newsbox.ch/ Informa plc: Interim Results for the -2-

27th Jul 2010 07:01

little by subscriptions in the financial services sector; elsewhere renewal rates remain high. Our Events and Training portfolio rebounded from the decline in 2009 and increased adjusted operating profits by 11.4%. This positive result was led by an increase in delegate numbers across our conference portfolio but also reflects the strength of the exhibition business. We have witnessed an economic recovery in most of the geographies and vertical sectors in which we operate but the strength and depth of the recovery varied widely. Although there are signs of renewed confidence in North America, our biggest market, it is fragile at this stage and it still remains challenging to secure large scale corporate engagements in our training operations. We have seen an improved trading environment in our important German market and countries such as Australia and Brazil are showing promising signs of growth. Despite the continuing issues in the financial services sector, our conference and training products have recovered well. Our subscription products have had a tougher time with banks and other financial institutions reluctant to return to previous spending levels. Our telecoms and healthcare products, both publishing and events, have continued to grow. In these circumstances, our strategy of building a geographically and vertically diverse portfolio has served us well. We have also benefited from right sizing the business over the past two years to the current level of activity and overhead. We continue to take steps to enhance the quality of our earnings. We have reduced the number of single subscribers to our products, selling enterprise wide licenses and thereby increased the overall revenue. We are also running more large scale events which account for over a third of our Events and Training revenues. Having removed substantial cost from our businesses over the past two years, we are now confident that it is the time to make selective investments by launching new products into the market. This will be on a targeted basis building on our geographic and vertical strengths. Our balance sheet remains strong with net debt at GBP905.7m, well within covenant levels, and we are on target to end the year with a net debt to EBITDA ratio within the range of 2 to 2.5 times. Although our free cash flow is lower than in the corresponding period last year, this is caused by our quadrennial printing exhibition, IPEX, where the majority of this year's income was received in 2009 and other timing issues. This is therefore not expected to affect full year cash generation which is expected to remain strong. There are more bolt-on acquisition opportunities than we have seen for a while so we are pursuing those that make financial and strategic sense. Academic Information Our Academic Information division accounts for 22.7% of the Group's revenue and 29.8% of the adjusted operating profit. Revenues of GBP141.5m (2009: GBP136.5m) have increased by 3.7% on an actual basis and 5.0% on an organic basis. Adjusted operating profit has also grown to GBP45.5m (2009: GBP42.9m), an increase of 6.1%. This year's journal renewal was in line with our expectations and we have achieved growth year on year. We are fortunate that we have a high proportion of our journals in Humanities and Social Sciences which typically has higher renewal rates than the longer established Science, Technology and Medicine areas. On the books side of the business, we secured a substantial sale of e-books to the Middle East which has boosted the first half result. So far in 2010, we have launched eight new journals, published 1,300 new books and won 15 new society journals. We have kept tight control of costs and worked hard with our academic customers to introduce different pricing models to suit their requirements. Of course, with reported cuts in educational spending worldwide, especially in the US which is our largest market, we are not complacent. We are in regular contact with our customers and, as in previous years, will be flexible and innovative in our approach to the content renewal in 2011. We continue to invest in our core delivery platform as access to our content is a transparent measure of quality. On the sales front we are increasing our efforts by adding more resource into emerging markets such as China, India and the Middle East. These areas now account for 8.6% of sales and are becoming increasingly important. Professional and Commercial Information Our PCI division accounts for 28.6% of the Group's revenue and 33.8% of the adjusted operating profit. This division, encompassing Datamonitor, Informa Business Information and Informa Financial Information, has performed in line with expectations. Revenues of GBP178.5m (2009: GBP185.6m) have slowed principally as a result of financial subscriptions but also as we proactively removed some marginal product. Organically, this reduction is 2.9%. Adjusted operating profits have only decreased by GBP2.2m to GBP51.6m (2009: GBP53.8m) as a result of increased digitisation and strong cost control. Consequently, adjusted operating profit margins were virtually unchanged at 28.9%. Overall PCI has done well in the first half of the year with renewal rates remaining high. As well as financial services this division, which has products in healthcare, commodities, law, maritime, telecoms and pharmaceuticals, has performed well. In the current environment, it takes slightly longer to close a new sale or up sell to existing clients but overall the business remains resilient. Almost three quarters of PCI's revenue comes from subscriptions, all of which are digitally delivered. We have introduced a number of new initiatives including a reorganisation of our commodities business where we have consolidated titles around our strongest brands. Also the Lloyd's Maritime Information Unit, which formerly consisted of a variety of products ranging from reports and data to consultancy, has now been rebranded as Lloyd's List Intelligence and adopted a focused, channel based approach to information delivery. Datamonitor has had a steady first half. It operates in a number of different verticals including telecoms and healthcare where performance has been strong. Tougher areas include the US and technology, although both of these are showing a few signs of improvement. Datamonitor continues to target emerging markets and is increasing its direct presence in a variety of markets utilising the wider Informa network. Overall, the drive towards offering our key corporate customers integrated solutions and enterprise-wide licences allows us to repackage our wealth of primary data and analysis, improving delivery efficiency and revenue retention. Advertising, which remains a tougher area, continues to be increasingly sidelined as a revenue stream and is now only 2% of Group revenues. Events and Training Our events and training portfolio accounts for 48.7% of Group revenues and 36.4% of adjusted operating profit. As expected, due to the reduction in the number of events held, revenues of GBP304.0m (2009 H1: GBP314.2m) have decreased by 3.2%, 1.5% on an organic basis. Adjusted operating profits have, however, increased by 11.4% to GBP55.6m (2009 H1: GBP49.9m) benefiting from increased delegate numbers and the lower cost base after the actions taken last year. The adjusted operating profit margin has therefore increased to 18.3% (2009 H1: 15.9%). This part of our business has three principal formats: exhibitions, conferences and training. Our exhibitions have remained resilient with notable successes at Arab Health, Palm China and IPTV. During the first half of the year, we held our one quadrennial event, IPEX. We hosted over 1,000 exhibiting companies and attracted 54,000 international visitors over the course of the eight day event. Given its success, we are planning to run new geo-cloned IPEX events around the world during the next four year cycle. Across the exhibition portfolio, rebookings into 2011 are 9% up on the equivalent period last year and we are targeting further growth through new launches, geo-cloning and acquisition. The one area of weakness is real estate in the Middle East where our Cityscape shows are down on previous years. However, the Cityscape portfolio which includes new launches in Saudi Arabia, remains one of our biggest profit contributors. Cityscape Global, held in Dubai, takes place in the second half of the year. Some of our largest conferences - GAIM, Fund of Funds and Prepaid Card Expo - are up 30% and across our smaller European conference businesses we have also experienced good growth. With a portfolio diversified both geographically and vertically we have benefited from improved economic conditions in Australia, Russia and Germany, amongst others, as well as seen increased demand for our content in the mining, telecoms, energy and financial services sectors. Our training portfolio was the most challenging area in the first half of 2010. It is pleasing that after almost three years of decline our corporate training businesses have achieved profit growth in the first half of 2010 with the smaller non-US operations performing better than those in the US. Growth in this part of our business is dependent on economic stability being maintained and employment levels increasing over the second half of the year. Encouragingly, for the first time in almost three years, work is being pulled forward and the outlook is gradually improving. The exception was Robbins Gioia, the US Government contractor, which has had a tough start to the year, losing a major contract and suffering as a result of (MORE TO FOLLOW) Dow Jones Newswires July 27, 2010 02:01 ET (06:01 GMT)