For Informa, the exhibitions and publishing group, events in the next few weeks include FanExpo, a pop culture event in Vancouver, the St Petersburg Power & Sailboat Show and World of Concrete in Shanghai.
Together with scores of other events around the globe, they provide a space where exhibitors can pay to show their wares and where punters, having paid to ogle boats and construction materials, can take out subscriptions to Informa’s networking and business intelligence services.
Informa’s global business-to-business exhibitions division is the biggest of four units that have emerged from the company’s growth acceleration plan, introduced by chief executive Lord (Stephen) Carter of Barnes when he took over at the start of 2014. The company’s latest trading statement shows it is also the fastest growing.
While the group reported organic revenue growth of 3.2 per cent in the ten months to the end of October, global exhibitions, which represent about 31 per cent of revenue, produced impressive growth of 9.2 per cent year on year.
Its business intelligence operations, representing about 20 per cent of sales, produced underlying revenue growth of 1.7 per cent ahead of an important period for subscription renewals.
Meanwhile, Informa’s academic publishing business, making up about 29 per cent of revenue, reported growth of 0.9 per cent, with strength in academic journals offset by the softer school and college textbook market.
Finally, Informa’s knowledge and networking division, representing 13 per cent of sales, saw underlying revenue decline 2.5 per cent during the period, although it has in recent weeks seen a return to positive growth for the first time in several years after a protracted period of reorganisation.
It adds up to the expectation of “a second consecutive year of modest positive growth for the overall business”, the trading update concluded. Shares in the company, which has a market capitalisation of £5.8 billion, rose 4.1 per cent to 731.5p.
For Malcolm Morgan, an analyst at Peel Hunt who has a “buy” recommendation on the stock, the prospect of positive growth in 2018 validates Lord Carter’s growth acceleration plan, due to end in 2018.
Unlike some analysts, who question the fit of Informa’s academic publishing division with its other potentially faster-growing businesses, he believes it provides depth and breadth to the portfolio. It does seem to make sense for Informa to have income streams that arise from a variety of cycles and audiences.
Informa has also achieved Lord Carter’s aim of shifting its focus from smaller conferences to bigger exhibitions and extending its global reach.
Its £1.2 billion purchase of US rival Penton Information Services hit both of these targets. It gave Informa ownership of Farm Progress, the US’s biggest outdoor farm event sometimes known as the Super Bowl of agriculture, and made the US its largest single market, accounting for nearly half of revenues.
The latest progress report, though not spectacular, is evidence that through a combination of investment of about £90 million in its growth acceleration plan and acquisition activity, Informa has improved the quality and organic growth potential of its underlying operations, while streamlining its structure.
It is fit for purpose, says Roddy Davidson, an analyst at Shore Capital, but also fully valued and possibly a less attractive buy than a number of other business-to-business players, such as Ascential, which also has a diverse portfolio but stronger growth potential, and UBM, a pure play events company.
ADVICE Hold
WHY Lord Carter’s growth acceleration plan has paid off. The company is streamlined and stable with quality assets but outlook remains modest
3i Infrastructure
There is a problem with infrastructure investment: everybody wants to do it. The truth is that the squeeze has existed for some time, making it harder for funds that invest in this area to make a decent return.
3i Infrastructure, one of the largest with £2.4 billion in assets under management, has continued to hold up well. Yesterday it posted an increase in net asset value (NAV) to £1.8 billion at 30 September, up from £1.7 billion at March 31.
The fund, which is 34 per cent owned by 3i, the private equity house, and invests in mid-market infrastructure businesses and greenfield and low-risk energy projects, has pointed out that record volumes of capital were chasing limited assets, especially in European regulated utilities.
That could throw up an interesting situation: the 3i fund is conducting a “strategic review” of its investments in Elenia, the second-largest distribution network in Finland, and Anglian Water, the largest water company in Britain.
Sales of both would cut 3i Infrastructure’s income but generate money that would probably be returned to investors. That would be on top of the fund’s existing plan to pay a dividend of 7.85p for the financial year ending March 31, 2018, which would be a 4 per cent rise on the previous year. The company declared an interim dividend of 3.925p yesterday, to be paid on January 8.
The picture is not entirely glowing. While Elenia and other investments rose in value in the past six months, other parts of the portfolio did not perform as well.
The valuations of both Oystercatcher, which does oil storage facilities, and Denmark-based ESVAGT, which provides emergency rescue and response vessels, were cut on lower growth prospects.
Charges of 1.6 per cent for managing the fund are among the highest for listed infrastructure funds, analysts at Numis noted yesterday.
No performance fees were accrued during the period but, given the prospect of disposals for a profit, such a payment would be likely in the next few months, Numis added.
ADVICE Hold
WHY It is trading at a 12 per cent premium to its net asset value, making it worth holding but too rich for a new punt
