2021 Half Year Results Statement
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Informa PLC Press Release
29 July 2021
Half-Year Results for Six Months to 30 June 2021
2021-2022: Improving Revenues, Profits and Cashflow
2021-2024: Growth Acceleration Plan II (GAP II)
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 2021, reporting further strength in its Subscriptions-led businesses and returning confidence across its B2B events portfolio.
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Stephen A. Carter , Group Chief Executive, Informa PLC, said: "Informa's Subscriptions-led businesses continue to deliver improving growth, reflecting our consistent investment in product development and increasing focus on specialist brands in growth markets." He added: "Our Physical Events business is increasingly returning in Mainland China and progressively rebuilding in North America and the Middle East, with positive forward bookings and growing commercial confidence. Clearly, however, there is continuing restriction and uncertainty in other parts of the world and we continue to monitor the rules and relaxation approaches on a country-by-country basis." He concluded: "Looking ahead over the next three years, a Growth Acceleration Plan will focus on delivering further growth in Subscriptions and Services, progressive recovery in Physical Events and continued expansion of our range of Digital Services, to meet growing customer demand for data-led, digital solutions in all our businesses." |
H1 2021 Financial Highlights
· Revenue and Profit: Statutory revenues of £688.9m (H1 2020 £814.4m) and Adjusted Operating Profit1 of £69.2m (H1 2020: £118.6m) reflect differing pandemic-impacts on the Physical Events business in the front half of 2020 and 2021;
· Improving statutory performance : The reduction in COVID-related exceptional costs and lower non-cash intangible amortisation delivers improvement in statutory operating loss to -£58.0m (H1 2020: -£739.9m);
· Strong Free Cash Flow1 : High cash conversion, supported by strong subscription renewals, positive forward bookings and low levels of refunds, delivers Free Cash Flow1 of £134.1m (H1 2020: £71.3m)
· Decreasing Net Debt :1 Free Cash Flow strength, combined with currency effect, drives a reduction in net debt to £1,890.1m (FY 2020: £2,029.6m); Strong financial position and growing confidence in the outlook reflected in investment grade status from Fitch, Moodys and Standard & Poors.
2021-2022: Improving Revenues, Profits and Cashflow
· Improving performance: Further strength in Subscription-led businesses is now being supported by growing commercial confidence in returning Physical Events and deeper digital diversification;
· Increased revenue guidance: Revenue guidance for the 2021 Transition Year raised to £1,800m± (from £1,700m±), with adjusted operating profit expected to be £375m± post currency effects; Forward momentum into 2022, underpinned by improving conversion of profits into cash;
· Confidence in returning Physical Events and Digital Services: In all three of Informa's major geographic markets (North America, Mainland China, Middle East), we are seeing a progressive return of physical event activity alongside increasing demand for Digital Services, with good customer support and progressive rebooking into 2022;
· Strength at Taylor & Francis: Strong first half performance (H1 URG: 3.0%), reflecting flexible, customer-led approach and consistent investment, including in Open Research. Robust subscription renewals, strength in eBooks and full pipeline of Open Research activity expected to deliver 2%+ underlying revenue growth in the full year;
· Accelerating growth at Informa Intelligence: Strong demand for specialist data and content, combined with consistent product investment continuing to deliver higher levels of growth (H1 URG: 7.9%). Strong forward sales pipeline and further growth in annualised contract values, most notably in Pharma, sees full year 2021 underlying revenue growth guidance raised to 4.5%+;
· Informa Intelligence increasing portfolio focus: Continuing focus in three core markets of Pharma, Maritime and Finance. Market launch of Curinos, a new brand providing competitive intelligence to the Retail Banking market, alongside EPFR Global and IGM brands in Finance, Lloyd's List in Maritime, and Citeline and Trialscope in Pharma. Confirmation of disposal of Barbour EHS, one of three non-core brands under review, with ongoing discussions in relation to Asset Intelligence and Barbour ABI.
2021-2024: Growth Acceleration Plan II (GAP II)
As we approach the end of the Transition Year, using our proven GAP methodology, Informa will implement GAP II, a programme to accelerate our strategy of Market Specialisation and increase Digitisation in all our businesses, thereby expanding our addressable audiences, improving the mix and quality of our revenue and bringing us closer to our markets and customers.
· Market Specialisation: Informa's strategy of building depth around specific customer markets and subject categories delivered through the pandemic and is providing momentum on the way out, both within our Subscriptions-led businesses and across our portfolio of B2B Physical Events brands and B2B Digital Services;
· Digital Acceleration: Accelerated customer adoption of digital technology through the last 18 months is driving change and creating new opportunities, providing scope to extend brands to broader audiences, deepen connections to customers and further expand in specialist Digital Services;
· Digital Information & Knowledge Services: Following five years of investment and focus, in Informa Intelligence and Taylor & Francis we are further advanced on data management and digital product development, which is delivering increased customer retention and improving underlying growth.
· Enhanced B2B Digital Services: Across our three B2B businesses (Informa Markets, Informa Connect, Informa Tech), we have accelerated our digital commitment in three areas: Smart Events, Content Marketing & Audience Access, Data Analytics & Purchasing Intent. Through IIRIS, our centralised and shared platform for collecting, collating and curating all our B2B audience data, we are building the capabilities to further increase the quality and reach of our digital service offering.
· FasterForward on ESG: Another key component of GAP II will be further operationalising the sustainability commitments within our FasterForward programme, including on renewable energy, efficient offices, and the increasingly positive role large-scale B2B events can make as effective, carbon-efficient consolidators of business travel.
· Capital Markets Day: Further details on the approach and ambitions of the 2021-2024 GAP II will be provided at a Capital Markets Day on Tuesday 7 December.
1 In this report we refer to non-statutory measures including underlying results, as defined in the Financial Review on page 9 and Glossary on page 49.
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Enquiries |
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Stephen A. Carter, Group Chief Executive |
+44 (0) 20 7017 5771 |
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Gareth Wright, Group Finance Director |
+44 (0) 20 7017 7096 |
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Richard Menzies-Gow, Director of IR & Communications |
+44 (0) 20 3377 3445 |
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Tim Burt / Zoë Watt - Teneo |
+44 (0) 7583 413254 / +44 (0) 7713 157561 |
H1 2021 Financial Summary
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H1 2021 |
H1 2020 |
Reported |
Underlying1 |
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£m |
£m |
% |
% |
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Revenue |
688.9 |
814.4 |
(15.4) |
(7.5) |
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Statutory operating loss |
(58.0) |
(739.9) |
n/a |
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Adjusted operating profit2 |
69.2 |
118.6 |
(41.7) |
(2.5) |
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Adjusted operating margin (%)2 |
10.0 |
14.6 |
(31.2) |
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Operating cash flow2 |
175.7 |
183.5 |
(4.3) |
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Statutory loss before tax |
(91.0) |
(801.2) |
n/a |
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Adjusted profit before tax2 |
36.3 |
71.0 |
(48.9) |
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Statutory diluted earnings per share (p) |
(6.1) |
(56.9) |
n/a |
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Adjusted diluted earnings per share (p)2 |
1.7 |
5.0 |
(66.0) |
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Free cash flow2 |
134.1 |
71.3 |
88.1 |
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Net debt (incl. IFRS 16)2 |
1,890.1 |
1,947.9 |
(3.0) |
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H1 2021 Divisional Highlights
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1 In this document we refer to Statutory and Underlying 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. Statutory 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
2021-2022: Improving Revenue, Profits and Cashflow
We are seeing further strength in our Subscriptions-led businesses and continued progress in B2B Digital Services now supported by the progressive return of Physical Events.
The pace and rate of Physical Events return continues to vary by region, with Mainland China most advanced, having been running major physical event brands for over a year post-pandemic. However, our largest market, North America, is also returning, as is the Middle East. The return of Physical Events in Europe is scheduled but later in the year.
We are focused on delivering as full a schedule as possible in 2022, when increasing customer confidence and the return to more relevant Industry calendar cycles will provide a better product experience.
In 2021, we are continuing to make scheduling decisions on a brand-by-brand basis, informed by customer feedback and with the focus on long-term value. For some markets and brands, like Construction (World of Concrete) and Healthcare (Arab Health/Medlab), this has seen us stage more targeted out-of-cycle events this year, supported by additional marketing support and continued investment in AllSecure security and hygiene measures. For others, like Brand Licensing (Licensing Expo) and Environmental Services (WWETT), we are focusing efforts on 2022. In the next quarter, we will stage events in CyberSecurity (Black Hat), Fashion (Magic) and Health & Nutrition (Natural Products Expo East), amongst others.
Guidance for full year 2021 revenue increased to £1,800m ±.
Guidance for adjusted operating profit of £375m ±, including currency effects.
Continuing strength in Subscriptions-led businesses
Our Subscriptions-led businesses performed strongly in the first six months of the year and momentum remains positive, with customer retention high and annualised contract values growing consistently.
In Taylor & Francis, Subscription renewals remain robust, as does forward growth. In Royalty-Based Publishing (including our Books business), consistent expansion of our front list and a strong focus on identifying underserved subject areas continues to produce results, aided by a full period of access to university libraries and bookshops through the first half, unlike in H1 2020.
In Open Research, our investment in building a platform of scale and quality, with a broad base of flexible, customer-led offerings for authors, funders and institutions, continues to deliver. This is reflected in the volume of open research articles published in the first half, which were +20% on the same period in 2020.
Underlying revenue growth guidance for 2021 increased to 2%+.
In Informa Intelligence, consistent levels of product investment and a clear focus on the quality of service offering continues to deliver improving underlying growth.
Our strategy to focus our portfolio on specialist markets where we have real strengths in brand, in data and in specialist expertise, is also proving effective. The disposal (c£35m, c14x EBITDA) of our Health & Safety information and registration business (Barbour EHS) will further improve our portfolio focus.
In each of our three core markets - Pharma (clinical trials intelligence and MedTech market data), Finance (mortgage pricing intelligence and international fund flow data) and Maritime (real-time tracking of global shipping and cargo) - we provide data and intelligence that delivers tangible value through competitive intelligence and real-time market analysis, therefore enabling better decision making.
In the Retail Banking market we have completed the combination of FBX and Novantas to create Curinos, a new Business and Brand providing competitive intelligence and decision support tools to consumer & commercial institutions. This includes product and pricing analytics and digital optimization tools that enable customers to make more profitable, data-driven decisions faster.
In Pharma, we seek to enable drug development companies to plan and deliver more efficient clinical trials, using proprietary data and sophisticated analytical tools to provide intelligent insights into key decisions around timing, location and approach. We have expanded our range of services in regulatory compliance and patient recruitment, the latter combining our deep market knowledge and broad customer reach to help identify the most suitable patients for trials, something that can save drug companies hundreds of millions of dollars in lost time and investment.
Underlying revenue growth guidance for 2021 increased to 4.5%+.
Specialist B2B Events and Digital Services
As we move into the second half, we are starting to confirm schedules and plans for our Brands in Informa Markets, Informa Connect and Informa Tech for 2022, when many will return to more relevant industry calendar cycles. In the 2021 Transition Year, we continue to remain flexible, planning for Physical Events where it is feasible, makes sense for customers and for the brands, whilst continuing to expand our B2B Digital Services offering.
Digital Services will be a growing element of the product mix, providing an opportunity to extend and enhance our specialist B2B communities through Smart Events, Specialist Content and Specialist Marketing Services. In the US, in particular, some of our brands have been generating revenue in these areas for some time, providing a strong foundation from which to expand this capability into other verticals.
This activity brings us closer to customers and provides deeper insight into market trends and individual preferences. It also generates significant volumes of first party data, from identification and firmographic data to real-time customer behavioural data.
Through our proprietary data and analytics platform, IIRIS, we are building the capabilities to capture, manage and curate consented customer data in a way that drives value, either in better informing traditional product development and customer targeting, or in the creation of a new range of audience solutions that provide highly qualified and targeted customer access or insight into purchasing intent.
Demand for face-to-face platforms remains strong and this is increasingly evident as more markets open up, particularly amongst commercial SMEs, for whom the trade show remains highly valuable.
In Mainland China, over the last 12 months since reopening, we have seen a consistent and progressive recovery in Physical Events activity, to the extent that some of our major brands in Beauty & Aesthetics (China Beauty Expo), have more than offset the absence of international participation through domestic strength. Rebooking trends in the region for 2022 are robust, with the possibility that total revenue in Mainland China could return close to 2019 levels, notwithstanding international quarantine measures remain in place, as does limited cross-border participation.
In North America and the Middle East, the returning schedule is one year behind China, with shortened sales cycles, and active decisions to make between an off-cycle return in 2021 or an on-cycle return in 2022.
Where we have already brought our brands back to market in North America and the Middle East, participation levels have been broadly as expected, with the number of exhibitors running around half of 2019 levels and with overall participation running at around 35-40%.
We expect participation levels to build over time and this is evident in the commitments we have for later in 2021, particularly where brands are running on a favourable industry calendar cycle. We are seeing progressive rebooking for 2022, giving us further confidence in our planned growth and recovery period through 2021-2024.
Board Update
Following the retirement of two Directors from the Board in June, Stephen Davidson has joined the Audit Committee, effective from July 2021.
2021-2024 Growth Acceleration Plan II ("GAP II")
Informa will implement a new Growth Acceleration Plan through 2021-2024, applying our growth focused operating methodology to accelerate our strategy of Market Specialisation and further expand in Digital Services. This will help us expand addressable audiences, improve the mix and quality of our revenue and bring us closer to customers.
Digital acceleration and post-COVID business trends
The COVID-19 pandemic has accelerated the adoption of digital technology in the workplace, underlining the efficiency of digital communications but also its shortcomings, with some types of work tasks and meetings far more suited to digital delivery than others.
In our events businesses, this delineation is also becoming clearer, with many of our content-led events, where participants are absorbing information, listening to speakers, asking questions etc, migrating online and/or to a hybrid model effectively, often attracting new audiences that never previously attended Physical Events.
Our transaction-driven events and exhibitions provide direct product exposure, direct access to customers, direct competitor insight and a rounded industry view that translates less naturally to a digital environment.
However, even here, where a direct digital alternative does not readily translate, the power of digital technology is increasingly being applied to deliver value for customers through pre-show discovery and planning, event registration, hybrid access and post-show education and connections.
Business travel volumes and indicators: B2B Events as an effective, carbon efficient consolidator of business travel
The rapid adoption of digital technology has implications for business travel and this is reflected in forward forecasts on airline volume and recovery, something we track through our CAPA aviation data business.
Its latest data, which is free-to-access at (www.informa.com/capa), shows that in Mainland China, domestic air travel has already recovered ahead of 2019 levels, whilst in the US, passenger volumes have been increasing rapidly since May but remain c20% below 2019 levels. Much of the US recovery to date has been driven by leisure travel and whilst corporate air ticket sales have picked up rapidly in recent weeks, our customer research indicates that US business travel will likely remain muted through the remainder of 2021 due to ongoing corporate travel restrictions and locked budgets for the year. As health concerns subside, airline capacity recovers and travel budgets are reinstated, we then expect a progressive recovery through 2021-2024, led by the commercial SME community, for whom the industry trade show is often a critical platform for launching products and securing business for the year ahead.
The efficiency of digital communication is expected to have some long-term impact on business travel. Our research suggests that internal company meetings and single company closed events will, to a much greater extent, be delivered through technology. Where business travel does return, there is an expectation it will be much more efficient and purposeful, with the average duration lengthening to incorporate multi-customer meetings and multi-industry access in a single trip.
All these trends lend themselves to Informa's major brands and services, which by their very nature deliver highly efficient platforms for whole industries to meet and do business. In much the same way that digitisation increased the value of face-to-face interactions with customers before the pandemic, we believe that post-pandemic, platforms that act as consolidators of business travel will become increasingly valuable.
Market Specialisation, Digitisation and GAP II
Informa's long-term focus on building depth in a range of customer markets and specialist subject categories has served us well through the pandemic, keeping us close to customers and ensuring our products and services have remained relevant throughout.
Market Specialisation will remain a key focus on the other side of COVID as we look to further deepen our customer relationships within a targeted range of specialist markets. This will include further expansion in the range of Digital Services we provide to these markets to meet the evolving expectations of customers.
We were investing consistently in our digital capabilities pre-COVID. At Taylor & Francis and Informa Intelligence, this started with the 2014-2017 Growth Acceleration Plan, when we set about upgrading our core product platforms and accelerating digital product development. Over time, this commitment, combined with an increasing focus on certain customer markets, has led to a progressive improvement in the scale and quality of growth of these businesses, as evidenced by current performance.
Across our three B2B businesses (Informa Markets, Informa Connect, Informa Tech), pre-COVID we were investing in building a range of B2B DigitalServices around our core events brands, including specialist content and media products, marketing services and digital directories.
Through 2021-2024 GAP II, we will seek to further expand and enhance this service offering, combining digital and face-to-face platforms to deliver an improved product and customer experience.
This expansion will focus on three core categories of B2B digital services:
1. Smart Events (Digital-only events, hybrid events, online training etc)
2. Content Marketing & Audience Access (Specialist Media & Specialist Marketing Services, Specialist Content, B2B Marketplaces, B2B Communities etc)
3. Data Analytics & Purchasing Intent (Audience Solutions, including audience extension, audience development and purchasing intent etc)
FasterForward on ESG
Another key component of GAP II will be further operationalising the sustainability commitments within FasterForward, our five-year programme to become a sustainable, positive impact company. These commitments include moving Faster to Zero, with the ambition to become a zero waste and net zero carbon company by 2030 or earlier, embedding Sustainability Inside all of our brands by 2025, and becoming a positive Impact Multiplier by enabling more than one million disconnected people to access networks and knowledge by 2025.
Our commitment to use our specialist brands and platforms to support sustainable development in our customers markets will also see us leverage the increasingly positive role large-scale B2B events can make as effective, carbon-efficient consolidators of business travel.
IIRIS…harnessing the power of B2B customer data
One of the foundations for effectively expanding our B2B digital service offering will be the collection and management of our first party data, helping us understand our customers and audiences better and deliver better experiences and more tailored services.
We are already capturing significant volumes of first party profile and behavioural data through the Physical Events and Digital Services we deliver. For example, in our market facing Informa Tech business, we have already identified more than 3.5 million unique customer profiles. However, the quality of our data is mixed in terms of the detail we have built, its accuracy and quality, and the proportion of customers we are actively engaged with where we have consent.
Through IIRIS, we are building a unified, centralised and shared platform to standardise our methodology and improve these outputs, providing a consistent approach to collation, curation and the management of all our B2B customer/audience profile and behavioural data. This will inform and support both our Physical Events and our B2B Digital Services, whilst also opening up the potential to deliver a range of data-led audience solutions, within the third category outlined above.
Financial Review
The statutory financial results for the first six months of the year reflect the differing impact of the COVID-19 pandemic on Informa's Physical Events business in the first half of 2020 and 2021. Our subscriptions businesses continue to deliver improving levels of growth, reflecting consistent investment and focus on our specialist brands within attractive growth markets. This strength is being supported by continued demand for B2B Digital Services and returning confidence in physical events in all three of our major geographic markets.
Furthermore, our balance sheet remains secure, with liquidity increasing to £1.5bn, no financial covenants on any of our Group level borrowings and no debt due to mature until 2023.
Income Statement
The results for the six months to 30 June 2021 reflect a strong trading performance in our Informa Intelligence and Taylor and Francis businesses, offset by the continuing pandemic related disruption to our physical events business. The continuing benefits of our COVID-19 Action Plan helped to limit the overall impact on the Group's financial performance. H1 2021 reported revenues and profits were lower than H1 2020 due to the prior year period including over two months of physical events revenues before COVID-19 control measures were introduced in North America, the Middle East and Europe.
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Adjusted results H1 2021 £m |
Adjusting items H1 2021 £m |
Statutory results H1 2021 £m |
Adjusted results H1 2 020 £m |
Adjusting items H1 2 020 £m |
Statutory results H1 2 020 £m |
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Revenue |
688.9 |
- |
688.9 |
814.4 |
- |
814.4 |
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Operating profit/(loss) |
69.2 |
(127.2) |
(58. 0) |
118.6 |
(858.5) |
(739.9) |
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Loss on disposal |
- |
(0.1) |
(0.1) |
- |
(4.0) |
(4.0) |
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Net finance costs |
(32.9) |
- |
(32. 9) |
(47.6) |
(9.7) |
(57.3) |
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Profit/(loss) before tax |
36.3 |
(127.3) |
(91.0) |
71.0 |
(872.2) |
(801.2) |
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Tax (charge)/credit |
(6.2) |
10.3 |
4.1 |
(9.2) |
43.9 |
34.7 |
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Profit/(loss) for the period |
30.1 |
(117.0) |
(86.9) |
61.8 |
(828.3) |
(766.5) |
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Adjusted operating margin |
10.0% |
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14.6% |
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Adjusted diluted and statutory diluted EPS |
1.7p |
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( 6.1)p |
5.0p |
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(56.9)p |
Statutory income statement results
The continuing disruption to our physical events portfolio led to a 15.4% decrease in statutory revenue to £688.9m, with the comparator period for the six months to 30 June 2020 including over two months where trading was unaffected by COVID-19.
The Group reported a lower statutory operating loss of £58.0m this year, compared with an operating loss of £739.9m for the six months to 30 June 2020. Both periods reflect the impact of the COVID-19 disruption on our events businesses, with the losses in the prior half year period significantly higher due to the non-cash goodwill impairment of £592.9m.
Statutory net finance costs reduced by £24.4m to £32.9m. The main driver of this decrease was the reduction in average net debt due to improving free cash flow in the first half of 2021, and the benefits of the COVID-19 Financing Action Plan implemented in 2020, which included debt rescheduling (replacing Private Placement debt with lower cost EMTN financing) and an equity issue. The reduction also reflects one-off costs associated with this plan within the prior half year period.
The combination of all these factors led to a statutory loss before tax of £91.0m, compared with a loss before tax of £801.2m in the six months ended 30 June 2020.
This lower statutory loss led to a tax credit for the period of £4.1m, compared with a £34.7m tax credit in the six months ended 30 June 2020.
This outcome translated into a statutory loss per share of 6.1p, compared with a loss per share of 56.9p for the six months ended 30 June 2020. The difference primarily reflects the net impact of further strength in our subscriptions businesses, the continuing impact of the COVID-19 pandemic on our events portfolio and the related non-cash impairment charge recorded last year, partially offset by a lower tax charge in that period. In addition, there is a 12.2% year-on-year increase in the weighted average number of shares in the first half of 2021, reflecting the full period impact of the equity issue of 250.3m shares in H1 2020.
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 11 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 statutory growth in the table below.
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Underlying growth/ (decline) |
Phasing and other items |
Acquisitions and disposals |
Currency change |
Statutory growth/ (decline) |
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H1 2021 |
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Revenue |
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(7.5%) |
(3.6%) |
1.3% |
(5.6%) |
(15.4%) |
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Adjusted operating profit |
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(2.5%) |
(28.5%) |
2.1% |
(12.8%) |
(41.7%) |
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H1 2020 |
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Revenue |
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(26.2%) |
(15.0%) |
(1.4%) |
0.5% |
(42.1%) |
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Adjusted operating profit |
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(54.0%) |
(19.1%) |
(1.0%) |
1.3% |
(72.8%) |
Adjusting Items
The items below have been excluded from adjusted results. The total adjusting items included in the operating loss in the period were £127.2m (H1 2020: £858.5m), with the decrease largely due to the non-recurrence of the non-cash impairment of goodwill of £592.9m incurred in H1 2020. The most significant items in H1 2021 were intangible asset amortisation of £134.8m and a credit of £18.7m for one-off insurance receipts associated with COVID-19-related event cancellations.
| H1 2021 | H1 2020 | FY 2020 |
| £m | £m | £m |
Intangible amortisation and impairment |
|
|
|
Intangible asset amortisation1 | 134.8 | 148.2 | 291.8 |
Impairment - goodwill | - | 592.9 | 592.9 |
Impairment - acquisition-related intangible assets | - | 1.0 | 38.5 |
Impairment - right of use assets | 2.1 | 17.4 | 36.1 |
Impairment - property and equipment | 0.7 | - | 8.8 |
Impairment - investments | - | 3.9 | 3.9 |
Acquisition costs | 0.3 | 0.8 | 2.8 |
Integration costs | 2.9 | 33.1 | 46.3 |
Restructuring and reorganisation costs |
|
|
|
Reorganisation and redundancy costs | 2.6 | 2.3 | 47.6 |
Vacant property and finance lease modification costs | (1.1) | 13.9 | 30.0 |
One-off insurance credits associated with COVID-19 | (18.7) | - | - |
Onerous contracts and one-off costs associated with COVID-19 | 4.4 | 43.4 | 52.6 |
Subsequent re-measurement of contingent consideration | (0.8) | 1.0 | (3.1) |
VAT charges | - | 0.6 | - |
Adjusting items in operating loss | 127.2 | 858.5 | 1,148.2 |
Loss on disposal businesses | 0.1 | 4.0 | 8.4 |
Finance income | - | - | (8.3) |
Finance costs | - | 9.7 | 161.8 |
Adjusting items in loss before tax | 127.3 | 872.2 | 1,310.1 |
Tax related to adjusting items | (10.3) | (43.9) | (127.7) |
Adjusting items in loss for the period | 117.0 | 828.3 | 1,182.4 |
1 Excludes acquired intangible product development and software amortisation
Intangible amortisation of £134.8m relates to the historical additions of book lists and journal titles, acquired databases, customer and attendee relationships and brands related to exhibitions, events and conferences. As it relates 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.
The non-cash impairment of goodwill in H1 2020 of £592.9m arose from the impact of the COVID-19 pandemic on the carrying value of our physical events portfolio, with no impairment in H1 2021.
The effective implementation of a Balanced Working Programme across the Group has improved real estate utilisation and efficiency, leading Informa to vacate a number of offices permanently. This led to the one-off impairment of right of use assets of £2.1m, together with vacant property and finance lease modification costs of £0.7m.
Integration costs of £2.9m include £2.3m relating to the acquisition of UBM, consisting mainly of process, property and colleague-related reorganisation costs.
Reorganisation and redundancy costs include one-off costs relating to initiatives within the Group's COVID-19 Action Plan undertaken in the first half of 2021.
One-off costs relating to onerous contracts associated with the pandemic were reduced significantly through the period, from £43.4m in the first half of 2020 to £4.4m this year. This reflects costs for events which were cancelled or postponed due to COVID-19, where the costs could not be recovered, typically related to venues and event set-up. One-off insurance credits associated with COVID-19 relate to insurance receipts from cancelled events.
The table below shows the results and adjusting items by Division, highlighting further strength in our Subscription-led businesses, Informa Intelligence and Taylor & Francis, offset by the impact of COVID-19 on physical events activity within Informa Markets, Informa Connect and Informa Tech.
| Informa Markets | Informa Intelligence | Informa Tech | Informa Connect | Taylor & Francis | Group |
| £m | £m | £m | £m | £m | £m |
Revenue | 187.6 | 162.2 | 58.1 | 35.8 | 245.2 | 688.9 |
Underlying revenue (decline)/growth | (29.3)% | 7.9% | 12.9% | (6.8)% | 3.0% | (7.5)% |
Statutory operating (loss)/profit | (118.6) | 38.7 | (14.1) | (23.0) | 59.0 | (58.0) |
Add back: |
|
|
|
|
|
|
Intangible asset amortisation1 | 86.7 | 7.3 | 9.0 | 6.7 | 25.1 | 134.8 |
Impairment - right of use assets | 0.5 | 0.3 | - | 0.1 | 1.2 | 2.1 |
Impairment - property and equipment | 0.3 | 0.1 | 0.1 | 0.1 | 0.1 | 0.7 |
Acquisition and integration costs | 1.9 | 1.0 | (0.2) | 0.3 | 0.2 | 3.2 |
Reorganisation and redundancy | 0.8 | 0.3 | (0.5) | 0.5 | 0.4 | 1.5 |
One-off insurance credits related to COVID-19 | (18.7) | - | - | - | - | (18.7) |
Onerous contracts and one-off costs associated with COVID-19 | 4.1 | - | 0.1 | 0.2 | - | 4.4 |
Remeasurement of contingent consideration | (0.3) | (0.5) | - | - | - | (0.8) |
Adjusted operating (loss)/profit | (43.3) | 47.2 | (5.6) | (15.1) | 86.0 | 69.2 |
Underlying adjusted operating profit (decline)/growth | (1,460%) | 4.8% | 79.0% | 58.0% | 3.6% | (2.5%) |
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, consisting of the interest costs on our corporate bonds and bank borrowings, decreased by £14.7m to £32.9m. The decrease primarily relates to lower debt levels reflecting improving free cash flow through the first half, as well as the benefits of the COVID-19 Financing Action Plan implemented in 2020. This included debt rescheduling (replacing Private Placement debt with lower cost EMTN financing) and an equity issue.
There were no adjusting items in finance costs or finance income. The amounts in the prior half year period include costs and income associated with the restructuring and rescheduling of debt, which included make-whole interest payments to debt holders.
The reconciliation of adjusted net finance costs to the statutory finance costs and finance income is as follows:
|
| H1 2021 £m | H1 2020 | FY 2020 £m |
Finance income |
| (2.0) | (4.8) | (15.3) |
Finance costs |
| 34.9 | 62.1 | 266.2 |
Add back: Adjusting items relating to finance income |
| - | - | 8.3 |
Add back: Adjusting items relating to finance costs |
| - | (9.7) | (161.8) |
Adjusted net finance costs |
| 32.9 | 47.6 | 97.4 |
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 (as defined in the glossary) reflects the blend of tax rates and profits in the jurisdictions in which we operate. In H1 2021, the Effective Tax Rate was 17.0% (H1 2020: 13.0%).
Earnings Per Share
Adjusted diluted earnings per share (EPS) was lower at 1.7p (H1 2020: 5.0p), reflecting lower adjusted earnings of £25.7m (H1 2020: £66.9m), combined with a 12.5% increase in the weighted average number of shares.
An analysis of adjusted diluted EPS and statutory diluted EPS is as follows:
| H1 2021 £m | H1 2020 | FY 2020 £m |
Statutory loss for the period | (86.9) | (766.5) | (1,037.6) |
Add back: Adjusting items in loss for the period | 117.0 | 828.3 | 1,182.4 |
Adjusted profit for the period | 30.1 | 61.8 | 144.8 |
Non-controlling interests | (4.4) | 5.1 | (3.9) |
Adjusted earnings | 25.7 | 66.9 | 140.9 |
Weighted average number of shares used in adjusted diluted EPS (m) | 1,510.3 | 1,342.8 | 1,426.5 |
Adjusted diluted EPS (p) | 1.7p | 5.0p | 9.9p |
|
|
|
|
Statutory loss for the period | (86.9) | (766.5) | (1,037.6) |
Non-controlling interests | (4.4) | 5.1 | (3.9) |
Statutory Earnings | (91.3) | (761.4) | (1,041.5) |
Weighted average number of shares used in diluted EPS (m) | 1,501.0 | 1,337.8 | 1,419.7 |
Statutory diluted EPS (p) | (6.1p) | (56.9p) | (73.4)p |
Currency Movements
One of the Group's strengths is its international reach and balance, with colleagues and businesses located in most major economies of the world. This means the Group generates revenues and costs in a mixture of currencies, with particular exposure to the US dollar, as well as some exposure to the Euro and the Chinese Renminbi.
In H1 2021, approximately 57% (H1 2020: 73%) of Group revenue was received in USD or currencies pegged to USD, with 5% (H1 2020: 4%) received in Euro and around 12% (H1 2020: 1%) in Chinese renminbi.
Similarly, we incurred approximately 46% (H1 2020: 56%) of our costs in USD or currencies pegged to USD, with 2% (H1 2020: 2%) in Euro and around 10% (H1 2020: 3%) in Chinese renminbi.
Each one cent ($0.01) movement in the USD to GBP exchange rate has a circa £7.7m (H1 2020: circa £11.2m) impact on annual revenue, and a circa £2.7m (H1 2020: circa £6m) impact on annual adjusted operating profit.
The following rates versus GBP were applied during the period:
| H1 2021 | H1 2020 | FY 2020 | ||||||
|
| Closing | Average | Closing | Average | Closing | Average | ||
|
| rate | rate | rate | rate | Rate | rate | ||
US Dollar |
| 1.39 | 1.39 | 1.23 | 1.26 | 1.37 | 1.29 | ||
Euro |
| 1.16 | 1.15 | 1.10 | 1.15 | 1.11 | 1.13 | ||
Renminbi |
| 8.95 | 8.97 | 8.68 | 8.90 | 8.94 | 8.88 | ||
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 2021, absolute levels of cash flow improved significantly year-on-year but remains lower than historical levels due to the current impact of COVID-19 on our event-led businesses.
The following table reconciles the statutory operating loss to Operating Cash Flow (OCF) and Free Cash Flow (FCF), both of which are defined in the glossary.
| H1 2021 £m | H1 2020 £m | FY 2020 £m |
Statutory operating loss | (58.0) | (739.9) | (880.4) |
Add back: Adjusting items | 127.2 | 858.5 | 1,148.2 |
Adjusted operating profit | 69.2 | 118.6 | 267.8 |
Depreciation of property and equipment | 6.5 | 8.5 | 16.8 |
Depreciation of right of use assets | 11.5 | 16.9 | 30.3 |
Software and product development amortisation | 22.6 | 19.8 | 41.1 |
Share-based payments | 7.5 | 3.6 | 11.2 |
Loss on disposal of other assets | 0.1 | 0.4 | 0.9 |
Adjusted share of joint venture and associate results | (1.3) | 0.3 | (0.8) |
Adjusted EBITDA1 | 116.1 | 168.1 | 367.3 |
Net capital expenditure | (18.9) | (25.5) | (48.4) |
Working capital movement2 | 81.0 | 44.2 | (81.9) |
Pension deficit contributions | (2.5) | (3.3) | (6.2) |
Operating Cash Flow | 175.7 | 183.5 | 230.8 |
Restructuring and reorganisation | (19.3) | (6.0) | (35.6) |
Onerous contracts and one-off costs / income associated with COVID-19 |
17.7 |
(35.4) |
(44.6) |
Net interest | (24.3) | (49.1) | (271.6) |
Taxation | (15.7) | (21.7) | (32.9) |
Free Cash Flow | 134.1 | 71.3 | (153.9) |
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, COVID-19 costs and acquisition and integration accruals or provisions as the cash flow relating to these amounts is included other lines in the Free Cash Flow and reconciliation from Free Cash Flow to net funds flow. The variance between the working capital in the Free Cash Flow and the Consolidated Cash Flow Statement is driven by the non-cash movement on these items.
Free Cash Flow was substantially higher than H1 2020 due to the effective management of working capital, as well as a reduction in one-off related COVID-19 costs and lower net interest and tax. The calculation of Operating Cash Flow conversion and Free Cash Flow conversion is as follows:
| Operating Cash Flow | Free Cash Flow | ||||||
| H1 2021 £m | H1 2020 £m | FY 2020 £m | H1 2021 £m | H1 2020 £m | FY 2020 £m | ||
OCF / FCF | 175.7 | 183.5 | 230.8 | 134.1 | 71.3 | (153.9) | ||
Adjusted operating profit | 69.2 | 118.6 | 267.8 | 69.2 | 118.6 | 267.8 | ||
OCF / FCF conversion | 253.9% | 154.7% | 86.2% | 193.8% | 60.1% | (57.5%) | ||
Net capital expenditure was £18.9m (H1 2020: £25.5m), equivalent to 2.7% of H1 2021 revenue (H1 2020: 3.1%). We expect full year 2021 capital expenditure to be at a similar level relative to revenue.
The working capital inflow of £81.0m was £36.8m higher than the inflow in H1 2020, reflecting strong cash controls and cash management. This includes the effective management of refund rates on events within our Postponement Programme, with only £12.6m of refunds requested during the period, and improving levels of cash collections on future events, with £383.9m of cash relating to future events held as at 30 June 2021.
Net cash interest payments of £24.3m were £24.8m lower than the prior half year, largely reflecting the timing of payments together with lower levels of debt in the period, the latter reflecting the improving free cash flow, the mix benefit of replacing Private Placement debt with lower cost EMTN financing and one-off finance fees of £12.5m in H1 2020.
The following table reconciles net cash inflow from operating activities, as shown in the consolidated cash flow statement to Free Cash Flow:
| H1 2021 £m | H1 2020 £m | FY 2020 £m |
Net cash inflow/(outflow) from operating activities per statutory cash flow | 146.1 | 76.1 | (139.5) |
Interest received | 2.0 | 3.6 | 5.7 |
Borrowing fees paid | - | (10.1) | (17.6) |
Purchase of property and equipment | (2.4) | (3.6) | (10.7) |
Purchase of intangible software assets | (8.3) | (19.0) | (23.8) |
Product development cost additions | (8.2) | (2.9) | (13.9) |
Add back: Acquisition and integration costs paid | 4.9 | 27.2 | 45.9 |
Free Cash Flow | 134.1 | 71.3 | (153.9) |
Net cash from operating activities increased by £70.0m to record an inflow of £146.1m, principally driven by reduced COVID-19 costs, the event cancellation insurance receipts, reduced integration spend and lower interest payments.
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 2021 £m | H1 2020 £m | FY 2020 £m |
Cash generated by operations per statutory cash flow | 188.1 | 140.4 | 153.1 |
Capex paid | (18.9) | (25.5) | (48.4) |
Add back: Acquisition and integration costs paid | 4.9 | 27.2 | 45.9 |
Add back: Restructuring and reorganisation costs paid | 19.3 | 6.0 | 35.6 |
Onerous contracts and one-off credits received/costs paid associated with COVID-19 |
|
35.4 |
44.6 |
Operating Cash Flow | 175.7 | 183.5 | 230.8 |
The following table reconciles Free Cash Flow to net funds flow and net debt, with net debt reducing by £139.5m to £1,890.1m during the 6 months to 30 June 2021, primarily due the positive free cash of £134.1m, and a £76.1m favourable movement in exchange rates, mainly driven by the movement in the EUR to GBP exchange rates.
| H12021 £m | H1 2020 £m | FY 2020 £m |
Free Cash Flow | 134.1 | 71.3 | (153.9) |
Acquisitions | (3.1) | (81.3) | (176.3) |
Disposals | 3.7 | 11.8 | 10.4 |
Dividends paid to Shareholders | - | - | (0.2) |
Dividends paid to non-controlling interests | (4.8) | (10.1) | (13.6) |
Issuance of shares | - | 975.2 | 973.7 |
Purchase of shares | (1.6) | - | (1.3) |
Net funds flow | 128.3 | 966.9 | 638.8 |
Non-cash movements | (21.5) | (67.1) | 61.3 |
Foreign exchange | 76.1 | (178.7) | (59.9) |
Net finance lease additions in the period | (9.7) | (11.4) | (12.2) |
Net debt at 1 January | (2,029.6) | (2,657.6) | (2,657.6) |
Acquired debt | (33.7) | - | - |
Net debt | (1,890.1) | (1,947.9) | (2,029.6) |
Financing and Leverage
The strong free cash flow performance, combined with positive currency effects through the period, helped to reduce net debt to £1.9bn at 30 June 2021 (H1 2020: £1.9bn; 31 December 2020: £2.0bn).
The Group retains significant available liquidity, with unutilised committed financing facilities available to the Group of £1,050.0m (30 June 2020: £1,650m which included SCCF facilities of £750m; 31 December 2020: £1,050.0m). Combined with £412.4m of cash, this resulted in available group level liquidity at 30 June 2021 of £1,462.4m. Details of acquired debt are provided in Note 14.
Following the proactive management of our financing structure, the average debt maturity on our drawn borrowings is currently 4.4 years (30 June 2020: 5.3 years; 31 December 2020: 4.8 years), with no significant maturities until July 2023.
Net Debt
| 30 June 2021 £m | 30 June 2020 m | 31 December 2020 m |
Cash and cash equivalents | (412.4) | (915.2) | (299.4) |
Private Placement loan notes | - | 1,141.0 | - |
Private Placement fees | - | (2.5) | - |
Bond borrowings | 2,037.3 | 1,349.8 | 2,111.1 |
Bond borrowing fees | (13.7) | (10.2) | (15.3) |
Bank borrowings | 36.1 | - | - |
Bank borrowing fees | (4.0) | (10.4) | (2.6) |
Derivative assets associated with borrowings | (24.5) | (4.8) | (44.6) |
Derivative liabilities associated with borrowings | 7.1 | 95.0 | 7.5 |
Net debt before leases | 1625.9 | 1,642.7 | 1,756.7 |
Finance lease liabilities | 271.8 | 314.5 | 280.8 |
Finance lease receivables | (7.6) | (9.3) | (7.9) |
Net debt | 1,890.1 | 1,947.9 | 2,029.6 |
Borrowings (excluding derivatives, leases, fees & overdrafts) | 2,073.4 | 2,490.8 | 2,111.1 |
Unutilised committed facilities (undrawn RCF) | 1,050.0 | 900.0 | 1,050.0 |
Unutilised committed facilities (undrawn SCCF) | - | 750.0 | - |
Unutilised committed facilities (undrawn Novantas facilities) | 43.3 | - | - |
Total committed facilities | 3,166.7 | 4,140.8 | 3,161.1 |
Following the repayment of the Private Placement loan notes in 2020, there are no financial covenants on our group level debt facilities in issue at 30 June 2021. There are financial covenants over $50.0m of drawn borrowings in the Novantas business combination.Our leverage ratio at 30 June 2021 was 6.2 times (31 December 2020: 5.6 times), and the interest cover ratio was 3.6 times (31 December 2020: 3.6 times). Both are calculated consistently with our historical financial covenants which no longer applied at 30 June 2021. See the glossary of terms for the definition of leverage ratio and interest cover.
The calculation of the leverage ratio is as follows:
|
|
| H1 2021 £m | H1 2020 £m | FY 2020 £m |
Net debt as reported |
|
| 1,890.1 | 1,947.9 | 2,029.6 |
Adjusted EBITDA (12 months to reporting date) |
|
| 315.3 | 715.8 | 367.3 |
Leverage |
|
| 6.0x | 2.7x | 5.5x |
Adjustment to EBITDA for covenant calculation1 |
|
| 1.0x | 0.2x | 0.8x |
Adjustment to net debt for covenant calculation1 |
|
| (0.8)x | (0.6)x | (0.7)x |
Leverage ratio per previousdebt covenants |
|
| 6.2x | 2.3x | 5.6x |
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 2021 £m | H1 2020 £m | FY 2020 £m |
Adjusted EBITDA (12 months to reporting date) |
|
| 315.3 | 715.8 | 367.3 |
Adjusted net finance costs (12 months to reporting date) |
|
| 82.7 | 101.4 | 97.4 |
Interest cover reported value |
|
| 3.8x | 7.1x | 3.8x |
Interest cover covenant EBITDA adjustment to ratio1 |
|
| (0.2)x | 0.2x | (0.2)x |
Interest cover per previous debt covenants |
|
| 3.6x | 7.3x | 3.6x |
1 Refer to Glossary for details of the nature of debt covenant adjustments to EBITDA for interest cover
Corporate development
Informa has a proven track record in creating value through identifying, executing and integrating complementary businesses effectively into the Group. In H1 2021, cash invested in acquisitions was £3.1m (H1 2020: £81.3m), with £5.2m net receipts relating to acquisitions net of cash acquired. Of this, £1.9m related to cash paid for business assets (H1 2020: £26.0m), £4.9m (H1 2020: £27.2m) to acquisition and integration spend and £1.5m (H1 2020: £28.1m) to the cash settlement on the exercise of an option relating to minority interests in certain Fashion shows in the US. Net proceeds from disposals amounted to £3.7m (H1 2020: £11.8m).
Acquisitions
On 28 May 2021, the Group combined its existing FBX business with Novantas. The Novantas business provides quantitative and qualitative competitive intelligence solutions for US retail banks and forms part of the Informa Intelligence division. This combination seeks to create a leading competitive intelligence and specialist data business serving the retail banking markets. The agreement is structured as an acquisition of Novantas on a cash and debt free basis by Informa and private equity firm, Inflexion, with Informa contributing its FBX business as non-cash consideration. None of the Group's existing liquidity was used to finance the acquisition.
Informa owns 57% of the equity voting shares of the combined business and have control to direct the relevant activities of the combined business and have therefore fully consolidated the results of Novantas.
The non-controlling interest at the acquisition date represents the total of the non-controlling share of the fair value of the Novantas net assets acquired together with the non-controlling interest share of the carrying value of FBX that has been contributed and the non-controlling interest share of value of preference shares that have been issued by Inflexion and Novantas management to the combined business. See note 14 for further details.
Pensions
The Group continues to meet all commitments to its pension schemes, which include six defined benefit schemes, all of which are closed to future accrual.
At 30 June 2021, the Group had a net pension liability of £11.0m (31 December 2020: £71.4m, 30 June 2020 £77.2m), comprising pension assets of £6.2m and pension deficits of £17.2m. Gross liabilities were £730.2m at 30 June 2021 (31 December 2020: £786.8m, 30 June 2020 £767.2m). The decrease in liabilities since the year end is predominantly driven by the increase to the discount rates used for calculating the present value of the pension liability with rates for UK schemes increasing 0.55% to 1.85%.
The net deficit remains relatively small compared with the size of the Group's balance sheet.
The triennial funding valuations for the UBM Pension Scheme and the Informa Final Salary Scheme (the two largest UK schemes representing 88% of the gross pension liabilities) have been completed with a valuation date of 31 March 2020.
Financial market conditions have significantly improved since the valuation date, meaning the aggregate funding positions of these schemes has improved, and in line with Regulator guidance to use post valuation experience, we have agreed with the respective Trustee Boards to allow most of the improvement in funding positions since the 31 March 2020 valuation date when calculating the required deficit repair contributions from the Group.
This has avoided an increase in Group cash contributions to these schemes from the amounts paid in recent years, with contributions remaining unchanged at £4.5m p.a. until such time as the Group resumes the payment of shareholder dividends when the contribution will rise to £5.75m p.a.
Principal Risks and Uncertainties
As with any company, at Informa, risk arises both as a natural consequence of doing business and in the pursuit of our strategy and business goals, and as a result Informa aim to manage rather than avoid risk. Informa's approach to risk management is focused:
• To identify and understand business risks, to ensure we are being curious, conscious and open about the risks we choose to take according to our risk appetite;
• To develop and deploy appropriate and effective risk strategies to address these risks and take advantage of opportunities, where these are present and appropriate; and
• To clearly report on risk assessments through the company's governance and management channels and bodies.
The Company's risk framework is designed to provide the Board, Audit Committee and executive management 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 which in turn reports through to the Board.
In the first half of 2021, COVID-19 has continued to restrict the operation of physical events and is recognised as a Principal Risk to the Group. Our response continues to be provided through our COVID-19 Action Plan and business planning process. We continue to monitor actions to ensure we are responding in the most appropriate ways for our colleagues, customers, communities and business operations.
Risk Profile at Half Year 2021
The risk of economic instability continues to be assessed as high due to the current control measures in place in many countries, designed to limit the spread of the pandemic. Such measures create an uncertain global trading environment and, more specifically, often include restrictions on face-to-face gatherings.
We continue to manage our response to the pandemic through our COVID-19 Action Plan, a programme of initiatives to build stability and security across the Group, which have included the implementation of an extended Postponement Programme across our physical events portfolio, the conservation of cash and the strengthening of our balance sheet to build financial resilience across the period of reduced trading.
This risk is also mitigated through the breadth and diversity of Informa's portfolio of businesses, with our Subscription-led businesses relatively unaffected by the pandemic and continuing to deliver strong underlying growth. In addition, with our Events-led businesses, we have a growing portfolio of B2B Digital Services, including Specialist Content, Media and Specialist Marketing Services activities.
The strength of Informa's specialist brands and customer relationships has also enabled the Company to build a portfolio of digital and smart events over the last 18 months, whilst scope for staging physical events around the world has been limited.
This increased focus on Digital Services has the potential to expand our addressable markets, albeit carries a degree of execution risk. The Company has therefore maintained the Market Risk assessment to be high.
The Company has a reliance on key counterparties in certain activities and areas of business operations. Global economic uncertainty, reduced revenue and capacity constraints may lead to individual key counterparties becoming less reliable, and therefore this risk continues to be monitored closely.
Data privacy related risks remain relevant for Informa and increases as the Group expands its Digital Services offering, and uses data in new ways to reach target audiences and improve the digital customer experience. The Company maintains and continues to target compliance with the relevant data privacy requirements, with ongoing focus on evolving privacy regulations around the world.
The Principal Risk around the inability to attract and retain key talent continues to evolve with the pandemic. As restrictions ease, at a group level we are starting to see voluntary colleague attrition increase gradually from 2020 levels, which were relatively low due to the pandemic. Results from our latest Colleague Pulse survey shows Colleague engagement remains strong at 80% and a high proportion of Colleagues (92%) believe management's response to the pandemic has been sensible and effective, with management leading by example and providing clear direction and information (91%). Colleagues also believe we have been strong at staying connected as teams (87%) and supporting flexible working (84%). Attracting, developing and retaining talent remains a risk, however, and as we put more emphasis on Digital Services, this risk may increase as we compete for highly sought after digital talent.
With Government restrictions still in place in some countries, business travel relatively subdued and physical events returning progressively, the likelihood and impact of a health and safety incident remains relatively low. As control measures are relaxed, more physical events return and customers and colleagues start to attend physical events and return to offices in larger numbers, this risk is expected to increase back towards pre-pandemic levels.
As at 30 June 2021, 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. These are the same 13 Principal Risks and Uncertainties identified at the 2020 year-end and outlined on pages 71 to 77 of the 2020 Annual Report and Accounts (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 attract and retain key talent
· Inadequate regulatory compliance
· Ineffective change management
· Inadequate response to major incidents
· Market risk
· Pandemic risk
· 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 cash generation in H1 2021, available liquidity, debt maturities and the Group's Principal Risks as set out on the previous two pages. There are no financial covenants on any of the Group level borrowings. A summary of the impact of COVID-19 on the Group's trading is detailed on pages 4-5.
Liquidity and Financing
The Group has a strong liquidity position. At 30 June 2021 the Group has £0.4bn of cash and undrawn committed credit facilities of £1.1bn. In addition, the cost base has been matched to current activity levels through the cost savings actioned in H2 2020, meaning the Group generated cash in the first half of 2021 and therefore the Group liquidity has increased since 31 December 2020.
The Group is a well-established borrower with an investment grade credit rating from Fitch, Moody's and S&P, which provides the Directors with confidence that the Group could further increase liquidity by raising additional debt finance. Following the repayment of the Private Placement (PP) notes in 2020, the group has no financial covenants on any of its Group level borrowings.
There are no borrowing maturities until July 2023. The first tranche of the Revolving Credit Facility ("RCF") mainly matures in February 2024, with the second tranche mainly maturing in February 2026.
Financial modelling
The business and operational impact of COVID-19 is discussed on pages 4 to 5. The Government control restrictions adopted worldwide to limit the spread of COVID-19 have created a degree of uncertainty around the forecasting of when physical events will be allowed to reopen and the pace and rate of revenue return. In response, in the going concern assessment period up to the end of 2022, the Directors have modelled two main scenarios: the base case and a reverse stress test. 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.
Financial Reporting
In modelling the base case the Directors have assumed the following:
•A robust performance by the subscriptions-led businesses in H2 2021 and 2022.
•A progressive return and reopening of physical events across 2021.
•All physical events in the going concern period deliver lower levels of revenue compared to 2019, as confidence and participation is not assumed to fully return in this period, international travel is assumed to recover gradually, events will often be taking place outside of the annual industry cycle and individual events may suffer from date bunching as they reopen.
In this base case scenario, the Group maintains liquidity headroom of more than £1.3bn.
The Directors have also modelled a reverse stress test, which assesses the liquidity position if the Group had no gross profit from 1 August 2021 to the end of 2022 and all event-related cash collected as at 30 June 2021 is refunded to customers. In this test the Group maintains positive liquidity headroom for at least 12 months following the start of the assessment period on 1 August 2021. The Directors feel that the assumptions applied in this reverse stress test are extremely remote, given that the Group's subscription-led businesses continue to trade strongly and physical events in our key markets outside Mainland China are starting to reopen.
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 including further cost savings.
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
Biographical details for the current Directors of Informa plc can be found on the Company's website: www.informa.com.
The Directors of Informa plc were listed in the 2020 Annual Report and Accounts, but since publication, Derek Mapp and Gareth Bullock did not stand for re-election at the AGM, with John Rishton confirmed as the Chair of Informa. Additionally Stephen Davidson has been appointed to the Audit Committee.
Responsibility Statement
We confirm that to the best of our knowledge:
a) the consolidated interim financial statements have been prepared in accordance with United Kingdom adopted International Accounting Standard 34, "Interim Financial Reporting";
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 2020 Annual Report.
Approved by the Board on 28 July 2021 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 2021 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 will be prepared in accordance with United Kingdom adopted International Financial Reporting Standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with United Kingdom adopted International Accounting Standard 34, "Interim Financial Reporting".
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 2021 is not prepared, in all material respects, in accordance with United Kingdom adopted International Accounting Standard 34 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
28 July 2021
Condensed Consolidated Income Statement
For the six months ended 30 June 2021
|
| 6 months ended 30 June (unaudited) |
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| |||||||||
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| Adjusted results | Adjusting items | Statutory results | Adjusted results | Adjusting items | Statutory results | Year ended 31 December | |||||
|
| 2021 | 2021 | 2021 | 2020 | 2020 | 2020 | 2020 (audited) | |||||
| Notes | £m | £m | £m | £m | £m | £m | £m | |||||
Revenue | 3 | 688.9 | - | 688.9 | 814.4 | - | 814.4 | 1,660.8 | |||||
Net operating expenses1 |
| (621.0) | (127.2) | (748.2) | (695.5) | (858.5) | (1,554.0) | (2,542.0) | |||||
Operating profit/(loss) before joint ventures and associates |
| 67.9 | (127.2) | (59.3) | 118.9 | (858.5) | (739.6) | (881.2) | |||||
Share of results of joint ventures and associates |
| 1.3 | - | 1.3 | (0.3) | - | (0.3) | 0.8 | |||||
Operating profit/(loss) |
| 69.2 | (127.2) | (58.0) | 118.6 | (858.5) | (739.9) | (880.4) | |||||
Loss on disposal of subsidiaries and operations |
| - | (0.1) | (0.1) | - | (4.0) | (4.0) | (8.4) | |||||
Finance income | 5 | 2.0 | - | 2.0 | 4.8 | - | 4.8 | 15.3 | |||||
Finance costs | 6 | (34.9) | - | (34.9) | (52.4) | (9.7) | (62.1) | (266.2) | |||||
Profit/(loss) before tax |
| 36.3 | (127.3) | (91.0) | 71.0 | (872.2) | (801.2) | (1,139.7) | |||||
Tax (charge)/credit | 7 | (6.2) | 10.3 | 4.1 | (9.2) | 43.9 | 34.7 | 102.1 | |||||
Profit/(loss) for the period |
| 30.1 | (117.0) | (86.9) | 61.8 | (828.3) | (766.5) | (1,037.6) | |||||
Attributable to: |
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|
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|
|
|
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| |||||
Equity holders of the parent |
| 25.7 | (117.0) | (91.3) | 66.9 | (828.3) | (761.4) | (1,041.5) | |||||
Non-controlling interest |
| 4.4 | - | 4.4 | (5.1) | - | (5.1) | 3.9 | |||||
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|
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|
| |||||||||
Earnings per share |
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| |||||||||
Basic (p) | 9 | 1.7 |
| (6.1) | 5.0 |
| (56.9) | (73.4) | |||||
Diluted (p) | 9 | 1.7 |
| (6.1) | 5.0 |
| (56.9) | (73.4) | |||||
1. Net operating expenses includes a foreign exchange gain of £1.1m. Adjusted gross operating expense totalled £622.1m.
| |||||||||||||
All results relate to continuing operations. Adjusting items are detailed in Note 4.
The notes on pages 31 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 2021
| 6 months ended | 6 months ended | Year ended |
| 30 June | 30 June | 31 December |
| 2021 (unaudited) | 2020 (unaudited) | 2020 |
| £m | £m | £m |
Loss for the period | (86.9) | (766.5) | (1,037.6) |
|
|
|
|
Items that will not be reclassified subsequently to profit or loss: |
|
|
|
Remeasurement of the net retirement benefit pension obligation | 59.3 | (49.0) | (47.6) |
Tax relating to items that will not be reclassified to profit or loss | (9.1) | 8.9 | 8.3 |
Total items that will not be reclassified subsequently to profit or loss | 50.2 | (40.1) | (39.3) |
|
|
|
|
Items that have been reclassified subsequently to profit or loss |
|
|
|
Recycling of exchange gains arising on disposal of foreign operations | - | - | - |
Items that may be reclassified subsequently to profit or loss |
|
|
|
Exchange (loss)/gain on translation of foreign operations | (96.7) | 409.0 | (46.2) |
Exchange gain/(loss) on net investment hedge debt | 44.0 | (156.4) | (13.0) |
Loss on derivatives in net investment hedging relationships | (73.5) | (54.1) | (42.0) |
Gain/(loss) on derivatives in cash flow hedging relationships | 84.8 | (0.1) | (1.1) |
Movement in cost of hedging reserve | (4.7) | - | 1.3 |
Tax credit relating to items that may be reclassified subsequently to profit or loss | (1.3) | - | 11.9 |
Total items that may be reclassified subsequently to profit or loss | (47.4) | 198.4 | (89.1) |
Other comprehensive income/(expense) for the period | 2.8 | 158.3 | (128.4) |
Total comprehensive expense for the period | (84.1) | (608.2) | (1,166.0) |
|
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|
|
Total comprehensive expense attributable to: |
|
|
|
- Equity holders of the Company | (90.9) | (601.1) | (1,169.8) |
- Non-controlling interest | 6.8 | (7.1) | 3.8 |
The notes on pages 31 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 2021 (unaudited)
| Share capital | Share premium account | Translation reserve | Other reserves | Retained earnings | Total1 | Non-controlling interests | Total equity |
| £m | £m | £m | £m | £m | £m | £m | £m |
At 1 January 2021 | 1.5 | 1,878.8 | (206.2) | 1,969.6 | 1,821.3 | 5,465.0 | 177.0 | 5,642.0 |
(Loss)/profit for the period | - | - | - | - | (91.3) | (91.3) | 4.4 | (86.9) |
Exchange gain on translation of foreign operations | - | - | (99.1) | - | - | (99.1) | 2.4 | (96.7) |
Exchange loss on net investment hedge debt | - | - | 44.0 | - | - | 44.0 | - | 44.0 |
Loss arising on derivative hedges | - | - | 6.6 | - | - | 6.6 | - | 6.6 |
Actuarial loss on defined benefit pension schemes | - | - | - | - | 59.3 | 59.3 | - | 59.3 |
Tax relating to components of other comprehensive income | - | - | (1.3) | - | (9.1) | (10.4) | - | (10.4) |
Total comprehensive (expense)/income for the period | - | - | (49.8) | - | (41.1) | (90.9) | 6.8 | (84.1) |
Dividends to non-controlling interests | - | - | - | - | - | - | (4.8) | (4.8) |
Share award expense | - | - | - | 7.5 | - | 7.5 | - | 7.5 |
Issue of share capital | - | (0.2) | - | - | - | (0.2) | - | (0.2) |
Own shares purchased | - | - | - | (1.4) | - | (1.4) | - | (1.4) |
Transfer of vested LTIPs | - | - | - | (10.4) | 10.4 | - | - | - |
Disposal of NCI | - | - | - | - | (4.5) | (4.5) | 4.5 | - |
Acquisition of NCI | - | - | - | - | 101.2 | 101.2 | 112.6 | 213.8 |
At 30 June 2021 | 1.5 | 1,878.6 | (256.0) | 1,965.3 | 1,887.3 | 5,476.7 | 296.1 | 5,772.8 |
1 Total attributable to equity holders of the parent
The notes on pages 31 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 2020 (unaudited)
| Share capital | Share premium account | Translation reserve | Other reserves | Retained earnings | Total1 | Non-controlling interest | Total equity |
| £m | £m | £m | £m | £m | £m | £m | £m |
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 31 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 2020 (audited)
| Share capital | Share premium account | Translation reserve | Other reserves | Retained earnings | Total1 | Non-controlling interests | Total equity |
| £m | £m | £m | £m | £m | £m | £m | £m |
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 year | - | - | - | - | (1,041.5) | (1,041.5) | 3.9 | (1,037.6) |
Exchange gain on translation of foreign operations | - | - | (46.1) | - | - | (46.1) | (0.1) | (46.2) |
Exchange loss on net investment hedge debt | - | - | (13.0) | - | - | (13.0) | - | (13.0) |
Loss arising on derivative hedges | - | - | (41.8) | - | - | (41.8) | - | (41.8) |
Actuarial loss on defined benefit pension schemes | - | - | - | - | (47.6) | (47.6) | - | (47.6) |
Tax relating to components of other comprehensive income | - | - | 11.9 | - | 8.3 | 20.2 | - | 20.2 |
Total comprehensive (expense)/income for the year | - | - | (89.0) | - | (1,080.8) | (1,169.8) | 3.8 | (1,166.0) |
Dividends to non-controlling interests | - | - | - | - | - | - | (13.6) | (13.6) |
Share award expense | - | - | - | 11.2 | - | 11.2 | - | 11.2 |
Issue of share capital | 0.2 | 973.5 | - | - | - | 973.7 | - | 973.7 |
Own shares purchased | - | - | - | (1.3) | - | (1.3) | - | (1.3) |
Transfer of vested LTIPs | - | - | - | (4.9) | 4.9 | - | - | - |
Acquisition of non-controlling interest | - | - | - | - | 9.3 | 9.3 | (9.3) | - |
At 31 December 2020 | 1.5 | 1,878.8 | (206.2) | 1,969.6 | 1,821.3 | 5,465.0 | 177.0 | 5,642.0 |
1 Total attributable to equity holders of the parent,
The notes on pages 31 to 57 are an integral part of these Condensed Consolidated Financial Statements.
Condensed Consolidated Balance Sheet
|
| 30 June 2021 | 30 June 2020 | 31 Dec 2020 |
|
| (unaudited) | (unaudited) | (audited) |
| Notes | £m | £m | £m |
Goodwill | 10 | 5,648.5 | 5,884.7 | 5,576.6 |
Other intangible assets |
| 3,038.4 | 3,466.0 | 3,094.5 |
Property and equipment |
| 46.5 | 67.4 | 49.1 |
Right of use assets |
| 205.2 | 247.5 | 209.9 |
Investments in joint ventures and associates |
| 21.0 | 19.5 | 20.0 |
Other investments |
| 7.5 | 7.4 | 7.3 |
Deferred tax assets |
| 1.0 | 6.1 | 8.4 |
Retirement benefit surplus |
| 6.2 | 1.0 | - |
Finance lease receivables |
| 5.9 | 7.4 | 6.4 |
Other receivables |
| 21.5 | 25.5 | 20.2 |
Derivative financial instruments |
| 24.5 | 4.8 | 44.6 |
Non-current assets |
| 9,026.2 | 9,737.3 | 9,037.0 |
Inventory |
| 34.4 | 36.3 | 31.3 |
Trade and other receivables |
| 322.1 | 528.0 | 358.1 |
Current tax asset |
| 1.7 | 9.2 | 4.9 |
Cash and cash equivalents | 12 | 412.4 | 915.2 | 299.4 |
Finance lease receivables |
| 1.7 | 1.9 | 1.5 |
Derivative financial instruments |
| 0.5 | 0.4 | - |
Assets classified as held for sale | 17 | 21.0 | - | - |
Current assets |
| 793.8 | 1,491.0 | 695.2 |
Total assets |
| 9,820.0 | 11,228.3 | 9,732.2 |
Lease liabilities |
| (31.7) | (32.5) | (33.4) |
Derivative financial instruments |
| - | (16.8) | (0.2) |
Current tax liabilities |
| (62.6) | (88.1) | (78.0) |
Provisions |
| (30.4) | (47.5) | (44.7) |
Trade and other payables |
| (377.0) | (440.7) | (343.7) |
Deferred income |
| (737.9) | (846.0) | (700.6) |
Liabilities associated with assets classified as held for sale | 17 | (3.7) | - | - |
Current liabilities |
| (1,243.3) | (1,471.6) | (1,200.6) |
Borrowings | 13 | (2,055.7) | (2,467.7) | (2,093.2) |
Lease liabilities |
| (240.1) | (282.0) | (247.4) |
Derivative financial instruments |
| (7.1) | (94.9) | (7.5) |
Deferred tax liabilities |
| (415.7) | (518.3) | (406.4) |
Retirement benefit obligation |
| (17.2) | (78.2) | (71.4) |
Provisions |
| (43.3) | (28.2) | (44.8) |
Trade and other payables |
| (20.3) | (18.0) | (16.2) |
Deferred income |
| (4.5) | (70.8) | (2.7) |
Non-current liabilities |
| (2,803.9) | (3,558.1) | (2,889.6) |
Total liabilities |
| (4,047.2) | (5,029.7) | (4,090.2) |
Net assets |
| 5,772.8 | 6,198.6 | 5,642.0 |
Share capital | 11 | 1.5 | 1.5 | 1.5 |
Share premium account |
| 1,878.6 | 1,881.0 | 1,878.8 |
Translation reserve |
| (256.0) | 83.2 | (206.2) |
Other reserves |
| 1,965.3 | 1,962.7 | 1,969.6 |
Retained earnings |
| 1,887.3 | 2,091.3 | 1,821.3 |
Equity attributable to equity holders of the parent |
| 5,476.7 | 6,019.7 | 5,465.0 |
Non-controlling interest |
| 296.1 | 178.9 | 177.0 |
Total equity |
| 5,772.8 | 6,198.6 | 5,642.0 |
The notes on pages 31 to 57 are an integral part of these Condensed Consolidated Financial Statements. The Board of Directors approved these Condensed Consolidated Financial Statements on 28 July 2021. | ||||
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2021
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| 6 months ended | 6 months ended | Year ended 31 December | |
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| 30 June 2021 | 30 June 2020 | 2020 | |
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| (unaudited) | (unaudited) | (audited) | |
| Notes | £m | £m | £m | |
Operating activities |
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Cash generated by operations | 12 | 188.1 | 140.4 | 153.1 | |
Income taxes paid |
| (15.7) | (21.7) | (32.9) | |
Interest paid |
| (26.3) | (42.6) | (259.7) | |
Net cash inflow from operating activities |
| 146.1 | 76.1 | (139.5) | |
Investing activities |
|
|
|
| |
Interest received |
| 2.0 | 3.6 | 5.7 | |
Purchase of property and equipment |
| (2.4) | (3.6) | (10.7) | |
Purchase of intangible software assets |
| (8.3) | (19.0) | (23.8) | |
Product development cost additions |
| (8.2) | (2.9) | (13.9) | |
Purchase of intangibles related to titles, brands and customer relationships |
| (1.9) | (3.6) | (7.3) | |
Acquisition of subsidiaries and operations, net of cash acquired | 14 | 5.2 | (22.4) | (77.3) | |
Acquisition of investment |
| - | - | (0.9) | |
Proceeds from disposal of subsidiaries and operations |
| 3.7 | 11.8 | 10.4 | |
Net cash outflow from investing activities |
| (9.9) | (36.1) | (117.8) | |
Financing activities |
|
|
|
| |
Dividends paid to shareholders | 8 | - | - | (0.2) | |
Dividends paid to non-controlling interests |
| (4.8) | (10.1) | (13.6) | |
Proceeds from EMTN bond issuance |
| - | - | 788.3 | |
Repayment of loans |
| - | (87.1) | (61.3) | |
New loan advances |
| - | - | - | |
Repayment of Private Placement borrowings |
| - | (153.0) | (1,227.8) | |
Borrowing fees paid |
| - | (10.1) | (17.6) | |
Repayment of the principal lease liabilities |
| (15.2) | (15.8) | (37.1) | |
Finance lease receipts |
| 0.9 | 1.2 | 2.3 | |
Acquisition of non-controlling interests |
| (1.5) | (28.1) | (44.9) | |
Cash outflow from purchase of shares |
| (1.6) | - | (1.3) | |
Cash inflow from issue of shares |
| - | 975.2 | 973.7 | |
Net cash (outflow)/inflow from financing activities |
| (22.2) | 672.2 | 360.5 | |
Net increase in cash and cash equivalents (including cash acquired) |
| 114.0 | 712.2 | 103.2 | |
Effect of foreign exchange rate changes |
| (1.0) | 7.9 | 1.1 | |
Cash and cash equivalents at beginning of the year |
| 299.4 | 195.1 | 195.1 | |
Cash and cash equivalents at end of period | 12 | 412.4 | 915.2 | 299.4 | |
The notes on pages 31 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 2021
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 2021 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 28 July 2021 and have been prepared in accordance with United Kingdom adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
The Condensed set of Consolidated Financial Statements has been prepared on a going concern basis, as outlined on page 20, 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 2020, which have been prepared in accordance with international accounting standards in conformity with the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in 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 2020, were approved by the Directors on 22 April 2021 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 2020 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.
The same accounting policies and methods of computation are followed in the condensed consolidated financial statements for the six months ended 30 June 2021 as compared with the most recent annual report and accounts.
2. Accounting Policies and Estimates (Continued)
Critical accounting judgements & estimates
As at 30 June 2021, the group noted one critical judgement, relating to the identification of CGUs. The critical judgements identified at 31 December 2020 were the identification of CGUs and the Identification of adjusting items.
As at 30 June 2021, the group noted three key sources of estimation uncertainty. These were with regards to the cash flow forecasts for the goodwill impairment assessment of those Divisions that have been triggered for a review, the measurement of retirement benefit obligations and the provisional fair values of the acquisition intangibles and goodwill associated with the acquisition of Novantas, Inc.
Judgements and estimates associated with the impairment assessment
For the impairment review, management have estimated future cash flows. 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. Details of the impact of uncertainties associated with the impairment assessment are outlined in the sensitivity analysis in Note 10.
Management have also made judgements relating to the WACC rate and Long-Term Growth Rate (LTGR) and these are outlined in Note 10. At 30 June 2021, the business forecast is subject to higher levels of uncertainty compared to periods prior to the impact of COVID-19 on our physical events operations. This increases uncertainty when considering future cash flow forecasts, as the shorter and longer term implications 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 the 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 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 2020 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 2021, the group has a total pension liability of £730.2m (30 June 2020: £767.2m, 31 December 2020: £786.8m), and a net pension deficit of £11.0m (30 June 2020: £77.2m, 31 December 2020: £71.4m).
Acquisition Intangibles estimation for the acquisition of Novantas, Inc.
Due to the proximity of the acquisition date of Novantas, Inc. on 28 May 2021 to the half year reporting date the provisional fair values of acquisition intangibles and goodwill relating to the acquisition have been estimated using the ratio of acquisition intangibles to goodwill using a recent comparable transaction undertaken by the group. These amounts are subject to estimation uncertainty relating to the value of the intangible assets being recognised, and the resulting goodwill to be recognised. This will be updated in the second half of 2021 through a detailed fair value exercise, which will involve support from a third-party valuation specialist. Further details are given in Note 14.
2. Accounting Policies and Estimates (Continued)
Basis of preparation
The group has adopted new standards and interpretations effective as of 1 January 2021 listed below:
· Amendment to IFRS 16, 'Leases' - Covid-19 related rent concessions (adopted 1 April 2021)
· Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform
- Phase 2
The adoption of these amendments and interpretations has not led to any changes to the Group's accounting policies or had any material impact on the financial position or performance of the Group. Other amendments to IFRSs effective for the period ended 30 June 2021 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.
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 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.
Revenue type | Performance obligations | Revenue recognition accounting policy | Timing of customer payments |
Exhibitor and related services | Provision of services associated with exhibition and conference events, including virtual events. | Performance obligations are satisfied at the point of time that services are provided to the customer with revenue recognised when the event has taken place. For events postponed due to COVID-19 the performance obligations and revenue recognition will align with the revised event dates. | Payments for events are normally received in advance of the event dates, which are typically up to 12 months in advance of the event date and are held as deferred income until the event date. For events postponed due to COVID-19, payments received may extend beyond 12 months before the event date. |
Subscriptions | Provision of journals and online information services that are provided on a periodic basis or updated on a real-time basis. | Performance obligations are satisfied over time, with revenue recognised straight-line over the period of the subscription. | Subscriptions payments are normally received in advance of the commencement of the subscription period which is typically a 12 month period and are held as deferred income.
|
Transactional sales | Provision of books and specific publications in print or digital format. | Revenue is recognised at the point of time when control of the product is passed to the customer or the information service has been provided. | Transactional sales to customers are typically on credit terms and customers pay accordingly to these terms. |
Attendee Revenue | Provision of exhibition or conference events. | Performance obligations are satisfied at the point of time that the event is held, with attendee revenue recognised at this date. | Payments by attendees are normally received either in advance of the event date or at the event. |
Marketing, advertising services and sponsorship | Provision of advertising, marketing services and event sponsorship. | Performance obligations are satisfied over the period of the advertising subscription or over the period when 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. | Payment for such services are normally received in advance of the marketing, advertising or sponsorship period. |
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 2020.
Impairment of Goodwill
We consider whether the carrying value of our goodwill and our intangible assets is impaired on an annual basis and more frequently if there are indicators of impairment. The most recent annual impairment review was performed as at 31 December 2020. 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
Six months ended 30 June 2021 (unaudited):
| Informa Markets | Informa Intelligence | Informa Tech | Informa Connect | Taylor & Francis | Total | |
£m | £m | £m | £m | £m | £m | ||
Revenue | 187.6 | 162.2 | 58.1 | 35.8 | 245.2 | 688.9 | |
Adjusted operating profit/(loss) before joint ventures and associates | (44.6) | 47.2 | (5.6) | (15.1) | 86.0 | 67.9 | |
Share of adjusted results of joint ventures and associates | 1.3 | - | - | - | - | 1.3 | |
Adjusted operating profit/(loss) | (43.3) | 47.2 | (5.6) | (15.1) | 86.0 | 69.2 | |
Intangible asset amortisation1 | (86.7) | (7.3) | (9.0) | (6.7) | (25.1) | (134.8) | |
Impairment - right use assets | (0.5) | (0.3) | - | (0.1) | (1.2) | (2.1) | |
Impairment - other | (0.3) | (0.1) | (0.1) | (0.1) | (0.1) | (0.7) | |
Acquisition and integration costs | (1.9) | (1.0) | 0.2 | (0.3) | (0.2) | (3.2) | |
Restructuring and reorganisation costs | (0.8) | (0.3) | 0.5 | (0.5) | (0.4) | (1.5) | |
One-off insurance credits associated with COVID-19 | 18.7 | - | - | - | - | 18.7 | |
Onerous contracts and one-off items associated with COVID-19 | (4.1) | - | (0.1) | (0.2) | - | (4.4) | |
Subsequent re-measurement of contingent consideration | 0.3 | 0.5 | - | - | - | 0.8 | |
Operating profit/(loss) | (118.6) | 38.7 | (14.1) | (23.0) | 59.0 | (58.0) | |
Loss on disposal of subsidiaries and operations |
|
|
|
|
| (0.1) | |
Finance income |
|
|
|
|
| 2.0 | |
Finance costs |
|
|
|
|
| (34.9) | |
Loss before tax |
|
|
|
|
| (91.0) | |
1. Excludes acquired intangible product development and software amortisation.
2. Adjusted operating profit before joint ventures and associates included the following amounts for depreciation and other amortisation: £17.1m for Informa Markets, £3.4m for Informa Connect, £9.5m for Informa Intelligence, £1.5m for Informa Tech and £9.1m for Taylor & Francis
3. Business Segments (Continued)
Six months ended 30 June 2020 (unaudited):2
| Informa Markets | Informa Intelligence | Informa Tech |
Informa Connect | Taylor & Francis | Total |
£m | £m | £m | £m | £m | £m | |
Revenue | 282.1 | 150.0 | 59.8 | 66.0 | 256.5 | 814.4 |
Adjusted operating profit/(loss) before joint ventures and associates |
12.8 | 47.6 | (19.8) | (18.9) | 97.2 | 118.9 |
Share of adjusted results of joint ventures and associates | 0.1 | - | - | (0.4) | - | (0.3) |
Adjusted operating profit/(loss) | 12.9 | 47.6 | (19.8) | (19.3) | 97.2 | 118.6 |
Intangible asset amortisation1 | (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) | (380.0) | 29.0 | (303.4) | (147.3) | 61.8 | (739.9) |
Loss on disposal of subsidiaries and operations |
|
|
|
|
| (4.0) |
Finance income |
|
|
|
|
| 4.8 |
Finance costs |
|
|
|
|
| (62.1) |
Loss before tax |
|
|
|
|
| (801.2) |
1. Excludes acquired intangible product development and software amortisation.
2. Restated to reflect moves of certain businesses between business segments
3. Adjusted operating profit before joint ventures and associates included the following amounts for depreciation and other amortisation: £19.9m for Informa Markets, £4.6m for Informa Connect, £9.5m for Informa Intelligence, £2.0m for Informa Tech and £9.2m for Taylor & Francis
3. Business Segments (Continued)
Year ended 31 December 2020 (audited):1
| Informa Markets | Informa Intelligence | Informa Tech | Informa Connect | Taylor & Francis | Total | ||||||
£m | £m | £m | £m | £m | £m | |||||||
Revenue | 523.5 | 305.3 | 151.8 | 124.2 | 556.0 | 1,660.8 | ||||||
Adjusted operating (loss)/profit before joint ventures and associates2 | (15.9) | 101.7 | (8.7) | (21.9) | 211.8 | 267.0 | ||||||
Share of adjusted results of joint ventures and associates | 0.4 | - | - | 0.4 | - | 0.8 | ||||||
Adjusted operating (loss)/profit | (15.5) | 101.7 | (8.7) | (21.5) | 211.8 | 267.8 | ||||||
Intangible asset amortisation3 | (185.7) | (16.6) | (20.7) | (16.8) | (52.0) | (291.8) | ||||||
Impairment - goodwill | (231.1) | - | (255.9) | (105.9) | - | (592.9) | ||||||
Impairment - acquisition-related intangibles | (24.1) | (2.7) | (6.2) | (4.5) | (1.0) | (38.5) | ||||||
Impairment - IFRS 16 right of use assets | (15.0) | (7.0) | (2.5) | (5.3) | (6.3) | (36.1) | ||||||
Impairment - property and equipment | (4.2) | (1.0) | (0.8) | (1.3) | (1.5) | (8.8) | ||||||
Impairment - external investments | - | (1.4) | - | (2.5) | - | (3.9) | ||||||
Acquisition and integration costs | (24.9) | (4.3) | (17.3) | (1.6) | (1.0) | (49.1) | ||||||
Restructuring and reorganisation costs | (39.5) | (6.5) | (11.8) | (11.7) | (8.1) | (77.6) | ||||||
Onerous contracts and one-off costs associated with COVID-19 | (46.3) | (0.1) | (2.9) | (3.3) | - | (52.6) | ||||||
Subsequent remeasurement of contingent consideration | (0.9) | - | 3.3 | 0.7 | - | 3.1 | ||||||
Operating (loss)/profit | (587.2) | 62.1 | (323.5) | (173.7) | 141.9 | (880.4) | ||||||
Loss on disposal of businesses |
|
|
|
|
| (8.4) | ||||||
Finance income |
|
|
|
|
| 15.3 | ||||||
Finance costs |
|
|
|
|
| (266.2) | ||||||
Loss before tax |
|
|
|
|
| (1,139.7) | ||||||
1. Restated to reflect moves of certain businesses between business segments
2. Adjusted operating profit before joint ventures and associates included the following amounts for depreciation and other amortisation: £38.8m for Informa Markets, £8.2m for Informa Connect, £19.2m for Informa Intelligence, £3.7m for Informa Tech and £18.3m for Taylor & Francis
3. Excludes acquired intangible product development and software amortisation
3. Business Segments (Continued)
Segment revenue by type
An analysis of the Group's revenue by segment and type is as follows:
Six months ended 30 June 2021 (unaudited):
| Informa Markets | Informa Intelligence | Informa Tech | Informa Connect | Taylor & Francis | Total | |
£m | £m | £m | £m | £m | £m | ||
Exhibitor | 129.8 | - | - | 0.7 | - | 130.5 | |
Subscriptions | 10.5 | 147.1 | 28.3 | 0.4 | 144.0 | 330.3 | |
Transactional sales | 3.9 | 7.8 | 12.7 | 2.1 | 100.9 | 127.4 | |
Attendee | 9.7 | - | 3.2 | 16.8 | - | 29.7 | |
Marketing and advertising services | 25.6 | 7.3 | 10.6 | 6.5 | 0.3 | 50.3 | |
Sponsorship | 8.1 | - | 3.3 | 9.3 | - | 20.7 | |
Total | 187.6 | 162.2 | 58.1 | 35.8 | 245.2 | 688.9 | |
Six months ended 30 June 2020 (unaudited):1
| Informa Markets | Informa Intelligence | Informa Tech | Informa Connect | Taylor & Francis | Total | |
£m | £m | £m | £m | £m | £m | ||
Exhibitor | 207.1 | - | 1.4 | 17.1 | - | 225.6 | |
Subscriptions | 10.5 | 139.1 | 27.6 | 0.9 | 153.6 | 331.7 | |
Transactional sales | 4.2 | 5.4 | 13.2 | 1.4 | 102.5 | 126.7 | |
Attendee | 18.9 | 0.1 | 3.8 | 28.0 | - | 50.8 | |
Marketing and advertising services |
28.6 |
|
|
|
|
| |
Sponsorship | 12.8 | 0.5 | 5.3 | 11.7 | - | 30.3 | |
Total | 282.1 | 150.0 | 59.8 | 66.0 | 256.5 | 814.4 | |
1 Restated for restructuring of Group Divisions
Year ended 31 December 2020 (audited):1
| Informa Markets | Informa Intelligence | Informa Tech | Informa Connect | Taylor & Francis | Total |
£m | £m | £m | £m | £m | £m | |
Exhibitor | 358.2 | - | 13.1 | 21.6 | - | 392.9 |
Subscriptions | 26.1 | 279.4 | 59.3 | 1.6 | 316.2 | 682.6 |
Transactional sales | 12.9 | 13.1 | 30.5 | 4.1 | 239.2 | 299.8 |
Attendee | 26.7 | 0.2 | 17.3 | 54.7 | - | 98.9 |
Marketing and advertising services | 77.1 | 11.7 | 21.0 | 14.7 | 0.6 | 125.1 |
Sponsorship | 22.5 | 0.9 | 10.6 | 27.5 | - | 61.5 |
Total | 523.5 | 305.3 | 151.8 | 124.2 | 556.0 | 1,660.8 |
1 Restated for restructuring of Group Divisions
Through the active and extended Postponement Programme, the Group's events revenue is expected to be more heavily weighted towards the second half of the 2021 year compared to both the second half of 2020 and the six months to 30 June 2021.
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
| 6 months
| Year ended | |
| ended 30 June 2021 | ended 30 June 2020 | 31 December 2020 | |
| (unaudited) | (unaudited) | (audited) | |
| £m | £m | £m | |
Intangible amortisation and impairment |
|
|
| |
Intangible asset amortisation1 | 134.8 | 148.2 | 291.8 | |
Impairment - goodwill | - | 592.9 | 592.9 | |
Impairment - acquisition-related intangible assets | - | 1.0 | 38.5 | |
Impairment - IFRS 16 right of use assets | 2.1 | 17.4 | 36.1 | |
Impairment - property and equipment | 0.7 | - | 8.8 | |
Impairment - investments | - | 3.9 | 3.9 | |
Acquisition costs | 0.3 | 0.8 | 2.8 | |
Integration costs | 2.9 | 33.1 | 46.3 | |
Restructuring and reorganisation costs |
|
|
| |
Redundancy and reorganisation costs | 2.6 | 2.3 | 47.6 | |
Vacant property and finance lease modification costs | (1.1) | 13.9 | 30.0 | |
One-off insurance credits associated with COVID-19 | (18.7) | - | - | |
Onerous contracts and other one-off costs associated with COVID-19 | 4.4 | 43.4 | 52.6 | |
Subsequent re-measurement of contingent consideration | (0.8) | 1.0 | (3.1) | |
VAT charges | - | 0.6 | - | |
Adjusting items in operating loss | 127.2 | 858.5 | 1,148.2 | |
Loss on disposal of subsidiaries and operations | 0.1 | 4.0 | 8.4 | |
Finance income | - | - | (8.3) | |
Finance costs | - | 9.7 | 161.8 | |
Adjusting items in loss before tax | 127.3 | 872.2 | 1,310.1 | |
Tax related to adjusting items | (10.3) | (43.9) | (127.7) | |
Adjusting items in loss for the period | 117.0 | 828.3 | 1,182.4 | |
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 and are excluded from adjusted results
· 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
· 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
· One-off insurance credits associated with COVID-19 relate to insurance receipts for events which were cancelled due to COVID-19
· 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 credits or costs incurred as a result of COVID-19.
· 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.
· Loss on disposal of subsidiaries and operations relate to costs arising from disposals in the period
· Finance costs in the year ended 31 December 2020 were incurred as part of our COVID-19 Action Plan, which removed financial covenants from our group level borrowings, pushed out our earliest debt maturity until July 2023 and improved available liquidity to over £1bn. The costs associated with this restructuring of debt, which included make-whole interest payments to debt holders, was £161.7m.
· The tax item relates to the tax effect on the items above.
5. Finance Income
| 6 months | 6 months | Year ended |
| ended 30 June 2021 | ended 30 June 2020 | 31 December 2020 |
| (unaudited) | (unaudited) | (audited) |
£m | £m | £m | |
Interest income on bank deposits | 1.8 | 3.6 | 5.5 |
Fair value gain on financial instruments through the income statement |
0.1 |
1.2 | 1.4 |
Interest income finance lessor leases | 0.1 | - | 0.1 |
Finance income before adjusting items | 2.0 | 4.8 | 7.0 |
Adjusting item: finance income associated with debt issuance and fair value gain on acquisition put options |
- | - | 8.3 |
Total finance income | 2.0 | 4.8 | 15.3 |
6. Finance Costs
| 6 months | 6 months | Year ended |
| ended 30 June 2021 | ended 30 June 2020 | 31 December 2020 |
| (unaudited) | (unaudited) | (audited) |
£m | £m | £m | |
Interest expense on borrowings and loans | 28.6 | 45.2 | 92.3 |
Interest on leases | 5.3 | 6.6 | 12.2 |
Interest cost on pension scheme net liabilities | 0.8 | 0.6 | 0.7 |
Total interest expense | 34.7 | 52.4 | 105.2 |
Fair value loss on financial instruments through the income statement |
0.2 | - | (0.8) |
Finance costs before adjusting items | 34.9 | 52.4 | 104.4 |
Adjusting item: financing expense associated with early repayment of debt and associated termination of put options |
- | 6.4 | 161.8 |
Adjusting item: financing expense | - | 3.3 | - |
Total finance expense | 34.9 | 62.1 | 266.2 |
7. Taxation
The tax charge comprises:
| 6 months | 6 months | Year ended |
| ended 30 June 2021 | ended 30 June 2020 | 31 December 2020 |
| (unaudited) | (unaudited) | (audited) |
£m | £m | £m | |
Current tax | 4.2 | 8.1 | 25.4 |
Deferred tax | (8.3) | (42.8) | (127.5) |
Total tax credit on loss on ordinary activities | (4.1) | (34.7) | (102.1) |
The Effective Tax Rate of 17.0% has been estimated using full year forecasts and has then been applied to the adjusted profit before tax for the period. The tax credit on adjusting items for the period has been calculated by applying to each adjusting item the tax rate for the jurisdiction in which the adjusting item arises, to the extent the item is expected to be taxable/deductible.
Legislation to increase the UK corporation tax rate from 19% to 25% from 1 April 2023 has been substantively enacted during the period. The effect of this change is to increase the deferred tax liability recognised by £10.7m. The tax credit on adjusting items includes the effect of this rate change in relation to adjusting items, principally deferred tax liabilities on intangible assets.
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. During the period a charging notice was issued by HMRC to Informa in relation to certain Group companies and periods and Informa paid an amount of £5.5m to HMRC. An appeal against this charging notice has been filed with HMRC in addition to the appeal filed with the Court of Justice of the European Union in 2019 following the European Commission's State Aid decision. No amount has been recognised in relation to this appeal.
As part of the acquisition accounting relating to contingent liabilities, an amount of £8m was provided in relation to the State Aid exposure for UBM companies. We do not believe that any further liability will arise to the Group in relation to the State Aid investigation and therefore have released the excess of this provision over the amount paid.
8. Dividends
In April 2020 the Group announced the temporary suspension of dividend payments, including the withdrawal of the proposed 2019 final dividend. There was no interim or final dividend for the year ended 2020 and no proposed interim dividend for the six months ended 30 June 2021. As at 30 June 2021 £0.2m (30 June 2020: £0.4m and 31 December 2020: £0.2m) dividends are still to be paid.
9. Earnings Per Share
Basic EPS
The basic earnings per share (EPS) calculation is based on a loss attributable to equity Shareholders of the parent of £91.3m (30 June 2020: loss £761.4m and 31 December 2020: loss £1,041.5m). To calculate basic earnings per share this amount is divided by the weighted average number of shares in issue (which is stated after deducting 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.
For the 6 months ended 30 June 2021, 6 months to 30 June 2020 and the year ended 31 December 2020 dilutive potential ordinary shares have no effect on the calculation of statutory diluted EPS as their conversion into ordinary shares cannot increase a loss per share
The table below sets out the weighted average number of shares used in the calculation of diluted EPS showing the adjustment in respect of dilutive potential Ordinary Shares:
| 6 months ended | 6 months ended | Year ended |
| 30 June 2021 | 30 June 2020 | 31 December 2020 |
| (unaudited) | (unaudited) | (audited) |
Weighted average number of shares used in basic earnings per share | 1,500,994,226 | 1,337,756,825 |
1,419,707,507 |
Effect of dilutive potential ordinary shares | - | - | - |
Weighted average number of shares used in diluted EPS calculation | 1,500,994,226 | 1,337,756,825 | 1,419,707,507 |
The table below sets out the weighted average number of shares used in the calculation of adjusted diluted EPS showing the adjustment in respect of dilutive potential Ordinary Shares:
| 6 months ended | 6 months ended | Year ended |
| 30 June 2021 | 30 June 2020 | 31 December 2020 |
| (unaudited) | (unaudited) | (audited) |
Weighted average number of shares used in basic earnings per share | 1,500,994,226 | 1,337,756,825 |
1,419,707,507 |
Effect of dilutive potential ordinary shares | 9,306,205 | 5,089,771 | 6,813,614 |
Weighted average number of shares used in adjusted diluted EPS calculation | 1,510,300,431 | 1,342,846,596 | 1,426,521,121 |
9. Earnings Per Share (Continued)
Earnings per share | 6 months ended | 6 months ended | Year ended | ||||
30 June 2021 (unaudited) | 30 June 2020 (unaudited) | 31 December 2020 (audited) | |||||
| Earnings
| Per share amount | Earnings | Per share amount | Earnings | Per share amount | |
| £m | Pence | £m | Pence | £m | Pence | |
Loss for the period | (86.9) |
| (766.5) |
| (1,037.6) |
| |
Non-controlling interests | (4.4) |
| 5.1 |
| (3.9) |
| |
Earnings for the purpose of statutory basic EPS/ statutory basic EPS (p) | (91.3) | (6.1) | (761.4) | (56.9) | (1,041.5) | (73.4) | |
Effect of dilutive potential ordinary shares | - | - | - | - | - | - | |
Earnings for the purpose of statutory diluted EPS/ diluted EPS (p) | (91.3) | (6.1) | (761.4) | (56.9) | (1,041.5) | (73.4) | |
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.
9. Earnings Per Share (Continued)
Adjusted earnings per share: | 6 months ended 30 June 2021 (unaudited) | 6 months ended 30 June 2020 (unaudited) | Year ended 31 December 2020 (audited) | |||
| Earnings | Per share amount | Earnings | Per share amount | Earnings | Per share amount |
| £m | Pence | £m | Pence | £m | Pence |
Earnings for the purpose of basic EPS/ statutory basic EPS (p) | (91.3) | (6.1) | (761.4) | (56.9) | (1,041.5) | (73.4) |
Adjusting items: |
|
|
|
|
|
|
Intangible asset amortisation | 134.8 | 9.0 | 148.2 | 11.1 | 291.8 | 20.5 |
Impairment - goodwill | - | - | 592.9 | 44.4 | 592.9 | 41.8 |
Impairment - acquisition-related intangible assets | - | - | 1.0 | 0.1 | 38.5 | 2.7 |
Impairment - IFRS 16 right of use assets | 2.1 | 0.1 | 17.4 | 1.3 | 36.1 | 2.5 |
Impairment - property and equipment | 0.7 | - | - | - | 8.8 | 0.6 |
Impairment - investments | - | - | 3.9 | 0.3 | 3.9 | 0.3 |
Acquisition and integration costs | 3.2 | 0.2 | 33.9 | 2.5 | 49.1 | 3.5 |
Restructuring and reorganisation costs | 1.5 | 0.1 | 16.2 | 1.2 | 77.6 | 5.5 |
One-off insurance credits associated with COVID-19 | (18.7) | (1.2) | - | - | - | - |
Onerous contracts and other one-off costs associated with COVID-19 | 4.4 | 0.3 | 43.4 | 3.2 | 52.6 | 3.7 |
Subsequent remeasurement of contingent consideration | (0.8) | - | 1.0 | 0.1 | (3.1) | (0.2) |
VAT charges | - | - | 0.6 | - | - | - |
Loss on disposal of subsidiaries and operations | 0.1 | - | 4.0 | 0.3 | 8.4 | 0.6 |
Finance income | - | - | - | - | (8.3) | (0.6) |
Finance costs | - | - | 9.7 | 0.7 | 161.8 | 11.4 |
Tax related to adjusting items | (10.3) | (0.7) | (43.9) | (3.3) | (127.7) | (9.0) |
Earnings for the purpose of adjusted basic EPS/ Adjusted basic EPS (p) | 25.7 | 1.7 | 66.9 | 5.0 | 140.9 | 9.9 |
Effect of dilutive potential ordinary shares | - | - | - | - | - | - |
Earnings for the purpose of adjusted diluted EPS/ Adjusted diluted EPS (p) | 25.7 | 1.7 | 66.9 | 5.0 | 140.9 | 9.9 |
10. Goodwill
| (Unaudited) £m |
Cost |
|
At 1 January 2021 | 6,237.9 |
Additions (note 14) | 154.2 |
Transfer to held for sale (note 17) | (19.2) |
Exchange differences | (70.7) |
At 30 June 2021 | 6,302.2 |
Accumulated impairment losses |
|
At 1 January 2021 | (661.3) |
Exchange differences | 7.6 |
At 30 June 2021 | (653.7) |
Carrying amount |
|
At 30 June 2021 | 5,648.5 |
At 31 December 2020 | 5,576.6 |
Impairment trigger test and Impairment review
In preparing the 30 June 2021 balance sheet, the Directors reviewed the carrying value of the Group's goodwill to assess if there were indicators of impairment.
This review starts with an assessment of current and forecast trading against the financial benchmarks used in the 2020 year end impairment review. This assessment was undertaken at 30 June 2021 and concluded that there were no indicators of impairment in the Taylor & Francis, Informa Intelligence, or Informa Connect CGUs. For the Informa Markets and Informa Tech CGUs, the gradual reopening and recovery of the US physical events market were considered to be indicators of impairment and therefore management conducted a full impairment review. The review found no impairment in the carrying value of goodwill.
In undertaking the impairment review management have made several key assumptions, specifically around Projected cash flows, Weighted Average Cost of Capital (WACC) rates and Long-Term Growth Rates (LTGR), as detailed in the key estimates and judgments section above.
10. Goodwill (Continued)
The methods for establishing these assumptions which are the same as those used in the going concern assessment are detailed below.
Key assumption | How we have defined this |
Projected cash flows | The forecasts for 2021 represent the latest detailed forecasts by management of current revenue streams, 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 2022 to 2024, management have used the outcomes from the three year planning process, together with a forecast for the 2025 year based on the recovery of physical events. 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 rate | For the Group's value in use calculation, a perpetual growth rate has been applied to the 2025 operating cash flow forecast. LTGR are based on external reports of 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. LTGR have not been risk adjusted to reflect any of the uncertainties noted above, as these uncertainties are reflected in the forecasts. |
Pre-tax discount rates | We have calculated the WACC 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. Discount rates have not been risk adjusted to reflect any of the uncertainties noted above, as these uncertainties are reflected in the forecasts. |
The average WACC pre-tax discount rates and LTGR at Half Year 2021, when the impairment review was undertaken were:
| Long-term market growth rates | Pre-tax discount rates | ||
|
Half Year 2021 (Unaudited) |
Full Year 2020 (Audited) |
Half Year 2021 (Unaudited) |
Full Year 2020 (Audited) |
Informa Markets | 2.3% | 2.5% | 10.7% | 11.1% |
Informa Tech | 1.9% | 2.0% | 11.4% | 11.3% |
The 30 June 2021 review found no impairment in the carrying value of goodwill, the review at 30 June 2020 resulted in an impairment of £592.9m, with £231.1m relating to Informa Markets, £105.9m relating to Informa Connect and £255.9m relating to Informa Tech.
The carrying amount of goodwill recorded in the CGU groups is set out below:
CGU Groups | As at | As at | As at |
| 30 June 2021 | 30 June 2020 | 31 December 2020 |
(Unaudited) | (Unaudited) | (Audited) | |
£m | £m | £m | |
Informa Markets | 3,547.5 | 3,820.5 | 3,598.8 |
Informa Connect | 325.7 | 350.3 | 328.3 |
Informa Tech | 428.4 | 479.4 | 433.3 |
Informa Intelligence | 812.3 | 671.2 | 678.6 |
Taylor & Francis | 534.6 | 563.3 | 537.6 |
| 5,648.5 | 5,884.7 | 5,576.6 |
Sensitivity analysis
The sensitivities provided represent areas assessed by management to be a key source of estimation uncertainty, as described in Note 2, for the Informa Markets and Informa Tech Divisions that were subject to the review. 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, which may impact our future cash flows, discount rates and LTGR. The cash flow sensitivity analysis scenario considered a 10% cash flow reduction in the period 2021 to 2025 including the perpetuity year reflecting an estimation of the impact of restricted ability to run physical events outside Mainland China and the pace of growth of current digital revenue streams. Sensitivity analysis scenarios considered changes to the key assumptions on the WACC rate and LTGR, with the sensitivity analysis showing the impact of WACC rates increasing by 100bps and LTGR reducing by 50bps.
The results from the sensitivity analysis showed there was headroom in all scenarios tested, with no impairments identified. 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 2021 amounted to £1.5m (30 June 2020 and 31 December 2020: £1.5m).
| 6 months ended | 6 months ended | Year ended |
| 30 June 2021 | 30 June 2020 | 31 December 2020 |
|
(unaudited) | (unaudited) | (audited) |
| Number of shares | Number of shares | Number of shares |
At 1 January | 1,502,137,804 | 1,251,798,534 | 1,251,798,534 |
Issue of new shares through share placement | - | 250,318,000 | 250,318,000 |
Other issue of shares | 975,000 | 13,876 | 21,270 |
At 30 June / 31 December | 1,503,112,804 | 1,502,130,410 | 1,502,137,804 |
|
|
|
|
As at 30 June 2021 the Informa Employee Share Trust (EST) held 1,147,651 (30 June 2020: 734,571; 31 December 2020: 697,644) ordinary shares in the Company at a market value of £5.8m (30 June 2020: £3.5m; 31 December 2020: £3.8m). As at 30 June 2021 the ShareMatch scheme held 905,420 (30 June 2020: 629,464; 31 December 2020: 710,697) ordinary shares in the Company. At 30 June 2021, the Group held 0.1% (30 June 2020: 0.1%; 31 December 2020: 0.1%) of its own called up share capital.
12. Notes to the Cash Flow Statement
| 6 months ended | 6 months ended | Year ended | |
| 30 June | 30 June | 31 December | |
| 2021 (unaudited) | 2020 (unaudited) | 2020 (audited) | |
| £m | £m | £m | |
Loss before tax | (91.0) | (801.2) | (1,139.7) | |
Adjustments for: |
|
|
| |
Depreciation of property and equipment | 6.5 | 8.5 | 16.8 | |
Depreciation of right of use assets | 11.5 | 16.9 | 30.3 | |
Amortisation of other intangible assets | 157.4 | 168.0 | 332.9 | |
Impairment - goodwill | - | 592.9 | 592.9 | |
Impairment - investments | - | 3.9 | 3.9 | |
Impairment - acquisition intangible assets | - | 1.0 | 38.5 | |
Impairment - property and equipment | 0.7 | - | 8.8 | |
Impairment - IFRS 16 right of use assets | 2.1 | 17.4 | 36.1 | |
Share-based payments | 7.5 | 3.6 | 11.2 | |
Subsequent re-measurement of contingent consideration | (0.8) | 1.0 | (3.1) | |
Finance lease modifications | (1.8) | - | (2.2) | |
Loss on disposal of businesses | 0.1 | 4.0 | 8.4 | |
Loss on disposal of property and equipment and software | 0.1 | 0.4 | 0.9 | |
Finance income | (2.0) | (4.8) | (15.3) | |
Finance costs | 34.9 | 62.1 | 266.2 | |
Share of results of joint ventures and associates | (1.3) | 0.3 | (0.8) | |
Operating cash inflow before movements in working capital | 123.9 | 74.0 | 185.8 | |
(Increase)/decrease in inventories | (3.1) | 2.2 | 7.2 | |
(Increase)/decrease in receivables | 3.4 | (63.7) | 114.8 | |
Increase/(decrease) in payables | 66.4 | 131.2 | (148.5) | |
Movements in working capital | 66.7 | 69.7 | (26.5) | |
Pension deficit recovery contributions | (2.5) | (3.3) | (6.2) | |
Cash generated by operations | 188.1 | 140.4 | 153.1 | |
12. Notes to the Cash Flow Statement (continued)
Analysis of movement in net debt (unaudited) as at 30 June 2021:
|
At 1 Jan 2021 £m | Non-cash movements £m | Cash flow £m | Exchange movements £m | At 30 June 2021 £m |
Cash at bank and in hand | 299.4 | - | 114.0 | (1.0) | 412.4 |
Overdrafts | - | - | - | - | - |
Cash and cash equivalents | 299.4 | - | 114.0 | (1.0) | 412.4 |
|
|
|
|
|
|
Bank loans due in more than one year | - | (35.3) | - | (0.8) | (36.1) |
Bank loan fees due in more than one year | 2.6 | 1.3 | - | 0.1 | 4.0 |
Bond borrowings due in more than one year | (2,111.1) | - | - | 73.8 | (2,037.3) |
Bond borrowing fees | 15.3 | (1.6) | - | - | 13.7 |
Derivative assets associated with borrowings | 44.6 | (20.1) | - | - | 24.5 |
Derivative liabilities associated with borrowings | (7.5) | 0.4 | - | - | (7.1) |
Lease liabilities | (280.8) | (10.3) | 15.2 | 4.1 | (271.8) |
Finance lease receivables | 7.9 | 0.7 | (0.9) | (0.1) | 7.6 |
Net debt | (2,029.6) | (64.9) | 128.3 | 76.1 | (1,890.1) |
Analysis of movement in net debt (unaudited) as at 30 June 2020:
|
At 1 Jan 2020 £m | Non-cash movements £m | Cash flow £m | Exchange movements £m | At 30 June 2020 £m |
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 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)
Reconciliation of movement in Net Debt
|
| 6 months ended | 6 months ended | Year ended 31 December | |
|
| 30 June 2021 | 30 June 2020 | 2020 | |
|
| (unaudited) | (unaudited) | (audited) | |
| £m | £m | £m | ||
Increase in cash and cash equivalents in the period (including cash acquired) |
| 114.0 | 712.2 | 103.2 | |
Cash flows from net drawdown of borrowings and derivatives associated with debt |
| 14.3 | 264.8 | 535.6 | |
Change in net debt resulting from cash flows |
| 128.3 | 977.0 | 638.8 | |
Non-cash movements including foreign exchange |
| 20.9 | (255.9) | 1.3 | |
Movement in net debt in the period |
| 149.2 | 721.1 | 640.1 | |
Net debt at beginning of the period |
| (2,029.6) | (2,657.6) | (2,657.6) | |
Net finance lease additions in the period |
| (9.7) | (11.4) | (12.1) | |
Net debt at end of the period |
| (1,890.1) | (1,947.9) | (2,029.6) | |
13. Borrowings
The Group had £3.2bn of committed facilities at 30 June 2021 (£4.1bn at 30 June 2020 and £3.2bn at 31 December 2020). Following debt repayments in November 2020 there are no financial covenants on any of the Group's group level bank or debt facilities. The total borrowings excluding lease liabilities and excluding derivative assets and liabilities associated with borrowings, are as follows:
| At 30 June 2021 (unaudited) | At 30 June 2020 (unaudited) | At 31 December 2020 (audited) |
£m | £m | £m | |
Current |
|
|
|
Bank borrowings | - | - | - |
Total current borrowings | - | - | - |
Non-current |
|
|
|
Bank borrowings | 36.1 | - | - |
Bank debt issue costs | (4.0) | (10.4) | (2.6) |
Bank borrowings - non-current | 32.1 | (10.4) | (2.6) |
Private Placement loan notes ($1,387.1m) - repaid Nov 2020 | - | 1,140.9 | - |
Private Placement issue costs | - | (2.5) | - |
Private Placement - non-current | - | 1,138.4 | - |
Euro Medium Term Note (€650.0m) - due July 2023 | 557.7 | 593.4 | 583.6 |
Euro Medium Term Note (€700.0m) - due October 2025 | 600.6 | - | 628.5 |
Euro Medium Term Note (£450.0m) - due July 2026 | 450.0 | 300.0 | 450.0 |
Euro Medium Term Note (€500.0m) - due April 2028 | 429.0 | 456.5 | 449.0 |
Bond borrowings and EMTN issue costs | (13.7) | (10.2) | (15.3) |
Bond borrowings - non-current | 2,023.6 | 1,339.7 | 2,095.8 |
Total non-current borrowings | 2,055.7 | 2,467.7 | 2,093.2 |
Total borrowings | 2,055.7 | 2,467.7 | 2,093.2 |
13. Borrowings (continued)
Bank borrowings reflect the debt acquired as part of the Novantas transaction (see note 14) representing £36.1m ($50.0m) of a drawn loan facility less finance fees of £1.6m ($2.2m). There are total loan facilities available relating to Novantas of up to $110.0m of which $60.0m has 6 year maturity from May 2021 and $50.0m has a maturity date no later than 28 May 2027. None of the Group's existing liquidity was used to finance the acquisition. There are other Bank borrowings facilities relating to the Group's RCF facilities of £1,050.0m, none of which were drawn at 30 June 2021 (31 December 2020: nil drawn, 30 June 2020: nil drawn). The RCF facilities comprise £30m maturing in February 2023, £420m maturing in February 2024, £60m maturing in February 2025 and £540m maturing in February 2026.
The Group does not have any of its property and equipment and other intangible assets pledged as security over its group level loans. See the Financial Review for further details.
14. Business combinations
Business combinations made in 6 months ended 30 June 2021
The principal business combination in the period to 30 June 2021 was the acquisition of Novantas, Inc.
Novantas, Inc.
On 28 May 2021, the group combined its existing FBX business with Novantas Inc., acquiring 57% of the common voting stock of this new combined business, with preference shares held by the private equity firm Inflexion and Novantas management and additional rights held by Inflexion over distributions at an exit event, which give Inflexion and Novantas management a preferential right to proceeds in the event of an exit. Novantas provides quantitative and qualitative competitive intelligence solutions for US retail banks, with particular strength in the deposits market. This combination seeks to create a leading competitive intelligence and specialist data business serving the retail banking markets.
Informa owns the majority of the common voting stock and has control of the board of this new business, and as such its results are fully consolidated from the acquisition date, with a corresponding Non-Controlling Interest (NCI) being recognised in equity in accordance with IFRS 10. As the preference shares hold no voting rights this does not affect the control of the entity under IFRS 10, however they are still accounted for as NCI. The preference shares have been classified as equity instruments and do not therefore form part of the fair value of net assets acquired. Preference shares are only settled at an exit event, or if management elect to make a distribution to the preference shareholders.
The total fair value of consideration, which is subject to adjustments for working capital, was £101.2m ($143.5m), being 59.2% of the total fair value of $242.5m for the FBX business. The fair value of consideration represents the percentage share of the fair value of the Informa FBX business that has been contributed in the transaction and is no longer attributable to Informa, with no cash contribution paid by Informa.
The goodwill arising from the acquisition was £154.2m ($218.6m) representing the total consideration of £101.2m ($143.5m) less the provisional fair value of the net assets acquired of £59.6m ($84.5m) and adding £112.6m ($159.6m) in respect of the value of NCI. The NCI is composed of £25.6m ($36.3m) relating to the proportional share of net assets held by the 43% NCI share of common stock and £87.0m ($123.3m) for the NCI share of the fair value of additional rights held by Inflexion and the fair value of preference shares held by Inflexion and Novantas management. The NCI fair values have been calculated using an option pricing model using an assumed estimated exit date.
In addition, a further non-controlling interest of £4.5m is recognised in respect of the partial disposal of the FBX assets, calculated as 43.0% of the carrying value of these net assets of £10.4m.
The initial accounting has only been provisionally determined at 30 June 2021, with amounts recognised in respect of the estimated fair value of identifiable assets acquired and liabilities assumed in respect of this acquisition provided below.
14. Business combinations (continued)
| Book value1 | Provisional Fair value and IFRS adjustments | Provisional fair value | |||
£m | £m | £m | ||||
Acquisition intangible assets | - | 105.6 | 105.6 | |||
Other intangible assets | 8.2 | - | 8.2 | |||
Property and equipment | 2.8 | - | 2.8 | |||
Right of use assets | - | 9.6 | 9.6 | |||
Trade and other receivables2 | 8.4 | (0.7) | 7.7 | |||
Other receivable relating to share option settlement 2, 3 | 39.2 | - | 39.2 | |||
Cash and cash equivalents | 4.3 | - | 4.3 | |||
Trade and other payables | (3.9) | - | (3.9) | |||
Other payable relating to share option settlement3 | (39.8) | - | (39.8) | |||
Tax liabilities | (0.1) | - | (0.1) | |||
Deferred income | (10.9) | 1.1 | (9.8) | |||
Provisions | - | (0.1) | (0.1) | |||
Borrowings | (33.7) | - | (33.7) | |||
Lease liabilities | - | (9.6) | (9.6) | |||
Deferred tax liabilities | (1.3) | (19.5) | (20.8) | |||
Total identifiable net assets acquired | (26.8) | 86.4 | 59.6 | |||
Provisional goodwill |
|
| 154.2 | |||
Non-controlling interests |
|
| (112.6) | |||
Total consideration |
|
| 101.2 | |||
1Book value excludes amounts recorded by Novantas for goodwill and acquisition intangible assets as these amounts are replaced at acquisition date
| ||||||
Satisfied by |
|
|
| |||
Fair value of non-controlling interest in Informa's FBX business |
|
| 101.2 | |||
Total consideration |
|
| 101.2 | |||
|
|
|
| |||
Net cash inflow arising on acquisition |
|
|
| |||
Cash consideration |
|
| - | |||
Less: cash and cash equivalents balances acquired |
|
| 4.3 | |||
|
|
| 4.3 | |||
The fair values and consideration are described as provisional due to the proximity of the acquisition to the Half Year reporting date. Provisional fair values of intangible assets arising on acquisition and goodwill have been estimated using a recent comparable transaction undertaken by the Group, using the ratio of 51% of intangibles arising on acquisition to goodwill before taking account of deferred tax on these intangibles. These are subject to estimation uncertainty and will be refined in the second half of 2021 through a detailed fair value exercise, which will involve support from a third-party valuation specialist. A reasonably possible increase in the ratio of acquisition intangibles to goodwill is 5%, bringing the ratio to 56%. This would increase the value of intangibles arising on acquisition (principally customer relationships) by £10.4m, reducing goodwill by £4.4m and increasing non-controlling interest by £3.3m and deferred tax liabilities by £2.7m.
The provisional value of consideration includes an estimate of the fair value of additional rights held by Inflexion over distributions at an exit event.
14. Business combinations (continued)
The provisional goodwill arising from the acquisition has been identified as relating to the following factors:
· Increased scale and specialisation in the financial intelligence retail banking market through access to new US, Canadian, UK and Australian bank relationships, where Informa previously had less access to Deposit data, by broadening the current product offerings and customer base;
· Synergy opportunities from incremental revenue cross-selling opportunities; and
· Access to an experienced and skilled workforce.
None of the goodwill recognised is expected to be deductible for tax purposes.
The disclosure above provides the estimated fair value of acquired identifiable assets and liabilities assumed from Novantas and are provisional, pending the completion of a final valuation. The provisional fair value of intangible assets arising on acquisition relate to customer relationships and are estimated to be £105.6m, with a deferred tax liability recognised on these intangibles of £27.1m. Other fair value and IFRS adjustments include the recognition of £9.6m of right of use assets and lease liabilities relating to IFRS 16 lease accounting for 4 property leases, a deferred tax asset recognised on losses of £7.7m, a £1.1m reduction to the book value of deferred revenue to reflect its fair value, a £0.7m trade receivables provision and a £0.1m other provision.
There was cash acquired of £4.3m and the fair value debt acquired as part of transaction of £33.7m, representing a $50.0m drawn loan facility.
No acquisition costs were incurred by Informa.
The Novantas business generated an Adjusted Operating Profit of £0.3m, profit after tax of £0.1m, and £3.8m of revenue for the period between the date of acquisition and 30 June 2021. If the acquisition had completed on the first day of the financial period, it would have generated loss after tax of £0.7m and £21.8m of revenue for the six month period to 30 June 2021.
Other business combinations
There was one other business combination in the six months ended 30 June 2021, being the acquisition on 6 May 2021 of the China Bakery Exhibition business, involving purchasing 50% of the business and taking control of the business. The total consideration was £2.6m, with 50% paid in the period (£1.3m) and 50% deferred for one year until May 2022. There were £1.6m of contingent and deferred consideration payments relating to acquisitions completed in prior periods and £3.8m of cash received relating to the finalisation of consideration associated with a prior year acquisition.
15. 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 2021, 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 £0.2m (30 June 2020: £0.3m) with a balance of £0.1m (30 June 2020: £0.1m) outstanding at 30 June 2021. Outstanding balances at 30 June 2021 are unsecured and settlement occurs in cash. There are no bad debt provisions for related party balances as at 30 June 2021, and no debts due from related parties have been written off during the period.
16. 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.
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.
16. Financial Instruments (continued)
Financial assets and liabilities measured at fair value in the Consolidated Balance Sheet and their categorisation in the fair value hierarchy at 30 June 2021 and 31 December 2020:
| Level 1 At 30 June 2021 (Unaudited) | Level 2 At 30 June 2021 (Unaudited) | Level 3 At 30 June 2021 (Unaudited) | Total At 30 June 2021 (Unaudited) | |
| £m | £m | £m | £m | |
Financial assets |
|
|
|
| |
Derivative financial instruments in designated hedge accounting relationships | - | 24.5 | - | 24.5 | |
Unhedged derivative financial instruments | - | 0.5 | - | 0.5 | |
Equity investments in unquoted companies | - | - | 7.5 | 7.5 | |
| - | 25.0 | 7.5 | 32.5 | |
Financial liabilities at fair value through profit or loss |
|
|
|
| |
Bank borrowings | - | - | - | - | |
Private placement loan notes | - | - | - | - | |
Bond borrowings | - | - | - | - | |
Derivative financial instruments in designated hedge accounting relationships1 | - | 7.1 | - | 7.1 | |
Deferred consideration on acquisitions2 | - | - | 3.1 | 3.1 | |
Contingent consideration on acquisitions3 | - | - | 4.4 | 4.4 | |
| - | 7.1 | 7.5 | 14.6 | |
1 Amounts relates to interest rate swaps associated with Euro Medium Term Notes
2 £2.9m increase from the prior year reflects a £3.1m increase arising from current year acquisitions and £0.2m decrease from payments relating to prior year acquisitions.
3 £2.3m reduction from the prior year reflects £1.6m decrease from payments relating to prior year acquisitions and £0.7m relating to remeasurements.
| Level 1 At 31 December 2020 (Audited) | Level 2 At 31 December 2020 (Audited) | Level 3 At 31 December 2020 (Audited) | Total At 31 December 2020 (Audited) | |
| £m | £m | £m | £m | |
Financial assets |
|
|
|
| |
Derivative financial instruments in designated hedge accounting relationships1 | - | 44.6 | - | 44.6 | |
Equity investments in unquoted companies | - | - | 7.3 | 7.3 | |
| - | 44.6 | 7.3 | 51.9 | |
Financial liabilities at fair value through profit or loss |
|
|
|
| |
Derivative financial instruments in designated hedge accounting relationships1 | - | 7.5 | - | 7.5 | |
Unhedged derivative financial instruments | - | 0.2 | - | 0.2 | |
Deferred consideration on acquisitions | - | - | 0.2 | 0.2 | |
Contingent consideration on acquisitions | - | - | 6.7 | 6.7 | |
| - | 7.7 | 6.9 | 14.6 | |
1 Amounts relate to interest rate swaps associated with Euro Medium Term Notes.
16. Financial Instruments (continued)
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 2021:
| Carrying amount 30 June 2021 (Unaudited) | Estimated fair value 30 June 2021 (Unaudited) | Carrying amount 31 December 2020 (Audited) | Estimated fair value 31 December 2020 (Audited) |
| £m | £m | £m | £m |
Financial liabilities |
|
|
|
|
Bond borrowings | 2,023.6 | 2,127.8 | 2,095.8 | 2,186.7 |
17. Assets classified as held for sale and liabilities directly associated with assets classified as held for sale
On 28 July 2021 the Group entered into an agreement to sell the Barbour EHS business, with completion expected on 30 July 2021, as part of ongoing portfolio management within Informa Intelligence. Consequently, the Group has classified the assets and liabilities of Barbour EHS as held for sale in the Condensed Consolidated Balance Sheet at 30 June 2021. The disposal does not meet the criteria of a discontinued operation.
The agreed sales price of £35m is subject to adjustment for working capital and is expected to result in net consideration of £32m which will be settled entirely in cash. The Group considers the net proceeds of disposal to reflect the fair value of the assets and liabilities of the business as at 30 June 2021, and as these exceed the carrying amounts of the related net assets, no impairment loss has been recognised on the carrying amounts classified as held for sale. The Group are expecting to realise a gain on sale of approximately £15m, being the excess of net disposal proceeds over the carrying value of the net assets.
17. Assets classified as held for sale and liabilities directly associated with assets classified as held for sale (continued)
The major classes of assets and liabilities held for sale as at 30 June 2021 were as follows:
| 30 June 2021 (unaudited) |
| £m |
Assets classified as held for sale |
|
Goodwill | 19.2 |
Property and equipment | - |
Right of use assets | - |
Trade and other receivables | 1.8 |
Cash and cash equivalents | - |
Total assets of disposal group held for sale | 21.0 |
Liabilities directly associated with assets classified as held for sale |
|
Trade and other payables | (0.6) |
Tax liabilities | - |
Deferred income | (3.1) |
Provisions | - |
Lease liabilities | - |
Total liabilities of disposal group held for sale | (3.7) |
Net assets of business held for sale | 17.3 |
18. Events after the Balance Sheet date
On 28 July 2021 the group entered into an agreement to sell the Barbour EHS business, with completion expected on 30 July 2021, see note 17 for further details.
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. 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.
Underlying measures of growth
Underlying measures of growth refer to the period-on-period change in revenue and adjusted operating profit, 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.
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 and integration costs, 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.
EBITDA
Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation and other non-cash items such as share-based payments and before adjusting items.
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.
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.
Adjusted net finance costs
Adjusted net finance costs are the sum of finance costs and finance income and exclude adjusting items for finance income and finance costs.
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.
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 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 Group's ability to turn Adjusted Operating Profit into cash in the business and is measured as a percentage by dividing Operating Cash Flow by adjusted operating profit in the period. The Financial Review provides the calculation of Operating Cash Flow conversion.
Free Cash Flow
Free Cash Flow is the 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 reconciliation of free cash flow to statutory measures.
Leverage ratio
The leverage ratio is the ratio of net debt to adjusted EBITDA for leverage purposes and is provided to enable an assessment of the Group's borrowings compared to its profit generation. For the leverage ratio, net debt is translated using average exchange rates for the 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.
Interest cover
Interest cover is the ratio of adjusted EBITDA for interest cover purposes to adjusted net finance costs and excluding fair value finance items. It is provided to enable an assessment of the Group's ability to cover its cost of financing from profits. The Financial Review provides the basis of the calculation of interest cover.
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