TIDMINF
RNS Number : 5089Z
Informa PLC
21 September 2020
Informa LEI: 5493006VM2LKUPSEDU20
Informa PLC Press Release
21 September 2020
2020 Half-Year Results and COVID-19 Action Plan
Stability and Security through 2021 & beyond
Informa (LSE: INF.L), the Information Services, Advanced
Learning, B2B Exhibitions and Events Group today announced its
financial results for the six-months ended 30 June 2020, alongside
an update on its ongoing actions to ensure Stability and Security
through 2021, amid continuing COVID-19 disruption.
-- H1 2020 Results: Adjusted Operating Profit(1) of GBP118.6m
(H1 2019: GBP435.7m) on revenues of GBP814.4m (H1 2019:
GBP1,407.6m), amid significant pandemic-impact on physical Events
business; COVID-19 non-cash impairments and exceptional costs
impact statutory pre-tax loss of GBP739.9m;
-- Data & Depth: Continued strong demand for specialist data
and intelligence helping offset COVID-19 disruption to physical
Events, with solid performance in Subscriptions businesses and
specialist B2B brands, underpinned by Informa's geographic breadth
and depth of customer relationships;
-- Recovery & Return: Physical Events business in Mainland
China back to operating capability, with 20 further B2B events
scheduled before year-end, highlighting recovery potential as
permissions return and confidence rebuilds; elsewhere, customer
engagement remains high with continued commitment to forward
bookings and growing participation in virtual events;
-- COVID-19 Action Plan: Group announces next stage of its
ongoing COVID-19 Action Plan to support Colleagues, stabilise the
business and secure baseline full-year revenues of
c.GBP1.7bn/GBP1.7bn-, including extending The Postponement
Programme to mid/late Spring 2021 and expansion of the Cost
Management Programme to deliver more than GBP600m+ of savings by
year-end;
-- 2021 Cashflow Positive: Combination of lower costs, more
efficient financing and effective cash management will secure
positive monthly cashflow position by January 2021, even assuming
no physical events activity other than shows within Mainland China
and outdoor events.
-- Balance sheet & Financing Security: Current liquidity of
GBP2.8bn, with intention to renegotiate or repay US private
placement notes, combined with planned issue of around GBP500m
equivalent Euro Bonds, extending drawn debt maturity through to
2023.
Stephen A. Carter , Group Chief Executive, Informa PLC, said:
"Despite the first-half disruption to physical Events businesses
caused by the pandemic, we are seeing strong demand and resilience
in our specialist Subscriptions, Data and Content, reflecting
the power of our brands and depth of geographic reach and customer
relationships. Encouragingly, we have also seen our physical Events
business recover in Mainland China, whilst our increasing participation
in virtual events is maintaining our brands, developing our digital
services and enhancing our data capabilities."
"We have extended our COVID-19 Action Plan to deliver further
business stability and security through to the end of 2021. This
package of measures extends our Postponement Programme to mid/late
Spring 2021, further lowers costs, reduces cash expenditures and
strengthens our balance sheet, underpinning full year revenues
of c.GBP1.7bn/GBP1.7bn-, which will also serve as our baseline
for 2021."
He added: "The combination of our resilient Subscriptions-led
businesses and the actions we are taking position Informa securely
through to the end of 2021. We remain confident that Informa will
emerge from the pandemic with Stability and Security, delivering
long-term sustainable growth and shareholder value."
H1 2020 Key Highlights
Financial results reflect the impact of COVID-19 and Informa's
effective response through its Postponement Programme, Cost
Management Programme and financing activities:
-- Statutory Group Revenue: GBP814.4m (H1 2019: GBP1,407.6m), reflecting robust performance by Subscriptions-led businesses and good start to the year by Events-led businesses, before COVID-19 disruption and launch of major programme to reschedule events;
-- Adjusted Operating Profit(1) : GBP118.6m (H1 2019:
GBP435.7m), with close to GBP300m of direct and indirect cost
savings in H1;
-- Statutory Operating Loss: First-half loss of GBP739.9m (H1
2019 profit: GBP248.3m), reflecting lower revenue, intangible
amortisation (GBP148.2m), COVID-19 non-cash impairments (GBP592.9m)
and exceptional costs (GBP43.4m);
-- Free Cash Flow(1) : GBP71.3m (H1 2019: GBP306.4m), with
resilient cash conversion, reflecting effective cost management and
cash controls, with low levels of customer refunds in H1;
-- Net Debt: GBP1947.9m (H1 2019: GBP2846.0m), with a leverage
ratio of 2.3x (H1 2019: 2.7x), supported by positive free cash
flow, equity raise and retained cash facilities;
-- Chairman Succession: In March, the Chairman's succession
process was paused to enable the Group to focus on the Stability
and Security of Informa through 2020/2021. The Group now has a
clear path into and through 2021 and, therefore, the Chairman
succession process, which was previously well progressed, has
resumed with the aim of concluding by year-end, with a detailed
update at the Group's Nine-Month Trading Statement in early
November.
COVID-19 Action Plan
Following the delayed recovery and return to business in North
America and EMEA, Informa is moving to the next stage of its
COVID-19 Action Plan:
-- Postponement Programme Extended to Spring 2021: Programme to
reschedule physical events to later dates has been extended to
mid-late Spring 2021, maximising the revenue opportunity from
physical events, supported by increasing commitment to and
experience in virtual events;
-- Effective Cost Management: Move to the next stage of the
Group's Cost Management Programme, with around GBP400m direct
savings to adjusted operating profit and GBP200m+ annualised
indirect savings by year-end, supported by a Voluntary Severance
Programme, a 2020/21 Sabbatical Programme, a Balanced Working
Programme and targeted compulsory redundancies largely in North
America and EMEA, aligning the 2021 cost base to the revenue
outlook;
-- 2021 Cashflow Positive: Strength of B2B brands and focus on
cash management reflected in customer commitment to forward
bookings, with refunds less than 15% of Events gross cash
collections. Combined with additional cost measures and increased
financing efficiency, delivering positive monthly cashflows in
January 2021, even if physical events activity remains limited to
domestic trade shows in Mainland China and outdoor events;
-- Ongoing Colleague Support: Further measures to support the
safety and wellbeing of Colleagues, including increased working
flexibility though the introduction of the Balanced Working
Model;
-- Further Financing Flexibility: Current liquidity of GBP2.8bn
and average debt maturity of 5.4 years. Intention to renegotiate or
repay US private placement notes, removing point covenant, combined
with planned issue of around GBP500m equivalent Euro-bonds,
extending drawn debt maturity to 2023.
(1) In this report we refer to non-statutory measures including
underlying results, as defined in the Financial Review on page 8
and Glossary on page 58.
Enquiries
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 IR
& Communications +44 (0) 20 3377 3445
Tim Burt / Zoe Watt - Teneo +44 (0) 20 7240 2486
----------------------------------------- --------------------
H1 2020 Financial Summary
H1 2020 H1 2019 Reported Underlying(1)
GBPm GBPm % %
--------------------------------------------------------- -------------- ----------- ------------- --------------------
Revenue 814.4 1,407.6 (42.1) (26.2)
Statutory operating (loss)/profit (739.9) 248.3 n/a
Adjusted operating profit(2) 118.6 435.7 (72.8) (54.0)
Adjusted operating margin (%)(2) 14.6 31.0 (52.9)
Operating cash flow(2) 183.5 415.1 (55.8)
Statutory (loss)/profit before tax (801.2) 232.8 n/a
Adjusted profit before tax(2) 71.0 377.8 (81.2)
Statutory diluted earnings per share (p) (56.9) 14.4 n/a
Adjusted diluted earnings per share (p)(2) 5.0 23.1 (78.4)
Dividend per share (p) n/a 21.9 n/a
Free cash flow(2) 71.3 306.4 (76.7)
Net debt (inc IFRS 16)(2) 1,947.9 2,846.0 (31.6)
--------------------------------------------------------- -------------- ----------- ------------- --------------------
H1 2020 Divisional Highlights H1 2020 H1 2019 Reported Underlying(1)
GBPm GBPm % %
------------------------------------- -------- -------- --------- --------------
Informa Markets
Revenue 284.7 722.0 (60.6) (45.1)
Statutory operating (loss)/profit (380.9) 136.6 n/a
Adjusted operating profit(2) 12.0 253.2 (95.3) (91.5)
Adjusted operating margin(2) (%) 4.2 35.1
------------------------------------- -------- -------- --------- --------------
Informa Connect
Revenue 65.5 141.6 (53.7) (42.6)
Statutory operating (loss)/profit (148.0) 7.9 n/a
Adjusted operating (loss)/profit(2) (20.0) 17.7 n/a n/a
Adjusted operating margin(2) (%) n/a 12.5
------------------------------------- -------- -------- --------- --------------
Informa Tech
Revenue 59.8 109.0 (45.1) (7.4)
Statutory operating (loss)/profit (300.1) 15.9 n/a
Adjusted operating (loss)/profit(2) (16.5) 29.0 n/a n/a
Adjusted operating margin(2) (%) n/a 26.6
------------------------------------- -------- -------- --------- --------------
Informa Intelligence
Revenue 147.9 183.2 (19.3) 1.8
Statutory operating profit 29.2 20.3 43.8
Adjusted operating profit(2) 47.8 42.8 11.7 27.5
Adjusted operating margin(2) (%) 32.3 23.4
------------------------------------- -------- -------- --------- --------------
Taylor & Francis
Revenue 256.5 251.8 1.9 (0.7)
Statutory operating profit 59.9 67.6 (11.4)
Adjusted operating profit(2) 95.3 93.0 2.5 2.5
Adjusted operating margin(2) (%) 37.2 36.9
------------------------------------- -------- -------- --------- --------------
(1) In this document we refer to Underlying and Reported
results. Underlying figures are adjusted for acquisitions and
disposals, the phasing of events including biennials, the impact of
changes from new accounting standards and accounting policy
changes, and the effects of currency. It includes, on a pro-forma
basis, results from acquisitions from the first day of ownership in
the comparative period and excludes results from sold businesses
from the date of disposal in the comparative period. Reported
figures exclude such adjustments. Alternative performance measures
are detailed in the Glossary.
(2) In this document we also refer to Statutory and Adjusted
results, as well as other non-statutory financial measures.
Adjusted results are prepared to provide an alternative measure to
explain the Group's performance. Adjusted results exclude adjusting
items as set out in Note 4 to the Financial Statements. Operating
cash flow, free cash flow, net debt and other non-statutory
measures are discussed in the Financial Review and the
Glossary.
Trading Outlook
The demand for specialist knowledge and information remains
resilient. This is reflected in solid trading and good visibility
in the majority of Informa's Subscription-led businesses and high
levels of engagement and activity across the Group's other digital
content, media, marketing services and virtual event
businesses.
The strength of these businesses, combined with the quality of
Informa's other B2B brands, broad geographic reach and strong
customer relationships, is providing stability and security in the
face of the significant, ongoing impact of COVID-19 on the Group's
physical events portfolio.
The COVID-19 pandemic continues to have a more volatile and
far-reaching impact around the world than initially predicted. Over
recent months, whilst Government control restrictions have been
gradually relaxed in many countries, more often than not this has
been followed by a resurgence in infections and an increasing cycle
of on/off targeted local lockdowns and extended travel
restrictions.
This includes in North America, Informa's largest market for
physical events, and also across EMEA. We had previously
anticipated events in these regions would gradually resume through
the summer, before picking up from September. However, this has not
been possible, leading to GBP1bn+ of budgeted physical events
revenue being cancelled this year and more than GBP450m since
June.
By contrast, our physical events business in Mainland China is
now back to operating capability and, combined with growth in
virtual events, specialist media and marketing services, is helping
to offset some of the weakness in North America. Full year Group
revenue is now expected to be in the range of c.GBP1.7bn/GBP1.7bn-,
with Informa tracking closer to the Vigilant Scenario outlined in
our April and June updates. As a consequence, we have moved to the
next stage of our COVID-19 Action Plan, including the delivery of
GBP600m+ cost savings to adjusted operating profit in 2020, with
direct savings of around GBP400m and GBP200m+ annualised indirect
savings by year-end.
Subscription-led Businesses (c.54% of H1 Revenue):
Our portfolio of subscriptions-led, specialist knowledge and
information businesses remain resilient, underpinned by
forward-booked subscriptions, with strong visibility and attractive
cash flows.
Taylor & Francis
Taylor & Francis continues to perform well. In Research
Publishing, consistent levels of growth are underpinned by high
renewal rates for journal subscriptions and further positive
momentum across open access. The outcome for 2020 is now largely
secure and focus is turning to 2021, as the new university year
approaches and the annual subscription renewal season gets
underway.
Advanced Learning also remains a robust business and whilst it
has seen some impact from COVID-19 on its supply chain and US
retail business, trading has started to return to more typical
patterns over recent months.
Informa Intelligence
Our B2B Information business continues to deliver predictable
underlying growth, reflecting the quality of its specialist
intelligence, valuable data and targeted customer solutions.
Pharma Intelligence is trading particularly strongly. Following
recent investment to upgrade our technology platforms, we are
delivering greater functionality to our customers through enhanced
APIs and workflow tools, and this is reaping benefits in a market
currently buoyant with activity.
As we approach a key period for subscriptions, overall momentum
is good, with renewal rates high, new business pipelines strong and
annualised contract values positive. This gives us confidence we
will deliver further resilient growth in the second half of the
year.
Informa Tech: Research & Data
Omdia is progressively establishing its brand with customers,
supported by a steady flow of new research and enhanced data
products. As its reputation grows, we continue to target a gradual
improvement in performance and growth.
Events-led Businesses (c.46% of H1 Revenue):
Informa Markets ran its first post-COVID trade show in Mainland
China in late June and has since run a further 20 events in the
region, all of them incorporating AllSecure protocols. These have
varied in size and location, including large-scale brands such as
China Beauty Expo in Shanghai, with around 2,500 exhibitors and
more than 100,000 visitors and Furniture China, with over 1,000
exhibitors and 100,000 visitors, as well as some more targeted
shows such as Hotelex Chengdu, with 140 exhibitors and over 14,000
visitors.
As more physical event brands trade in Mainland China, customer
enquiries and forward commitments are rising, illustrating the path
to recovery as permissions and confidence return, with clear pent
up demand in the market. Elsewhere, this is reflected in the
continuing commitment to forward bookings and cash deposits as
events are rescheduled to 2021, with refund requests currently
running at less than 15% of Events gross cash collections.
Outside of Mainland China, Informa Markets, Informa Connect and
Informa Tech all continue to face significant disruption from
COVID-19, with scale physical events in North America, in
particular, but also across EMEA, not yet feasible.
Virtual Events and Digital Services
Despite the absence of physical events, we are using the
strength of our brands, knowledge of specialist markets and strong
relationships to deliver virtual events and other digital services
for customers of our event brands. This includes a wide range of
specialist content, media and marketing services activities, as
well as a burgeoning portfolio of virtual events.
On virtual events, we are constantly innovating and adapting to
meet customer demand and the specifics of our specialist markets,
with products ranging from webinars providing education and content
and a way to keep our brands visible, to more sophisticated
platforms driving customer value through targeted matchmaking,
product showcases and virtual factory tours.
Virtual events are a different product to physical events,
lacking the intimacy and immediacy that creates networking
opportunities and personal interactions. However, they have their
own advantages, such as unlimited reach, which allows us to target
a much broader customer set, including those who do not typically
attend a physical show. Virtual events also generate deep pools of
data, providing unique insights into customer behaviour and
preferences. We believe there is power and differentiation across
both mediums and an opportunity to generate real value from
harnessing the strengths of both to deliver better customer
insights and more highly qualified leads.
Over recent months, the level of customer engagement and
participation in some of our virtual events has grown
significantly, often where an early decision was made to cancel the
physical event to put full focus on building a powerful digital
platform. Examples include Black Hat and Enterprise Connect within
Informa Tech, BioEurope Spring and IM Power in Informa Connect and
Spark Change and the upcoming CPHI Festival of Pharma within
Informa Markets.
In total, we expect to run more than 500 virtual events across
all formats in 2020, attracting more than 500k+ attendees. The main
objective for many this year is to keep our brands visible and
customer engagement high. Revenues are typically below the physical
product but this has potential for improvement as platforms become
more sophisticated, the range of services we offer broadens and we
are able to plan and market the virtual events more
effectively.
Chairman Succession
In January, Informa announced the launch of a process to
identify a new Group Chairman to succeed Derek Mapp. This process
was temporarily paused in March to enable the Group to focus on the
response to COVID-19 and the stability and security of Informa
through 2020/2021.
With the Group now in a stable position, with a clear path into
and through 2021, the Chairman succession process, which was
previously well progressed, has resumed with the aim of concluding
by year-end, with a detailed update at the Group's Nine-Month
Trading Statement in early November.
Stability & Security through 2021
Informa continues to demonstrate depth and resilience through
our Subscription-led businesses and the power of our data and
relationships through media, marketing services and virtual events
activities.
In June, we had anticipated physical events would return
gradually through the summer, phased by market, but with strength
returning to our largest market, North America, before the end of
the year. However, the impact and reach of COVID-19 remains
significant, with physical events still not running at scale in
North America, nor anywhere else other than Mainland China.
COVID-19 Action Plan
The recovery in Mainland China continues to build in pace and
scale and the outlook for the remainder of 2020 looks steady, as
confidence returns in that market and in the broader region.
However, this is more than offset by the slower recovery in North
America and elsewhere, with the net consequence a reduction to
Group revenue expectations for the full year. We are now tracking
closer to the Vigilant Case scenario outlined in our April and June
updates.
In response, today we are moving to the next phase of our
COVID-19 Action Plan, introducing a further range of measures to
ensure we can continue to manage the business for long-term
strength and value:
-- Postponement Programme Extended to mid/late Spring 2021
As we look to 2021, we remain flexible in our approach to the
year to ensure we create the best opportunities for our brands and
customers. We already have a full schedule of virtual events
planned, with the advantage of much greater advance planning and
pre-marketing than was possible in 2020.
In addition, today we are announcing the extension of our
Postponement Programme to mid/late Spring 2021, with the majority
of our physical events scheduled for the beginning of 2021 being
moved to a later date. This will de-risk the early months of the
year, providing a longer period to move beyond COVID-19 disruption,
exposure to a second wave of the virus through the winter months in
the Northern Hemisphere and the other side of the US presidential
election.
AllSecure: A key component in gaining permissions from local
authorities and rebuilding confidence amongst participants, is the
AllSecure Standard for events. This was created through
collaboration amongst leading organisers, association partners and
suppliers, establishing an industry best-practise playbook for
running physical events to the highest standards of hygiene, safety
and cleanliness.
It has already been widely adopted by the industry, governments
and health authorities across the world and Informa AllSecure, the
adoption of the standard for all Informa's physical events, is now
being actively deployed across all our brands, including the
returning physical events in Mainland China.
-- Effective Cost Management
Early in 2020, as the initial impact of COVID-19 became clear,
we introduced a series of direct and indirect cost controls,
helping to secure around GBP300m of total savings within the first
six months of the year, whilst continuing to preserve and protect
the core talent and intellectual property within the Group:
-- Recruitment Rate: The postponement of all affected
recruitment and review of all contractors and consultants;
-- Rewards Phasing: The cancellation of annual salary reviews,
merit rises, cost of living increases and other rewards;
-- Project Review: The postponement of all non-essential projects and capital expenditure;
-- Discretionary Costs: A reduction of all non-essential spend,
including travel, professional fees
-- Procurement: The review and renegotiation of major contracts with suppliers;
-- Property: The review of our real estate portfolio to
consolidate office space and improve utilisation and
efficiency;
-- Employment Flexibility: The 2020 Informa Sabbatical, under
which Colleagues can take voluntary unpaid leave over a six-month
period.
Today we are moving to the next stage of our Cost Management
Programme, with a target to deliver GBP600m+ savings to adjusted
operating profit by year-end, including direct cost savings of
around GBP400m and GBP200m+ of annualised indirect savings, further
aligning the Group's costs to our revenues going into 2021.
This will be supported by a range of initiatives, including the
further reduction of all non-essential costs, a second edition of
the 2020 Sabbatical Programme, the launch of the Balanced Working
Programme, and the Voluntary Severance Programme, as well as some
targeted compulsory redundancies largely in North America and
EMEA.
-- Ongoing Colleague Support
Throughout the COVID-19 pandemic, we have always prioritised the
safety and wellbeing of Colleagues and Customers. From early advice
and guidance, to remote working support, flexibility for community
volunteering and direct assistance through the Informa Colleague
Support Fund, we have aimed to provide both personal and
professional support and reassurance.
As the world gradually starts to return to offices, the Group is
providing further flexibility and support through its Balanced
Working Programme. Recognising the success of remote working
through lockdown but also the value of office-based working for
more collaborative activities, we are providing colleagues with
much greater flexibility to adopt a more blended approach.
This will see the Group introduce more flexible office
structures and working environments, enabling Informa to use its
office space more effectively, closing smaller locations that are
no longer required and consolidating space in other offices. The
efficiencies this creates will contribute to the expanded cost
management programme.
-- Cashflow Controls
The combination of our actions to reduce costs, increase
financing efficiency and focus on cash management, is expected to
move the Group into a monthly cash positive position by January
2021, even if physical event activity remains limited to Mainland
China and outdoor events.
This will further strengthen our overall liquidity position and
enable management to focus on the long-term value of our brands and
businesses.
-- Further Financing Flexibility
As the COVID-19 pandemic unfolded, we moved quickly to
strengthen our balance sheet and improve liquidity through a range
of measures, including extending our banking facilities and raising
additional equity. As at 30 June, our liquidity was GBP2.8bn,
including eligibility for the Bank of England's COVID Corporate
Finance Facility (CCFF), and the average debt maturity was 5.4
years.
Today we are taking additional steps to increase our financing
flexibility. This includes the intention to renegotiate or repay
our US Private Placement notes (GBP1.1bn of borrowings) by the end
of the year, combined with the planned issuance of around GBP500m
equivalent Euro Bonds. This will extend the maturity profile of the
current debt structure.
Repaying the private placement notes removes its covenant from
our debt structure, reduces interest payments and extends drawn
debt maturities to 2023, whilst leaving the Group with GBP1.5bn+ of
liquidity, with average debt maturity of 5.8 years. Combined with
our Cost Management Programme, these actions would also deliver a
monthly cash positive position by January 2021.
We believe these actions will significantly strengthen our
financing flexibility, ensuring we have sufficient liquidity to the
other side of COVID-19.
Financial Review
Income Statement
In the first half of 2020, Informa demonstrated resilience and
depth through our Subscriptions-led businesses and the power of our
data and relationships in events through our media, marketing
services and virtual events activities. Our physical events
portfolio started the year positively before being severely
disrupted by COVID-19, which led to a major Postponement Programme,
a switch into virtual events for many brands, and a number of
cancellations. These actions significantly reduced the revenue and
profit reported in the period in comparison to last year.
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
results items results results items results
H1 2020 H1 2020 H1 2020 H1 2019 H1 2019 H1 2019
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- -------------- --------------- -------------- -------------- --------------- --------------
Revenue 814.4 - 814.4 1,407.6 - 1,407.6
-------------------- -------------- --------------- -------------- -------------- --------------- --------------
Operating
profit/(loss) 118.6 (858.5) (739.9) 435.7 (187.4) 248.3
(Loss)/profit on
disposal - (4.0) (4.0) - 42.9 42.9
Net finance costs (47.6) (9.7) (57.3) (57.9) (0.5) (58.4)
-------------------- -------------- --------------- -------------- -------------- --------------- --------------
Profit/(loss)
before tax 71.0 (872.2) (801.2) 377.8 (145.0) 232.8
Tax(charge)/credit (9.2) 43.9 34.7 (71.8) 35.6 (36.2)
-------------------- -------------- --------------- -------------- -------------- --------------- --------------
Profit/(loss) for
the period 61.8 (828.3) (766.5) 306.0 (109.4) 196.6
-------------------- -------------- --------------- -------------- -------------- --------------- --------------
Adjusted operating
margin 14.6% 31.0%
Adjusted diluted
EPS (1) 5.0p (56.7)p 23.1p 14.4p
-------------------- -------------- --------------- -------------- -------------- --------------- --------------
(1) H1 2019 Restated for share placement
Statutory income statement results
The disruption to our physical events portfolio led to a
decrease in statutory revenue of 42.1% to GBP814.4m.
The Group reported a statutory operating loss of GBP739.9m
compared to an operating profit of GBP248.3m for the six months to
30 June 2019. This reflects the reduction in revenue as well as a
number of adjusting items, including a non-cash impairment of
GBP592.9m relating to goodwill.
This impairment reflects the impact of COVID-19 on the long-term
trading outlook for our physical events portfolio in our Events-led
businesses. The impairment review was based on forecasts as at 30
June, when the continued inability to run physical events in our
largest market, North America, or elsewhere was expected to
significantly impact the full year outcome in 2020, before our
assumption of a gradual recovery over the next few years. For
modelling purposes, it was assumed that the Group returns to 2019
levels of operating cash flow by 2025. This results in a non-cash
impairment of GBP231.1m for Markets, GBP105.9m for Connect and
GBP255.9m for the Tech Division. Since the 30 June, the outlook in
Mainland China has improved with physical events now running in the
second half of the year.
Statutory net finance costs fell 2% to GBP57.3m, comprising of
GBP62.1m of finance costs and GBP4.8m of investment income. The
combination of lower interest rates and the successful refinancing
of a USD Bond and certain US Private Placement notes delivered a
GBP9.0m reduction in interest expense on borrowings offset by a
GBP9.2m increase in finance costs.
The combination of all these factors led to a statutory loss
before tax of GBP801.2m, compared to a profit before tax of
GBP232.8m for the 6 months ended 30 June 2019.
The statutory loss before tax led to a tax credit for the period
of GBP34.7m, compared to a tax charge of GBP36.2m in the period to
30 June 2019.
Statutory diluted earnings per share decreased from 14.4p for
the 6 months to 30 June 2019 to a loss per share of 56.9p. This
primarily reflected the impact of COVID-19 on trading and the
impairment, partially offset by the favourable tax charge for the
period. There was also a 78.3m increase in the weighted average
number of shares compared to the first half of 2019, reflecting the
impact of the equity addition in April, which saw 250.3m new shares
issued.
Measurement and Adjustments
In addition to statutory results, adjusted results are prepared
for the income statement. These include adjusted operating profit,
adjusted diluted earnings per share and other underlying measures.
A full definition of these metrics can be found in the glossary of
terms on page 58. The Divisional table on page 38 provides a
reconciliation between statutory operating profit and adjusted
operating profit by division.
Underlying revenue and adjusted operating profit growth on an
underlying basis are reconciled to reported growth in the table
below. This highlights that phasing was one of the main reconciling
items in the first half, reflecting the significant number of event
postponements in the period. For the calculation of underlying
growth, where an event originally scheduled for the first half of
2020 was postponed to the second half, the corresponding event
revenue from the first half of 2019 was removed from the 2019
comparative. In the case where an event due to be held in the first
half of 2020 was cancelled, no adjustment to 2019 revenue was
made.
Underlying Phasing Acquisitions Currency Reported
growth and other and disposals change growth
items
H1 2020
Revenue (26.2%) (15.0%) (1.4%) 0.5% (42.1%)
Adjusted operating
profit (54.0%) (19.1%) (1.0%) 1.3% (72.8%)
--------------------- ----------- ----------- --------------- --------- ---------
H1 2019
Revenue 3.4% (1.5%) 40.0% 5.2% 47.1%
Adjusted operating
profit 8.2% (2.9%) 31.7% 11.0% 48.0%
--------------------- ----------- ----------- --------------- --------- ---------
Adjusting Items
The items below have been excluded from adjusted results. The
total adjusting items in the period increased to GBP858.5m (H1
2019: GBP187.4m), largely due to the COVID-19 related impairment of
goodwill and COVID-19 related onerous contract costs and one-off
costs.
H1 2020 H1 2019 FY 2019
GBPm GBPm GBPm
--------------------------------------------------------- -------- -------- --------
Intangible amortisation and impairment
Intangible asset amortisation(1) 148.2 155.4 312.4
Impairment - acquisition-related intangible assets 1.0 - 3.8
Impairment - acquisition-related goodwill 592.9 - 0.9
Impairment - right of use assets 17.4 2.9 4.6
Impairment - external investments 3.9 - -
Acquisition costs 0.8 0.3 3.3
Integration costs 33.1 19.8 56.4
Restructuring and reorganisation costs
Redundancy and reorganisation costs 2.3 5.7 6.4
Vacant property and finance lease modification costs 13.9 1.2 2.2
Onerous contracts associated with COVID-19 37.9 - -
Other items associated with COVID-19 5.5 - -
Subsequent re-measurement of contingent consideration 1.0 2.1 3.2
VAT charges 0.6 - 1.8
Adjusting items in operating profit 858.5 187.4 395.0
Loss/(profit) on disposal businesses 4.0 (42.9) 95.4
Investment income - - (1.2)
Finance costs 9.7 0.5 13.5
---------------------------------------------------------- -------- -------- --------
Adjusting items in profit before tax 872.2 145.0 502.7
Tax related to adjusting items (43.9) (35.6) (83.5)
Adjusting items in profit for the period 828.3 109.4 419.2
---------------------------------------------------------- -------- -------- --------
(1) Excludes acquired intangible product development and
software amortisation
Intangible amortisation of GBP148.2m relates to acquired book
lists and journal titles, acquired databases, customer and attendee
relationships and brands related to exhibitions, events and
conferences. As it is related to acquisitions, it is not treated as
an ordinary cost. By contrast, intangible asset amortisation
arising from software assets and product development is treated as
an ordinary cost in the calculation of operating profit, so is not
treated as an adjusting item.
Impairment of goodwill of GBP592.9m arises from the impact of
COVID-19 on the carrying value of our physical events portfolio.
Following an H1 2020 impairment review of the events-related
businesses, impairments were made in all our Events-led businesses,
including Informa Markets (GBP231.1m), Informa Connect (GBP105.9m)
and Informa Tech (GBP255.9m). Impairments reflect the relative
levels of headroom in these divisions in the previous reporting
period. See note 10 of the financial statements for further
details.
Impairment of right of use assets of GBP17.4m and vacant
property and finance lease modification costs of GBP13.9m resulted
from our decision to permanently vacate a number of office
properties from June 2020.
Integration costs of GBP33.1m include GBP21.8m relating to the
acquisition of UBM, consisting mainly of process, property and
colleague-related reorganisation costs. This brings the cumulative
UBM integration costs to GBP103.7m to date, in line with guidance.
The remaining GBP11.3m of integration costs relates to the addition
of IHS Markit's TMT research and intelligence portfolio.
Onerous contracts associated with COVID-19 were GBP37.9m through
the period, arising from costs for events which were cancelled or
postponed due to COVID-19, where the costs cannot be recovered,
typically related to venues and event set-up. The other items
associated with COVID-19 of GBP5.5m are one-off indirect costs
incurred as a result of COVID-19, largely relating to contractual
commitments to the owner of an event that was cancelled.
The table below shows the results and adjusting items by
Division, with a robust performance by our Subscriptions-led
businesses, Informa Intelligence and Taylor & Francis, offset
by the impact of COVID-19 on our Events-led businesses, Informa
Markets, Informa Tech and Informa Connect.
Informa Markets Informa Informa Tech Informa Connect Taylor & Group
Intelligence Francis
GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ---------------- ---------------- ------------- ---------------- ---------------- -----------
Revenue 284.7 147.9 59.8 65.5 256.5 814.4
Underlying
revenue growth (45.1%) 1.8% (7.4%) (42.6%) (0.7%) (26.2%)
Statutory
operating
(loss)/profit (380.9) 29.2 (300.1) (148.0) 59.9 (739.9)
Add back:
Intangible asset
amortisation(1) 93.4 8.7 11.2 8.8 26.1 148.2
Impairment of
right use assets 3.5 5.1 0.9 3.6 4.3 17.4
Impairment of
goodwill 231.1 - 255.9 105.9 - 592.9
Impairment -
other - 1.4 - 2.5 1.0 4.9
Acquisition costs - - 0.5 - 0.3 0.8
Integration costs 18.9 0.6 11.8 1.7 0.1 33.1
Restructuring and
reorganisation
costs 4.6 2.7 1.2 4.1 3.6 16.2
Onerous contracts
and one-off
costs associated
with COVID-19 39.5 0.1 1.7 2.1 - 43.4
Re-measurement of
contingent
consideration 1.3 - 0.4 (0.7) - 1.0
VAT charges 0.6 - - - - 0.6
Adjusted
operating profit 12.0 47.8 (16.5) (20.0) 95.3 118.6
Underlying
adjusted
operating profit
(decline)/growth (91.5%) 27.5% (1 . 8%) (862.0%) 2.5% (54 . 0%)
------------------ ---------------- ---------------- ------------- ---------------- ---------------- -----------
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, principally consisting of the
interest costs on our US private placement loan notes, our
corporate bonds and bank borrowings, decreased by GBP10.3m to
GBP47.6m. The decrease primarily relates to lower interest rates
following a refinancing of the USD Bond and certain Private
Placement notes in October 2019 and February 2020. The GBP9.7m
Adjusting items relating to finance costs consist of GBP6.4m fair
value movement on acquisition put options and GBP3.3m associated
with the early settlement of borrowings in 2020.
The reconciliation of adjusted net finance costs to the
statutory finance costs and investment income is as follows:
H1 2020 H1 2019 FY 2019
GBPm GBPm GBPm
--------------------------------------------------------- -------- -------- --------
Investment income (4.8) (4.4) (10.1)
Finance costs 62.1 62.8 134.1
Add back: Adjusting items relating to investment income - - 1.2
Add back: Adjusting items relating to finance costs (9.7) (0.5) (13.5)
---------------------------------------------------------- -------- -------- --------
Adjusted net finance costs 47.6 57.9 111.7
---------------------------------------------------------- -------- -------- --------
Taxation
The Group continues to recognise that taxes paid are part of the
economic benefit created for the societies in which we operate, and
that a fair and effective tax system is in the interests of
tax-payers and society at large. We aim to comply with tax laws and
regulations everywhere the Group does business and Informa has open
and constructive working relationships with tax authorities
worldwide. Our approach balances the interests of stakeholders
including shareholders, governments, colleagues and the communities
in which we operate.
The Group's effective tax rate reflects the blend of tax rates
and profits in the jurisdictions in which we operate. In H1 2020,
the effective tax rate (as defined in the glossary) was 13.0% (H1
2019: 19.0%).
Earnings Per Share
Adjusted diluted earnings per share (EPS) decreased by 78.4% to
5.0p (H1 2019: 23.1p). This reflects a 77.1% decrease in adjusted
earnings to GBP66.9m (H1 2019: GBP291.8m), combined with a 6.2%
increase in the weighted average number of shares. In April, an
equity addition led to the issue of 250.3m new shares, priced at
400 pence per a share, a 4 per cent discount to the previous
closing share price of 416.8 pence on 15 April 2020. The weighted
average number of shares for the prior period has been restated to
reflect the new shares issued, leading to a restatement of earnings
per share and dividends per share as well. The restated earnings
per share figures are detailed below
Reconciliation of Adjusted profit after tax and adjusted diluted
earnings per share is as follows:
H1 2020 H1 2019 FY 2019
GBPm GBPm GBPm
----------------------------------------------------------- -------- -------- --------
Statutory (loss)/profit for the period (766.5) 196.6 246.1
Add back: Adjusting items in profit for the period 828.3 109.4 419.2
----------------------------------------------------------- -------- -------- --------
Adjusted profit for the period 61.8 306.0 665.3
Non-controlling interests 5.1 (14.2) (20.6)
----------------------------------------------------------- -------- -------- --------
Adjusted earnings 66.9 291.8 644.7
Weighted average number of shares used in diluted EPS (m) 1,342.8 1,265.0 1,264.2
----------------------------------------------------------- -------- -------- --------
Adjusted diluted EPS (p) 5.0p 23.1p 51.0p
----------------------------------------------------------- -------- -------- --------
Statutory (loss)/profit for the period (766.5) 196.6 246.1
Non-controlling interests 5.1 (14.2) (20.6)
----------------------------------------------------------- -------- -------- --------
Statutory Earnings (761.4) 182.4 225.5
Weighted average number of shares used in diluted EPS (m) 1,342.8 1,265.0 1,264.2
----------------------------------------------------------- -------- -------- --------
Statutory Diluted EPS (p) (56.9p) 14.4p 17.9p
----------------------------------------------------------- -------- -------- --------
Dividends
In April, as part of the Group's response to the COVID-19
pandemic through our COVID-19 Action Plan, and following
consultation with shareholders, the Board announced the suspension
of dividends, including the withdrawal of the 2019 final
dividend.
Currency Impact
One of the Group's strengths is its international reach and
balance, with colleagues and businesses in most major regions of
the world. This means the Group generates revenues and costs in a
mixture of currencies, with particular exposure to the US Dollar
and some exposure to the Euro and the Chinese Renminbi.
In H1 2020, approximately 73% (H1 2019: 62%) of Group revenue
was received in USD or currencies pegged to USD, with 4% (H1 2019:
4%) received in Euro and around 1% (H1 2019: 8%) in Chinese
Renminbi.
Similarly, we incurred approximately 56% (H1 2019: 54%) of our
costs in USD or currencies pegged to USD, with 2% (H1 2019: 2%) in
Euro and around 3% (H1 2019: 7%) in Chinese Renminbi.
Each one cent ($0.01) movement in the USD to GBP exchange rate
has a circa GBP11.2m (H1 2019: cGBP14.2m) impact on annual revenue,
and a circa GBP6m (H1 2019: cGBP6m) impact on annual adjusted
operating profit.
For the purposes of calculating Informa's leverage, in
accordance with the Group's banking covenants, both profit and net
debt are translated using the average exchange rate during the
relevant period.
The following rates versus GBP were applied during the
period:
H1 2020 H1 2019 FY 2019
------------ ------------------ ------------------ ------------------
Closing Average Closing Average Closing Average
rate rate rate rate Rate rate
----------- -------- -------- -------- -------- -------- --------
US Dollar 1.23 1.26 1.27 1.30 1.32 1.28
Euro 1.10 1.15 1.11 1.15 1.17 1.14
Renminbi 8.68 8.90 8.72 8.78 9.17 8.80
------------ -------- -------- -------- -------- -------- --------
Free Cash Flow
Cash generation remains a key priority and focus for the Group,
providing the funds and flexibility for paying down debt, future
organic and inorganic investment, and consistent shareholder
returns. Our businesses typically convert adjusted operating profit
into cash at an attractive rate, reflecting the relatively low
capital intensity of the Group. In H1 2020, conversion rates
remained relatively high, however, absolute levels of cashflow were
lower, reflecting the impact of COVID-19 on our Events-led
businesses.
The following table reconciles statutory operating profit to
operating cash flow and free cash flow. See glossary of terms for
the definition of free cash flow and operating cash flow.
H1 2020 H1 2019 FY 2019
GBPm GBPm GBPm
-------------------------------------------------------------- --------- -------- --------
Statutory operating ( loss) / profit (7 39.9) 248.3 538.1
Add back: Adjusting items 8 58.5 187.4 395.0
-------------------------------------------------------------- --------- -------- --------
Adjusted operating profit 11 8.6 435.7 933.1
Depreciation of property and equipment 8.5 8.4 17.2
Depreciation of right of use assets 16.9 15.8 33.1
Software and product development amortisation 19.8 21.8 41.9
Share-based payments 3.6 5.3 10.4
Loss on disposal of other assets 0.4 - -
Adjusted share of joint venture and associate results 0.3 (0.5) (1.5)
--------
Adjusted EBITDA (1) 168.1 486.5 1,034.2
Net capital expenditure (25.5) (26.2) (49.8)
Working capital movement (2) 44.2 (42.2) (13.6)
Pension deficit contributions (3.3) (3.0) (5.4)
-------------------------------------------------------------- --------- -------- --------
Operating Cash Flow 183.5 415.1 965.4
Restructuring and reorganisation (6.0) (5.3) (9.9)
Onerous contracts and one-off costs associated with COVID-19 (35.4) - -
Net interest (3) (49.1) (50.6) (132.8)
Taxation (21.7) (52.8) (100.6)
-------------------------------------------------------------- --------- -------- --------
Free Cash Flow 71.3 306.4 722.1
-------------------------------------------------------------- --------- -------- --------
(1) Adjusted EBITDA represents adjusted operating profit before
interest, tax, and non-cash items including depreciation and
amortisation
(2) Working capital movement excludes movements on
restructuring, reorganisation, acquisition and integration
accruals
(3) Amount includes GBP3.3m of m ake-whole interest paid in
respect of the early refinancing of bond and private placement
debt
The decrease in cash generated compared to H1 2019 is largely
driven by the impact of COVID-19 on operating profit, together with
the one-off costs of onerous contracts, and other one-off costs
associated with COVID-19. These factors were partly offset by
favourable working capital movement. The calculation of operating
and free cash flow conversion is as follows:
Operating cash flow Free cash flow
-------------------------------------------- ---------------------- --------------------------------
H1 H1 FY H1 H1 FY
2020 2019 2019 2020 2019 2019
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------------- ----------- --------- ------- ------- ------ ------
Operating Cash Flow/ Free cash flow 183.5 415.1 965.4 71.3 306.4 722.1
Adjusted operating profit 11 8.6 435.7 933.1 1 18.6 435.7 933.1
Operating cash / Free cash flow conversion 154.7% 95.3% 103.5% 60.1% 70.3% 77.4%
-------------------------------------------- ----------- --------- ------- ------- ------ ------
Net capital expenditure was GBP25.5m (H1 2019: GBP26.2m),
equivalent to 3.1% of 2020 revenue (H1 2019: 1.8%). We expect full
year 2020 capital expenditure to be at a similar level relative to
revenue.
The working capital inflow of GBP44.2m was a GBP86.4m
improvement on the GBP42.2m outflow in H1 2019, reflecting the
impact of COVID-19 on the working capital phasing within the
Events-led businesses. Specifically, this reflects lower deferred
income releases due to the cancellation or postponement of events
that were scheduled to be held in H1 2020 until later in the year.
This increase in deferred income resulted in an increase in trade
receivables, the balance of which is spread across a large range of
geographies, industries and customers, with no significant
concentration of credit risk. Having assessed the provisions
related to expected credit losses in the context of COVID-19, we
concluded there was no material change required to these provisions
at the half year. The Group continues to collect cash in advance
for events and as at 30 June 2020 the Group was holding GBP402.8m
of cash relating to future events. The strength of our brands and
demand for our products led to relatively few customers asking for
refunds on cash committed to events that were postponed or
cancelled, with only GBP41.2m requested during the period.
Net cash interest payments of GBP49.1m were GBP1.5m lower than
the prior year, largely reflecting lower interest rates following
the refinancing of the USD Bond and certain Private Placement
notes. In H1 2020 borrowing fees of GBP10.6m were paid relating new
financing facilities.
The following table reconciles net cash inflow from operating
activities, as shown in the consolidated cash flow statement to
free cash flow:
H1 2020 H1 FY
GBPm 2019 2019
GBPm GBPm
------------------------------------------------------------------- -------- ------- -------
Net cash inflow from operating activities per statutory cash flow 76.1 315.5 719.6
Interest received 3.6 0.6 5.5
Borrowing fees paid (10.1) - -
Purchase of property and equipment (3.6) (10.2) (17.5)
Purchase of intangible software assets (19.0) (12.9) (25.3)
Product development cost additions (2.9) (3.1) (7.0)
Add back: Acquisition and integration costs paid 27.2 16.5 46.8
-------
Free Cash Flow 71.3 306.4 722.1
------------------------------------------------------------------- -------- ------- -------
Net cash inflow from operating activities decreased by GBP239.4m
to GBP76.1m, principally driven by the reduction in adjusted
operating profit.
The following table reconciles cash generated by operations, as
shown in the consolidated cash flow statement, to operating cash
flow shown in the free cash flow table above:
H1 2020 H1 2019 FY 2019
GBPm GBPm GBPm
---------------------------------------------------------------- -------- -------- --------
Cash generated by operations per statutory cash flow 140.4 419.5 958.5
Net Capex paid (25.5) (26.2) (49.8)
Add back: Acquisition & integration costs paid 27.2 16.5 46.8
Add back: Restructuring & reorganisation costs paid 6.0 5.3 9.9
Onerous contracts and one-off costs paid associated with COVID 35.4 - -
--------
Operating Cash Flow per Free Cash flow statement 183.5 415.1 965.4
----------------------------------------------------------------- -------- -------- --------
The following table reconciles free cash flow to net funds flow
and net debt, with net debt reducing by GBP709.7m to GBP1,947.9m
during the 6 months to 30 June 2020, primarily due to the net
receipt of GBP975.2m from the share placement proceeds, partly
offset by a GBP178.7m increase due to the unfavourable movement in
the USD to GBP exchange rates.
H1 H1 Full Year
2020 2019 2019
GBPm GBPm GBPm
---------------------------------------------------- ---------- ---------- ----------
Free Cash Flow 71.3 306.4 722.1
Acquisitions and integration (81.3) (82.4) (311.1)
Disposals 11.8 164.2 179.3
Dividends paid to shareholders - (185.6) (280.0)
Dividends paid to non-controlling interests (10.1) (11.5) (17.5)
Net share proceeds/ (purchase) 975.2 (1.2) (15.9)
---------------------------------------------------- ---------- ---------- ----------
Net funds flow 966.9 189.9 276.9
Non-cash movements (67.1) (0.6) 5.7
Foreign exchange (178.7) (19.3) 87.4
Net debt b/f (2,657.6) (2,681.9) (2,681.9)
Net finance lease additions in the period (11.4) (4.9) (16.5)
IFRS 16 leases at 1 January 2019 - (343.6) (343.6)
IFRS 16 finance lease receivable at 1 January 2019 - 14.4 14.4
---------- ----------
Net debt (1,947.9) (2,846.0) (2,657.6)
---------------------------------------------------- ---------- ---------- ----------
Financing and Leverage
Positive free cash flow and the strength of our balance sheet,
supported by the equity addition in April, helped to reduce the
Group's leverage at 30 June 2020, with net debt to EBITDA ending
the period at 2.3 times (H1 2019: 2.7x). This reflected net debt of
GBP2.0bn or GBP1.6bn on a pre-IFRS 16 basis at 30 June 2020 (H1
2019: GBP2.8bn), including unutilised committed financing
facilities of GBP1,650.0m (H1 2019: GBP698.9m).
On 24 January 2020, both tranches of the Group's revolving
credit facility (RCF) were extended by one further year, with the
GBP600m tranche now due in February 2025 and the GBP300m tranche in
February 2023.
On 24 February 2020, we made an early repayment to the US
private placement holders of the $200.5m debt maturing in December
2020.
In March 2020, the Group secured a surplus, committed credit
facility of GBP750m, with a maturity of up to 30 months, providing
additional flexibility through the current period of uncertainty
created by COVID-19.
Following the pro-active management of our financing structure,
the average debt maturity on our drawn borrowings is currently 5.4
years (4.4 years as at 30 June 2019), with no borrowing maturities
until June 2022.
30 June 2020 30 June 31 December
GBPm 2019 2019
GBPm GBPm
--------------------------------------------------------------- ------------- -------- ------------
Cash and cash equivalents (915.2) (316.9) (195.1)
Bank overdraft - 49.5 -
Private placement loan notes 1,141.0 1,406.2 1,212.8
Private placement fees (2.5) (3.1) (2.7)
Bond borrowings 1,349.8 1,163.3 1,279.1
Bond borrowing fees (10.2) (6.6) (11.0)
Bank borrowings - revolving credit facility (RCF) - 201.1 56.9
Bank borrowing fees (10.4) (2.5) (2.2)
Derivative assets associated with borrowings (4.8) (2.4) (3.9)
Derivative liabilities associated with borrowings 95.0 38.1 22.4
--------------------------------------------------------------- ------------- -------- ------------
Net debt before leases 1,642.7 2,526.7 2,356.3
Finance lease liabilities 314.5 333.8 316.6
Finance lease receivables (9.3) (14.5) (15.3)
--------
Net debt 1,947.9 2,846.0 2,657.6
--------------------------------------------------------------- ------------- -------- ------------
Borrowings (excluding derivatives, leases, fees & overdrafts) 2,490.8 2,770.6 2,548.8
Unutilised committed facilities (undrawn portion of RCF) 1,650.0 698.9 843.1
--------------------------------------------------------------- ------------- -------- ------------
Total committed facilities 4,140.8 3,469.5 3,391.9
--------------------------------------------------------------- ------------- -------- ------------
There are no financial covenants on our debt facilities other
than for our US private placement loan notes in issue at 30 June
2020, where the principal financial covenants are a maximum
leverage ratio of 3.5 times and a minimum interest cover of 4.0
times, tested semi-annually .
At 30 June 2020, our covenant leverage ratio was 2.3 times (30
June 2019: 2.7 times), calculated in accordance with our note
purchase agreements. The interest cover ratio was 7.3 times (30
June 2019: 8.6 times). See glossary of terms for the definition of
leverage ratio and interest cover.
The calculation of the leverage ratio is as follows:
H1 2020 H1 2019 FY 2019
GBPm GBPm GBPm
--------------------------------------------------- -------- -------- --------
Net debt as reported (post IFRS 16) 1,947.9 2,846.0 2,657.6
Adjusted EBITDA 715.8 961.6 1,034.2
Leverage ratio reported value 2.7x 3.0x 2.6x
Adjustment to EBITDA for covenant calculation 1 0.2x 0.1x 0.2x
Adjustment to net debt for covenant calculation 1 (0.6)x (0.4)x (0.3)x
----------------------------------------------------- -------- -------- --------
Leverage ratio per debt covenants 2.3x 2.7x 2.5x
----------------------------------------------------- -------- -------- --------
1 Refer to Glossary for details of the nature of debt covenant
adjustments to EBITDA and Net Debt for leverage ratio
The calculation of interest cover is as follows:
H1 2020 H1 2019 FY 2019
GBPm GBPm GBPm
------------------------------------------------------ -------- -------- --------
Adjusted EBITDA 715.8 961.6 1,034.2
Adjusted net finance costs 101.4 110.6 111.7
-------------------------------------------------------- -------- -------- --------
Interest cover reported value 7.1x 8.7x 9.3x
Interest cover covenant EBITDA adjustment to ratio 1 0.2x 0.1x 0.1x
-------------------------------------------------------- -------- -------- --------
Interest cover per debt covenant 7.3x 8.6x 9.4x
-------------------------------------------------------- -------- -------- --------
1 Refer to Glossary for details of the nature of debt covenant
adjustments to EBITDA for interest cover
Share placement
As part of our COVID-19 Action Plan, on 15th April 2020 the
Company announced a share issue of 250,318,000 new Ordinary Shares,
representing approximately 19.99% of the Company's existing issued
share capital. 125,159,000 new Ordinary Shares were issued on 20
April 2020 and a further 125,159,000 on 5 May 2020. The share issue
Placing Price was 400 pence per a share and represented a discount
of 4 per cent to the closing share price of 416.8 pence on 15 April
2020. The gross proceeds raised through the placement were
GBP1,001m.
Corporate development
Informa has a proven track record in creating value through
identifying, executing and integrating complementary businesses
effectively into the Group. In H1 2020, cash invested in
acquisitions was GBP81.3m (H1 2019: GBP82.4m), with GBP26.0m
relating to acquisitions (H1 2019: GBP65.9m), GBP27.2m (H1 2019:
GBP16.5m) relating to acquisition and integration costs and
GBP28.1m (H1 2019: GBPnil) relating to the exercise of an option
relating to minority interests in certain Fashion shows in the US.
Net proceeds from disposals amounted to GBP11.8m (H1 2019:
GBP164.2m).
Acquisitions
On 9 January 2020 the Group acquired F1000 Research for
consideration of GBP16.0m, including GBP14.9m cash consideration.
The business is an open research publishing company and forms part
of the Taylor & Francis Open Access Portfolio.
Pensions
The Group continues to meet all commitments to its pension
schemes, which include six defined benefit schemes. At 30 June
2020, the Group had a net pension liability of GBP77.2m (31
December 2019: GBP30.1m), represented by a pension deficit of
GBP78.2m (31 December 2019: GBP35.0m) and a pension surplus of
GBP1.0m (31 December 2019: GBP4.9m). Gross liabilities were
GBP767.2m at 30 June 2020 (31 December 2019: GBP730.8m). This
increase is predominantly driven by a decrease to the discount
rates used whilst calculating the present value of the pension
liability.
The net deficit remains relatively small compared to the size of
the Group's balance sheet. All schemes are closed to future accrual
and the Group expects to make GBP7.7m of employer deficit recovery
payments during 2020.
Principal Risks and Uncertainties
Informa's approach to risk management focuses on ensuring that
significant risks are identified and understood, managed and
mitigated appropriately, and monitored and reported to the
company's governance bodies.
Informa's risk framework is designed to provide the Board and
Audit Committee with oversight of the most significant risks faced
by the Group. Regular analysis and scanning for emerging risks are
embedded in our risk management process and overseen by the Risk
Committee. The Risk Committee reports through the Audit Committee
to the Board.
In the first half of 2020, the pandemic has materially impacted
our business and is recognised as a new principal risk to the
Group. Our response, through our COVID-19 Action Plan, is outlined
on page 6 of our Half Year Report.
Risk Profile at Half Year 2020
The pandemic has prompted a reassessment of certain principal
risks, resulting in four having increased risk scores, and two
having decreased risk scores.
Increased principal risk assessments
The risk of economic instability has increased following the
control measures enacted to limit the spread of the pandemic, which
limit face to face gatherings, and the weaker global trading
environment that has resulted. In response the Group has put in
place a range of measures to conserve cash and strengthen our
balance sheet to build financial resilience for a period of reduced
trading. Our portfolio of products and services continue to offer
diversification geographically and in terms of end markets, whilst
before COVID-19 around one third of the Group's pre-COVID revenue
was generated from non-events activities.
The strength of our specialist brands and customer relationships
has enabled us to find other ways to stay connected and provide
solutions to customers whilst restrictions on physical events
remain in place around the world. This includes our specialist
content, media and marketing services activities, and also through
a burgeoning portfolio of virtual events.
This increased provision of digital and virtual services creates
opportunities but also increases uncertainty. We have therefore
elevated the market risk assessment.
We have a reliance on key counterparties in certain areas of our
operations. Global economic uncertainty, reduced revenue and
capacity constraints may lead to individual key counterparties
becoming less reliable, potentially increasing the possibility of
issues related to this risk.
We assess that data privacy related risks have increased. As we
develop products and services that use data in new ways to reach
target audiences and improve the digital customer experience, we
continue to target compliance with the relevant data privacy
requirements. The new and continually evolving privacy regulations
around the world continue to build complexity to our data
compliance programmes.
Decreased principal risk assessments
Since the start of the pandemic, colleague attrition levels have
decreased, and therefore we consider the risk of being unable to
retain key talent is lower than before. Results from our latest
Colleague survey shows there has been an increase in Colleague
engagement up to a record level of 86%. A very high proportion of
Colleagues (92%) responded that they believe management's response
to the pandemic has been sensible and effective and 91% said the
management team has led by example and provided clear direction and
information.
Whilst Government control restrictions remain in place, we are
operating very few of our physical events, business travel is
significantly reduced, and we are returning to our offices in
measured and appropriate ways. This all means the likelihood and
impact of a health and safety incident is currently reduced. This
risk is expected to return to pre-pandemic levels as control
measures are relaxed and customers and colleagues start to attend
our events and offices in larger numbers.
As at 30 June 2020, the Group recognises 13 principal risks
which have the potential to cause the most significant impact to
the delivery of its strategic objectives, performance, future
prospects and reputation. This comprises 12 Principal Risks and
Uncertainties that were identified at the 2019 year-end, plus the
pandemic risk that has been added since.
The 12 Principal Risks and Uncertainties identified at the 2019
year-end were outlined on pages 84 to 90 of the 2019 Annual Report
(available on the Company's website at www.informa.com).
These risks are summarised below (not in order of
magnitude):
-- Acquisition and integration risk
-- Data loss and cyber breach
-- Economic instability
-- Health and safety incident
-- Inability to retain key talent
-- Inadequate regulatory compliance
-- Ineffective change management
-- Major incident
-- Market risk
-- Pandemic
-- Privacy regulation risk
-- Reliance on key counterparties
-- Technology failure
Going Concern
Overview
In adopting the going concern basis for preparing the financial
statements, the Directors have considered the future trading
prospects of the Group's businesses, the Group's available
liquidity, debt maturities and obligations under its borrowing
covenants, and the Group's principal risks as set out on page 19. A
summary of the impact of COVID-19 on the Group's trading is
detailed on pages 4-11. Given the disruption to trading the
Directors have completed a comprehensive going concern review and,
taking into consideration the recent guidance issued by the FCA and
the FRC, are disclosing more information in respect of this review
than in previous years. Further details, including the analysis
performed and conclusion reached, are set out below.
Liquidity and financing position
The Group has a strong liquidity position. As at 30 August 2020
the Group has GBP1.4bn of cash and undrawn credit facilities of
GBP1.4bn (including access to GBP300m of Bank of England CCFF which
is uncommitted until drawn). The Group has taken a number of
actions to reinforce its liquidity position since the start of
March including, but not limited to, the following:
-- Raising GBP1bn through the equity issuance in April
-- Securing a Surplus Credit Facility of GBP750m, which is currently undrawn
-- Confirming eligibility for GBP300m of Bank of England CCFF
liquidity, which is currently undrawn, and uncommitted until
drawn
-- Withdrawing the 2019 Final Dividend and suspending further dividends
-- A range of direct and indirect cost controls
In addition, the Group is a well-established borrower with an
investment grade credit rating which provides the Directors with
confidence that the Group could further increase liquidity by
raising additional debt finance. The only Group borrowings with
covenants are the GBP1.1bn of US Private Placement (US PP) notes
which are due for repayment from 2022 to 2028. The principal
financial covenant ratios under the private placement loan notes
are maximum net debt to EBITDA of 3.5 times and minimum EBITDA
interest cover of 4.0 times, tested semi-annually. See the glossary
of terms for the definition of leverage and interest cover
ratios.
Financial modelling
The business and operational impact of COVID-19 to date in 2020
is discussed on pages 4 to 11. The Government control restrictions
adopted worldwide to limit the spread of COVID-19 have created a
degree of uncertainty around the forecasting of Informa's physical
events revenues. In response, in the going concern assessment
period up to the end of 2021, the Directors have modelled a number
of different scenarios based off three underlying sets of
forecasts, representing the base case, an upside case and a
downside case. Key assumptions made in these scenarios include the
timing of when control restrictions are relaxed, allowing physical
events to resume, and also the participation levels at these events
as confidence returns.
In modelling the base case the Directors have assumed the
following:
-- No physical events are held until 2021, apart from in
Mainland China, where events resumed operating in Q3 2020;
-- All physical events in 2020 and 2021 have lower levels of
participants compared to 2019, as confidence and participation is
assumed to return gradually, with international travel also assumed
to recover gradually;
-- A gradual recovery of our event-led businesses in 2021, with
revenue predominantly phased to the second half of the year;
and
-- A robust performance by subscriptions-led businesses in 2021,
albeit with an assumption of some macro-economic impact impacting
revenues compared to 2020.
In this scenario, the Group maintains liquidity headroom of more
than GBP2bn but would breach the leverage covenant on the US
Private Placement debt at the 2020 year-end.
In modelling the downside case, the Directors have assumed that
there are no physical events held until the second half of 2021
apart from in Mainland China, where events are operating from Q3
2020. Furthermore, when physical events do return in the second
half of 2021, it is assumed the revenue contribution is lower than
in the base case, although additional cost savings are also
assumed. All other assumptions are consistent with the Base Case.
In this scenario the Group maintains minimum liquidity headroom of
more than GBP2bn but would also breach the leverage covenant on the
US Private Placement debt at the 2020 year-end.
Although the base and downside cases indicate a breach of
covenants in the going concern period, the Directors are confident
that a waiver for the leverage and interest cover covenants on the
US Private Placement debt could be obtained from the debt holders,
if required. Alternatively, given the strong liquidity position of
the group the US Private Placement debt could be prepaid with
existing liquidity so to avoid a breach of covenants. As a result,
the Directors do not consider that the forecast covenant breach
constitutes a material uncertainty in respect of going concern.
The Directors have also modelled a reverse stress test, which
assesses the liquidity and covenant position if the Group had no
gross profit from 1 October 2020 to the end of 2021 and all
event-related cash collected as at 31 July 2020 was refunded to
customers. In this test the Group maintains liquidity headroom of
GBP0.8bn at a minimum but would breach the leverage covenant and
would therefore require a covenant waiver. The Directors feel that
the assumptions applied in this reverse stress test are extremely
remote, given that the Group's subscription-led businesses
continues to generate gross profit.
Going concern basis
Based on the scenarios modelled the Directors believe that the
Group is well placed to manage its financing and other business
risks satisfactorily and have been able to form a reasonable
expectation that the Group has adequate resources to continue in
operation for at least twelve months from the signing date of these
consolidated interim financial statements. The Directors therefore
consider it appropriate to adopt the going concern basis of
accounting in preparing the financial statements. The long-term
impact of COVID-19 is uncertain and should the impact of the
pandemic on trading conditions be more prolonged or severe than
currently forecast by the Directors, the Group may need to
implement additional operational or financial measures.
Cautionary statements
This interim management report contains certain 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. The terms 'expect', 'should
be', 'will be' and similar expressions (or their negative) 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.
Past performance should not be taken as an indication or
guarantee of future results, and no representation or warranty,
express or implied, is made regarding future performance. These
forward-looking statements speak only as of the date of this
interim management report and are based on numerous assumptions
regarding Informa's present and future business strategies and the
environment in which Informa will operate in the future. 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 after the date of this announcement or to update
or keep current any other information contained in this interim
management report.
Nothing in this interim management report should be construed as
a profit forecast. All persons, wherever located, should consult
any additional disclosures that Informa may make in any regulatory
announcements or documents which it publishes. This announcement
does not constitute an invitation to underwrite, subscribe for or
otherwise acquire or dispose of any Informa PLC shares, in the UK,
or in the US, or under the US Securities Act 1933 or in any other
jurisdiction.
Board of Directors
The Directors of Informa plc are listed in the 2019 Annual
Report and Accounts. Biographical details for the current Directors
can be found on the Company's website: www.informa.com.
Responsibility Statement
We confirm that to the best of our knowledge:
a) the consolidated interim financial statements have been
prepared in accordance with IAS 34 'Interim Financial Reporting' as
adopted by the European Union;
b) the consolidated interim financial statements, which have
been prepared in accordance with the applicable set of accounting
standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the issuer, or the
undertakings included in the consolidation as a whole as required
by DTR 4.2.4R;
c) the interim management report includes a fair review of the
information required by DTR 4.2.7R, namely;
i. an indication of important events that have occurred during
the first six months of the financial year and their impact on the
consolidated interim financial statements; and
ii. a description of the principal risks and uncertainties for
the remaining six months of the financial year.
d) the interim management report includes, as required by DTR
4.2.8, a fair review of material related party transactions that
have taken place in the first six months of the financial year and
any material changes in the related-party transactions described in
the 2019 Annual Report.
Approved by the Board on 20 September 2020 and signed on its
behalf by:
Stephen A. Carter Gareth Wright
Chief Executive Group Finance Director
Independent Review Report to Informa PLC
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2020 which comprises the Condensed
Consolidated Income Statement, the Condensed Consolidated Statement
of Comprehensive Income, the Condensed Consolidated Statement of
Changes in Equity, the Condensed Consolidated Balance Sheet, the
Condensed Consolidated Cash Flow Statement and related notes 1 to
18. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2020 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, UK
20 September 2020
Condensed Consolidated Income Statement
For the six months ended 30 June 2020
6 months ended 30 June (unaudited)
-----------------------------------------------------------------------
Year ended
Adjusted Adjusting Statutory Adjusted Adjusting Statutory 31
results items results results items results December
2019
2020 2020 2020 2019 2019 2019 (audited)
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------ ---------- ---------- ---------- ---------- ----------- ---------- -----------
Revenue 3 814.4 - 814.4 1,407.6 - 1,407.6 2,890.3
Net operating
expenses(2) (695.5) (858.5) (1,554.0) (972.4) (187.4) (1,159.8) (2,353.7)
----------------- ------ ---------- ---------- ---------- ---------- ----------- ---------- -----------
Operating
profit/(loss)
before joint
ventures and
associates 118.9 (858.5) (739.6) 435.2 (187.4) 247.8 536.6
Share of results
of joint
ventures and
associates (0.3) - (0.3) 0.5 - 0.5 1.5
----------------- ------ ---------- ----------- ---------- -----------
Operating
profit/(loss) 118.6 (858.5) (739.9) 435.7 (187.4) 248.3 538.1
(Loss)/profit on
disposal of
subsidiaries
and operations - (4.0) (4.0) - 42.9 42.9 (95.4)
Investment
income 5 4.8 - 4.8 4.4 - 4.4 10.1
Finance costs 6 (52.4) (9.7) (62.1) (62.3) (0.5) (62.8) (134.1)
----------------- ------ ---------- ---------- ---------- ---------- ----------- ---------- -----------
Profit/(loss)
before tax 71.0 (872.2) (801.2) 377.8 (145.0) 232.8 318.7
Tax
(charge)/credit 7 (9.2) 43.9 34.7 (71.8) 35.6 (36.2) (72.6)
----------------- ------ ---------- ---------- ---------- ---------- ----------- ---------- -----------
Profit/(loss)
for the period 61.8 (828.3) (766.5) 306.0 (109.4) 196.6 246.1
----------------- ------ ---------- ---------- ---------- ---------- ----------- ---------- -----------
Attributable to:
Equity holders
of the parent 66.9 (828.3) (761.4) 291.8 (109.4) 182.4 225.5
Non-controlling
interest (5.1) - (5.1) 14.2 - 14.2 20.6
----------------- ------ ---------- ---------- ---------- ---------- ----------- ---------- -----------
Earnings per
share(1)
- Basic (p) 9 5.0 (56.9) 23.2 14.5 17.9
- Diluted (p) 9 5.0 (56.9) 23.1 14.4 17.9
----------------- ------ ---------- ---------- ---------- ---------- ----------- ---------- -----------
1. Restated for share placement (see Note 14.)
2. Net operating expenses includes a foreign exchange gain of GBP4.3m. Gross operating expense
total GBP699.8m.
All results relate to continuing operations. Adjusting items are
detailed in Note 4.
The notes on pages 33 to 57 are an integral part of these
Condensed Consolidated Financial Statements.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2020
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(unaudited
(unaudited) ) (audited)
GBPm GBPm GBPm
------------------------------------------------ ------------- ------------ ------------
(Loss)/profit for the period (766.5) 196.6 246.1
Items that will not be reclassified
subsequently to profit or loss:
Actuarial loss on defined benefit pension
schemes (49.0) (10.9) (1.6)
Tax relating to items that will not
be reclassified to profit or loss 8.9 1.9 0.7
------------
Total items that will not be reclassified
subsequently to profit or loss (40.1) (9.0) (0.9)
Items that have been reclassified subsequently
to profit or loss
Recycling of exchange losses/gains
arising on disposal of foreign operations - (0.2) 1.2
Items that may be reclassified subsequently
to profit or loss
Exchange gain/(loss) on translation
of foreign operations 409.0 39.9 (233.5)
Exchange (loss)/gain on net investment
hedge debt (156.4) (14.9) 73.1
Loss on derivative hedges(1) (54.2) (10.1) (21.2)
Total items that may be reclassified
subsequently to profit or loss 198.4 14.9 (181.6)
Other comprehensive income/(expense)
for the period 158.3 5.7 (181.3)
------------------------------------------------ ------------- ------------ ------------
Total comprehensive (expense)/income
for the period, before initial application
of IFRS 16 (608.2) 202.3 64.8
Effect of initial application of IFRS
16 that will not be reclassified subsequently
to profit or loss - 4.1 4.1
------------------------------------------------ ------------- ------------ ------------
Total comprehensive (expense)/income
for the period (608.2) 206.4 68.9
Total comprehensive (expense)/income
attributable to:
- Equity holders of the parent (601.1) 192.7 48.2
- Non-controlling interest (7.1) 13.7 20.7
------------------------------------------------ ------------- ------------ ------------
(1) Amount includes movements on derivatives in cash flow
(GBP0.1m) and net investment (GBP54.1m) hedge relationships
The notes on pages 33 to 57 are an integral part of these
Condensed Consolidated Financial Statements.
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2020 (unaudited)
Share
Share premium Translation Other Retained Non-controlling Total
capital account reserve reserves earnings Total(1) interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ --------- --------- ------------ --------- --------- --------- ----------------- ----------
At 1 January 2020 1.3 905.3 (117.2) 1,964.6 2,887.9 5,641.9 196.1 5,838.0
Loss for the
period - - - - (761.4) (761.4) (5.1) (766.5)
Exchange gain on
translation of
foreign
operations - - 411.0 - - 411.0 (2.0) 409.0
Exchange loss on
net investment
hedge debt - - (156.4) - - (156.4) - (156.4)
Loss arising on
derivative
hedges - - (54.2) - - (54.2) - (54.2)
Actuarial loss on
defined benefit
pension schemes - - - - (49.0) (49.0) - (49.0)
Tax relating to
components of
other
comprehensive
income - - - - 8.9 8.9 - 8.9
------------------ --------- --------- ------------ --------- --------- --------- ----------------- ----------
Total
comprehensive
income/(expense)
for the period - - 200.4 - (801.5) (601.1) (7.1) (608.2)
Dividends to
non-controlling
interests - - - - - - (10.1) (10.1)
Share award
expense - - - 3.7 - 3.7 - 3.7
Issue of share
capital 0.2 975.7 - - - 975.9 - 975.9
Own shares
purchased - - - (0.7) - (0.7) (0.7)
Transfer of
vested LTIPs - - - (4.9) 4.9 - - -
At 30 June 2020 1.5 1,881.0 83.2 1,962.7 2,091.3 6,019.7 178.9 6,198.6
------------------ --------- --------- ------------ --------- --------- --------- ----------------- ----------
(1) Total attributable to equity holders of the parent
The notes on pages 33 to 57 are an integral part of these
Condensed Consolidated Financial Statements.
Condensed Consolidated Statement of Changes in Equity
(Continued)
For the six months ended 30 June 2019 (unaudited)
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 31 December
2018 1.3 905.3 63.3 1,974.5 2,933.8 5,878.2 193.4 6071.6
------------------- --------- --------- ------------ ---------- ---------- --------- ---------------- --------
As previously
reported - Effect
of initial
application
of IFRS 16 on
1 January 2019 - - - - 4.1 4.1 - 4.1
------------------- --------- --------- ------------ ---------- ---------- --------- ---------------- --------
At 1 January 2019
as restated for
initial
application
of IFRS 16 1.3 905.3 63.3 1,974.5 2,937.9 5,882.3 193.4 6,075.7
------------------- --------- --------- ------------ ---------- ---------- --------- ---------------- --------
Profit for the
period - - - - 182.4 182.4 14.2 196.6
Recycling of
exchange
losses on
disposal - - (0.2) - - (0.2) - (0.2)
Exchange gain
on translation
of foreign
operations - - 40.4 - - 40.4 (0.5) 39.9
Exchange loss
on net investment
hedge debt - - (14.9) - - (14.9) - (14.9)
Loss arising on
derivative hedges - - (10.1) - - (10.1) - (10.1)
Actuarial loss
on defined
benefit
pension schemes - - - - (10.9) (10.9) - (10.9)
Tax relating to
components of
other
comprehensive
income - - - - 1.9 1.9 - 1.9
------------------- --------- --------- ------------ ---------- ---------- --------- ---------------- --------
Total
comprehensive
income for the
period - - 15.2 - 173.4 188.6 13.7 202.3
Dividends to
shareholders - - - - (185.8) (185.8) - (185.8)
Dividend to
Non-controlling
interests - - - - - - (11.5) (11.5)
Share award
expense - - - 5.3 - 5.3 - 5.3
Own shares
purchased - - - (1.2) - (1.2) - (1.2)
Transfer of vested
LTIPs - - - (5.7) 5.7 - - -
NCI arising on
purchase of
business - - - - - - 0.1 0.1
NCI on disposal
of business - - - 1.2 - 1.2 (0.5) 0.7
At 30 June 2019 1.3 905.3 78.5 1,974.1 2,931.2 5,890.4 195.2 6,085.6
------------------- --------- --------- ------------ ---------- ---------- --------- ---------------- --------
(1) Total attributable to equity holders of the parent,
The notes on pages 33 to 57 are an integral part of these
Condensed Consolidated Financial Statements.
Condensed Consolidated Statement of Changes in Equity
(Continued)
For the twelve months ended 31 December 2019 (audited)
Share
Share premium Translation Other Retained Non-controlling Total
capital account reserve reserves earnings Total(1) interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ---------- --------- ------------ --------- --------- --------- ----------------- ----------
At 31 December
2018 1.3 905.3 63.3 1,974.5 2,933.8 5,878.2 193.4 6071.6
As previously
reported -
Effect of
initial
application of
IFRS 16 on 1
January 2019 - - - - 4.1 4.1 - 4.1
At 1 January
2019 as
restated for
initial
application of
IFRS 16 1.3 905.3 63.3 1,974.5 2,937.9 5,882.3 193.4 6,075.7
Profit for the
year - - - 225.5 225.5 20.6 246.1
Exchange loss on
translation of
foreign
operations - - (233.6) - - (233.6) 0.1 (233.5)
Exchange gain on
net investment
hedge debt - - 73.1 - - 73.1 - 73.1
Loss arising on
derivative
hedges - - (21.2) - - (21.2) - (21.2)
FX recycling of
disposed
entities - - 1.2 - - 1.2 - 1.2
Actuarial loss
on defined
benefit pension
schemes - - - - (1.6) (1.6) - (1.6)
Tax relating to
components of
other
comprehensive
income - - - - 0.7 0.7 - 0.7
----------------- ---------- --------- ------------ --------- --------- --------- ----------------- ----------
Total
comprehensive
income for the
year - - (180.5) - 224.6 44.1 20.7 64.8
Dividends to
Shareholders - - - - (280.3) (280.3) - (280.3)
Dividends to
non-controlling
interests - - - - - - (17.5) (17.5)
Share award
expense - - - 10.4 - 10.4 - 10.4
Issue of share
capital - - - - - - - -
Own shares
purchased - - (15.9) - (15.9) - (15.9)
Transfer of
vested LTIPs - - - (5.7) 5.7 - - -
Disposal of NCI - - - 1.3 - 1.3 (0.5) 0.8
At 31 December
2019 1.3 905.3 (117.2) 1,964.6 2,887.9 5,641.9 196.1 5,838.0
----------------- ---------- --------- ------------ --------- --------- --------- ----------------- ----------
(1) Total attributable to equity holders of the parent,
The notes on pages 33 to 57 are an integral part of these
Condensed Consolidated Financial Statements.
Condensed Consolidated Balance Sheet
30 June 30 June
2020 2019(1) 31 Dec 2019(1)
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
---------------
Goodwill 10 5,884.7 6,329.8 6,144.4
Other intangible assets 3,466.0 3,726.5 3,437.4
Property and equipment 67.4 70.7 69.0
Right of use assets 247.5 277.2 264.4
Investments in joint ventures and
associates 19.5 19.3 19.8
Other investments 7.4 5.2 10.1
Deferred tax assets 6.1 7.0 6.7
Retirement benefit surplus 1.0 4.8 4.9
Finance lease receivables 7.4 12.9 13.0
Other receivables 25.5 1.3 27.8
Derivative financial instruments 4.8 3.2 3.9
---------------
Non-current assets 9,737.3 10,457.9 10,001.4
--------------------------------------- ------ ------------ ------------ ---------------
Inventory 36.3 45.8 38.5
Trade and other receivables 528.0 495.7 476.1
Current tax asset 9.2 12.8 8.9
Cash and cash equivalents 12 915.2 316.9 195.1
Finance lease receivables 1.9 1.6 2.3
Derivative financial instruments 0.4 - 1.0
Current assets 1,491.0 872.8 721.9
--------------------------------------- ------ ------------ ------------ ---------------
Total assets 11,228.3 11,330.7 10,723.3
--------------------------------------- ------ ------------ ------------ ---------------
Borrowings 13 - (49.5) (152.2)
Lease liabilities (32.5) (34.1) (34.2)
Derivative financial instruments (16.8) (70.8) (36.4)
Current tax liabilities (88.1) (87.6) (97.5)
Provisions (47.5) (55.7) (35.0)
Trade and other payables (440.7) (397.5) (482.8)
Deferred income (846.0) (780.2) (746.5)
Current liabilities (1,471.6) (1,475.4) (1,584.6)
--------------------------------------- ------ ------------ ------------ ---------------
Borrowings 13 (2,467.7) (2,758.4) (2,380.7)
Lease liabilities (282.0) (299.7) (282.4)
Derivative financial instruments (94.9) (47.5) (22.4)
Deferred tax liabilities (518.3) (593.8) (540.4)
Retirement benefit obligation (78.2) (44.7) (35.0)
Provisions (28.2) (12.0) (19.1)
Trade and other payables (18.0) (9.5) (17.4)
Deferred income (70.8) (4.1) (3.3)
--------------------------------------- ------ ------------ ------------ ---------------
Non-current liabilities (3,558.1) (3,769.7) (3,300.7)
--------------------------------------- ------ ------------ ------------ ---------------
Total liabilities (5,029.7) (5,245.1) (4,885.3)
--------------------------------------- ------ ------------ ------------ ---------------
Net assets 6,198.6 6,085.6 5,838.0
--------------------------------------- ------ ------------ ------------ ---------------
Share capital 11 1.5 1.3 1.3
Share premium account 1,881.0 905.3 905.3
Translation reserve 83.2 78.5 (117.2)
Other reserves 1,962.7 1,974.1 1,964.6
Retained earnings 2,091.3 2,931.2 2,887.9
--------------------------------------- ------ ------------ ------------ ---------------
Equity attributable to equity holders
of the parent 6,019.7 5,890.4 5,641.9
Non-controlling interest 178.9 195.2 196.1
--------------------------------------- ------ ------------ ------------ ---------------
Total equity 6,198.6 6,085.6 5,838.0
--------------------------------------- ------ ------------ ------------ ---------------
1. Represented to reflect finalisation of provisional acquisition accounting
for CAPA and update to acquisition accounting for IHS (see Note 14.)
The notes on pages 33 to 57 are an integral part of these Condensed Consolidated
Financial Statements.
The Board of Directors approved these Condensed Consolidated Financial
Statements on 20 September 2020.
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2020
6 months 6 months Year ended
ended ended 31 December
30 June 30 June
2020 2019 2019
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
--------------------------------------------------- ------------ ------------ -------------
Operating activities
Cash generated by operations 12 140.4 419.5 958.5
Income taxes paid (21.7) (52.8) (100.6)
Interest paid (42.6) (51.2) (138.3)
-------------
Net cash inflow from operating activities 76.1 315.5 719.6
----------------------------------------------- --- ------------ ------------ -------------
Investing activities
Interest received 3.6 0.6 5.5
Purchase of property and equipment (3.6) (10.2) (17.5)
Purchase of intangible software assets (19.0) (12.9) (25.3)
Product development cost additions (2.9) (3.1) (7.0)
Purchase of intangibles related to titles,
brands and customer relationships (3.6) (28.9) (59.4)
Acquisition of subsidiaries & operations,
net of cash acquired 15 (22.4) (37.0) (167.7)
Acquisition of investment - - (5.0)
Cash inflow on disposal of subsidiaries
and operations 11.8 164.2 179.3
Net cash (outflow)/inflow from investing
activities (36.1) 72.7 (97.1)
----------------------------------------------- --- ------------ ------------ -------------
Financing activities
Dividends paid to shareholders 8 - (185.6) (280.0)
Dividends paid to non-controlling interests (10.1) (11.5) (17.5)
Proceeds from EMTN bond issuance - - 443.7
Repayment of loans (87.1) (228.2) (499.7)
New loan advances - 192.6 41.2
Repayment of private placement borrowings (153.0) - (143.4)
Borrowing fees paid (10.1) (2.9) (9.4)
Repayment of the principal lease liabilities (15.8) (13.9) (34.5)
Finance lease receipts 1.2 1.4 2.3
Acquisition of non-controlling interests (28.1) - (32.2)
Cash inflow/(outflow) from issue/(purchase)
of share capital 975.2 (1.2) (15.9)
Net cash inflow/(outflow) from financing
activities 672.2 (249.3) (545.4)
----------------------------------------------- --- ------------ ------------ -------------
Net increase in cash and cash equivalents
(including cash acquired) 712.2 138.9 77.1
Effect of foreign exchange rate changes 7.9 3.6 (6.9)
Cash and cash equivalents at beginning
of the year 195.1 124.9 124.9
-------------
Cash and cash equivalents at end of period 12 915.2 267.4 195.1
----------------------------------------------- --- ------------ ------------ -------------
The notes on pages 33 to 57 are an integral part of these
Condensed Consolidated Financial Statements.
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2020
1. General information and basis of preparation
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 unaudited Condensed set of Consolidated Financial Statements
as at 30 June 2020 and for the six months then ended comprise those
of the Company and its subsidiaries and its interests in joint
ventures and associates (together referred to as the 'Group').
These Condensed set of Consolidated Financial Statements were
approved for issue by the Board of directors on 20 September 2020
and have been prepared in accordance with International Accounting
Standard (IAS) 34 Interim Financial Reporting, as adopted by the
European Union.
The Condensed set of Consolidated Financial Statements has been
prepared on a going concern basis, as outlined on page 21, and does
not constitute the Group's statutory financial statements within
the meaning of section 434 of the Companies Act 2006. The Condensed
set of Consolidated Financial Statements should be read in
conjunction with the Annual Report and audited Financial Statements
for the year ended 31 December 2019, which have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
The Group's most recent statutory financial statements, which
comprise the Annual Report and audited Financial Statements for the
year ended 31 December 2019, were approved by the Directors on 9
March 2020 and delivered to the Registrar of Companies. The 31
December 2020 balances in this report have been extracted from the
Annual Report. The Auditor's Report on those accounts was not
qualified, did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying the
report and did not contain statements under section 498 of the
Companies Act 2006. The Consolidated Financial Statements of the
Group as at, and for the year ended, 31 December 2019 is available
upon request from the Company's registered office at 5 Howick
Place, London, SW1P 1WG, United Kingdom or at www.informa.com .
2. Accounting Policies and Estimates
In the application of the Group's accounting policies, which are
described in the annual report and accounts, the Directors are
required to make judgements, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from
these estimates.
Critical accounting judgements & estimates
As at 31 December 2019, the group noted one critical judgement,
relating to the identification of CGUs. As there were no
acquisitions or restructurings requiring a significant judgement in
this respect, management have concluded this is no longer a
critical judgement for the period ended 30 June 2020.
As at the year ended 31 December 2019, the group noted two key
sources of estimation uncertainty. These were with regards to
contingent consideration and measurement of retirement obligations.
For contingent consideration, due to cash disbursements and the
natural progression on these time limited consideration payments,
the estimate in this regard became less material, so management no
longer view this to be a critical accounting estimate. Retirement
benefit obligations remain significant at 30(th) June 2020, and as
such are discussed as a critical accounting estimate in detail
below.
2. Accounting Policies and Estimates (Continued)
Judgements and estimates associated with the impairment
assessment
For the impairment review, management have estimated future cash
flows for the group. This is based on projected operating profits,
future long-term growth rates, and discount rates. Management view
the key source of estimation uncertainty to be around future
operating profits, with uncertainty relating to the depth of the
economic impact from COVID-19, and the speed of any subsequent
recovery, alongside variability in the recovery across the
geographies in which the group operates. Management's approach for
establishing these assumptions has been detailed below. Details of
the impact of any uncertainties associated with the impairment
assessment are provided in Note 10.
Management have also made critical judgements relating to the
WACC rate and Long-Term Growth Rate (LTGR). The method for
establishing these assumptions are detailed below.
Key assumption How we have defined this
Projected cash flows The forecasts for 2020 represent the latest detailed
forecasts by management at the reporting date,
based on the COVID-19 containment measures in the
markets we operate, alongside the feedback from
customers on confidence to travel and attend large
physical events.
For 2021, management have undertaken a forecasting
exercise at the reporting date as to the likely
volume and profitability of events running through
the year, forecasting a prolonged downturn through
the year, as containment measures continue and
confidence in the market to travel and attend large
scale events remains low. This forecast assumes
an element of business adaption as the company
deploys virtual and hybrid events across the group
where feasible.
For the periods 2022-2025, management have made
a judgement as to the likely shape and length of
recovery in the sectors they operate. Management's
short to medium term forecasts at the reporting
date from 2022 to 2025 and by 2025 reflect a deeper
economic impact and slower recovery on the events
industry when compared to GDP forecasts for the
same period in the relevant geographies. This is
based on management expecting large scale physical
events being one of the last parts of the economy
to return to normal trading levels.
Considering this in financial forecasts, this results
in a recovery to 2019 cash flow levels for the
events revenues for these CGUs over the course
of 2021 to 2025. These projections represent the
directors' best estimate of the future performance
of these businesses.
From 2026 onwards, a long-term growth rate is applied
to the 2025 cash flows, as discussed below.
Across each of these time horizons, management
have considered external metrics, market data and
publicly available economic outlooks, taking these
into account when determining the estimate.
Long-term growth For the Group's value in use calculation, a perpetual
rate growth rate has been applied to 2025 operating
cash flow. Long-term growth rates are based on
external reports on long-term GDP growth rates
for the main geographic markets in which each CGU
and Division operates and therefore are not considered
to exceed the long-term average growth prospects
for the individual markets. Long term growth rates
have not been risk adjusted to reflect any of the
uncertainties noted above, as these uncertainties
are reflected in the forecasts.
Discount rate applied We have calculated the weighted average cost of
capital for each CGU and CGU group. For the cost
of debt, we have considered market rates, based
on entities with a comparable credit rating. The
cost of equity is calculated using the CAPM model.
The group has concluded that, due to increased
market volatility, using spot rates as at 30 June
would not give a discount rate that a market participant
would expect at the balance sheet date. As a result,
the group uses a longer-term average yield as the
risk-free rate, adjusted using comparable Betas,
equity risk premia and country risk premia. Discount
rates have not been risk adjusted to reflect any
of the uncertainties noted above, as these uncertainties
are reflected in the forecasts.
At 30 June 2020, the business forecast is subject to higher
levels of uncertainty compared to the prior periods given the
impact of COVID-19 on our Event-led businesses. This drives
increased uncertainty when considering future cash flow forecasts,
as the shorter and longer term impacts of COVID-19 evolve.
Operationally, this uncertainty relates to future COVID-19
containment policies, such as travel restrictions or limitations on
physical events, the extent of the economic impact alongside the
speed of the future recovery, delayed recovery to business
confidence and variability in each of these factors across the
various geographies the group operates within. In our impairment
assessment, management have considered these uncertainties whilst
making the above key assumptions.
Measurement of retirement benefit obligations
The measurement of the retirement benefit obligation and surplus
involves the use of a number of assumptions. The most significant
of these relate to the discount rate, the rate of increase in
salaries and pension and mortality assumptions. The most
significant scheme is the UBM Pension Scheme (UBMPS). Note 34 of
the accounts for the year ended 31 December 2019 details the
principal assumptions which have been adopted following advice
received from independent actuaries and also provides sensitivity
analysis with regard to changes to these assumptions. As at 30 June
2020, the group has a total pension liability of GBP767.2m (31
December 2019: GBP730.8m), and a net pension deficit of GBP77.2m
(31 December 2019: GBP30.1m).
Basis of preparation
In the period, the group has adopted new standards and
interpretations effective as of 1 January 2020 listed below:
-- Amendments to IFRS 3 Business Combinations: Definition of a Business
-- Amendments to IFRS 9, IAS 39 and IFRS17: Interest Rate Benchmark Reform
-- Amendments to IAS 1 and IAS 8: Definition of Material
-- Amendments to References to the Conceptual Framework in IFRS Standards
-- Amendment to IFRS 16: Covid-19-Related Rent Concessions (effective as of 1 June 2020)
The adoption of these amendments and interpretations has not led
to any changes to the Group's accounting policies or had any other
material impact on the financial position or performance of the
Group . Other amendments to IFRSs effective for the period ending
30 June 2020 have no impact on the group.
The preparation of the Condensed Set of Consolidated Financial
Statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
2. Accounting Policies and Estimates (Continued)
The tax charge/credit in the Condensed Consolidated Income
Statement for the interim period is determined using an estimate of
the effective tax rate for the full year, adjusted for any
adjusting items in the period.
Revenue
IFRS 15 Revenue from Contracts with Customers provides a single,
principles-based five-step model to be applied to all sales
contracts. It is based on the transfer of control of goods and
services to customers and requires the identification and
assessment of the satisfaction of delivery of each performance
obligation in contracts in order to recognise revenue.
Where separate performance obligations are identified in a
single contract, total revenue is allocated on the basis of
relative stand-alone selling prices to each performance obligation,
or management's best estimate of relative value where stand-alone
selling prices do not exist.
Revenue is measured at the fair value of consideration received
or receivable and represents amounts receivable for goods and
services provided in the normal course of business, net of
discounts, VAT and other sales-related taxes, and provisions for
returns and cancellations. Revenue for each category type of
revenue is typically fixed at the date of the order and is not
variable. Payments received in advance of the satisfaction of a
performance obligation are held as deferred income until the point
at which the performance obligation is satisfied.
Deferred income in non-current liabilities relates to payment in
advance received for biennial events, triennial events and events
postponed to after 30 June 2021. Current deferred income balances
at 30 June 2020 will be recognised as revenue within 12 months.
Revenue type Performance Revenue Timing of
obligations recognition customer
accounting payments
policy
---------------------------- ---------------------------- ---------------------------- ----------------------------
Exhibitor Provision of Performance Payments for
and related services obligations events
services associated are satisfied at are normally
with exhibition the received
and conference point of time in advance of
events, that services the event
including are provided to dates, which are
virtual events. the typically
customer with up to 12 months
revenue in
recognised when advance of the
the event
event has taken date and are
place. held as
In light of deferred income
postponements until
due to COVID-19 the event date.
the In
performance light of the
obligations COVID-19
and revenue situation,
recognition payments
will align with received may
the extend
revised event beyond 12 months
dates. before
the event date
where
there have been
postponements
to events.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Subscriptions Provision of Performance Subscriptions
journals and obligations payments
online are satisfied are normally
information over time, received
services that with revenue in advance of
are provided recognised the commencement
on a periodic straight-line of the
basis or updated over the subscription
on a real-time period of the period which is
basis. subscription. typically
a 12 month
period and
are held as
deferred
income.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Transactional Provision of Revenue is Transactional
sales books and recognised sales
specific at the point of to customers are
publications time typically
in print or when control of on credit terms
digital the and
format. product is customers pay
passed to accordingly
the customer or to these terms.
the
information
service
has been
provided.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Attendee Provision of Performance Payments by
Revenue exhibition or obligations attendees
conference are satisfied at are normally
events. the received
point of time either in
that the advance of
event is held, the event date
with or at
attendee revenue the event. . In
recognised light
at this date. of the COVID-19
situation,
payments
received may
extend beyond 12
months
before the event
date
where there have
been
postponements to
events.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Marketing, Provision of Performance Payment for such
advertising advertising, obligations services
services marketing are satisfied are normally
and sponsorship services over the received
and event period of the in advance of
sponsorship. advertising the marketing,
subscription or advertising or
over sponsorship
the period when period.
the
marketing
service is
provided.
Revenue relating
to advertising
or sponsorship
at events is
recognised
on a point of
time basis
at the event
date.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Revenue relating to barter transactions is recorded at fair
value and the timing of recognition is in line with the above.
Expenses from barter transactions are recorded at fair value and
recognised as incurred. Barter transactions typically involve the
trading of show space or conference places in exchange for services
provided at events or media advertising. See note 3 for further
details of revenue by segment.
Financial risk management and financial instruments
The Group has exposure to the following risks from its use of
financial instruments:
-- Insufficient Capital risk management
-- Financial Market risk
-- Credit risk
-- Liquidity risk
The Condensed set of Consolidated Financial Statements do not
include all financial risk management information and disclosures
required in the annual financial statements; they should be read in
conjunction with the Group's annual statutory Financial Statements
as at 31 December 2019.
In the first half of 2020, the global pandemic risk has
materially impacted our business and is recognised as a new
principal risk to the company.
Impairment of Goodwill
We consider whether the carrying value of our goodwill and our
intangible assets is impaired on an annual basis. The most recent
annual impairment review was performed as at 31 December 2019. For
the half year we consider whether there have been any impairment
indicators identified, either internal or external.
We test for the impairment of intangible assets at the
individual Cash Generating Unit ("CGU") level and do this by
comparing the carrying value of assets in each cash CGU with value
in use calculations derived from the latest Group cash flow
projections.
We test for the impairment of goodwill at the business segment
level (see note 3 for business segments). Business segments
represent an aggregation of CGUs and reflect the level at which
goodwill is monitored. We test for goodwill impairment by
aggregating the carrying value of assets across CGUs in each
segment level and comparing this to value in use calculations
derived from the latest Group cash flow projections.
3. Business Segments
The Group has identified reportable segments based on financial
information used by the Directors in allocating resources and
making strategic decisions. We consider the chief operating
decision maker to be the Executive Directors. The Group's five
identified reportable segments under IFRS 8 Operating Segments are
as described in the Divisional Trading Review. There is no
difference between the Group's operating segments and the Group's
reportable segments.
Segment revenue and results
6 months ended 30 June 2020 (unaudited):
Informa Informa
Markets Intelligence Informa Tech Informa Connect Taylor & Francis Total
GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ----------------- ------------- ----------------- ----------------- --------
Revenue 284.7 147.9 59.8 65.5 256.5 814.4
----------------- ----------------- ----------------- ------------- ----------------- ----------------- --------
Adjusted
operating
profit/(loss)
before joint
ventures and
associates 11.9 47.8 (16.5) (19.6) 95.3 118.9
Share of
adjusted
results of
joint ventures
and associates 0.1 - - (0.4) - (0.3)
----------------- ----------------- ----------------- ------------- ----------------- ----------------- --------
Adjusted
operating
profit/(loss) 12.0 47.8 (16.5) (20.0) 95.3 118.6
Intangible asset
amortisation(1) (93.4) (8.7) (11.2) (8.8) (26.1) (148.2)
Impairment -
right use
assets (3.5) (5.1) (0.9) (3.6) (4.3) (17.4)
Impairment -
acquisition
related
goodwill (231.1) - (255.9) (105.9) - (592.9)
Impairment -
other - (1.4) - (2.5) (1.0) (4.9)
Acquisition and
integration
costs (Note 4) (18.9) (0.6) (12.3) (1.7) (0.4) (33.9)
Restructuring
and
reorganisation
costs (Note 4) (4.6) (2.7) (1.2) (4.1) (3.6) (16.2)
Onerous
contracts and
one-off costs
associated with
COVID-19 (Note
4) (39.5) (0.1) (1.7) (2.1) - (43.4)
Subsequent
re-measurement
of contingent
consideration (1.3) - (0.4) 0.7 - (1.0)
VAT charges (0.6) - - - - (0.6)
Operating
profit/(loss) (380.9) 29.2 (300.1) (148.0) 59.9 (739.9)
Loss on disposal
of subsidiaries
and operations (4.0)
Investment
income 4.8
Finance costs (62.1)
----------------- ----------------- ----------------- ------------- ----------------- ----------------- --------
Loss before tax (801.2)
----------------- ----------------- ----------------- ------------- ----------------- ----------------- --------
1. Excludes acquired intangible product development and software amortisation.
3. Business Segments (Continued)
6 months ended 30 June 2019 (unaudited)(2)
Informa Informa
Markets Intelligence Informa Tech Informa Connect Taylor & Francis Total
------------------
GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----------------- ----------------- ------------- ---------------- ----------------- --------
Revenue 722.0 183.2 109.0 141.6 251.8 1,407.6
------------------ ----------------- ----------------- ------------- ---------------- ----------------- --------
Adjusted
operating profit
before joint
ventures and
associates 252.9 42.8 29.0 17.5 93.0 435.2
Share of results
of joint
ventures and
associates 0.3 - - 0.2 - 0.5
------------------ ----------------- ----------------- ------------- ---------------- ----------------- --------
Adjusted
operating profit 253.2 42.8 29.0 17.7 93.0 435.7
Intangible asset
amortisation(1) (99.5) (12.8) (11.7) (5.6) (25.8) (155.4)
Impairment of
right use assets (2.9) - - - - (2.9)
Acquisition and
integration
costs (12.7) (3.5) (1.2) (2.7) - (20.1)
Restructuring and
reorganisation
costs (1.7) (5.5) (0.2) 0.1 0.4 (6.9)
Subsequent
re-measurement
of contingent
consideration 0.2 (0.7) - (1.6) - (2.1)
------------------
Operating
profit/(loss) 136.6 20.3 15.9 7.9 67.6 248.3
Profit on
disposal of
businesses 42.9
Investment income 4.4
Finance costs (62.8)
------------------ ----------------- ----------------- ------------- ---------------- ----------------- --------
Profit before tax 232.8
------------------ ----------------- ----------------- ------------- ---------------- ----------------- --------
1. Excludes acquired intangible product development and software amortisation.
2. Restated for restructuring of Group Divisions.
3. Business Segments (Continued)
Year ended 31 December 2019 (audited):(2)
Informa Informa Taylor &
Markets Intelligence Informa Tech Informa Connect Francis Total
-----------------
GBPm GBPm GBPm GBPm GBPm GBPm
----------------- --------------- ---------------- ------------- ---------------- ---------------- -------------
Revenue 1,442.8 348.1 256.2 283.6 559.6 2890.3
----------------- =============== ================ ============= ================ ================ =============
Adjusted
operating
profit before
joint ventures
and associates 492.3 104.6 71.3 46.2 217.2 931.6
Share of results
of joint
ventures and
associates 1.4 0.1 - - - 1.5
----------------- =============== ================ ============= ================ ================ =============
Adjusted
operating
profit 493.7 104.7 71.3 46.2 217.2 933.1
Intangible asset
amortisation(1) (197.6) (23.2) (21.7) (17.9) (52.0) (312.4)
Impairment -
goodwill and
intangibles (4.7) - - - - (4.7)
Impairment -
right of use
assets (1.4) (0.9) - - (2.3) (4.6)
Acquisition and
integration
costs (39.3) (3.3) (12.2) (4.6) (0.3) (59.7)
Restructuring
and
reorganisation
costs (3.0) (4.8) (0.6) (0.2) - (8.6)
Subsequent
remeasurement
of contingent
consideration 1.6 (3.1) - (1.7) - (3.2)
VAT charges (1.8) - - - - (1.8)
----------------- =============== ================ ============= ================ ================ =============
Operating profit 247.5 69.4 36.8 21.8 162.6 538.1
Profit on
disposal of
businesses (95.4)
Investment
income 10.1
Finance costs (134.1)
=============
Profit before
tax 318.7
----------------- --------------- ---------------- ------------- ---------------- ---------------- -------------
(1) Excludes acquired intangible product development and
software amortisation. 2. Restated for restructuring of Group
Divisions.
Segment revenue by type
An analysis of the Group's revenue by segment and type is as
follows:
6 months ended 30 June 2020 (unaudited):
Informa Informa Taylor & Francis
Markets Informa Connect Informa Tech Intelligence Total
------------------
GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------------------ ---------------- ------------- ------------------ ----------------- ------
Exhibitor 250.5 32.3 9.3 - - 292.1
Subscriptions - - 30.9 137.4 153.9 322.2
Transactional
sales - - - 5.5 102.6 108.1
Attendee 10.7 20.0 4.1 - - 34.8
Marketing and
advertising
services 16.2 4.9 9.5 5.0 - 35.6
Sponsorship 7.3 8.3 6.0 - - 21.6
Total 284.7 65.5 59.8 147.9 256.5 814.4
------------------ ------------------ ---------------- ------------- ------------------ ----------------- ------
3. Business Segments (Continued)
Year ended 31 December 2019 (audited):
Informa Informa Taylor & Francis
Markets Informa Connect Informa Tech Intelligence Total
------------------
GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----------------- ---------------- ------------- ----------------- ----------------- --------
Exhibitor 1213.6 53.6 71.2 - - 1338.4
Subscriptions - - 42.0 296.0 302.5 640.5
Transactional
sales - - - 18.9 257.1 276.0
Attendee 63.8 149.7 84.3 - - 297.8
Marketing and
advertising
services 91.5 22.0 18.5 33.2 - 165.2
Sponsorship 73.9 58.3 40.2 - - 172.4
Total 1,442.8 283.6 256.2 348.1 559.6 2,890.3
------------------ ----------------- ---------------- ------------- ----------------- ----------------- --------
4. Adjusting Items
The Board considers certain items should be recognised as
adjusting items (see glossary of terms for the definition of
adjusting items) since, due to their nature or infrequency, such
presentation is relevant to an understanding of the Group's
performance. These items do not relate to the Group's underlying
trading and are adjusted from the Group's adjusted operating profit
measure. The following charges/(credits) are presented as adjusting
items:
6 months ended 6 months ended Year ended
30 June 2020 30 June 2019 31 December 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
---------------------------------------------------------- --------------- --------------- -----------------
Intangible amortisation and impairment
Intangible asset amortisation(1) 148.2 155.4 312.4
Impairment - acquisition-related intangible assets 1.0 - 3.8
Impairment - acquisition-related goodwill 592.9 - 0.9
Impairment - right of use assets 17.4 2.9 4.6
Impairment - external investments 3.9 - -
Acquisition costs 0.8 0.3 3.3
Integration costs 33.1 19.8 56.4
Restructuring and reorganisation costs
Redundancy and reorganisation costs 2.3 5.7 6.4
Vacant property and finance lease modification costs 13.9 1.2 2.2
Onerous contracts associated with COVID-19 37. 9 - -
Other items associated with COVID-19 5. 5 - -
Subsequent re-measurement of contingent consideration 1.0 2.1 3.2
VAT charges 0.6 - 1.8
Adjusting items in operating loss/profit 858.5 187.4 395.0
Loss/(profit) on disposal of businesses 4.0 (42.9) 95.4
Investment income - - (1.2)
Finance costs 9.7 0.5 13.5
---------------------------------------------------------- --------------- --------------- -----------------
Adjusting items in loss/profit before tax 872.2 145.0 502.7
Tax related to adjusting items (43.9) (35.6) (83.5)
Adjusting items in loss/profit for the period 828.3 109.4 419.2
1. Excludes acquired intangible product development and software amortisation
-- Intangible asset amortisation - the amortisation charges in
respect of intangible assets acquired through business combinations
or the acquisition of trade and assets
-- Impairment - the Group tests for impairment on an annual
basis or more frequently when an indicator exists. Impairment
charges are excluded from adjusted results. Note 10 details the
goodwill impairment.
-- Impairment of right of use assets and vacant property and
finance lease modification costs mainly relate to the permanent
closure of a number of office properties from June 2020
-- Acquisition and integration - costs incurred in acquiring and
integrating share and asset acquisitions
-- Restructuring and reorganisation - --costs incurred by the
Group in business restructuring and operating model changes
-- Onerous contracts associated with COVID-19 relate to onerous
contract costs for events which have been cancelled or postponed
and the costs cannot be recovered. The costs largely relate to
venue, marketing and event set-up costs.
-- Other items associated with COVID-19 are one-off indirect
cost incurred as a result of COVID-19, largely relating to a
contractual commitment to the owner of an event that was
cancelled.
-- Subsequent re-measurements of contingent consideration are
recognised in the period as charges or credits to the Consolidated
Income Statement unless these qualify as measurement period
adjustments arising within one year from the acquisition date.
-- VAT charges of GBP0.6m relate to an increase of the existing
provisions for VAT penalties relating to the UAE which the group is
disputing
-- Loss on disposal of subsidiaries and operations is the loss
on disposal in the period related principally to the impairment of
loan note receivable
-- Finance costs of GBP9.7m primarily relate to the fair value
movement of acquisition put options (GBP6.4m), and the early
settlement of outstanding Private Placement debt in February 2020
(GBP3.3m)
-- The tax items relate to the tax effect on the items above and adjusting tax items
5. Investment Income
6 months ended 6 months ended Year ended
30 June 2020 30 June 2019 31 December 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Interest income on bank deposits 3.6 2.2 4.7
Fair value gain on financial instruments through the income
statement 1.2 1.9 3.4
Interest income finance lessor leases - 0.3 0.8
Investment income before adjusting items 4.8 4.4 8.9
Adjusting item: fair value gain on acquisition put options - - 1.2
Total investment income 4.8 4.4 10.1
6. Finance Costs
6 months ended 6 months ended Year ended
30 June 2020 30 June 2019 31 December 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Interest expense on borrowings and loans 45.2 54.2 105.5
Interest cost on pension scheme net liabilities 0.6 0.6 1.4
Interest cost IFRS 16 leases 6.6 7.0 14.3
Total interest expense 52.4 61.8 121.2
Fair value loss on financial instruments through the income
statement - 0.5 (0.6)
Finance costs before adjusting items 52.4 62.3 120.6
Adjusting item: fair value movement on acquisition put options 6.4 0.5 -
Adjusting item: financing expense associated with 2019 Private
Placement debt 3.3 - 13.5
Total finance expense 62.1 62.8 134.1
7. Taxation
The tax charge comprises:
6 months ended 6 months ended Year ended
30 June 2020 30 June 2019 31 December 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Current tax 8.1 47.7 109.0
Deferred tax (42.8) (11.5) (36.4)
Total tax (credit)/charge on loss/profit on ordinary activities (34.7) 36.2 72.6
In 2017 the European Commission announced that it would be
opening a State Aid investigation into the UK's Controlled Foreign
Company regime and in particular the exemption for group finance
companies. Like many UK based multinational companies, the Group
has made claims in relation to this exemption and will potentially
have an additional tax liability if a negative State Aid decision
is upheld. The maximum amount that could become payable by the
Group in relation to this matter is GBP37.2m. As part of the
acquisition accounting relating to contingent liabilities, an
amount of GBP8.0m has been provided in relation to UBM companies.
We do not currently believe it is probable that we will ultimately
have to make a payment in respect of this issue and therefore have
not provided for any additional liabilities.
8. Dividends
6 months ended 6 months ended Year ended
30 June 2020 30 June 2019 31 December 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Amounts recognised as distributions to equity holders in the period:
Final dividend for 2018 of 14.85p per share - 185.8 185.8
Interim dividend for 2019 of 7.55p per share - - 94.5
- 185.8 280.3
Proposed (not recognised as a liability at the end of the period)
Interim dividend for 2019 of 7.55p per share - 94.4 -
In April 2020 the Directors withdrew the proposed 2019 final
dividend. There is no proposed interim dividend for the six months
ended 30 June 2020. As at 30 June 2020 GBP0.4m (30 June 2019:
GBP0.3m and 31 December 2019: GBP0.4m) of dividends are still to be
paid.
9. Earnings Per Share (EPS)
Basic EPS
The basic earnings per share (EPS) calculation is based on a
loss attributable to equity Shareholders of the parent of GBP761.4m
(30 June 2019: profit GBP182.4m and 31 December 2019: profit
GBP225.5m). This loss on ordinary activities after taxation is
divided by the weighted average number of shares in issue (less
those shares held by the Employee Share Trust and ShareMatch).
Diluted EPS
The diluted EPS calculation is based on the basic EPS
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.
The table below sets out the adjustment in respect of dilutive
potential Ordinary Shares:
6 months ended 6 months ended Year ended
30 June 2020 30 June 2019 31 December 2019
(unaudited) (unaudited)(1) (audited)(1)
Weighted average number of shares used in basic EPS
calculation 1,337,756,825 1,259,487,359 1,259,117,620
Effect of dilutive potential ordinary shares (2) - 5,477,281 5,113,320
Weighted average number of shares used in diluted EPS
calculation 1,337,756,825 1,264,964,640 1,264,230,940
1. Restated for share placement (see Note 14.)
2. For 30 June 2020 dilutive potential ordinary shares have no
effect on the calculation of
diluted EPS as their conversion into ordinary shares cannot
increase the loss per share
9. Earnings Per Share (EPS) (Continued)
Earnings per share: 6 months ended 6 months ended Year ended
30 June 2020
(unaudited) 30 June 2019 (unaudited) 31 December 2019 (audited)
Earnings Per share amount Earnings Per share amount Earnings Per share amount
GBPm Pence GBPm Pence(1) GBPm Pence(1)
(Loss)/profit for the period (766.5) - 196.6 - 246.1 -
Non-controlling interest 5.1 - (14.2) - (20.6) -
Earnings for the purpose of
statutory basic EPS/ statutory
basic EPS (p) (761.4) (56.9) 182.4 14.5 225.5 17.9
Effect of dilutive potential
ordinary shares - - - (0.1) -
Earnings for the purpose of
statutory diluted EPS/ diluted
EPS (p) ( 761.4 ) (56.9) 182.4 14.4 225.5 17.9
1. Restated for share placement (see Note 14.)
9. Earnings Per Share (EPS) (Continued)
Adjusted EPS
The basic and diluted adjusted EPS calculations have been made
to provide additional useful information on the underlying
performance. Profits are based on operations attributable to equity
Shareholders and are adjusted to exclude items that in the opinion
of the Directors would distort underlying results, with those items
detailed in Note 4.
Adjusted earnings per share: 6 months ended 6 months ended Year ended
30 June 2020 30 June 2019 31 December 2019
(unaudited) (unaudited) (audited)
Per share Per share Per share
Earnings amount Earnings amount Earnings amount
GBPm Pence GBPm Pence(1) GBPm Pence(1)
Earnings for the purpose of
basic EPS/ statutory basic EPS
(p) (761.4) (56.9) 182.4 14.5 225.5 17.9
Adjusting items:
Intangible asset amortisation 148.2 11.1 155.4 12.3 312.4 24.8
Impairment -
acquisition-related intangible
assets 1.0 0.1 - - 3.8 0.3
Impairment -
acquisition-related goodwill 592.9 44.4 - - 0.9 0.1
Impairment - of right of use
assets 17.4 1.3 2.9 0.2 4.6 0.4
Impairment - external
investments 3.9 0.3 - - - -
Acquisition and integration
costs 33.9 2.5 20.1 1.6 59.7 4.7
Restructuring and
reorganisation costs 16.2 1.2 6.9 0.6 8.6 0.7
Onerous contracts associated
with COVID-19 37.9 2.8 - - - -
Other items associated with
COVID-19 5.5 0.4 - - - -
Subsequent re-measurement of
contingent consideration 1.0 0.1 2.1 0.2 3.2 0.2
VAT charges 0.6 - - - 1.8 0.1
Loss/(profit) on disposal of
subsidiaries and operations 4.0 0.3 (42.9) (3.4) 95.4 7.6
Investment income - - - - (1.2) (0.1)
Finance costs 9.7 0.7 0.5 - 13.5 1.1
Tax related to adjusting items (43.9) (3.3) (35.6) (2.8) (83.5) (6.6)
Earnings for the purpose of
adjusted basic EPS/ adjusted
basic EPS (p) 66.9 5.0 291.8 23.2 644.7 51.2
Effect of dilutive potential
ordinary shares - - - (0.1) - (0.2)
Earnings for the purpose of
adjusted diluted EPS/ adjusted
diluted EPS (p) 66.9 5.0 291.8 23.1 644.7 51.0
1. Restated for share placement
(See Note 14.)
10. Goodwill
(Unaudited)
GBPm
Cost
At 1 January 2020 6,261.1
Additions 12.7
Disposals (0.9)
Exchange differences 320.4
At 30 June 2020 6,593.3
Accumulated impairment losses
At 1 January 2020 (116.7)
Disposals 0.9
Impairment loss (592.9)
Exchange differences 0.1
At 30 June 2020 (708.6)
Carrying amount
At 30 June 2020 5,884.7
At 31 December 2019 (1) 6,144.4
1. 31 December 2019 amount restated for CAPA and IHS fair value
adjustments (see Note 14.)
Impairment review
At the 30 June 2020 reporting date, impairment indicators were
identified with regards to three of our groups of CGUs in regards
to goodwill, namely the business segments which derive the majority
of their revenue from operating physical events: Informa Markets,
Informa Tech and Informa Connect. For the CGUs within these groups,
there were also indicators of impairment over intangible assets
arising on acquisition. The outbreak of COVID-19 has led to the
cancellation or postponement of the majority of physical events
since March, and therefore a reduction in the revenue generated by
these businesses. The short term and potential longer term impact
has been considered as an indicator of impairment and this has
resulted in impairment reviews being undertaken at 30 June 2020 for
the Informa Markets, Informa Connect and Informa Tech CGU groups,
and for the individual CGUs within these groups.
No similar triggers were identified with regards to the Taylor
& Francis CGU group, or with regards to the Informa
Intelligence CGUs or CGU group.
Management have made several key assumptions, specifically on
cash flows, WACC rates and long term growth rates, whilst forming
their impairment conclusion, as detailed in the key estimates and
judgments section above. The average WACC and Long term market
growth rates as at the 30(th) June were:
Long-term market growth Pre-tax discount rates
rates
Six months Year ended Six months Year ended
ended ended
30 June 2020 31 December 30 June 2020 31 December
(Unaudited) 2019 (Unaudited) 2019
(Audited) (Audited)
Informa Markets 2.3% 2.2% 10.1% 9.3%
Informa Connect 1.7% 1.7% 10.7% 9.6%
Informa Tech 1.9% 1.9% 11.8% 10.9%
10. Goodwill (Continued)
For the Informa Markets group of CGUs, which contains 8 CGUs,
the WACC ranged from 8.8% to 18.5%, and the long term growth rate
ranged from 1.4% to 3.1%. For the Informa Connect group of CGUs,
which contains 5 CGUs, the WACC ranged from 10.5%-11.4% and the
long term growth rate ranged from 1.6% to 2.0%
See Note 2 on accounting policies and estimates for further
details on the impairment testing of goodwill and the key
assumptions used.
The review found no impairment arising from the review of
intangible assets in any CGU. The review of goodwill showed an
impairment of GBP592.9m and this was reflected at 30 June 2020,
impacting the CGU Groups as follows:
Impairment of goodwill
Six months ended Six months Year ended
ended
30 June 2020 30 June 2019 31 December
2019
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
Informa Markets 231.1 - -
Informa Connect 105.9 - -
Informa Tech 255.9 - -
Total 592.9 - -
Following the impairment at 30 June 2020, the carrying amount of
goodwill recorded in the CGU groups is set out below:
CGU Groups Six months ended Six months ended Year ended
30 June 2020 30 June 2019 31 December 2019
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
Informa Markets 3,820.5 3,960.1 3,848.4
Informa Connect 350.3 471.1 436.7
Informa Tech 479.4 599.5 678.0
Informa Intelligence 671.2 771.8 648.0
Taylor & Francis 563.3 541.4 533.4
5,884.7 6,343.9 6,144.5
10. Goodwill (Continued)
Sensitivity analysis
The sensitivities provided represent areas assessed by
management to be a key source of estimation uncertainty, as
described note 2. Key uncertainties relate to the depth of the
economic impact from COVID-19 containment measures, the speed of
recovery, and the variability in impact across the geographies in
which the group operates. Sensitivity analysis scenarios also
considered changes to the key assumptions on the rate of WACC and
Long term growth rates (LTGR), with the sensitivity analysis
showing the impact of WACC rates increasing by 1.0% and LTGR
reducing by 0.5%. Our cash flow sensitivity analysis scenario
considered a potentially extended and severe restriction on our
ability to run events into the future, which indicate a reasonably
possible further 7% reduction in operating profits to 2025.
The results from the sensitivity analysis would indicate the
following further impairment for those CGU groups subject to review
at 30 June 2020, in addition to the GBP592.9m impairment that has
been recorded in the results for the period ended 30 June 2020:
Forecast cash WACC rates increasing LTGR reduction
flow reduction by 1.0% by
GBPm GBPm 0.5%
GBPm
Informa Markets 184.3 685.2 275.1
Informa Connect 31.0 54.6 20.7
Informa Tech 29.8 63.6 23.3
Total 245.1 803.4 319.1
The above sensitivities indicate management's assessment of
reasonably plausible, material changes in the environment which
could lead to a further impairment.
11. Share Capital
Share capital as at 30 June 2020 amounted to GBP1.5m (30 June
2019 and 31 December 2020: GBP1.3m).
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2020 2019 2019
(unaudited) (unaudited) (audited)
Number of shares Number of shares Number of shares
At 1 January 1,251,798,534 1,251,798,534 1,251,798,534
Issue of new shares through share placement 250,318,000 - -
Other issue of shares 13,876 - -
At 30 June / 31 December 1,502,130,410 1,251,798,534 1,251,798,534
As at 30 June 2020 the Informa Employee Share Trust held 734,571
(30 June 2019: 77,666; 31 December 2019: 958,988) ordinary shares
in the Company. As at 30 June 2020 the ShareMatch scheme held
629,464 (30 June 2019: 452,074; 31 December 2010: 474,979) ordinary
shares in the Company.
On 15 April 2020 the Company announced a share placement of
250,318,000 new Ordinary Shares in the capital of the Company,
representing approximately 19.99% of the Company's existing issued
share capital. 125,159,000 new Ordinary Shares were issued on 20
April 2020 and a further 125,159,000 on 5 May 2020.
The shares were issued at GBP4.00 per share resulting in gross
proceeds of GBP1,001.3m and net proceeds of GBP975.9m.
12. Notes to the Cash Flow Statement
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2020 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
(Loss)/profit before tax (801.2) 232.8 318.7
Adjustments for:
Depreciation of property and equipment 8.5 8.4 17.2
Depreciation of right of use assets 16.9 15.8 33.1
Amortisation of other intangible assets 168.0 177.2 354.3
Impairment - goodwill 592.9 - 0.9
Impairment - external investments 3.9 - -
Impairment - acquisition intangible assets 1.0 - 3.8
Impairment - property and equipment(1) - 4.1 -
Impairment - right of use assets 17.4 2.9 4.6
Share-based payments 3.6 5.3 10.4
Subsequent re-measurement of contingent consideration 1.0 2.1 3.2
Loss/(profit) on disposal of businesses 4.0 (42.9) 95.4
Loss on disposal of PPE and software 0.4 - -
Investment income (4.8) (4.4) (10.1)
Finance costs 62.1 62.8 134.1
Share of adjusted results of joint ventures and associates 0.3 (0.5) (1.5)
Operating cash inflow before movements in working capital and pension
contributions 74.0 463.6 964.1
Decrease in inventories 2.2 5.1 12.3
(Increase)/decrease in receivables (63.7) (16.1) 20.6
Increase/(decrease) in payables 131.2 (30.1) (33.1)
Movements in working capital 69.7 (41.1) (0.2)
Pension deficit contributions (3.3) (3.0) (5.4)
Cash generated by operations 140.4 419.5 958.5
12. Notes to the Cash Flow Statement (continued)
Analysis of movement in net debt (unaudited):
At 30
June
At 1 Jan 2020 Non-cash movements Cash flow Exchange movements 2020
GBPm GBPm GBPm GBPm GBPm
Cash at bank and in hand 195.1 - 712.2 7.9 915.2
Overdrafts - - - - -
Cash and cash equivalents 195.1 - 712.2 7.9 915.2
Bank loans due in less than one year - - - - -
Bank loans due in more than one year (56.9) - 87.1 (30.2) -
Bank loan fees due in more than one
year 2.2 8.2 - - 10.4
Private placement loan notes due in
less than one year (152.2) - 153.0 (0.8) -
Private placement loan notes due in
more than one year (1,060.6) (2.6) - (77.8) (1,141.0)
Private placement loan note fees 2.7 (0.2) - - 2.5
Bond borrowings due in more than one
year (1,279.1) - - (70.7) (1,349.8)
Bond borrowing fees 11.0 (0.8) - - 10.2
Derivative assets associated with
borrowings 3.9 0.9 - - 4.8
Derivative liabilities associated with
borrowings (22.4) (72.6) - - (95.0)
Lease liabilities (316.6) (5.9) 15.8 (7.8) (314.5)
Finance lease receivables 15.3 (5.5) (1.2) 0.7 9.3
Net debt (2,657.6) (78.5) 966.9 (178.7) (1,947.9)
12. Notes to the Cash Flow Statement (continued)
Analysis of movement in net debt (unaudited)
At 30
June
At 1 Jan 2019 Non-cash movements Cash flow Exchange movements 2019
GBPm GBPm GBPm GBPm GBPm
Cash at bank and in hand 168.8 - 144.6 3.5 316.9
Overdrafts (43.9) - (5.7) 0.1 (49.5)
Cash and cash equivalents 124.9 - 138.9 3.6 267.4
Bank loans due in less than one year (156.9) - 152.7 4.2 -
Bank loans due in more than one year (78.5) - (117.1) (5.5) (201.1)
Bank loan fees due in more than one
year 0.9 (1.2) 2.8 - 2.5
Private placement loan notes due in
more than one year (1,396.4) 0.7 - (10.5) (1,406.2)
Private placement loan note fees 3.4 (0.3) - - 3.1
Bond borrowings due in more than one
year (1,163.0) 1.1 - (1.4) (1,163.3)
Bond borrowing fees 7.4 (0.9) 0.1 - 6.6
Derivative assets associated with
borrowings 1.5 - - 0.9 2.4
Derivative liabilities associated with
borrowings (25.2) - - (12.9) (38.1)
Lease liabilities (343.6) (4.9) 13.9 0.8 (333.8)
Finance lease receivables 14.4 - (1.4) 1.5 14.5
Net debt (3,011.1) (5.5) 189.9 (19.3) (2,846.0)
Reconciliation of movement in Net Debt
Year ended
6 months ended 6 months ended 31 December
30 June 2020 30 June 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Increase in cash and cash equivalents in the period 712.2 138.9 77.1
Cash flows from net draw-down of borrowings and derivatives
associated with debt instruments
and finance leases 264.8 51.0 199.8
Change in net debt resulting from cash flows 977.0 189.9 276.9
Non-cash movements including foreign exchange (255.9) (24.8) 93.1
Movement in net debt in the period (before opening IFRS 16 debt) 721.1 165.1 370.0
Net debt at beginning of the period (2,657.6) (2,681.9) (2,681.9)
IFRS 16 lease liabilities at 1 January 2019 - (343.6) (343.6)
IFRS 16 finance lease receivables at 1 January 2019 - 14.4 14.4
Net finance lease additions in the period (11.4) - (16.5)
Net debt at end of the period (1,947.9) (2,846.0) (2,657.6)
13. Borrowings
The Group had GBP4.1bn of committed facilities at 30 June 2020
(GBP3.5bn at 30 June 2019 and GBP3.4bn at 31 December 2019), see
Financial Review for further details. The total borrowings
excluding lease liabilities and excluding derivative assets and
liabilities associated with borrowings, are as follows:
At 30 June At 30 June At 31
2020 2019 December 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Current
Bank overdraft - 49.5 -
Private placement loan note ($200.5m) - repaid February 2020 - - 152.2
Total current borrowings - 49.5 152.2
Non-current
Bank borrowings - revolving credit facility (1) - - 56.9
Bank borrowings - revolving credit facility - due February 2022 - 201.1
Bank debt issue costs (10.4) (2.5) (2.2)
Bank borrowings - non-current (10.4) 198.6 54.7
Private placement loan note ($385.5m) - due December 2020 - 304.0 -
Private placement loan note ($45.0m) - due June 2022 37.4 36.5 35.0
Private placement loan note ($120.0m) - due October 2022 97.8 94.6 91.1
Private placement loan note ($55.0m) - due January 2023 44.8 43.4 41.7
Private placement loan note ($76.1m) - due June 2024 69.0 64.2 61.8
Private placement loan note ($80.0m) - due January 2025 65.2 63.1 60.7
Private placement loan note ($200.0m) - due January 2025 163.0 157.7 151.8
Private placement loan note ($130.0m) - due October 2025 106.0 102.5 98.7
Private placement loan note ($365.0m) - due January 2027 297.5 287.9 277.1
Private placement loan note ($116.0m) - due June 2027 97.2 94.6 90.9
Private placement loan note ($200.0m) - due January 2028 163.0 157.7 151.8
Private debt issue costs (2.5) (3.1) (2.7)
Private placement - non-current 1,138.4 1,403.1 1,057.9
Bond borrowings ($350.0m) - repaid November 2019 - 279.7 -
Euro Medium Term Note (EUR650.0m) - due July 2023 593.4 583.6 553.4
Euro Medium Term Note (GBP300.0m) - due July 2026 300.0 300.0 300.0
Euro Medium Term Note (EUR500.0m) - due April 2028 456.5 - 425.7
Bond borrowings and EMTN issue costs (10.2) (6.6) (11.0)
Bond borrowings - non-current 1,339.7 1,156.7 1,268.1
Total non-current borrowings 2,467.7 2,758.4 2,380.7
Total borrowings 2,467.7 2,807.9 2,532.9
(1) On 24 January 2020 the two tranches of RCF were extended by
one further year, resulting in GBP600m maturing in February 2025
and GBP300m maturing in February 2023
The principal financial covenant ratios under the private
placement loan notes are maximum net debt to EBITDA of 3.5 times
and minimum EBITDA interest cover of 4.0 times, tested
semi-annually and calculated according to the Note Purchase
Agreements. During the period there were no breaches to covenants
under the Group's private placement loan notes. The Group does not
have any of its property and equipment and other intangible assets
pledged as security over loans.
14. Restatement
Fair value restatement
Finalisation of the acquisition balance sheet of Centre for Asia
Pacific Aviation Pty Ltd (CAPA)
In 2020 the group completed the IFRS 3 fair value exercise in
relation to the acquisition of CAPA within the 12-month
remeasurement period from the acquisition date. This has resulted
in the following restatements to the balance sheets of the 30 June
2019 and 31 December 2019 financial statements, with no impact on
the income statement:
-- An increase of GBP0.8m in provisions and a corresponding increase in goodwill
-- Increase in accruals of GBP0.1m and a corresponding increase in goodwill
-- Impairment of GBP0.2m in fixed assets and a corresponding increase in goodwill
Fair value restatements to the acquisition balance sheet of the
TMT Research and Intelligence portfolio from IHS Markit (TMT)
An update to the provisional fair value 1 August 2019
acquisition balance sheet of TMT has resulted in the following
restatements to the balance sheet of the 31 December 2019 financial
statements:
-- A reduction in trade receivables of GBP0.3m, with a corresponding increase in goodwill
Restatement of EPS and Dividends per Share due to discount on
the share placement
On 15 April 2020 the Company announced a share placement of
250,318,000 new Ordinary Shares, representing approximately 19.99%
of the Company's existing issued share capital. 125,159,000 new
Ordinary Shares were issued on 20 April 2020 and a further
125,159,000 on 5 May 2020. The share placement price was 400 pence
per a share and represented a discount of 4 per cent to the closing
share price of 416.8 pence on 15 April 2020. The gross proceeds
raised through the placement were GBP1,001m. The issue of shares at
a discount required the restatement of prior years' weighted
average number of shares, earnings per share and dividends per
share.
H1 2019 (Restated) H1 2019 FY 2019 (Restated) FY2019
Basic EPS (p) 14.5 14.6 17.9 18.0
Diluted EPS (p) 14.4 14.5 17.9 18.0
Adjusted basic EPS (p) 23.2 23.3 51.2 51.5
Adjusted diluted EPS (p) 23.1 23.2 51.0 51.3
Weighted average number of
shares used in diluted EPS
calculation 1,264,964,640 1,256,467,977 1,264,230,940 1,255,739,205
Weighted average number of
shares used in basic EPS calculation 1,259,487,359 1,251,027,486 1,259,117,620 1,250,660,231
Dividends per share (p) 7.50 7.55 7.50 7.55
15. Business combinations
On 9 January 2020 the Group acquired F1000 Research Limited for
consideration of GBP16.0m, inclusive of GBP14.9m cash
consideration. The business is an open research publishing company
and forms part of the Taylor & Francis business. Of this
balance GBP12.7m was recognised as goodwill with the remainder
being allocated to acquisition intangibles.
On 17 January 2020 a payment of GBP28.1m ($37.0m) was made in
relation to the settlement of an option held by a third party that
was exercised on 15 January 2020. This related to an option
associated with certain Fashion events in the US which were
acquired as part of the 2018 UBM plc acquisition.
The Group paid net deferred and contingent consideration
relating to prior year business combinations of GBP7.5m.
16. Related Party Transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. Transactions with related parties are made
at arm's length.
Transactions with Directors
There were no material transactions with Directors of the
Company during the year, except for those relating to remuneration
and shareholdings. For the purposes of IAS 24 Related Party
Disclosures, Executives below the level of the Company's Board are
not regarded as related parties.
Other related party disclosures
At 30 June 2020, Informa Group companies have guaranteed the
pension scheme liabilities of the Taylor & Francis Group
Pension and Life Assurance Scheme, the Informa Final Salary Scheme
and the UBM Pension Scheme.
During the period, Informa entered into related party
transactions to the value of GBP0.3m (30 June 2019: nil) with a
balance of GBP0.1m (30 June 2019: nil) outstanding at 30 June 2020.
Outstanding balances at year-end are unsecured and settlement
occurs in cash. There are no bad debt provisions for related party
balances as at 30 June 2020, and no debts due from related parties
have been written off during the period.
17. Financial Instruments
This note provides an update on the judgements and estimates
made by the group in determining the
fair values of the financial instruments since the last annual
financial report.
Fair value hierarchy
Valuation techniques use observable market data where it is
available and rely as little as possible on entity-specific
estimates. The fair values of interest rate swaps and forward
exchange contracts are measured using discounted cash flows. Future
cash flows are based on forward interest/exchange rates (from
observable yield curves/forward exchange rates at the end of the
reporting period) and contract interest/forward rates, discounted
at a rate that reflects the credit risk of the counterparties.
The fair values of put options over non-controlling interests
(including exercise price) and contingent and deferred
consideration on acquisitions are measured using discounted cash
flow models with inputs derived from the projected financial
performance in relation to the specific contingent consideration
criteria for each acquisition, as no observable market data is
available. The fair values are most sensitive to the projected
financial performance of each acquisition; management makes a best
estimate of these projections at each financial reporting date and
regularly assesses a range of reasonably possible alternatives for
those inputs and determines their impact on the total fair
value.
An increase of 20% to the projected financial performance used
in the put option measurements would increase the aggregate
liability by GBPnil. The fair value of the contingent and deferred
consideration on acquisitions is not significantly sensitive to a
reasonable change in the forecast performance.
Financial instruments that are measured subsequently to initial
recognition at fair value are grouped into Levels 1 to 3, based on
the degree to which the fair value is observable, as follows:
Level 1 fair value measurements are those derived from
unadjusted quoted prices in active markets for identical assets or
liabilities.
Level 2 fair value measurements are those derived from inputs,
other than quoted prices included within Level 1, that are
observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices).
Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are
not based on observable market data (unobservable inputs), such as
internal models or other valuation methods. Level 3 balances
include investments where, in the absence of market data, these are
held at cost, and adjusted for impairments which are taken to
approximate to fair value. Level 3 balances for contingent
consideration use future cash flow forecasts to determine the fair
value, with the fair value of deferred consideration balances taken
as the receivable amount adjusted for an impairment assessment. The
fair value of put options over non-controlling interest uses the
present value of the latest cash flow forecast for each
business.
Financial assets and liabilities measured at fair value in the
Consolidated Balance Sheet and their categorisation in the fair
value hierarchy at 30 June 2020 and 31 December 2019:
Level 1 Level 2 Level 3 Total
At 30 June 2020 At 30 June 2020 At 30 June 2020 At 30 June 2020
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBPm GBPm GBPm GBPm
Financial assets
Derivative financial instruments in
designated hedge accounting relationships - 4.8 - 4.8
Equity investments in unquoted companies - - 7.4 7.4
- 4.8 7.4 12.2
Financial liabilities at fair value
through profit or loss - - - -
Private placement loan notes - 69.0 - 69.0
Bond borrowings - - - -
Derivative financial instruments in
designated hedge accounting
relationships(1) - 94.9 - 94.9
Deferred consideration on acquisitions - - - -
Contingent consideration on acquisitions - - 11.6 11.6
Put options over non-controlling interests - - 17.0 17.0
- 163.9 28.6 192.5
(1) GBP94.9m relates to interest rate swaps associated with Euro
Medium Term Notes.
17. Financial Instruments (Continued)
Level 1 Level 2 Level 3 Total
At 31 December 2019 At 31 December 2019 At 31 December 2019 At 31 December 2019
(Audited) (Audited) (Audited) (Audited)
GBPm GBPm GBPm GBPm
Financial assets
Derivative financial
instruments in designated
hedge accounting
relationships - 3.9 - 3.9
Equity investments in
unquoted companies - - 10.1 10.1
- 3.9 10.1 14.0
Financial liabilities at
fair value through profit
or loss - - - -
Private placement loan
notes - 61.8 - 61.8
Derivative financial
instruments in designated
hedge accounting
relationships(1) - 22.4 - 22.4
Deferred consideration on
acquisitions - - 2.5 2.5
Contingent consideration
on acquisitions - - 18.7 18.7
Put options over
non-controlling interests - - 36.4 36.4
- 84.2 57.6 141.8
(1) GBP22.4m relates to interest rate swaps associated with Euro
Medium Term Notes.
Fair value of other financial instruments (unrecognised)
The group also has a number of financial instruments which are
not measured at fair value in the balance sheet. For the majority
of these instruments, the fair values are not materially different
to their carrying amounts, since the interest receivable/payable is
either close to current market rates or the instruments are
short-term in nature. Significant differences were identified for
the following instruments at 30 June 2020:
Carrying amount Estimated fair value Carrying amount Estimated fair value
30 June 2020 30 June 2020 31 December 2019 2018 (1)
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBPm GBPm GBPm GBPm
Financial liabilities
Private placement loan notes 1,069.4 1,355.5 1,148.3 1,226.4
Bond borrowings 1,339.7 1,301.0 1,268.1 1,309.0
2,409.1 2,656.5 2,416.4 2,535.4
18. Events after the Balance Sheet date
On 21 August 2020 the group settled options held by a 4.1%
minority holder of certain parts of our ASEAN businesses and a
payment of GBP16.9m ($22.3m) was made. This settlement enables the
Group to take 100% ownership of the ASEAN business.
Glossary of terms: Alternative Performance Measures
The group provides adjusted results and underlying measures in
addition to statutory measures, in order to provide additional
useful information on business performance trends to Shareholders.
The Board considers these non-GAAP measures as the most appropriate
way to measure the Group's performance because it aids
comparability to the prior year and is also in line with the
similarly adjusted measures used by peers and therefore facilitates
comparison.
The terms "adjusted" and "underlying" are not defined terms
under IFRS and may not therefore be comparable with similarly
titled measurements reported by other companies. These measures are
not intended to be a substitute for, or superior to, IFRS measures.
The Financial Review provides reconciliations of Alternative
Performance Measures (APMs) to statutory measures and also provides
the basis of calculation for certain APM metrics. These APMs are
provided on a consistent basis with the prior periods.
Adjusted results and adjusting items
Adjusted results exclude items that are commonly excluded by
peers across the knowledge and information and media sector:
amortisation and impairment of goodwill and intangible assets
relating to businesses acquired and other intangible asset
purchases of book lists, journal titles, acquired databases and
brands related to exhibitions and conferences, acquisition,
impairment of right of use assets, acquisition and integration
costs, restructuring and reorganisation costs, subsequent
remeasurement of contingent consideration, profit or loss on
disposal of businesses and other items that in the opinion of the
Directors would impact the comparability of underlying results.
Adjusted results are prepared for the following measures which
are provided in the Consolidated Income Statement. Adjusted
operating profit, Adjusted net finance costs, Adjusted Profit
before tax (PBT), Adjusted tax charge, Adjusted Profit After Tax
(PAT), Adjusted earnings, and Adjusted diluted earnings per share.
Adjusted operating margin, Adjusted tax charge and Adjusted EBITDA
are used in the Financial Review.
Adjusted net finance costs
Adjusted net finance costs are the sum of finance costs and
investment income and exclude adjusting items for investment income
and finance costs.
EBITDA
Adjusted EBITDA is earnings before interest, tax, depreciation,
amortisation and other non-cash items such as share-based payments
and before adjusting items.
Covenant-adjusted EBITDA for interest cover purposes is earnings
before interest, tax, depreciation and amortisation and adjusting
items. It is adjusted to be on a pre-IFRS 16 basis.
Covenant-adjusted EBITDA for leverage purposes is earnings
before interest, tax, depreciation and amortisation and adjusting
items. It is adjusted to include a full year's trading for
acquisitions and remove trading results for disposals and adjusted
to be on a pre-IFRS 16 basis.
Effective tax rate
The effective tax rate is shown as a percentage and is
calculated by dividing the adjusted tax charge by the adjusted
profit before tax. For interim accounts the effective tax rate is
estimated for the full year and this is applied to the interim
adjusted profit before tax to arrive at the adjusted tax
charge.
Free cash flow
Free cash flow is a key financial measure of cash generation and
represents the cash flow generated by the business before cash
flows relating to acquisitions and disposals and their related
costs, dividends, any new equity issuance or purchases and debt
issues or repayments. Free cash flow is one of the Group's key
performance indicators and is an indicator of operational
efficiency and financial discipline, illustrating the capacity to
reinvest, fund future dividends and repay debt. The Financial
Review provides a reconciliations of free cash flow to statutory
measures
Interest cover
Interest cover is calculated according to the Group's debt
covenants and is the ratio of covenant-adjusted EBITDA for interest
cover purposes to adjusted net finance costs and excluding fair
value finance items. It is provided to enable the assessment of our
debt position together with our compliance with these specific debt
covenants. The Financial Review provides the basis of the
calculation of interest cover.
Leverage ratio
The leverage ratio is calculated according to the Group's debt
covenants and is the ratio of net debt to covenant-adjusted EBITDA
for leverage purposes and is provided to enable the assessment of
our debt position together with compliance with our specific debt
covenants. Covenant-adjusted net debt is translated using average
exchange rates for the 12-month period and is adjusted to include
deferred consideration payable, exclude derivatives associated with
borrowings, and to be on a pre-IFRS 16 basis. The Financial Review
provides the basis of the calculation of the leverage ratio.
Operating Cash flow and operating cash flow conversion
Operating cash flow is a financial measure used to determine the
efficiency of cash flow generation in the business and is measured
by and represents free cash flow adding back interest, tax,
restructuring and reorganisation costs. The Financial Review
reconciles operating cash flow to statutory measures.
Operating cash flow conversion is a measure of the strength of
cash generation in the business and is measured as a percentage by
dividing operating cash flow by adjusted operating profit in the
reporting period. The Financial Review provides the calculation of
operating cash flow conversion.
Underlying measures of growth
Underlying measures of growth refer to revenue and adjusted
operating profit results adjusted for acquisitions and disposals,
the phasing of events, including biennials, the impact of changes
from implementing new accounting standards and accounting policy
changes and the effects of changes in foreign currency by adjusting
the current year and prior year amounts to use consistent currency
exchange rates. Phasing and biennial adjustments relate to the
alignment of comparative period amounts to the timing of events in
the current year.
The results from acquisitions are included on a pro-forma basis
from the first day of ownership in the comparative period.
Disposals are similarly adjusted for on a pro-forma basis to
exclude results in the comparative period from the date of
disposal. Underlying measures are provided to aid comparability of
revenue and adjusted operating profit results against the prior
year. The Financial Review provides the reconciliation of
underlying measures of growth to reported measures of growth in
percentage terms.
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