnings for the purpose of Adjusted Basic EPS / Adjusted
Diluted EPS 171.6 23.6 171.4 24.3
Adjusting items:
Redundancy and restructuring costs (Note 6) 7.2 1.0 13.7 2.0
Acquisition and integration costs (Note 6) 33.1 4.6 2.3 0.3
Intangible amortisation and impairment (Note 6) 184.4 25.4 113.4 16.1
Subsequent re-measurement of contingent consideration
(Note 6) (7.4) (1.0) (0.3) -
Loss/(profit) on disposal and other adjusting items (Note
6) 39.8 5.4 (9.1) (1.3)
Investment income (Note 6) (58.9) (8.1) - -
Add back tax on adjusting items (Note 6) (63.2) (8.7) (13.2) (1.9)
Earnings for the purpose of Adjusted Basic EPS 306.6 42.2 278.2 39.5
Effect of dilutive potential ordinary shares - (0.1) - -
---------------------------------------------------------- --------- ----------------- --------- -----------------
Earnings for the purpose of Adjusted Diluted EPS 306.6 42.1 278.2 39.5
---------------------------------------------------------- --------- ----------------- --------- -----------------
(1) Restated for bonus element of 2016 rights issue (2015
adjusted EPS previously reported 42.9p).
12 Borrowings
2016 2015
----------------------------------------------------------------
GBPm GBPm
---------------------------------------------------------------- --- -------- ------
Current
Bank overdraft 9.4 2.0
---------------------------------------------------------------- --- -------- ------
Bank borrowings - current 14 9.4 2.0
---------------------------------------------------------------- --- -------- ------
Private placement loan note ($102.0m) - due December 2017 82.9 -
Private placement loan note (EUR50.0m) - due December 2017 42.8 -
Private placement loan note (GBP40.0m) - due December 2017 40.0 -
Private placement fees (0.2) -
---------------------------------------------------------------- --- -------- ------
Private placement - current 14 165.5 -
---------------------------------------------------------------- --- -------- ------
Total current borrowings 174.9 2.0
---------------------------------------------------------------- --- -------- ------
Non-current
Bank borrowings - revolving credit facility - due October 2020 300.2 359.1
Acquisition facility - due March 2018 548.6 -
Bank borrowing fees (3.7) (4.2)
---------------------------------------------------------------- --- -------- ------
Bank borrowings - non-current 14 845.1 354.9
---------------------------------------------------------------- --- -------- ------
Private placement loan note ($102.0m) - due December 2017 - 68.8
Private placement loan note (EUR50.0m) - due December 2017 - 36.8
Private placement loan note (GBP40.0m) - due December 2017 - 40.0
Private placement loan note ($385.5m) - due December 2020 313.3 260.2
Private placement loan note ($120.0m) - due October 2022 97.5 81.0
Private placement loan note ($130.0m) - due October 2025 105.7 87.8
Private placement fees (1.3) (1.6)
---------------------------------------------------------------- --- -------- ------
Private placement - non-current 14 515.2 573.0
---------------------------------------------------------------- --- -------- ------
Total non-current borrowings 1,360.3 927.9
---------------------------------------------------------------- --- -------- ------
1,535.2 929.9
---------------------------------------------------------------- --- -------- ------
There have been no breaches of covenants under the Group's bank
facilities and private placement loan notes during the year. The
bank and private placement borrowings are guaranteed by material
subsidiaries of the Group. The Group does not have any material
amount of its property and equipment and other intangible assets
pledged as security over loans.
The Group has issued private placement loan notes amounting to
USD 737.5m (2015: USD 737.5m), GBP 40.0m (2015: GBP 40.0m) and EUR
50.0m (2015: EUR 50.0m). As at 31 December 2016, the note
maturities ranged between one and nine years (2015: two and ten
years), with an average duration of 4.2 years (2015: 5.5 years), at
a weighted average interest rate of 4.3% (2015: 4.3%).
The Group maintains the following lines of credit:
-- GBP900.0m (2015: GBP900.0m) revolving credit facility, of
which GBP300.2m (2015: GBP359.1m) has been drawn down at 31
December 2016. Interest is payable at the rate of LIBOR plus a
margin based on the ratio of net debt to EBITDA; and
-- GBP548.6m ($675.0m) Acquisition Facility Agreement for up to
30 months to March 2019, of which GBP548.6m ($675.0m) was drawn on
31 December 2016. On 25 January 2017 the Group issued GBP406.4m
($500.0m) of private placement loan notes, the proceeds of which
were used in January 2017 to repay GBP406.4m ($500.0m) of the
acquisition facility;
-- GBP150.0m Term Facilities Agreement is available to be drawn
until December 2017, and if drawn, has a final maturity of December
2019. GBPnil was drawn on 31 December 2016; and
-- GBP51.2m (2015: GBP32.6m) comprising a number of bilateral
bank uncommitted facilities that can be drawn down to meet
short-term financing needs. These facilities consist of GBP 16.0m
(2015: GBP 16.0m), USD 13.0m (2015: USD 13.0m), EUR 18.0m (2015:
EUR 8.0m), AUD 2.0m (2015: AUD 2.0m), and CAD 2.0m (2015: CAD
2.0m). Interest is payable at the local base rate plus a
margin.
-- The Group has two bank guarantee facilities comprising in
aggregate up to EUR 7.0m (2015: EUR 7.0m), and up to AUD 1.5m
(2015: AUD 1.5m).
The effective interest rate as at 31 December 2016 is 2.3%
(2015: 3.4%).
The Group had the committed undrawn borrowing facilities at 31
December 2016 relating to the undrawn amount of the revolving
credit facility of GBP599.9m (2015: GBP540.9m).
13 Share Capital
Share capital as at 31 December 2016 amounted to GBP0.8m (2015:
GBP0.6m).
On 11 October 2016, the Group issued 162,234,656 ordinary shares
of 0.1p each through a 1-for-4 Rights Issue. The shares were issued
at GBP4.41 each and raised gross proceeds of GBP715.5m (GBP701.5m
net proceeds after expenses of GBP14.0m). Trading in the new shares
commenced on 26 October 2016. The excess of cash received over the
nominal value of the shares issued was recorded as share premium.
The net proceeds were used to part fund the acquisition of the
Penton business (see Note 15).
On 2 November 2016 the Group issued 12,829,146 ordinary shares
to the sellers of the Penton business in part consideration for the
sale ("Consideration Shares"). The number of shares reflected the
sterling equivalent of $100.0m divided by the 95 per cent. of the
volume weighted average closing price per share of Informa shares
on the London Stock Exchange for the 10 consecutive trading days
ending on the third trading day immediately prior to Closing,
converted at the average exchange rate over such 10 consecutive
trading day period. The share premium (net of transaction costs) is
GBP905.3m at 31 December 2016.
2016 2015
---------------------------------------------------------------------------
GBPm GBPm
--------------------------------------------------------------------------- ----- -----
Issued and fully paid
824,005,051 ordinary shares of 0.1p each (2015: 648,941,249 of 0.1p each) 0.8 0.6
--------------------------------------------------------------------------- ----- -----
Number of Number of
-------------------------------------------------------------------------
Shares Shares
2016 2015
------------------------------------------------------------------------- ------------ ------------
At 1 January 648,941,249 648,941,249
Issue of new shares related to the Rights Issue 162,234,656 -
Issue of new shares related to consideration for the Penton acquisition 12,829,146 -
------------------------------------------------------------------------- ------------ ------------
At 31 December 824,005,051 648,941,249
------------------------------------------------------------------------- ------------ ------------
14 Notes to the cash flow statement
2016 2015
-------------------------------------------------------------
Notes GBPm GBPm
------------------------------------------------------------- ------ ------- -------
Profit before tax 178.3 219.7
Adjustments for:
Depreciation of property and equipment 5 6.5 6.1
Amortisation of other intangible assets 5 131.3 112.3
Impairment - Goodwill 6 65.8 13.9
Impairment - Other intangible assets 6 1.9 -
Share-based payment 3.9 2.6
Subsequent re-measurement of contingent consideration 6 (7.4) (0.3)
Loss/(profit) on disposal of businesses 16 39.8 (9.1)
Loss on disposal of other assets - 0.1
Investment income 7 (59.5) (4.7)
Finance costs 8 40.2 30.6
Share of results of joint ventures and associate (0.8) 0.1
------------------------------------------------------------- ------ ------- -------
Operating cash inflow before movements in working capital 400.0 371.3
------------------------------------------------------------- ------ ------- -------
Increase in inventories (6.8) -
Increase) in receivables (64.2) (21.0)
Increase in payables 86.2 41.7
------------------------------------------------------------- ------ ------- -------
Movements in working capital 15.2 20.7
------------------------------------------------------------- ------ ------- -------
Cash generated by operations 415.2 392.0
------------------------------------------------------------- ------ ------- -------
Analysis of Net Debt
At 1 At 31
January 2016 Non-cash Movements Cash flow Exchange Difference December 2016
GBPm GBPm GBPm GBPm GBPm
-------------------------------- ------------- ------------------- ---------- -------------------- --------------
Cash at bank and in hand 34.3 - (3.6) 18.9 49.6
Overdrafts (2.0) - (6.7) (0.7) (9.4)
-------------------------------- ------------- ------------------- ---------- -------------------- --------------
Cash and cash equivalents 32.3 - (10.3) 18.2 40.2
Other loan receivable 0.3 - (0.2) 0.1 0.2
Private placement due in less
than one year - (165.7) - - (165.7)
Bank loans due in more than one
year (359.1) - (433.0) (56.7) (848.8)
Private placement loan notes
due in more than one year (574.6) 165.7 - (107.6) (516.5)
Bank loan fees 4.2 (2.2) 1.7 - 3.7
Private placement fees 1.6 (0.5) 0.4 - 1.5
Total (895.3) (2.7) (441.4) (146.0) (1,485.4)
-------------------------------- ------------- ------------------- ---------- -------------------- --------------
Included within the cash outflow of GBP441.4m (2015: inflow of
GBP25.1m) is GBP1,455.9m (2015: GBP928.9m) facility loan
repayments, GBP1,888.9m (2015: GBP812.0m) of facility loan drawn
downs, no private placement repayments (2015: GBP73.3m) and no
private placement draw downs (2015: GBP166.5m).
Net debt consists of loans and other borrowings (both current
and non-current), less cash and cash equivalents. Net debt includes
the costs incurred in raising debt and associated capitalised
arrangement fees.
15 Business Combinations
The provisional amounts recognised in respect of the estimated
fair value of identifiable net assets and liabilities in respect of
acquisitions made in 2016 and payments made in 2016 relating to
prior year acquisitions were:
Net assets/(liabilities) at acquisition date
Light Reading Other 2016 Other payments for
acquisitions prior year
Penton Finovate acquisitions Total
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- -------- --------------- --------- ---------------------- --------------------- --------
Intangible assets 648.2 24.6 5.1 22.2 - 700.1
Property and equipment 7.9 - - - - 7.9
Investments 0.2 - - - - 0.2
Deferred tax asset - 0.2 - - - 0.2
Trade and other
receivables 41.2 3.7 0.4 2.6 - 47.9
Cash and cash
equivalents 21.4 2.0 0.8 3.5 - 27.7
Trade, other payables
and provisions (24.9) (1.8) - (1.9) 4.7 (23.9)
Deferred income (59.5) (1.6) (1.5) (4.0) - (66.6)
Deferred tax
liabilities (114.7) - (3.9) (0.9) - (119.5)
Retirement benefit
obligation (19.6) - - - - (19.6)
----------------------- -------- --------------- --------- ---------------------- --------------------- --------
Identifiable net
assets acquired 500.2 27.1 0.9 21.5 4.7 554.4
Goodwill 833.8 22.8 20.1 0.9 - 877.6
----------------------- -------- --------------- --------- ---------------------- --------------------- --------
Total consideration 1,334.0 49.9 21.0 22.4 4.7 1,432.0
----------------------- -------- --------------- --------- ---------------------- --------------------- --------
Satisfied by:
Cash consideration 1,240.2 46.3 14.2 16.1 - 1,316.8
Deferred and
contingent
consideration paid - - 0.4 - 4.7 5.1
Deferred closing price
adjustment (6.6) 3.6 1.3 - - (1.7)
Deferred consideration 18.2 - - 4.0 - 22.2
Contingent
consideration - - 5.1 2.3 - 7.4
Share consideration 82.2 - - - - 82.2
----------------------- -------- --------------- --------- ---------------------- --------------------- --------
Total consideration 1,334.0 49.9 21.0 22.4 4.7 1,432.0
----------------------- -------- --------------- ---------------------- ---------------------
Net cash outflow
arising on
acquisitions:
Cash consideration 1,240.2 46.3 14.2 16.1 - 1,316.8
Deferred and
contingent
consideration paid - - 0.4 - 4.7 5.1
Less: net cash
acquired (21.4) (2.0) (0.8) (3.5) - (27.7)
Net cash outflow
arising on
acquisitions 1,218.8 44.3 13.8 12.6 4.7 1,294.2
Business combinations made in 2016
Penton Information Services
On 2 November 2016, the group acquired 100% of the issued share
capital of Penton Information Services, a leading independent
US-based Exhibitions and Professional Information services
business.
The provisional amounts recognised in respect of the estimated
fair value of the identifiable assets acquired and liabilities
assumed are as follows:
Book value Fair value
adjustments Fair value
GBPm GBPm GBPm
Intangible assets 17.6 630.6 648.2
Property and equipment 7.9 - 7.9
Investments 0.2 - 0.2
Deferred tax asset 46.8 (46.8)(1) -
Trade and other receivables 42.9 (1.7) 41.2
Cash and cash equivalents 21.4 - 21.4
Trade and other payables (23.8) (1.1) (24.9)
Deferred income (59.5) - (59.5)
Borrowings - - -
Deferred tax liabilities - (114.7) (114.7)
Retirement benefit obligation (19.6) - (19.6)
Identifiable net assets acquired 33.9 466.3 500.2
Provisional goodwill 833.8
Total consideration 1,334.0
1 The fair value adjustment of Deferred Tax Assets represents
the net presentation of Deferred Tax Assets against Deferred Tax
Liabilities.
The net cash consideration at closing, using an exchange rate of
1.22, was GBP1,218.8m ($1,482.5m), comprising GBP1,240.2m
($1,508.6m) of cash consideration paid to the vendors at closing
date, less cash acquired of GBP21.4m ($26.1m). Total consideration
at closing, using an exchange rate of 1.22, was GBP1,334.0m
($1,622.7m), consisting of GBP1,240.2m ($1,508.6m) of consideration
settled in cash, deferred closing price refund of GBP6.6m ($8.0m),
GBP82.2m ($100.0m) of share consideration and deferred
consideration with an estimated fair value of GBP18.2m ($22.1m)
payable in October 2018 for anticipated future tax benefits.
The provisional value of Identifiable net assets of GBP500.2m
included cash of GBP21.4m, intangible assets of GBP648.2m and
deferred tax liabilities of GBP114.7m. A goodwill balance of
GBP833.8m has been recorded. These net asset amounts are
provisional and reflect a preliminary valuation performed by a
third party valuation expert. These numbers are therefore subject
to change in accordance with IFRS 3 Business Combinations (revised
2008) once the full purchase price allocation and fair value
analysis has been completed.
The goodwill of GBP833.8m arising from the acquisition of Penton
relates to the following factors:
-- Provides Informa with increased scale in the Global
Exhibitions market, where it now ranks as one of the top 3
commercial exhibition organisers;
-- Enhances Informa's market leadership in a number of
verticals, particularly natural products and ingredients,
agriculture and infrastructure;
-- A strong management team with expertise which can be applied
to other parts of the Group; and
-- Increases Informa's exposure to the US, the largest economy
in the world, providing greater balance across geographies and
products.
Acquisition costs charged to operating profit (included in
adjusting items in the Consolidated Income Statement) for the year
ended 31 December 2016 amounted to GBP26.2m for advisor and related
external fees and an income statement credit of GBP58.9m relating
to the derivative forward contract used to hedge the proceeds of
the equity rights issue (see Note 7). In addition, there were
underwriting fees associated with the equity rights issue of
GBP14.0m which were charged to the Share Premium account.
The business contributed GBP34.0m of revenue and a loss after
tax of GBP4.8m for the period between the date of acquisition and
31 December 2016. If the acquisition had completed on the first day
of the financial year, it would have contributed GBP276.0m of
revenue and GBP21.1m of a profit after tax to the Group for the
year ended 31 December 2016.
Light Reading LLC
On 13 July 2016, the group acquired 100% of the issued share
capital of Light Reading LLC a leading content-driven B2B
integrated marketing services company serving the communications
industry. The Company forms part of the Knowledge & Networking
segment. Total consideration was GBP49.9m ($67.2m) of which
GBP44.3m ($59.6m) was paid in cash, net of cash acquired of GBP2.0m
($2.7m), and there is a deferred consideration amount payable of
GBP3.6m ($4.9m).
The provisional amounts recognised in respect of the estimated
fair value of the identifiable assets acquired and liabilities
assumed are as follows:
Book value Fair value
adjustments Fair value
GBPm GBPm GBPm
Intangible assets - 24.6 24.6
Deferred tax asset - 0.2 0.2
Trade and other receivables 4.1 (0.4) 3.7
Cash and cash equivalents 2.0 - 2.0
Trade and other payables (1.8) - (1.8)
Deferred income (1.6) - (1.6)
Identifiable net assets acquired 2.7 24.4 27.1
Provisional goodwill 22.8
Total consideration 49.9
The goodwill of GBP22.8m arising from the acquisition of Light
Reading relates to the following factors:
-- Existing workforce skills and expertise;
-- Savings on net operating costs by reducing duplication;
Acquisition costs (included in adjusting items in the
Consolidated Income Statement) for the year ended 31 December 2016
amounted to GBP0.2m.
The business contributed GBP5.3m of revenue and profit after tax
of GBP0.4m for the period between the date of acquisition and 31
December 2016. If the acquisition had completed on the first day of
the financial year, it would have contributed GBP14.0m of revenue
and GBP1.9m of profit after tax to the Group for the year ended 31
December 2016.
Finovate Group, Inc.
On 25 April 2016, the group acquired 100% of the issued share
capital of Finovate Group, Inc. one of the premier event companies
in the Fintech innovation space in the US. The Company will form
part of the Knowledge & Networking segment. Total consideration
was GBP21.0m ($30.6m) of which GBP13.4m ($19.6m) was paid in cash
at closing, net of cash acquired of GBP0.8m ($1.1m) and GBP0.4m
($0.5m) of deferred consideration was paid in the year, with
contingent and deferred consideration amounts payable of GBP6.4m
($9.4m). The provisional amounts recognised in respect of the
estimated fair value of the identifiable assets acquired and
liabilities assumed are as follows
Book value Fair value
adjustments Fair value
GBPm GBPm GBPm
Intangible assets - 5.1 5.1
Trade and other receivables 0.4 - 0.4
Cash and cash equivalents 0.8 - 0.8
Trade and other payables - - -
Deferred income (1.5) - (1.5)
Deferred tax liabilities - (3.9) (3.9)
Identifiable net assets acquired (0.3) 1.2 0.9
Provisional goodwill 20.1
Total consideration 21.0
The goodwill of GBP20.1m arising from the acquisition of
Finovate Group relates to the following factors:
-- Existing workforce skills and expertise;
-- Savings on net operating costs by reducing duplication;
Acquisition costs (included in adjusting items in the
Consolidated Income Statement) for the year ended 31 December 2016
amounted to GBP2.7m.
The business contributed GBP5.0m of revenue and profit after tax
of GBP0.9m for the period between the date of acquisition and 31
December 2016. If the acquisition had completed on the first day of
the financial year, it would have contributed GBP7.2m of revenue
and GBP0.9m of profit after tax to the Group for the year ended 31
December 2016.
Other business combinations made in 2016
On 14 June 2016, the group acquired 100% of the issued share
capital of Eurovir SAS, a European medical events business. The
Company will form part of the Global Exhibitions segment. Total
consideration was GBP6.8m (EUR 9.0m) of which GBP2.8m (EUR 3.8m)
was paid in cash, net of cash acquired of GBP2.4m (EUR 3.1m) and
there are deferred and contingent consideration amounts payable of
GBP1.6m (EUR 2.1m).
On 9 August 2016, the group acquired 100% of the issued share
capital of Market Rates Insight, Inc. a US-based company providing
financial institutions with comprehensive market intelligence on
deposits, loans and fees. The Company will form part of the
Business Intelligence segment. Total consideration was GBP3.1m
($4.1m) of which GBP2.7m ($3.6m) was paid in cash, and there are
deferred consideration amounts payable of GBP0.4m ($0.5m)
On 31 August 2016, the group acquired 100% of the issued share
capital of Xconomy, Inc. a US-based company providing market
intelligence on business, life sciences and technology. The Company
will form part of the Knowledge & Networking segment. Total
consideration was GBP2.5m ($3.6m) of which GBP0.7m ($1.3m) was paid
in cash, net of cash acquired of GBP0.3m ($0.3m), and there are
deferred and contingent consideration amounts payable of GBP1.5m
($2.0m).
On 4 October 2016, the group acquired 100% of the issued share
capital of Co-Action Publishing AB, a Swedish based publishing
company. The Company will form part of the Academic Publishing
segment. Total consideration was GBP3.9m of which GBP3.2m was paid
in cash, net of cash acquired of GBP0.3m, and there are deferred
consideration amounts payable of GBP0.4m.
On 16 October 2016, the group acquired 60% of the issued share
capital of Chengdu Weiner Meibo Exhibition Co. Ltd, a beauty
exhibition business in Chengdu, China. The group has an option to
purchase a further 20% from 2020. The Company will form part of the
Global Exhibitions segment. Total consideration was GBP2.1m (CNY
18.0m) of which GBP1.3m (CNY 10.9m) was paid in cash, net of cash
acquired of GBP0.4m (CNY 3.5m), and there are deferred
consideration amounts payable of GBP0.4m (CNY 3.6m).
On 25 November 2016, the group acquired 60% of the issued share
capital of Shanghai Yingye Exhibitions Co., Ltd which controls the
assets of China (Shanghai) International Floor Industry Exhibition
and China (Shanghai) International Mortar Technology and Equipment
Exhibition. The business operates exhibitions and conferences in
China for the Floor Industry and for Mortar Technology and
Equipment. The Company will form part of the Global Exhibitions
segment. Total consideration was GBP4.0m (CNY 32.8m) of which
GBP1.9m (CNY 16.0m) was paid in cash, net of cash acquired of
GBP0.1m (CNY 0.4m), and there were deferred contingent
consideration payments of GBP2.0m (CNY 16.4m).
Update on consideration paid in 2016 relating to business
combinations completed in prior years
During 2016 contingent and deferred consideration cash payments
of GBP4.7m relating to acquisitions completed in prior years.
16 Disposal of subsidiaries and operations
During the year, the Group generated the following net
(loss)/profit on disposal of subsidiaries and operations:
2016 2015
Segment GBPm GBPm
Corporate Training businesses loan impairment (39.9) -
Robbins Gioia loan recovery 4.0 -
Other operations (loss)/gain on disposal (2.6) 0.3
Corporate Communications International Limited loss on disposal Knowledge & Networking (1.3) -
Consumer Information business profit on disposal Business Intelligence - 7.4
Conference businesses in Sweden, Denmark and the Netherlands profit on
disposal Knowledge & Networking - 1.4
(Loss)/profit for the year from disposal of subsidiaries and operations (39.8) 9.1
Impairment of loan note receivable
In early 2013 the Group entered into an agreement to sell its
five Corporate Training businesses for a mixture of cash and
interest bearing loan notes. Following the under-performance of
these businesses in 2016 with the new owners, the loan and related
accrued interest receivable has been fully impaired in the year,
leaving a carrying value of GBPnil at 31 December 2016 (carrying
value at 31 December 2015: GBP35.7m ($51.9m)).
This resulted in a total write off charge of GBP39.9m ($51.9m)
representing GBP31.4m ($40.0m) for the fair value of the principal
loan amount and GBP8.5m ($11.9m) for accrued interest recognised in
prior periods. There was also a GBP4.0m ($5.0m) recovery from a
previously fully provided loan note relating to Robbins Gioia,
where there was agreement for recovery and funds were received in
February 2017.
Disposals made in 2016
On 9 February 2016 the Group disposed of its Adam Smith
conference business, Corporate Communications International
Limited. Consideration was in the form of shares, resulting in the
Group taking a 49% shareholding in the acquiring entity, Pestana
Management Limited, of which 25% carry voting rights. The loss on
disposal was GBP1.3m and the cash disposed with business was
GBP1.2m. From the date of disposal, this new investment will be
accounted for as an Associate using equity accounting.
There were other disposals which resulted in a loss of
GBP2.6m.
17 post balance sheet event
On 1 March 2017, the Group entered into a definitive agreement
to acquire 100% of the share capital of Yachting Promotions, Inc.,
("YPI") for cash consideration of GBP106.0m ($133.0m), subject to
customary closing conditions. YPI is the operator of some of the
largest international yachting and boat shows in the US. The
business will form part of the Global Exhibitions division. Based
on its results in the 12 months ended 31 December 2016, the
consideration represents a trailing multiple of 11.5 times EBITDA
before tax assets. In our original press release dated 2 March
2017, these tax assets were disclosed as having a net present value
of $33.9m, reflecting historical net operating losses of around
$40m that are deductible for US tax purposes over several years.
After receiving updated technical advice on the tax structure of
the acquisition, we can now confirm that the acquisition will bring
with it higher net operating losses of between $40m and $50m. These
will, however, be available over a longer time period than
initially advised, equating to a net present value of between $15m
and $18m. Including these tax assets, the acquisition consideration
of $133m represents a multiple of just under 10 times EBITDA. An
updated press release is available at www.informa.com.
Further information in respect of the accounting for the
acquisition will be provided in the Annual Report for the year
ending 31 December 2017.
Annual Report and Financial Statements 2016
The Annual Report and Financial Statements for the financial
year ended 31 December 2016 will be sent to shareholders and
published on www.informa.com in April 2017.
Copies of this announcement may be obtained during normal
business hours from the Company Secretary at the Company's office
at 5 Howick Place, London, SW1P 1WG.
Cautionary Statements
This document contains forward looking statements. These
statements are subject to a number of risks and uncertainties and
actual results and events could differ materially from those
currently being anticipated as reflected in such forward looking
statements. The terms 'expect', 'should be', 'will be' and similar
expressions identify forward looking statements. Factors which may
cause future outcomes to differ from those foreseen in forward
looking statements include, but are not limited to: general
economic conditions and business conditions in Informa's markets;
exchange rate fluctuations, customers' acceptance of its products
and services; the actions of competitors; legislative, fiscal and
regulatory developments; changes in law and legal interpretation
affecting Informa's intellectual property rights and internet
communications; and the impact of technological change. These
forward looking statements speak only as of the date of this
interim management report. Except as required by any applicable law
or regulation, the Group expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward looking statements contained in this document to reflect
any change in the Group's expectations or any change in events,
conditions or circumstances on which any such statement is
based.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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March 06, 2017 02:00 ET (07:00 GMT)
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