Informa Regulatory News (INF)

THIS ANNOUNCEMENT, INCLUDING THE APPENDICES AND THE INFORMATION IN THEM, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN THE UNITED STATES OR ANY OTHER JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Informa PLC Press Release

16 April 2020

Trading Update

Stability & Strength

London: Informa Group PLC ("Informa" or the "Company" or the "Group"), the International Exhibitions, Events, Information Services and Advanced Learning Group, is today providing an update on trading and further details on its COVID-19 Action Plan.

The Action Plan forms part of Informa's response to the significantly deeper, more volatile and wide-reaching impact of the COVID-19 pandemic around the world than was initially expected. To stay ahead of this, the Company is today announcing further cost-reductions, the temporary suspension of dividends, discussions on a debt covenant waiver and the issue of additional new equity. Supported by resilient performances and cashflows from its subscription businesses, this combined set of actions provide Stability and Strength to the other side of COVID-19, enabling Informa to manage its Brands and customers for long-term growth and value, and avoid short-term actions that damage the business.

Key Highlights

· Long-term Value…Informa's approach through the period of the COVID-19 pandemic is to focus on the long-term strength and value of the Group's Brands and customer relationships;

· Short-term Disruption…Since the end of January in Mainland China, the scale, depth and reach of the COVID-19 pandemic has extended beyond initial predictions, significantly impacting the world, global commerce and business and, in particular, the Group's Events-related businesses;

· Resilient Performance…The Subscriptions-related businesses (c35% of revenue) have remained resilient and continue to grow consistently, underpinning the Group and providing strength in the face of the negative impact of COVID-19 on the Events-related businesses.

· Stability & Strength…Whilst the power of Informa's B2B events businesses continue to be evidenced by customer enquiries and re-bookings, it is now clear the path to the other side of COVID-19 will be more gradual and phased than initially anticipated. The Group is therefore extending its COVID-19 Action Plan through a series of enhanced measures to ensure Stability and Strength in this period:

· Preserving Strength…A continuous programme of customer support, targeted rebate funds, digital/virtual platforms and a commitment to avoid redundancies and retrenchment, with the focus on preserving long term value and professional intellectual capability;

· Financing Control…Complementary measures, including the temporary suspension of dividends, constructive discussions on a covenant waiver for the Group's US PP debt, an application to the Bank of England's COVID Corporate Financing Facility and the proposed placing of further equity;

· Cost & Cash Management…Enhanced measures delivering £130m+ direct/indirect savings including the removal of all discretionary costs, a recruitment freeze and a Board/Leadership salary sacrifice;

· Operating Flexibility…Extension of The Postponement Programme, with £460m+ of revenue rescheduled to Q3/Q4 2020 and less than 10% of Events revenue cancelled to date;

· Colleague Support…Extended measures providing flexibility, guidance and support, including full remote working, a sabbatical programme and the launch of The Informa Colleague Support Fund

First Quarter Trading Update

The scale and breadth of the COVID-19 pandemic has significantly exceeded initial predictions, with half the world's population currently in lockdown, widespread international travel restrictions and many businesses and industries in temporary shutdown.

The impact on our Events-related businesses (c65% of revenue) has intensified significantly since the initial disruption early in the first quarter in Mainland China, with no events of any scale scheduled to take place in April. This reduced level of activity is now expected to stretch through the second quarter and much of the third quarter, with a gradual and phased recovery from Q3 into the final quarter of the year.

Against this backdrop, Informa's focus remains on prioritising the health and safety of Colleagues and Customers, whilst making decisions for the long-term strength and stability of our Brands and Businesses.

Informa is fortunate to have a highly dedicated and professional team of Colleagues across the world, who have risen to the personal and professional challenges presented by the COVID-19 pandemic, adapting seamlessly to continuous, remote working to continue to deliver for Customers, whilst fully supporting each other, through this extraordinary period.

The anchor of the Informa Group remains the resilient and predictable Subscriptions-related businesses (c35% of revenue). These businesses continue to grow well, with strong subscription renewals at Taylor & Francis and positive annualised contract values at Informa Intelligence.

Across these information businesses, the Group has moved quickly to make relevant information and data available to support the scientific and medical response to the COVID-19 pandemic. This includes the creation of open access microsites by both Taylor & Francis and Pharma Intelligence, including links and references to all relevant articles, books, data, analysis and information published by these businesses.

Following six years of strength and delivery, prior to the emergence of the COVID-19 pandemic the Events-related businesses continued to deliver strong performances amongst the Group's major brands, with equally strong rebooking for 2021 in Healthcare & Pharma (Arab Health +20%) and Construction & Real Estate (The Roofing Show +11%).

As the scale and reach of the COVID-19 pandemic started to become clear, the Group moved quickly on the first stage of The Postponement Programme, using its strong relationships with customers and venues to secure commercially relevant dates later in the year. Over £460m of revenue has now been rescheduled, with a deliberately heavy weighting to the last four months of the year.

Stability & Strength

Informa first launched the COVID-19 Action Plan in late January 2020, initially focused on Mainland China, to provide an internal framework for fast decision making and a set of targeted actions to support Colleagues and the long-term Stability and Strength of our Brands and Customer relationships.

Gradual and Phased Return in China

Informa's decisions and responses to the COVID-19 pandemic are partly informed by the steady progress of the Group's businesses in China, which are now beginning to re-emerge, with offices re-opening and Colleagues returning to increasingly normal working patterns.

It remains clear that there is significant demand for major B2B Event Brands, with customer commitments and cash collections continuing. However, it is also now clear that the path to full recovery for our events businesses in China will be gradual. Working with local governments/authorities, venue owners and professional communities, the Group is identifying a number of steps along the way, trends that we expect to be mirrored in other geographies as they also emerge out of the other side of the COVID-19 pandemic:

· Phased return: Social distancing and other control measures are being relaxed gradually to avoid the risk of a resurgence in infections, suggesting a gradual and phased recovery for events;

· Region by region: The pace of exit from COVID-19 will also vary by region. Within China, a number of commercial centres have approved the issue of events licenses, but others have yet to and so the Group is planning on a phased return through the second half of 2020;

· Domestic versus International: As events return, Informa will be focusing initial participation around domestic audiences (c75% of exhibitors), and planning on a longer lead time before the full return of international hosted buyer communities;

· Revenue attrition: The Group is assuming an informed level of revenue attrition on our returning brands in light of the significant impact of the pandemic on macro-economic conditions and our customers' businesses;

· Biosecurity: Informa is working with local governments/authorities and venue owners to provide certified levels of biosecurity, enhanced hygiene, electronic registration, mobile data screening, density management and other relevant on-site checks and facility upgrades.

Stability and Strength through a Gradual and Phased Return

As part of the COVID-19 Action Plan, the Group is planning and preparing for multiple different scenarios in terms of the timing and shape of the gradual recovery of its Events businesses. As outlined, the current Operating Plan ("Base Case") now assumes zero revenue from events in the second quarter and much of the third quarter, before a gradual and phased recovery through Q3 into the final quarter of the year.

The Group's Vigilant Case ("Downside Case") assumes an even more gradual return, with zero revenue from events until the fourth quarter, before a phased recovery through the final months of the year.

The extension of the Group's COVID-19 Action Plan, including the combined effect of all the enhanced measures detailed below, is designed to provide Stability and Strength It will enable Informa to preserve and protect the intellectual capital within the Group and manage the business for long-term strength and value, whilst also managing its balance sheet sensibly, even if the shape of recovery turns out to be more gradual and phased than the Group's current Operating Plan.

Financing Control Measures

A range of complementary financing measures to ensure the Stability and Strength of the Group, including:

· Dividend Suspension: The temporary suspension of dividend payments, including the withdrawal of the 2019 Final Dividend. The Board intends to review dividend policy later in 2020;

· Covenant Waiver: Constructive discussions underway with US private placement debt holders, a process aligned with and enhanced by today's other measures;

· Liquidity Backstop: Alongside the Group's existing Revolving Credit Facility (£900m) and Surplus Credit (£750m) Facility, as a major UK information services employer, Informa has completed its application for eligibility to issue commercial paper under the Bank of England's COVID Corporate Finance Facility;

· Proposed Equity Addition: Noting recent statements by the Financial Conduct Authority and the Pre-Emption Group in relation to targeted equity issuances, Informa is immediately launching the proposed placing of up to 19.9% of new equity, with full details set out in today's simultaneous Placing Announcement. The net proceeds of the placing, which includes full participation from the Informa PLC Board and the Group's entire international Executive Management Team, will be used to strengthen the Group's balance sheet, reduce overall net debt and lower leverage.

Cost & Cash Management Measures

Informa has already implemented a range of direct and indirect cost controls, securing £130m+ of annualised savings to date, whilst protecting and preserving the intellectual property and core talent within the Group:

· Recruitment Pause: The postponement of all recruitment and review of all contractors/consultants;

· Rewards Phasing: The postponement of salary reviews and merit rises, and the introduction of voluntary salary sacrifices by the Group CEO/CFO (33% of salary), the PLC Board (25%) and the entire international Executive Management Team (25%);

· Project Review: The postponement of all non-essential projects and capital expenditure;

· Discretionary Costs: The removal of all non-essential spend, including travel, professional fees etc

· Employment Flexibility: The 2020 Informa Sabbatical, under which Colleagues can take voluntary unpaid leave over a six-month period.

Operating Flexibility Measures

The Group has extended The Postponement Programme, working with customers and venues and securing commercially attractive dates focused around the last four months of 2020:

· The Postponement Programme: Informa has rescheduled 60+ large Brands and c.350 small Brands, representing £460m+ of revenue. Additionally, the Group has rephased (biennials)/cancelled 60+ brands, with revenue of £150m+;

· Biosecurity: Informa is investing in industry leading biosecurity protocols standards and control, working with governments, venue operators and professional communities.

Colleague Support Measures

Informa has always prioritised the safety and wellbeing of Colleagues and Customers, introducing a range of measure to provide flexibility, guidance and support:

· Digital and Virtualisation: Effective platforms for maintaining close customer engagement through virtual events and digital Stay Connected content programmes;

· Remote Working Capability: Seamless move to effective remote working across the Group;

· In-Market Support: Strict adherence to local government and health authority advice; 

· Consistent Communications: Weekly CEO and Divisional Management Townhalls and video updates;

· Volunteering Flex: Relaxed volunteering policy to facilitate in-community and family support;

· The Informa Colleague Support Fund: A discrete, funded programme for Informa Colleagues in particular hardship due to COVID-19.

This Announcement should be read in its entirety. In particular, the information provided in the "Important Notices" section of this Announcement should be read and understood.

Important Notices

This Announcement is for information purposes only and shall not constitute an offer to sell or issue or the solicitation of an offer to buy, subscribe for or otherwise acquire securities in any jurisdiction in which any such offer or solicitation would be unlawful. Any failure to comply with this restriction may constitute a violation of the securities laws of such jurisdictions. Persons needing advice should consult an independent financial adviser.

This communication is not an offer of securities for sale in the United States. The securities referred to herein have not been and will not be registered under the US Securities Act 1933, as amended (the "Securities Act") or under the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold directly or indirectly in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities laws of any state or any other jurisdiction of the United States.

Certain statements contained in this Announcement constitute "forward-looking statements" with respect to the financial condition, performance, strategic initiatives, objectives, results of operations and business of the Company. All statements other than statements of historical facts included in this Announcement are, or may be deemed to be, forward-looking statements. Without limitation, any statements preceded or followed by or that include the words ''targets'', ''plans'', ''believes'', ''expects'', ''aims'', ''intends'', ''anticipates'', ''estimates'', ''projects'', ''will'', ''may'', "would", "could" or "should", or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; and (ii) business and management strategies and the expansion and growth of the Company's operations. Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results, performance or achievements to differ materially from those projected or implied in any forward-looking statements. The important factors that could cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, the macroeconomic and other impacts of COVID-19, economic and business cycles, the terms and conditions of the Company's financing arrangements, foreign currency rate fluctuations, competition in the Company's principal markets, acquisitions or disposals of businesses or assets and trends in the Company's principal industries. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this Announcement may not occur.

Notes to Editors

Informa PLC

Informa is a leading international Exhibitions, Events, Information Services and Scholarly Publishing Group. It helps commercial, professional and academic communities work smarter and make better decisions faster, through specialist content and intelligence, and opportunities to connect and learn. For more information, please visit www.informa.com.