Informa Plc · LSE:INF
Informa — Investor Day (November 2014)
78 slides from Informa's investor day presentation, November 2014
Slide 1: Investor Presentation: Growth & Acceleration
Investor Presentation Growth & Acceleration November 2014
Slide 2: Disclaimer
Disclaimer These materials are being supplied to you by Informa PLC (“Informa”) solely for your information and for use at this presentation. All numbers and charts included in this presentation are from Informa data unless specified otherwise. These materials may not be reproduced in any form, redi
Slide 3: Introduction
Introduction Stephen A. Carter Group Chief Executive
Slide 4: Presentation overview
Presentation overview Introduction: Stephen A. Carter, Group Chief Executive Growth Acceleration Plan: Alex Roth, Director of Strategy & Business Planning GAP Structure & Funding: Gareth Wright, Group Finance Director Strengthen & Grow: Patrick Martell, Chief Executive – Business Intelligenc
Slide 5: Where we started 2014
Where we started 2014 Group CEO retires after 25 years Highly distributed operational structure Group CFO departs for new role Opportunistic approach to M&A A balanced Group portfolio High margins versus peers Attractive, growing markets Underinvestment in some key areas Talented individuals, vertic
Slide 6: 2014–2017 Growth Acceleration Plan
2014–2017 Growth Acceleration Plan The Growth Acceleration Plan MEASURED CHANGE ACCELERATED CHANGE Accelerate & Scale • Growth investment Strengthen • Performance acceleration • Return on investment • Funding Operational Fitness • Portfolio management • Targeted M&A • Strategic review • Catch up inv
Slide 7: Operational fitness
Operational fitness Strategic Review In depth study of markets, capabilities, structure and opportunities Strengthened Executive Management Team and appointment of Divisional Talent Senior Management Teams Operating Structure New Operating Structure established, to be effective from Jan 2015 Locatio
Slide 8: Twenty questions from the 2013 FY results
Twenty questions from the 2013 FY results Do you see logic/synergy to owning all three divisions? What is your view on leverage? 1 (ie Are you going to sell Academic Publishing or Business Intelligence?) 11 (ie Will you gear the balance sheet more aggressively?) How does your management style differ
Slide 9: Growth Acceleration Plan
Growth Acceleration Plan Alex Roth Director of Strategy & Business Planning 9
Slide 10: Objectives of the Portfolio Evaluation Programme
Objectives of the Portfolio Evaluation Programme January February March April May June July August September October November December 10
Slide 11: PEP project plan
PEP project plan January February March April May June July August September October November December Market Overview Portfolio Evaluation Strategic Planning Financial Impact Implementation Planning 11
Slide 12: Framework for Growth Acceleration Plan (GAP)
Framework for Growth Acceleration Plan (GAP) Growth Acceleration Plan 1 2 3 4 5 6 GAP GAP GAP Portfolio GAP Acquisition GAP GAP Operating Management Management Strategy Investment Funding Structure Model • Establishment of • Installation of • Establishment • Strategic filter • £70-90m • Refinancing
Slide 13: GAP Investment
level transformation plan 52015 122015 Hizoi6 | 22016 | Hi7017_ | ¥22017 vias wazois | azor7 | zz ansformation plan level transformé | qi2015 | 22015 a . informa — informa informa
Slide 14: GAP Investment: financial profile
5 GAP Investment: financial profile £m £m £m People and AP organisation 2015 £30-40 Customer BI engagement & value creation 2016 £30-35 GE Product and content refresh K&N Production 2017 £10-15 agility and Group scale 14
Slide 15: GAP Investment: overview of initiatives
5 GAP Investment: overview of initiatives Operational Fitness Strengthen Accelerate & Scale • Restructure BI around market verticals • Expand sales capability across BI People and • Streamline and consolidate K&N • Enhance commercial sales capability in AP organisation • Transfer assets across Divis
Slide 16: GAP Investment: illustration of BI initiative
5 GAP Investment: illustration of BI initiative WORK STREAM Improve discoverability in search, and personalisation of content Inconsistent taxonomy applied across product sets CURRENT STATUS Lack of global search mechanism Limitations in multi-device access PROJECT Establishment of metadata
Slide 17: GAP Investment: projected returns
5 GAP Investment: projected returns Projected post-tax return on GAP investment Cash payback % ROI: 15-20% ROI: 25-35% • Positive ROI from year 3 • Peak margin impact of 150-250 bps • Cash payback within 2015 2016 2017 2018 four years (Year 1) (Year 2) (Year 3) (Year 4) Investment range (m) £30-40 £
Slide 18: GAP Structure & Funding
GAP Structure & Funding Gareth Wright Group Finance Director
Slide 19: Framework for Growth Acceleration Plan (GAP)
Framework for Growth Acceleration Plan (GAP) Growth Acceleration Plan 1 2 3 4 5 6 GAP GAP GAP Portfolio GAP Acquisition GAP GAP Operating Management Management Strategy Investment Funding Structure Model • Establishment of • Installation of • Establishment • Strategic filter • £70-90m • Refinancing
Slide 20: GAP Operating Structure
20 (2) GAP Operating Structure Academic Business Global g Publishing Intelligence Exhibitions Networking CEO Roger Horton Patrick Martell Will Morris Andrew Mullins CFO Stuart Dawson Kevin Donagher Malcolm Carradus Carl Barnes e ovum Broadband BvUnG \WORLDFORUMGO4 Taylor & Francis Grou DATAMONITOR l
Slide 21: GAP Operating Structure
1 GAP Operating Structure Formerly Global Events Medical Journals Policy Advisory Service Training & Learning 21
Slide 22: GAP Operating Structure: Academic Publishing
1 GAP Operating Structure: Academic Publishing 2013 Revenue Scale within specialisms, extend geo-reach, By geography UK enhance discoverability North America Cont Europe Moderated growth, higher margin profile RoW Retain and enhance US revenue base Academic Publishing 2013 More balanced mix
Slide 23: GAP Operating Structure: Business Intelligence
1 GAP Operating Structure: Business Intelligence 2013 Revenue Vertical prioritisation, scaling across niches, By geography UK revitalising product North America Cont Europe Lower growth, lower margin profile RoW Retain and enhance US revenue base Business Intelligence 2013 Revenue (£m) 305.9
Slide 24: GAP Operating Structure: Knowledge & Networking
1 GAP Operating Structure: Knowledge & Networking 2013 pro-forma revenue Operational consolidation, market focus, By geography product refresh UK North America Organic revenue decline, mid-teens margin Cont Europe RoW High exposure to Europe Knowledge & Networking 2013 Vertical strengths in
Slide 25: GAP Operating Structure: Global Exhibitions
1 GAP Operating Structure: Global Exhibitions 2013 Pro-Forma Revenue inc Virgo & China Beauty Geo-diversification, scale in verticals, strategic By geography acquisitions Brazil China Double-digit organic growth and strong North America Middle East margins, comparable to peers RoW Build and ex
Slide 26: GAP Investment: 2014-2017 investment framework
5 GAP Investment: 2014-2017 investment framework Group wide investment programme Total investment now projected to be £70-90m Over 70 individual project plans assessed 70-80% Capex versus 20-30% Opex Implementation planning nearing completion First phase of projects underway in H1 2015
Slide 27: GAP Investment: projected returns
5 GAP Investment: projected returns Projected post-tax return on GAP investment Cash payback % ROI: 15-20% ROI: 25-35% • Positive ROI from year 3 • Peak margin impact of 150-250 bps • Cash payback within 2015 2016 2017 2018 four years (Year 1) (Year 2) (Year 3) (Year 4) Investment range (m) £30-40 £
Slide 28: GAP Funding: 2014-2017
6 GAP Funding: 2014-2017 Full assessment of sources of funding Informa Debt Financing Summary Instrument C’cy Amount Amount Maturity Interest Phase 1: New £900m Revolving Credit Facility C’cy (m) GBP (m) RCF GBP 900 900 Oct-19 LIBOR Replaces £625m facility maturing in April 2016 +0.6-1.2% US P
Slide 29: GAP Funding: 2014-2017 Dividend commitment
6 GAP Funding: 2014-2017 Dividend commitment Understand importance of dividends to shareholders Full review of Dividend Policy post July announcement Healthy annual free cash flow alongside GAP investment Good management discipline Underpinning dividend payments at a minimum inflationary l
Slide 30: GAP Funding: 2014-2017 leverage range
6 GAP Funding: 2014-2017 leverage range Target leverage of 2.0x to 2.5x On-going strong free cash flow Annual Dividend payments of £110m+ Active, targeted acquisition programme Differentiator… minimal pension deficit 30
Slide 31: GAP Acquisition Strategy: 2014-2017
4 GAP Acquisition Strategy: 2014-2017 Proactive rather than reactive Approach Focus on quality of assets, strategic fit and potential to add value Current focus on Global Exhibitions Post-acquisition integration playbook Delivery Integration Officer Post-acquisition investment to maximis
Slide 32: GAP Acquisition Strategy: Building geographic strength in Global Exhibitions
4 GAP Acquisition Strategy: Building geographic strength in Global Exhibitions £54m £160m £20bn RoW Middle East Brazil China No revenue North America from Brazil or North America Includes IPEX Informa Informa Market 2006 2013PF 32 Source: AMR International, Company data
Slide 33: GAP Acquisition Strategy: Building vertical strength in Global Exhibitions
4 GAP Acquisition Strategy: Building vertical strength in Global Exhibitions Health & Nutrition Beauty Property & Construction Hobbyist / Fans 33
Slide 34: Summary
Summary 1 GAP Operating Structure 4 GAP Acquisition Strategy 5 GAP Investment 6 GAP Funding New RCF Dividend commitment Strong free cash flow, balance of investment and returns 34
Slide 35: Strengthen & Grow
Strengthen & Grow Patrick Martell Chief Executive – Business Intelligence 35
Slide 36: An exciting move and 2014 beyond
An exciting move and 2014 beyond 36
Slide 37: Business Intelligence: Niche → Nano markets
Business Intelligence: Niche → Nano markets • Generics • Off label use • Disease type Finance • • Drug discovery Pre-clinical development • Bio-techniques Business Intelligence • IP asset management • • Health and safety Chemical Maritime & Legal • Clinical trials planning compounds • Clinical opera
Slide 38: Initial diagnosis of Business Intelligence
Initial diagnosis of Business Intelligence Structural change: Physical to digital, news to insight Lack of focus Fragmented organisational structure Organic revenue decline of 5-10% but high margins maintained Renewal rates Under-investment in falling people, platforms & content Cost cutting to main
Slide 39: Strengthen & Grow: 2015 action plan
Strengthen & Grow: 2015 action plan Management Team Appoint Senior Management Team; CTO to be appointed in H1 2015 Organisational Restructure the Division around market-facing verticals structure Sales & Marketing Improve vertical focus and customer engagement Subscriptions Immediate priority on sub
Slide 40: Strengthen & Grow: Building the management team
Strengthen & Grow: Building the management team CEO Patrick Martell CFO Sales & Marketing Kevin Donagher Gary Nugent HR CTO Emma Blaney TBA MD / Verticals Lara Boro Finance Pharma & TMT Maritime Agra Healthcare & Law 40
Slide 41: Strengthen & Grow: trusted brands with niche expertise
Strengthen & Grow: trusted brands with niche expertise FINANCE PHARMA & TMT MARITIME AGRA HEALTHCARE & LAW 41
Slide 42: Strengthen & Grow: reorganise around verticals
Strengthen & Grow: reorganise around verticals Finance Pharma & TMT Maritime Agra Healthcare & Law Sales and Marketing Production Support Services 42
Slide 43: GAP Investment: 2014-2017 Business Intelligence
5 GAP Investment: 2014-2017 Business Intelligence Customer Improve renewal visibility & process Build pricing engine Engagement & Re-engineer and harmonise sales, fulfilment Enhance customer support and self help Value Creation and marketing systems/processes Enhance e-commerce capabilitie
Slide 44: Strengthen & Grow
Strengthen & Grow Attractive markets Talented people, good products and established brands 2014-2017 Growth Acceleration Plan Simplify, focus and reorganise around verticals Management refresh & strengthen Investment to catch-up and grow Transition from information & news to intelligen
Slide 45: Academic Strength
Academic Strength Roger Horton Chief Executive – Academic Publishing 45
Slide 46: Academic Strength: Market Backdrop
Academic Strength Market Backdrop 46
Slide 47: Market backdrop
Market backdrop Mature In developed markets, the Academic industry is relatively mature Resilience The market offers consistent, defensive growth through the cycle Competition A number of large-scale players with global reach Content origination well developed in emerging markets but revenue Geograp
Slide 48: Global academic industry - subject profile
Global academic industry - subject profile £3.3bn £7.1bn £6.7bn Newsletters & Directories Online A&I Other 0.5 Market Size Market Growth Services 1.2 0.6 Online A&I Services Newsletters & Directories – 0.3 £16-17bn 2-3% 2.0 Online A&I Journals Services 0.9 1.0 Market structure Journals Journals • Jo
Slide 49: Global academic industry - geographic profile
Global academic industry - geographic profile £3.3bn £6.7bn £6.4bn ROW: 0.1 ROW: 0.4 ROW: 0.4 Market Size Market Growth Asia-Pacific Asia-Pacific Asia-Pacific 0.7 1.6 1.3 £16-17bn 2-3% Europe Europe Europe Market Structure 1.3 2.0 1.7 • North America still dominant as a region • Asia-Pacific growing
Slide 50: Academic Publishing Overview
Academic Strength Academic Publishing Overview 50
Slide 51: Academic Publishing overview
Academic Publishing overview Depth and quality of relationship with academic community Excellence in consolidating niches across the broad spectrum of academic disciplines Leading publisher in HSS segment Emphasis on quality, scale and automation Informa’s Academic Publishing Division has co
Slide 52: Competitive positioning
Competitive positioning Operating Margin Informa Reed Elsevier Informa AP Thomson Reuters = £1bn revenue Wolters Kluwer Pearson Wiley 2012/13 Organic Revenue YoY Growth Source: Company annual reports, Simba (NB All are Group figures except Informa and Reed Elsevier) 52
Slide 53: Differentiated industry approach
Differentiated industry approach The ‘T&F way’…commitment to the long-term Management approach, style and longevity Partnership relationship with academic authors and institutions Emphasis on quality and offering…commitment to knowledge Consistently fair, seen as a good partner for societi
Slide 54: Differentiated publishing approach
Differentiated publishing approach BOOKS Key niches from 2nd year undergraduate through to high level research JOURNALS Scholarly by subscription – Review material – Open Access Publishing across the levels from teaching to research 54
Slide 55: Differentiated operating model
Differentiated operating model Infrastructure consolidated and where possible centralised Technology supportive of industrialisation Digital distribution or through localised hubs Format neutral, content ownership and price control Full integration of acquisitions High quality, low cost ma
Slide 56: Academic Publishing performance
Academic Publishing performance Informa Academic Publishing Revenue 2009-2013 Informa Academic Publishing Operating Profit 2009-2013 (Constant currency figures) (Constant currency figures) CAGR 5.2% CAGR 7.1% Books Journals Medical journals 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Source: C
Slide 57: Academic Strength: Growth Opportunities
Academic Strength Growth Opportunities 1. Customer 2. Content 3. Sales models/format 4. Medical Journals 57
Slide 58: 1. Customers – location and type
1. Customers – location and type Geographic expansion 2013 Revenue by Geography Content origination Revenue generation UK North America Customer segmentation Cont Europe Professional v Corporate v Academic RoW Direct v Intermediary 58
Slide 59: 2. Content – growth and discoverability
2. Content – growth and discoverability Journal article volume growth Growth in new specialisms and research Expansion of book catalogue in key niches Discoverability to drive backlist sales and collection usage Open Access opportunity Content is our core strength 59
Slide 60: 3. Sales Models and Formats
3. Sales Models and Formats Print, print & online, online only Flexible sales Subscription – single, collection, consortia model Author pays – OA Rental / Archives / Collections E-only journals Format eBook penetration neutrality Print still robust for books Mobility – digital delive
Slide 61: 4. Medical Journals – overview
4. Medical Journals – overview Revenue of £40m in 2013 185 primary research and review journals 60% of revenue from annual subscriptions 40% of revenue from regular non-subscription revenue Special deals Archives Pharma & Corporate offerings 61
Slide 62: 4. Medical Journals – the opportunity
4. Medical Journals – the opportunity ST & M A full STM offering – opportunity to leverage usage and scale Efficiency Content production, platform technology, global distribution Society contracts just 13% of Medical Journal revenue versus >20% in rest of 3rd Party journal portfolio Adjacency Subjec
Slide 63: GAP Investment: 2014-2017 Academic Publishing
5 GAP Investment: 2014-2017 Academic Publishing Customer Engagement & Value Creation Investment in sales capability Expansion of global sales presence People & Organisation Enhance customer workflow integration & analytical tools Product People & Product personalisation & content discoverabi
Slide 64: Academic Strength: Summary
Academic Strength Summary 64
Slide 65: Academic Publishing summary
Academic Publishing summary Resilient and growing market, increasingly global Differentiated…industry approach and operating model 2014-2017 Growth Acceleration Plan Expand customer base geographically and by segment Grow volume and discoverability of content Flexible sales models and fo
Slide 66: Growth & Acceleration
Growth & Acceleration Stephen A. Carter Group Chief Executive 66
Slide 67: Attractive markets
Attractive markets Market Category Market Size Market Growth Competitive Environment Business & Professional • Strength in established brands Information & £65bn 3-5% Intelligence • Competition specific to sub-verticals Academic Books & • Stability for larger publishers Journals £30bn 2-3% • Otherwi
Slide 68: 2014–2017 Growth Acceleration Plan
2014–2017 Growth Acceleration Plan The Growth Acceleration Plan MEASURED CHANGE ACCELERATED CHANGE Accelerate & Scale • Growth investment Strengthen • Performance acceleration • Return on investment • Funding Operational Fitness • Portfolio management • Targeted M&A • Strategic review • Catch up inv
Slide 69: Framework for Growth Acceleration Plan (GAP)
Framework for Growth Acceleration Plan (GAP) Growth Acceleration Plan 1 2 3 4 5 6 GAP GAP GAP Portfolio GAP Acquisition GAP GAP Operating Management Management Strategy Investment Funding Structure Model • Establishment of • Installation of • Establishment • Strategic filter • £70-90m • Refinancing
Slide 70: GAP Investment: projected returns
5 GAP Investment: projected returns Projected post-tax return on GAP investment Cash payback % ROI: 15-20% ROI: 25-35% • Positive ROI from year 3 • Peak margin impact of 150-250 bps • Cash payback within 2015 2016 2017 2018 four years (Year 1) (Year 2) (Year 3) (Year 4) Investment range (m) £30-40 £
Slide 71: Growth targets
Growth targets AP Continued growth at or ahead of the Academic market BI Positive organic growth run rate by end 2016 GE Continued growth ahead of the Exhibitions market K&N Positive organic growth run rate by end 2015 71
Slide 72: GAP Management Model
2 GAP Management Model Stephen Carter CEO Gareth Wright Group FD Executive Knowledge Talent & Strategy & Academic Business Global IR, Comms General Management Publishing Intelligence Exhibitions & Trans- Business & Brand Counsel Team Networking formation Planning Senior Management Teams 72
Slide 73: Measures of success
Measures of success Improved Overall growth International customer in content under growth management management Market Growth in e- Everything leadership in commerce and digital target verticals digital leads Product iteration, Customer 73 platform neutrality and mobility engagement throughout year
Slide 74: Where we are going
Where we are going Measured Change to Accelerated Change Balanced portfolio positioned for growth and scale Consistent organic growth across all Operating Divisions Objective: improved returns for shareholders 74
Slide 75: Appendix
Appendix informa
Slide 76: Historical financials under new structure
Historical financials under new structure 2013 2014 Academic Publishing Q1 H1 Q3 YTD FY Q1 H1 Q3 YTD Revenue (£m) 184.2 407.8 183.6 Organic Revenue Growth 2.3% 3.0% 3.6% 4.7% 0.0% 3.3% 3.1% Adjusted Operating Profit (£m) 63.0 150.9 63.0 Adjusted Operating Margin (%) 34.2% 37.0% 34.3% 2013 2014 Busin
Slide 77: Historical financials under new structure
Historical financials under new structure 2013 2014 Global Exhibitions Q1 H1 Q3 YTD FY Q1 H1 Q3 YTD Revenue (£m) 101.0 160.2 121.6 Organic Revenue Growth 13.3% 21.0% 14.2% 15.8% 13.9% 20.1% 22.7% Adjusted Operating Profit (£m) 38.7 50.0 48.5 Adjusted Operating Margin (%) 38.3% 31.2% 39.9% 2013 2014
Slide 78: Thank you
Thank you informa