Informa plc (LON:INF)

Earnings Call: H2 2020

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Apr 22, 2021

Summary

FY20 revenue was £1.661bn and adjusted operating profit nearly £270m, as COVID-19 sharply curtailed physical events. The FY21 £1.7bn baseline assumes subscription growth and a gradual event return, with cash-flow neutrality or better targeted.

Thank you very much for taking the time to join us here at the Informa 2020 annual results. I am joined by Gareth Wright, our Group Finance Director. Gareth and I are just going to take you through the results themselves for 2020, and then perhaps as importantly or more importantly, talk a little bit about our guidance for the remainder of this year, 2021, and also look forward to what we see as a period of growth and revitalization going out to 2024. We have themed this presentation Continuing Stability and Security because our business has, as you know, been very impacted by the COVID-19 pandemic. We feel very confident about where the business is, and indeed how we have navigated our way through the challenges, not just of last year, but also this year, what we are treating as a transition year as we move back to growth and recovery and then future revitalization. The disclaimer stands as normal. Now we will get into the meat of the presentation. We have talked for many years about Informa servicing or being part of the knowledge and information economy. There has never been a period like last year, where the power of data, of information, of connectivity, of the ability to work remotely, to be dependent upon accurate data, original insights, verified intelligence, has never been more vivid than over the last 12 to 14 months. That economy is a growth market in every sense. We obviously operate in the B2B aspect of that market, providing market specialist information, knowledge and service to our customers in our many markets. Looking into 2021, what are the key messages or the key thoughts we would like to leave you with? Gareth and I will work through the detail of this. We spent a lot of time at the beginning of last year when it became very evident to us that this COVID pandemic was going to be a material consequence, not just for our business, but more importantly, for the rest of the world, that we would have to move fast to ensure stability and security, not just in our financing, which Gareth will take us through in more detail, but also in our costs, in how we dealt with our customers, and what it meant for how we built the future strength of the company. We were very focused on ensuring we were making long-term decisions, not just surviving in the present, but more importantly, having long-term value in the future. Our subscriptions businesses moved center stage, and they really have had a very strong 2020 and an even stronger opening to the first quarter of 2021, which we will talk about. We are seeing 2021 as a transition year. There is a return to physical activity in different parts of the world, most notably in mainland China, but not only in mainland China. We will give a sense of how we see that unfolding. We have, as a result of the lockdown, been engaged in the development of attendant and adjacent digital services alongside our B2B event brands. That has afforded us a learning opportunity and a development opportunity, a product development opportunity. We will give you more of a sense of what that means, not just for the short term as a replacement, but as a long-term part of the product offer alongside our events. Data and customer knowledge, customer insight, customer understanding, has become even more important, particularly in a world where you cannot meet your customers face to face and get that texture, that depth. The power and the value of the data that powers our business has gone up in its importance. We will talk a little bit about that as well. We gave an undertaking at the end of last year, which we reiterated in our pre-close statement in January, that we would discipline ourselves to operate within a positive cash envelope in 2021. We set a baseline of revenue certainty for 2021 of around GBP 1.7 billion, which we underscore today. We also want to talk a little bit about the importance of sustainability and our own FasterForward program, which has been a big part of our business for some time and is going to become even more important in the years ahead. That is the snapshot of the group. As everyone knows, we operate in three markets, and we remain committed to those three markets. The business information market, the provision of specialist data and intelligence. In our case, within that division, two, three end markets, the pharma market, the maritime market, and the financial intelligence market, with a primary focus on retail financial intelligence. We operate in the B2B market where our events businesses are primarily focused, providing products and services to our customers largely to enable them to go to market, meet their customers, and connect buyers and sellers. Then we operate in the market for advanced learning, for verified, accurate, peer-reviewed, advanced learning and knowledge. In all three of those markets, we remain confident that the forward attractions of those markets are as they ever were, albeit there is an increasing importance of the power of data information and applied technology. All subjects we will return to. To go back to go forward, here is the headline summary of our 2020 results. Our performance is broadly in line with guidance. We issued, unusually for us, a pre-close update in early January in order that the world could get a sense of the stability and security in our outturn from 2020. Today, we are confirming those numbers. Our group revenue is pretty much down the fairway with that pre-close guidance at GBP 1.661 billion. You can see the gap versus the normalized year that was 2019. A material gap in revenue, almost entirely a function of the COVID-19 pandemic impact on our physical events business. On the profit line, we made a profit in the year, an adjusted operating profit of just shy of GBP 270 million. Still significantly down on our normalized profit run rate. Alongside that, we moved significantly on our cost base in year. Both on our direct costs and our indirect costs, we on a full year basis, ended up with nearly GBP 600 million reduction in our standard operating costs. We will talk more about that later. We did end up with an operating loss as a result of all of those impacts on our business, largely a judgment on the carrying value of some of the assets in our events business, and largely a function of a view of the likely profitability in 2020, which you can see, and indeed, the likely profitability in 2021, which you can see as a result of the transition year. It does not change our view of the long, long-term value of those assets, but that is an impairment that we announced in the half year and we confirm in the full year. We did have positive operating cash flow in 2020. There was a cash outflow as a result of the various onerous costs and some of the debt restructuring costs. As I said earlier, we are committing again to living within our own cash envelope in year. The net consequence of all of that leaves us with a net debt reduced year on year, largely a function of the equity raise and the support from shareholders, affected in part by some of those cash outflows. I would hope in the main that those financial outcomes are in line with guidance and pre-close disclosure, and they are almost entirely a function of the impact of the COVID-19 pandemic. Just to step into the individual businesses. I am going to start with our subscription-led businesses for obvious reasons. They became more center stage in 2020 and remain so in 2021. Informa Intelligence, our business there has been on a march for some time of improvement, of portfolio rationalization to focus around the three markets where we can see we have a competitive position, a proprietary position, and a position we can defend on a going forward basis. We have seen very strong performance from all of those businesses, but particularly from our Pharma Intelligence business. The key, if you like, the anatomy of that business that is important to look at is our renewal rates. Because that then means that as we drive for new business and new product development, we can take that as growth rather than as replacement. We are in fact upgrading our guidance today on the forward growth in that business, partly as a function of having had consecutive quarters now of performance and partly a function of the strength of the business in the opening part of 2021. We will talk a bit more about that later as well. Similarly, Taylor & Francis, absent that slightly tight period in the second quarter of last year where there were campus closures and some supply chain issues which affected our print books in our reference business. Taylor & Francis had a very strong performance. Our shift towards open access, the flexibility in our approach to subscription arrangements with customers, and fundamentally the quality of our content and our archive has really served us extremely well. Similarly, we are confirming that we see this business going back in 2021 to more pre-COVID levels of revenue growth than we actually saw as a matter of fact. It was essentially flat in 2020. So very strong performance, consistent performance, and very good forward visibility and an upgrade in guidance for the intelligence business. There were a series of steps during 2020 that gave us the stability and security that we sought, and we started by taking a position that the important value of our company was in our intellectual property, our assets, and particularly the specialist expertise in and amongst the colleague community. We then focused on the balance sheet because in year 2020, we took the view, rightly with hindsight, that the balance sheet would be what really mattered, and that required a raft of work around our equity and then around our debt. At a very specific level, a removal of financial covenants out to the middle of 2023, by which point we feel that we will be comfortably back into growth and forward ambition. We did the work on the cost that Gareth Wright will unpack. It gave us some flexibility to then look at our events program and shift it out. Initially in all candour, we thought that postponement would take us to September of last year. By and large, that proved to be accurate in mainland China. But actually in the rest of the world, we then had to make a follow-on judgment in September that really we had to extend that program. Which we did, and we took the view then that extending it to June, late spring to June of 2021 was probably a sensible judgment. By and large, that has proven to be right, and we'll give you a deeper indication of the specific geographical timing and phasing of return later on in the presentation. In 2021, we're applying a similar approach, but doubling down further on our subscription business, seeing the gradual return of physical events, and critically, the learning and the experience of 2020 on digital services and on the power and value of data has led us to make some very specific decisions around the technology and service stack on our digital service capabilities in our events business, and in how we manage our central database of proprietary B2B customer information and insights, which I'll return to later on in the presentation. As I say, we're committing to our baseline revenue of GBP 1.7 billion, and that largely is a function of what we can see today in our subscription business performance and the growth they're delivering in our mainland business in China, in those digital services that we are confident in providing to our B2B events customers, and in our relatively small and discreet portfolio of outdoor events. Is there a possibility that we might nudge above that? We might, and that will be largely determined in the main by the pace and rate of return in North America. We'll give you more color around that later. How is reopening looking? Well, everyone will have their own data on case counts and on new case counts. Almost every day we see some spikes in some geographic locations, and there are indeed some parts of the world that are still engaged in very structured lockdown rules and regulations. Our judgment is that the trend lines are in favor of vaccines ahead of the virus. Therefore, you can see in different locations an improving degree of normalized activity, albeit with some new guidance and conventions around what the next normal looks like. For us, as this slide tries to lay out, our three key markets for our physical products are Mainland China, which for all intents and purposes domestically is back to pre-COVID performance levels. North America, which is beginning to return on a state-by-state basis, and symbolically and substantively we will be returning to Vegas in June with three major industrial brands, World of Concrete in the construction market, TISE in the services market, and WasteExpo in the waste and industrials market. Then the United Arab Emirates, where we have a big position in Dubai and then across the region. That is a little bit more of a mix of a regional, domestic, and international meeting point, and so we think the pace of return there might be more phased again. Then Continental Europe, probably at a slower pace of return. We have chosen Italy as an example because we are scheduling an event in Italy, our CPHI event, which many of you will be aware of, at the back end of the year. Our expectation is that that market will be open by that point. So a mixed picture, but broadly a progressive return through 2021, teeing us up for more strength, participation, and performance in 2022. This just unpacks it a little bit more and specifically gives you a sense of some of the other markets in the rest of the world, Taiwan, Japan, Thailand, South Korea, Egypt, Turkey. So there are other places in the world where we are trading, almost entirely domestically or sub-regionally. For the moment, in our guidance and in our judgment, we have removed international revenues from our guidance for this year. In the U.S., this is a snapshot of where we are today, and it gives you a sense that decisions are being made on a state-by-state basis, and it varies by state, partly for reasons of geography and climate, partly for reasons of how the COVID experience has played out, and partly determined by the pace and rate of the vaccine rollout. All of these locations matter to us, and they matter to different markets in different ways. But broadly speaking, we are seeing opening as the conversation that we are having in the main. We are in deep collaborative discussion with venues, with state governments, with local governments. We have the benefit of having run nearly 45 to 50 scale events in mainland China, where we've deployed our All Secure Operating Protocol, which provides a whole range of security obligations on density, on crowd management, on digital registration, on access, on meeting arrangements. All of that security is part of what is allowing us to bring our product back to life for our customers. Forward bookings in the main look positive. As is noted in the financial section, the level of refunds from customers who had pre-committed really remains relatively modest. We thought it might be useful to provide people with a little bit more texture about what is the nature of our brand and product portfolio when you're looking at our events business, because it's an amorphous portfolio if you're looking at it often from the outside. We've tried to look at this through the lens of what did the COVID experience teach us about our brands and our products? This gives you a sense of the anatomy of our B2B events portfolio. It indicates a number of things that I think are relevant to both the transition year of 2021, but then also the return period that follows on from that. Our business is very weighted towards major brands. Over 90% of our business is in what we would categorize as a power brand, in our top 50 or a large-scale market brand. We do still have some very localized brands, but it is a relatively minimal part of our portfolio by revenue. Our balance of participation weights towards domestic participation rather than international participation, or domestic and sub-regional. In the near term, we believe that that is where travel patterns will return fastest. We've certainly seen that in China, and we are seeing that in North America. We weight more towards our major locations, North America, Mainland China, and the U.A.E. Nearly 60% of our portfolio by revenue is trading in those three main geographies. It significantly weights towards larger brands by revenue, north of $1 million-$3 million of annualized revenue on a per brand basis. We believe that shape and architecture gives us quite some confidence that as the market does come back in full in 2022, in 2023, in 2024, actually, it will lean more towards major brands in major trade routes, in major locations, with significant footprints of domestic and regional activity. In summary, we're seeing 2021 as a transition year, and we think that's a sensible approach. It's guiding us to make some decisions in 2021 which are more focused on 2022 and 2023 than necessarily maximizing revenues in 2021. That speaks to pricing, it speaks to ensuring safety and security and confidence in the event experience, our All Secure Operating Protocol. It speaks to scheduling and whether or not we bunch too many events at the back end of 2021 or actually wait and bring them back in full glory in 2022 or 2023. That's how we're thinking about 2021 as it relates to the scheduling and practicalities of our events portfolio. Alongside that, we're also using it to further embed the skills that we have learnt and the products that we've developed in digital services, and we're accelerating the management of our data in our B2B business. I'll come back and talk about that after Gareth. Looking out from 2021 to 2022, 2023, 2024, the period where we had to make that impairment judgment at the half year in 2020, we do see further growth acceleration across the group. We see it in our intelligence and subscription business, hence the revenue upgrade. We see it in our open research, our open science, our advanced learning business in Taylor & Francis. We see it in the progressive return of physical. We see it in the growth of digital services, probably replacing some of that long tail of smaller events, and local market brands that may not be as powerful post-pandemic as they were before. We see continued investment for longer term growth, and we would see flowing from that an increase in our profit flow with the same discipline on cash conversion that we've historically seen in our business. On that note, I'd now like to hand over to Gareth to take you through the 2020 outcome in detail and how we're thinking about 2021. Gareth. Thank you, Stephen. Good morning, everyone, and thank you for taking the time to join the webinar. I'm going to talk you through a couple of slides on the 2020 results, to unpick those for you a bit. I think what that'll show you is an income statement performance in line with the guidance and expectations for the market, but a cash performance, and therefore closing financial position, better than we guided to in September. I'm also going to talk you through the actions we've been taking through Q4 2020 and into Q1 2021 to ensure the ongoing stability and security of Informa. Let's start with the income statement. We delivered GBP 1.661 billion of revenue in 2020, which is in the range of the trading update that we gave in the first week of January. That's a tale of two cities between a consistent and strong performance from our subscription businesses and the impact of the COVID-19 pandemic on our physical B2B events businesses. The operating profit of almost GBP 270 million benefited from our cost management program that we introduced during the year, and I'll talk about that in more detail on a later slide. Net interest, net finance costs reduced year on year, which is a factor of the equity raise in the first half of the year that reduced average debt levels, but also a fact that we replaced our U.S. private placement borrowings with lower cost EMTN financing. That produces a weighted average cost of debt of about 3.75% going into 2021, lower than the north of 4% cost of finance in 2020. Both those numbers including IFRS 16 costs. The effective tax rate reduced from 19% to 15%, which is really a function of the fact that our tax deductions or certain of our tax deductions are relatively fixed rate in nature. Therefore, when you have a year of lower profitability as we had in 2020, those deductions become a larger part of the mix overall, and that reduced our effective tax rate to 15%. I think looking forward into 2021, I think we'd assume a higher tax rate as the profitability of the business begins to increase. Therefore, people thinking about it in the range of 19% again are probably in the right place. Finally, in relation to the 2020 income statement, I think there's four kind of headline exceptional costs, exceptional charges that we've got to mention. At the half year, we took a non-cash goodwill impairment of GBP 593 million to reflect the change in the carrying value of the business following the COVID pandemic. We reassessed that at year-end, and there was no need to take any further charge beyond what we took at the half year. The non-cash intangible amortization in the year was about GBP 290 million, a touch lower than 2019, but broadly consistent year-on-year. In the interest line, we included about GBP 155 million charge for the cost of restructuring and rescheduling our US private placement borrowings, which enabled us to finish the year with no financial covenants in place over the group. Then finally, we incurred some COVID-related restructuring costs, which ensured that we finished 2020 with a cost base aligned to the revenue expectations for the start of 2021. Moving on to the divisional analysis, which enables us to unpick the revenue and OP performance in a little bit more detail. I think the first headline you start with is the strong and resilient performance of the subscription businesses. Informa Intelligence delivered another good performance despite some disruption from the COVID-19 pandemic. Full year underlying revenue growth was 1.8%, consistent with what we reported at the half year, and all three of the businesses in pharma, finance, and maritime performed strongly. The OP margin increases year-on-year, as you can see there, which is from the benefit of disposals that we made in 2019, where we exited some lower margin businesses. Moving into 2021, we're seeing a combination of good subscription renewals and strong new business sales. We exited the key renewal season, which kind of finishes in January, February, with a strong performance in our annualized contract value year-on-year. All that really across the business gives us confidence in increasing the underlying revenue guidance up to 4%+, as we've announced this morning. This is driven really by the consistent ongoing investment in products, in platforms, and the service capability of that division, which is something that we've done for a number of years since the growth acceleration plan and continue to do going forward. It's really delivering, I say, dividends in terms of the improved performance of that business. Turning to Taylor & Francis, it delivered a good performance across the year, I think despite some of the difficulties in Q2 in terms of the COVID disruption. In the first half when we experienced that disruption, our underlying revenue position was a 0.7% decline. But as you can see from the numbers that we have announced this morning, the H2 position has returned to growth and therefore gets us back to essentially a flat revenue position year-on-year. Within those numbers, the improved performance was largely in the books business once we got out of the Q2 period of disruption to the supply chain, and to campuses, and to particularly the U.S. retail business. Journals subscription revenues were consistent and strong all through the year. Encouragingly, even with that flat revenue performance, we have been able to report 1.3% increase in underlying profits today. That is really a function of certainly some short-term cost saving measures, like travel costs that came out as a result of the pandemic. But really underlying it is the strong cost control culture and value creation culture in that business. Reported margins were maintained year-on-year. Moving into 2021, we are seeing that the strong digital subscription renewals in the business, the significant growth in the e-books revenues, and the continued strong performance of the open research journals and other products give us confidence about returning to growth for the full year in 2021 in this business. For Informa Markets, Informa Connect, and Informa Tech, it is really worth going back to the start of 2020 when actually we started the year trading very well and delivering around about GBP 275 million worth of revenue in the period before the COVID-19 pandemic took effect. After that, as I said, the performance of 2020 is really driven by the impact of the COVID-19 pandemic on our physical B2B events business. In response, we launched the postponement program, pushing events back within 2020 and now back within 2021. We responded with an accelerated program of virtual hybrid events, ultimately delivering over 500 products in the year through those channels. We responded with our cost saving program, which is a targeted program focusing on both direct costs and indirect costs in the business, removing over GBP 600 million of costs on a run rate basis in the year. Focusing on our outlook for 2021, I think there are two main themes. Firstly, we see 2021 as a transition year, as Stephen has spoken to. Really the performance in the transition year will be dependent on the pace and scale of reopening of B2B physical events, which will vary inherently by region and by end market. Our early decision last September to extend our postponement program through into 2021 to late spring, early summer is paying dividends in terms of our ability to schedule events and to get perhaps more permissions to operate in 2021. Secondly, I think it is important to say we remain very confident in the model. We remain very confident in the B2B physical event space based on the customer feedback we are receiving, based on the low level of refunds that are being requested, based on customer commitment forward for events in 2021, and based on the desire for the regions and the cities in which we operate our scale events for us to return to the market and to reopen. On the next slide, I am talking a bit about the sources of revenue in 2020 and how the £1.661 billion revenue number builds up for 2020. I am also talking with one eye on 2021 and how the components of our £1.7 billion revenue baseline builds up. For 2020, firstly, as I said on the previous slide, before we closed and before events closed for the pandemic in Q1, we delivered about £275 million worth of revenue. We also delivered revenue following the reopening events, and Stephen has mentioned just now, really that is a conversation about mainland China, where we delivered more than £150 million worth of revenue across the full year. In Informa Markets, Informa Connect, Informa Tech, there were always media, data research, and marketing services revenues, and those maintained a consistent level of performance year-on-year. We added over £100 million worth of virtual events revenue in 2020 from standing up those new revenue streams. The balance of the revenue number, £860 million from a combination of Taylor & Francis and Informa Intelligence, gets us to the £1.66 billion outcome that we are reporting today. Turning to 2021, we have committed to a baseline revenue number of £1.7 billion. We committed to that in September at the half year, and we are reconfirming that commitment today. That is a broadly similar number as what we reported for 2020, but actually the component parts of it are quite different. For example, that £275 million of revenue that we delivered in Q1 2020, that again does not repeat in exactly the same way in 2021. The baseline assumes that we continue to grow our subscription businesses. Mainland China continues to operate as we are seeing in operating year to date in 2021. We continue to operate outdoor events, which is again, something that we have done in 2020 and in early 2021. We continue to grow our digital services, media, and virtual events activities through the year. Clearly, physical events may return more broadly. They may return faster than being envisaged in the £1.7 billion baseline number, and we will just have to see how that pans out across 2021. In the first instance, as those physical event revenues return, you may see some switching out of virtual events into the physical revenues as the budget of our customers just changes from one area to another. Overall, this is what we are planning to deliver in 2021 as a baseline, and Stephen is going to unpick a bit more in his second section how we are delivering the products and the services that will achieve that. This slide shows the year-on-year movement in OP with the impact of the COVID-19 pandemic on profitability, clearly the largest single dynamic as you would expect. We offset that impact with a targeted cost management program that I am going to talk about in a bit more detail on a later slide. In headline terms, what we have done there is we have right-sized our cost base to the level of activity we are seeing at the start of 2021, which ensures that we can remain cash flow neutral as a minimum in the new year. You should note that within the year, we delivered the GBP 400 million plus of direct cost savings and GBP 200 million of indirect cost savings on a run rate basis by the end of the year. The actual indirect cost savings in the year were more like GBP 140 million, just so you can understand the mix between 2020 and what to expect in 2021. Within the circa GBP 270 million of OP that we delivered, there is a good performance from Informa Intelligence, which increased its margins year-on-year, and a good performance from Taylor & Francis, which maintained margins year-on-year. The net outcome being that we delivered an adjusted operating profit margin of 16% for the full year. Focusing on cash flow, again you can see unsurprisingly the largest single dynamic in the numbers is the impact of COVID-19 on the business. In response, we launched a series of cash flow initiatives to help deliver financial stability and security for the business by the end of the year. There was a circa GBP 80 million working capital outflow, as you can see there on the slide, which is really a factor of the cancellation and postponement of events in 2020, which meant we were not taking the same normal level of rebookings for 2021 events. We did collect quite a lot of cash, as I will show in the next slide, overall. Interest cash flows reduced year-on-year. As I said earlier, that was probably a factor of the equity raise, reducing average net debt, and also the lower cost EMTN borrowings. Tax cash flows reduced year-on-year, which is really a factor of the lower profitability of the business in 2020. It is worth noting that CapEx was maintained at consistent levels, around about GBP 50 million compared to 2019. But the weighting of that was really more towards Taylor & Francis and Informa Intelligence to support the strong growth we were seeing in those businesses. Overall, the cash flow initiatives generated around about GBP 100 million of free cash flow before the one-off COVID cash flows. And those COVID cash flows were to restructure the balance sheet, eliminating our financial covenants, and to realign the cost base with the activity levels we are expecting in early 2021. And the net of all those delivered a free cash outflow of GBP 150 million for the full year. At the half year, I think we guided to a number more in the range of GBP 230 million-GBP 250 million of free cash outflow. As you can see, we have done better than that in the year, which has really been a factor of a better working capital performance, in the second half of the year, than perhaps we were prudently forecasting at the half year. And also those restructuring costs coming out less than we thought they might do when we guided the market at the half year. On the next slide, talking a bit about refunds and the deferred income carried in the balance sheet in relation to our events businesses. On the previous slide, I mentioned that working capital had a bit of an outflow for these refunds. But I think there's a couple of key things we want to point out from this slide. First of all, despite the fact that the COVID-19 pandemic impacted B2B physical events materially in 2020, you can see from that there's also a material level of cash was collected in the business, both in terms of 2020 events in places like China, but also forward-looking deposits into 2021. Customers, on the whole, have chosen to leave their deposits with us. The level of refunds that we've seen in the business overall has been pretty small. That decision to leave the funds with us, we think, is an indication of the strength of the brands and the strength of the market positions that our B2B physical events have. The refunds we did see mainly occurred in Q2 2020, following the initial series of cancellations and postponements of the events program. And actually, in a number of specific shows, this was driven actually by our desire to support the SME communities behind those shows and to make sure that they got the refunds if they needed them to support their financial position. But in the second half of the year, refunds have been running at pretty low levels. We've seen that maintained into Q1 of 2021, and actually have been running at levels lower than the collections we've been taking in the business, hence why we're finishing 2020 with around about GBP 300 million worth of events deferred revenue in the balance sheet. I talked a couple of times about the targeted cost management program that we launched in the year, and therefore, I think it's worth just giving a little bit more color around that. There's two key elements to it, the direct cost savings of GBP 400 million plus, and the indirect cost savings of GBP 200 million plus. The direct cost savings are all made in areas directly related to the operation of physical events, so areas like venue costs, security, marketing and promotion that occurs in the run-up to the events. The key thing about that is those costs will only return when we start to operate face-to-face physical events again. In other words, when we're generating revenue from those events, then the costs will return, and not before that. In terms of the indirect cost savings, which were GBP 200 million on a run rate basis and GBP 140 million on an in-year basis, the savings were delivered in a step-by-step way, looking to really minimize the disruption to our colleague community, one of our key assets in Informa, and we wanted to make sure that while we saved the cost in the indirect cost base, it didn't impact our colleagues. These costs won't restart until we choose for them to come back into the business, and that will occur when we can see credible levels of revenue generation and OP generation from the face-to-face events business. So how and when these costs come back into our business are totally under our control. Focusing on the balance sheet, our refinancing work got us to a position of stability and security by the end of 2020. I would really like to go on record with my thanks to both the treasury team and the finance team at Informa for all the work they did in 2020, getting us there under what were very difficult operating conditions for everyone. They did a great job in terms of helping us restructure the balance sheet. The output of this work is that we have no maturities until July 2023. Our work here, since we last spoke to you, includes a couple of different things. We have extended the maturity of the revolving credit facility by a further year, so it mainly matures in 2024 and 2026 now. Plus, we refinanced and canceled the short-term credit facility we put in place in March 2020. We refinanced that with the MTN debt, which has the advantage of being longer term and also having no financial covenants. I would like to add that I think the strong support for the two MTN raises we did during 2020 demonstrates the ongoing commitment of the debt markets to the Informa story. We have substantial liquidity of GBP 1.35 billion at year-end. This includes the RCF, which was fully undrawn at the year-end and remains fully undrawn today. During Q4, we increased the size of this from GBP 900 million to GBP 1.05 billion by adding a further three banks to the syndicate. Also in liquidity, we have GBP 300 million worth of cash on the balance sheet as we continue to run a cash position larger than we would normally do to aid the liquidity position through the period of COVID disruption. Finally, as I said on the previous slides, we have right-sized the cost base across the second half of 2020 to ensure that it is consistent with the activity levels we are seeing in early 2021, and that ensures that we are cash flow neutral or cash flow positive in the new year. We can confirm today that we have delivered a cash flow positive result for the first quarter of 2021. In summary, no maturities until July 2023, no financial covenants, substantial liquidity of GBP 1.35 billion protected by cash generation in the business. I think all this demonstrates our stability and security in financing through to 2023. I am going to wrap up with a summary where we think we stand moving through the 2021 transition year. We are seeing continued strength and actually accelerating growth in our subscription businesses at Taylor & Francis and Informa Intelligence. As Stephen has outlined, we have seen a progressive reopening of face-to-face B2B physical events, and we continue to see that as we go through the year. Which alongside the growing range and depth of our B2B digital services, I think leaves us with a confidence around the outlook for Informa Markets, Informa Connect, and Informa Tech. We have right-sized the cost base, as I said, to the level of activity in terms of revenue that we are starting the year in terms of 2021. We are cash flow positive, which means with no maturities, no covenants, and substantial liquidity, we have a strong confidence around our financial position. Within that position, we still are investing for growth, both in terms of OpEx and CapEx, to support the growth in Informa Intelligence, Taylor & Francis, and the return to growth in the other three divisions. And that, I think, with the performance we are seeing in the business model across the end of 2020 and early 2021, the strength of the businesses, the strength of the brands, give us confidence around our performance in 2021, and as we return to recovery and revitalization in 2022 and beyond. I am now going to pass you back to Stephen, who is going to talk to you through the remaining slides. Thanks, Gareth. Right. Just very briefly before we get into questions, what I would like to do is just look in with a little bit more depth into some of our businesses, look up into the future, and then look out at what we think are some of the opportunities that are available to us. I am going to start where we started back in January 2020, when we first felt the full wave impact of COVID on our business, which initially was in mainland China. We made really two decisions, one that Gareth has talked about a lot, which was we wanted to move by focusing on the future long-term value of our brands and our business, and thereby ensure that we gave ourselves room to breathe, room to maneuver, and to maintain our market strength and our customer relationships. The other was that at the heart of our strategy at Informa is specialisms. Championing the specialist is our mission statement. At a practical level, what that really means is across the company in many places, we have thousands of colleagues who, in their individual areas, are experts, deeply knowledgeable about their customers, their subject area, their research area, their product area. As it related to colleagues, we also therefore wanted to ensure that we minimized negative impact of the COVID pandemic on colleagues. That led us to a whole series of approaches on flexible working, unlimited volunteering, sabbatical options, salary sacrifice, employee support funds, wellbeing programs, all of which were designed to allow us to move with flexibility and preserve the intellectual capital of the company. By and large, I think that will prove to have been the most significant decision that we made as a company going into the COVID-19 pandemic. Looking down in a little bit more depth in our Intelligence business, this is, I think I can say, an unqualified success story, but not one that happened overnight. For those watching and listening with longer memories, you may recall that in 2013 and 2014, we were lagging in this market. We had a series of relatively disparate assets and businesses, many of which had come to us through packages of acquisitions. We were in more markets than we are in today. So we've been through a very systemic program of product investment, of portfolio rationalization, of focus, and of improving our product platforms, the user experience for our customers, the speed and responsiveness of our data, and the relevance of what it is we do for the customers that we serve. It has taken us time to build a business with the architecture and the capabilities that you need to be a player in the information services market, and we now feel comfortable and confident that in our three markets, in Pharma Intelligence, in financial intelligence with a focus on retail, financial intelligence, which I'll touch on a bit more, and in maritime, we really do have a portfolio that is competitive, relevant, and has future growth potential. At its heart in these businesses, as we worked out, it's the subscription renewal rate, the vote every year by your existing customers as to whether the product and the service is worth resubscribing to. Back in 2013, our renewal rates were in the high 60s, low 70s, and we've worked progressively to get that back up into the 90% mark, which allows us to use product innovation, product development, and new business to drive growth rather than just revenue substitution. The kind of poster child for success for us has been in pharma, where we've taken our Citeline brand and our Scrip brands, longstanding brands, and really invested behind them to build out our credibility in clinical trials intelligence, and the workflow tools that we're offering our customers, whether they be pharma companies or CROs. We've added to that with marketing services capability, and most recently with clinical trial performance capability with the addition of the TrialScope business, which we brought into that portfolio last year. The combination of those products and services in that very specific specialist market around clinical trials and drug trials and drug discovery, which has been very topical for all of us in the last period, has proven to be a real success story. We are, and we touch on this briefly in our release, looking at a similar, if you like, adjacency extension in our financial data business, where we have a business, FBX, which provides pricing and product data to largely U.S. retail banking institutions on available products in the mortgage market. We're looking to create a partnership with another business that does essentially the same thing but with a different take, but focused on the lending market. We believe that combination will make us a much bigger player, much more relevant, and allow us to extend our relationships with that banking customer base. So a steady development of product, of relevance, of performance, and of capability is what really stands behind our commitment to growth and acceleration in Information Services. Similarly, in Taylor & Francis, which has been a much longer part of our company. But back in 2013, 2014, the big gap, if you like, was our lack of presence in what at the time people believed was certainly a change, possibly a challenge, and conceivably an existential threat, the provision of open access services. The ability for people to pay to publish rather than be bound in or limited to a subscription access product, either at the point of publication or at the point of consumption. We have moved progressively into that market by addition and by organic development. We have also become much more flexible and customer orientated in the way in which we construct access to what you might describe as more traditional research subscription arrangements. At the same time, we have been innovating in the electronic service provision in our reference business. The combination of all of those things has made the business much broader, much more customer orientated, and is shifting the emphasis away from a business that was born and rooted largely in providing services to institutional academic customers, largely through the library or the librarian. Still a very important part of our product and customer and service mix, but increasingly not the only part. Again, that diversification and that spread, and importantly, flexibility and capability, is what is giving us strength to underpin a return to pre-COVID levels of growth and performance on a going forward basis. In our Events business, when the world closed, and we all went remote, the same was true for the provision of services to our B2B customers. We did have a range of capabilities, but they were varied, in some cases patchy, and in some areas not really fit for the level of scale that you need when half the world's population is in enforced lockdown. 2020 really was a real live crash course in how do you accelerate capability in any or all of these services, a simple hybrid event or a virtual event, online matchmaking, directory services, product services, search services, video services, webinar services. There is a whole range of digital services that we have had to bring to market and develop. We have used 2020 really to come to an approach which allows us to build a technology and service stack, and we have centered on two, largely. Swapcard for our B2B marketplace businesses, our tradeshow businesses, and Totem as the platform and service stack for our knowledge, content, and networking products. We now actually have a nontrivial business in providing virtual and hybrid events with a high level of participation. The user experience is getting better. It is not, in our view, a replacement for physical product. It is an addendum to, in some instances, a hybrid companion to a physical product. In other instances, it allows us to extend out of the physical time period to allow a more continuous relationship with our customers on an ongoing basis. We would not have wished any of the circumstances of COVID-19 for anyone, let alone for our business. But it has allowed us, at speed, to both accelerate and compress the learning and the capabilities we need in this area, which previously perhaps we saw as a secondary or tertiary activity when physical events were operating at full bore. To give you a specific example, CPHI, which I know many people who may be watching today have either been to or seen, is probably our single largest event in continental Europe. It is peripatetic. It moves around. This year, it will be in Milan in November. Last year, in 2019, obviously, it was a physical event, scale event, 50,000 attendees, 2,000 exhibitors. It is the leading destination event for Global Pharma. In 2020, that was not possible to happen physically, so we had a pure virtual event, but it was a 2-week event. It was a festival over a period of time. In 2021, it will be a hybrid in the spring, virtual in the late part of the year, physical, with a high degree of forward demand for that event to come back physically, but a high degree of continuing participation in the provision of content, contact, and continued engagement through the hybrid platform. Talking of data and information, we as a business inevitably generate an enormous amount of data at a simple level, profile data. Who are you? What company do you work for? What is your area of specialism? What are you interested in? Who do you want to meet? What products and services are you most attracted to? We also get activity data, either on the firm or the company or on the individual as a result of participation or usage of product directories or event websites or alternative content search or video libraries. We have used last year to further accelerate the disciplines that we have in our own company on data collection, and then post the collection, data collation, and then doing that in a way that has all of the appropriate consents and confidentiality, but then might allow us the potential to develop additional services of value to our customers on lead qualification, on access, or indeed, on purchasing intent. We have stood that up inside our company as currently a non-revenue generating operational unit. We've given it a working name inside our business so that we all know what we're talking about, IIRIS. The quality of the data in IIRIS, the value of it as an input into the accuracy and relevance of what we're doing for our B2B customers, we believe will be one of the long-term benefits of the experience of the last 12 to 14 months. I'd like to touch on sustainability. This is, for good reason, a topic du jour, increasingly everywhere in the world. Gareth and I are making this presentation based in London, and of course, in the U.K. this year, the U.K. government will be hosting the COP26, a gathering of countries from around the world focused on the issues of environmental impact and climate change. Five or 6 years ago in our business, we took the view that this was going to become a very relevant clearing factor for customers, for colleagues, candidly, and also for investors. ESG has emerged as the term of art to define the appropriate level of impact that a company is allowed to have or should have in order to pursue its commercial aims and gains. We have built up a capability inside our business, and then a programmatic approach to getting to carbon neutrality, where we already are, an appropriate level of ranking and performance in the indices we have chosen to be the ones that we pay attention to. As many people on this call will know, there are many ranking indices, but there are some that are judged to be good measures of where companies are performing. We have invested time and process outcomes as a result of participating in those. Also, we have built some in-business changes around energy supply, around contractor relationships, around obligations on the supply chain, around office usage, and the practical impacts of our activities on carbon and carbon consequences. We feel very confident that our program, which we call FasterForward, will get us to where we want to be, net zero by 2030 or earlier, zero waste by 2030 or earlier. We see ourselves as having the ambition to be able to provide a product or a service, a subscription product, a reference product, a research product, or a physical event product, which more than secures the most efficient way of allowing our customers to do their business with the lowest, least, or zero carbon impact. From an investor point of view, ensuring that we retain our ESG credentials for that source of capital that only wants to allocate itself to businesses with those credentials. Just to summarize where we are in 2021. Our view of 2021 is we want to be, at a minimum, steady as she goes. In order to do that, whilst the GBP 1.7 billion baseline looks hauntingly familiar to the GBP 1.7 billion circa outcome in 2020, the composition is different. There is at least GBP 300 million worth of revenue that does not repeat in 2021 that we had in 2020. A lot of that is being compensated for by a combination of growth in 2021 in our subscription businesses versus 2020, continued growth there, the return of physical events in those parts of the world that we know, mainland China, primarily, the increase in our ability to provide credible and compelling and relevant digital services to our B2B events customers. Do we see a possibility to move from steady as she goes to steady as she grows, and that baseline number goes up? Possibly. There may be a faster return to physical events, particularly in North America, that we can see here today in April. We will provide more guidance on that at the half year in July. To summarize, a year of continuing stability, but a transition year. More products and services in B2B digital services, greater power and value in our data. We stay within our cash, we manage our costs. We do not draw down on our liquidity. We commit to a baseline of GBP 1.7 billion, and we watch, wait, and participate constructively and responsibly on physical return, particularly in North America. We continue to invest in our program of sustainability and sustainable impacts, or carbon impacts sustainably, to preserve our ESG status. A housekeeping, but an important housekeeping point. John Rishton, our new chairman, not a new colleague for Gareth and I, we know John well and have worked with him for the last three or four years, will take over as chairman of the company in June at our AGM. John has spent time already meeting most of our larger shareholders, and soon a broader community of our smaller shareholders. He knows our company well. He brings significant and relevant experience for where our company is going on a going-forward basis, particularly internationally, and we are delighted at the prospect of working with John. He will forgive me, and hopefully you will, if I finish by saying a thank you, both a company thank you and a personal thank you. This is a virtual event. Hopefully it is working for you. In normal circumstances, our Chairman would be here, and many of you would be too, and you would get a chance to say your own farewells. Derek has been many things to this company. We worked out the other day that he has been around the board of a company either not quite called Informa, then called Taylor & Francis and Informa, now called Informa for over 20 years. That probably pushes the boundaries of corporate governance rules today, but things were different then. Derek can, I think, lay claim to being a co-creator of our company. He can certainly lay claim to having made an enormous contribution to our company. He has been a compelling and very effective counselor for many people, including myself, Gareth, and many colleagues across the company. He has been a great colleague. For shareholders, I hope you share our view that he really has more than delivered impact and value, and we wish him well, and we would like to record our thanks. I would now like to take some questions, and I will hand it over to the moderator. Yeah. Good morning, guys. I have got three questions, all on events. First one, can you give us any indications on the forward bookings picture for 2022 from the larger Chinese shows you just run, like HOTELEX? Second question, you did not mention Hong Kong really, I do not think, in the presentation. As far as I can tell, they have got a four-week quarantine at the moment. Authorities seem to be very cautious about opening up there. How likely is it that we get physical events in Hong Kong in the second half? I am thinking of the Hong Kong Jewelry show and Cosmoprof. The third question, you mentioned pricing as one thing that you are giving some consideration to in 2021, Stephen. Is not the rule in exhibitions that if you start giving pricing discounts one year, it is super hard to get those back in your negotiations for the following year? Can you maybe elaborate a little bit more on what you are thinking about for pricing? Okay. Thanks, Nick, and nice to hear from you. I think I will just take those in the order they came. On forward bookings for 2022, strong is the short answer, and specifically on. I do not particularly want to get into a show-by-show forward booking number, because you will come back on me next year. Right. Specifically, on the one you mentioned, actually, I would say at the top end of strong. Indeed, for those events that we have already made a decision are not going to happen in 2021, and we have moved to 2022, forward commitments equally remain steady. I think Gareth spoke to that a bit on both cash and refunds. So both our customer satisfaction work and our forward bookings on either events that have been held in 2021 or events that have been moved to 2022, I think we feel is giving us cause for confidence. Hong Kong, good question. Apologies for driving past that. We drove past it because it is not in our GBP 1.7 billion number, just to be clear. We are going to reserve judgment. You are absolutely right, the situation in Hong Kong is materially different from the situation in mainland China for a variety of reasons. We have not yet made decisions on either Hong Kong Jewelry or Cosmoprof, and we will continue to work with the authorities and the relevant parts of the industry. In the case of Cosmoprof, our partner, BolognaFiere, to decide what the options are. There are conceivable options, probably more alternative options for Cosmoprof than for Hong Kong. At the moment, we have made no judgments on that. On pricing, I do not want to overstate this, but really, our primary objective, and I think this is sensible, for 2021, is metaphorically or literally to get customers back on the horse, and remind them of the benefit of the product. So we are not engaging in material work on price rises in 2021 on what would be 2021 on 2019 in the main. I am not sure I entirely agree with your view that the comp going into 2022 or 2023 will be what happened in 2021 or 2020 because it is such an aberrant experience. Frankly, we have a high degree of confidence, and we have seen this where we have reopened events, that the customer response to getting back to meeting their customers, meeting their suppliers, meeting their distributors, and trading is such a in-the-round positive experience, that the sense of commercial satisfaction and personal reward from participation, I think will give us comfort that the customer value is there, the product value is there, and therefore, we can price to that. But in good time, Nick. Okay, I'll take our next question from Annick Maas from Exane BNP Paribas. Please go ahead. Good morning. I also have three questions on the exhibitions, but a bit more medium term, I guess. The first one is, I assume your negotiation power with leading venues must be relatively strong given your portfolio. Has that helped you maybe in renegotiating some of the contracts with these venues, and that could help your margins, for example, in the future? My second one is on insurances. I guess some of your peers to the part really about their very strong insurance policies. Has COVID made you rethink how you think about insurance policies in the events business and how it could strengthen your model going forward? The third one is, let's assume we are back to 2019 levels next year, the year after, or in three years. Beyond that, what are the three elements that make you think the industry could grow at a higher pace than it has over the last decade, please? Thank you. Thanks, Annick. I'll try one. I'll let Gareth deal with two, and then I'll comment on three, and he may want to come in as well. On the first point, I would like to put on record from our point of view as a company, how constructive our discussions have been with venues in pretty much every place in the world where we operate, and that is quite most places where trade shows are conducted. By and large, those have been partnership discussions. We were helped, I think, in that, in that we decided early to postpone, and so the forward management of capacity and rebooking and the shifting of contracts to accommodate for that. We were certainly earlier, and in many instances, earlier than most. But by and large, those conversations have been really very constructive and flexible. In many instances, venues adjusted for us, even though contractually they could have taken a different position. That was material to us in 2020, and that mattered a lot. On a going forward basis, it varies depending upon where you are. I do not think it is yet clear, in my own view, as to what the long-term settling position on venue pricing, either the number or more importantly, the architecture of the pricing, because costs are calculated quite differently depending upon which venue you are negotiating with. I think that is slightly up for grabs. It is probably our single biggest unit cost. It is about GBP 300 million of our costs, and therefore we pay attention to it, as you would expect. We will want to manage the return of our costs, as Gareth said, with as much discipline, if not maybe more, than the return of our revenue. If the experience of 2020 and 2021 is anything to go by, it has deepened the relationship with our venue partners. We all have the same objective, them in a way more than us, because many of those venues are owned by states or governments. Frankly, in many locations, the value of returning to a location, go back to Nick's question about Hong Kong. The value to Hong Kong of bringing Cosmoprof or Hong Kong Jewelry, or indeed any other organizer's event to Hong Kong way exceeds the venue rentals. They, like you, are taking a long-term view. On the 2019 levels and return for growth, and when that happens, we are not calling that, but we share your view that it is probably a one, two, three-year journey. We do believe that the experience of developing alternative digital services will give us secondary, tertiary revenue streams which we can develop. We do think that the market will pivot in favor of highly efficient travel. Highly efficient travel is never better illustrated than a large-scale, high-impact industrial trade show, because you can avoid 50 travel experiences by having one. We believe that that value equation is going to be written larger, as the world gets more penetrating on true cost accounting and full cost impacts for commercial activity. The power of the trade show, the single point trade show, which is the hallmark event in an industrial calendar, is going to go up, not down. Do you want to touch on insurance, Gareth? Yeah, I think insurance really going forward. I think the first question you've got to ask about insurance, and event cancellation insurance post-COVID is will you be able to get it? You saw this in the Far East, that actually, since the SARS outbreak coming up to 10 years ago, actually getting event cancellation insurance in the Far East has been impossible. The market just won't insure that. I think what you're going to see post-COVID is the insurance market will have a real fundamental reassessment of event cancellation insurance and the areas where they've had to pay out post-COVID. There will be elements of that insurance cover that you just won't be able to get. If you can get it, then of course it's going to be what cost is it going to be to insure yourself in that. Premiums, I think across all types of event cancellation insurance are going to increase markedly. We're already kind of getting that feedback from the insurance industry. Prices aren't settling yet because we haven't got out of COVID. But if you can get it, then it's going to be what cost is it to you, and does that become an economically favorable or advantageous position to go into? We review the insurance coverage on a regular basis through the year, and we have an annual renewal, as you'd expect. That annual renewal is on a calendar year basis, so we're a good six months off from engaging with that for the 2021 year. But that's how I would be thinking about insurance going forward, is something that possibly is just going to be harder to actually get in terms of event cancellations, both for the exhibition industry, but across the wider events business, if you're running concerts or anything like that as well. It's just going to be harder to insure yourself in those markets. Okay. Thank you very much. Next question comes from Adam Berlin from UBS. Please go ahead. Hi. Good morning, everyone. I've also got three questions on events. First question is, you said that you delivered around GBP 300 million of event revenue in Q1 2020. Can you tell us the number for Q1 2021? Second question is, what do you think is a good assumption for us to use for the drop-through of any incremental revenues above the GBP 1.7 billion baseline from additional physical events to EBIT in 2021, based on the previous conversation around venue renegotiations as well? My third question is, given the good liquidity position you're now in and signs of a recovery in physical events, are you a bit more open now to looking at M&A going forward? Are there things in the market that you've always wanted to own that are kind of available and a bit cheaper than normal that you're starting to think about, or is it still too soon? Thanks very much. Thanks, Adam. Interesting questions. I might take them in reverse order and let Gareth decide how much he wants to tell you about the first one. On the last, a bit cheaper than normal, I think, is the key question. We have not spent an enormous amount of time on this, but there's not much evidence that asset owners are repricing for the current circumstance. We'll see how that changes. We always keep an open mind. The only thing I would say, if your question is related to the events market specifically, which I assume it is from your opening comment, that you had three questions on events, I don't believe that even without the pandemic, we were not really at a point where we were looking to make a further acquisition or addition at scale in the events market. We have a material platform capability in every major geography and in the 10 or 15 major location markets. What we have been focused on, even before the pandemic, is adding specific competencies and capabilities, more focused on data assets. I think the last acquisition we did in the events business was a data information business in aviation called CAPA, which we added to our aviation portfolio, which consists of events, media, and now data. The last acquisition we did last year was TrialScope, which was a data business in our Pharma Intelligence portfolio. Might we pick up spot opportunities? Yes. But the key will be, are they priced accordingly? On the drop-through point, I do not know the answer to that question, but I probably would not be dropping it through the normal 60%, 70%. I am looking at Richard. You would see me doing that, Adam, if you were here in person. For a combination of reasons, I think that is going to be a lower number, if you go back to my getting people back on the horse point. But self-evidently, there will be a drop-through. I do not know what the range is, 30% to 50%, probably, something like that. But right now, we are primarily focused on getting venues opened up. We want that opening to be successful for the community, for the location, for the participants. We have seen how beneficial that is in mainland China. We had the same approach in China, and now, bar international participants, we are back to pretty much pre-COVID performance levels. I think we will over-invest in the All Secure Operating Protocol environment, we will over-invest in marketing, we will over-invest in customer support, and I think that will be a very sensible way of driving participation revenue and confidence in the product. On the first quarter, I do not know what the exact number is, but the truth of the matter is, the first quarter was an odd quarter because we postponed everything out of the first quarter. What is the exact number? Well, minimum. We ran some outdoor events in the U.S., ran a couple of boat shows, et cetera. We have run various small events globally in areas where we have permission to operate again. But at a headline level, the number was very low for Q1 because of that decision to shift all the revenue out of the period before late spring, early summer. It is not that we have been running events and generating no revenue, it is the fact that we just have not operated the events because we wanted to get out of the Northern Hemisphere winter. We wanted to get to a period where more vaccinations would have taken place. We wanted to kind of avoid any fallout from the U.S. elections, et cetera. That conscious decision to move everything back to late spring, early summer, means that just the operational activity in events in Q1 has been very, very low. Thank you very much. Those were all really clear answers. Appreciate it. Thanks, Adam. Thank you. Our next question comes from Patrick Wellington from Morgan Stanley. Please go ahead. Oh yeah, morning, everybody. A couple of questions. I am going to ask one not about events, which is Taylor & Francis. What is a pre-COVID level of organic growth? I would say it is 2% plus, but you may have a different answer. Second question is about the scale of a couple of things. I think you touched on the idea that you might drop some of your smaller events, and that they will not return post-COVID. So can you give us an idea in revenue terms of the scale of such events to be dropped? And would that imply that Informa post-COVID in events is faster growth and higher margin, because those events would have been slower growth and lower margin. And similarly, could you give us an idea of the scale of there seems to be a decision going on to not hold some events so that you will have a better 2022. Can you give us an idea of the scale of that number in revenue terms? And then nicking a fourth question, I am going to make an assertion which you might not agree with. If I go back to September, your first half results, I would say that you are less bullish about the degree to which you will exceed the GBP 1.7 billion baseline than you were at that time. So in summary, in sort of Twitter, 140 characters, why are you less bullish? And does that make you, at the same time, more or less positive about what the revenue outturn might be in 2022, because some of those things you are doing are for the benefit of 2022. Thanks, Patrick. Quite a lot in that. Let me try and work my way through some of it and turn to Gareth for help. On your Taylor & Francis point, pre-COVID levels of growth for us would be between 1% and 2%. And we will take a view. We have had a good first quarter, and in all aspects of the business, in open access, in subscription renewals, and in both physical and e-books. As you know better than anyone, underneath the kind of surface of calm progression, it is a more volatile market than the consistency would suggest. But we feel, I think, confident about the power of the portfolio and the nature of our ability to remain relevant to our customers. So sort of in that range, and we will see whether it is better. On smaller events, yes, probably. We have not put a revenue number on it, an event number. It's maybe, I don't know, 80 plus, maybe as many as 100 brands might not return. You're right, I think that that will focus the portfolio. I was trying to get into that on my slide on the kind of portfolio architecture. I think it will force us to focus more on the larger brands, the power brands, the market brands, and the major trade routes. My own personal view is I think the market will naturally go to those for a variety of reasons. Those are definitely, assuming you don't have capacity constraints, those are higher margin businesses with potential growth. I think the real question if you're trying to do revenue balancing is can we replace that lost revenue from those, if you like, disappearing, to use it for want of a better word, smaller events products from digital services over the period. I think we feel quietly confident that there's an opportunity there as well. On bunching, it's very hard to give you an answer to that. I apologize, but we really are taking it on a case-by-case basis. For some markets and some geographies for some reasons, it really matters to the community to have a restarting event, and therefore we might do it for individual reasons. In others, we might come to the agreement that it makes more sense to pause and wait for a kind of, in inverted commas, full return in 2022. That is often determined really by the end state of the market that we're serving. So we really are making it on a case-by-case basis. But you're right to say that our focus is on balance more on ensuring that the event in '22 is a powerhouse success for the industry rather than we serve something up in '21 just for ourselves. I think that is really going to bear a lot of fruit in the future because it is deepening our relationships with key industry groups, trade associations, partners. I think the responsibility dimension of that is relevant. Am I less bullish or more bullish? You're probably a better reader of it than me in a way because I'm not objective. I don't think I'm either less bullish or more bullish. I don't have enough evidence yet sitting here in April to be able to call it. is very clear. I think the confidence and factual performance in mainland China, frankly, has been stronger than I would have predicted. So I was less bullish on that than it has materialized. In 2020, as you know, we believed that America would be back in September, October, and it didn't, and that encourages us to be more prudent. For now, I think, staying in the steady as she goes rather than steady as she grows category is sensible. Let's see where we are in the half year. I think that's how I would say it, Patrick. Okay. But if you looked at just the pace of development, do you think that makes you more bullish about 2022 than you were in September? Because, as you say, China's probably doing better, and frankly, I think you're expecting 30,000 people to turn up at World of Concrete, which seems like an amazing number. Doesn't that make you feel that the U.S. has perhaps developed faster than you originally thought? My confidence in the long-term value of the product and the enthusiasm and commitment of customers and partners and associations and venues and locations, for the relevance and the impact of physical has definitely gone up. But what happens in May or June, we're delighted to be going back to Vegas. We put a lot of work into that reopening program with the authorities on the ground. We used the pop-up in Orlando in the earlier part of the year to give us a case study on how to do it responsibly. It's important to us, it's important to the community, and it's important to Vegas. But, as you know, to take the World of Concrete example, World of Concrete is normally a January show, and the reason why it's normally a January show is, in January, most people, they're not laying concrete. Whereas in June, they are. As you know, the calendar date is very important to many industries, and every time you shift it out of its normal slot, it doesn't mean you can't run a credible event that services the market, but there's normally a reason why industry X meets in Anaheim in March, or Barcelona in February, or Vegas in January. And getting back to that calendar cycle and right-sizing the cadence of the industry does give me more confidence about 2022. I'll be thinking of Barcelona in November myself. Thank you very much. That's a commercial break, Patrick. Next question, sorry. Thank you. I would now like to take the next question from Rajesh Kumar from HSBC. Please go ahead. Hi. Good morning. Thanks for taking the question. First question is on financial gearing. What is your thinking on the appropriate longer-term financial gearing? Appreciate that you might have not finalized what is the right number, but if you could give us some color on how you're thinking about it, that would help. The second one is, you provided some color on 2022 forward booking. The numbers are looking strong. If you were to think about the number of exhibitors and participants, could you give us some color on if the same number of exhibitors or 10% lower than 2019 level of exhibitors are thinking about turning up, and if participant per organization is greater or lower? Just how do you see the moving parts in that strong forward-booking number? The third one is on Taylor & Francis. I think it is going quite strong. There have been a lot of question around library budgets, especially on the academic publishing. Last year was quite strong for open access. Quite a lot of researchers finished their articles because they couldn't travel. Do you think we need to think about a bit of difficult comps for library budgets when we are thinking about the near-term future? Are you finished with laying out your questions, Rajesh? Yes. Please go ahead. Well, thank you very much. I will touch on the third and the second, and maybe let Gareth pick up on how we are thinking about gearing in the mid to long term. We will take your second. It is a good question. For now, we are working on the assumption that international travel, however you define that, will be muted, limited, and in 2021, essentially nonexistent. Certainly, there is no assumption of that in our GBP 1.7 billion number, and frankly, not much assumption of it even in the likely upside. I do not have a good enough crystal ball to give you a view as to when that will return. There is much talk, as you will know, about travel tunnels between key locations, London and New York, to give you an obvious example, but others. We are taking the view, I think sensibly, that we should be thinking about 2022 with probably less international travel than historically, which therefore means that the domestic and sub-regional markets and attendees and exhibitors become more important. And within that probably means that from a customer profile point of view, the small to medium-size enterprise exhibitor becomes more important than the large corporate exhibitor. And actually, that speaks well to the trade show because the trade show is a much more attractive product or a very attractive product for an SME customer, because it is a way of getting to market, meeting customers, getting profile, gaining distribution. Corporate customers, large scale international multinationals, have other routes to market. I think we feel confident that for the domestic and sub-regional SME, the trade show will remain popular. So you might see some infill, maybe lower large-scale multinational corporations and more SMEs. So there might be a change in mix, and we are seeing a bit of that in mainland China and in other places. On Taylor & Francis, you are correct. Statistically, library budgets are definitely feeling the pinch. The converse of that, of course, is that actually participation in advanced learning is on the increase, not just in the U.S. and in continental Europe, but importantly in China and India and other parts of the world. So the demand for specialism and advanced learning, the bit of the education market that we are in, is definitely increasing. The participants in the funding of research are broadening. Now, that does not mean that the academic institutions are not by far and away the majority, but they are increasingly not the only participant or funder and certainly not the only user. That is in large part what is driving a lot of the open access activity because it is becoming more accessible to get in. But what has not changed, and the COVID experience has underscored this truth, if nothing else has, is the power of independently verified science. The need for it to be done at speed, but with accuracy and independent validation and verification. So the fundamentals of the market we feel good about. Gareth, do you want to pick up on the gearing? Yeah. Clearly at the moment, our short-term objective on the gearing is very much around reducing it from where it was at the year end of 2020. We have consistently reduced our debt levels since 2018, when we completed the UBM combination. Our objective then was always to bring the debt down, and that has been successfully achieved. You have got to adjust for IFRS 16 coming in in one of the years. But otherwise, if you look at it since 2018, it has been a consistent march down in debt levels over time. In terms of leverage, it has gone up, which is really a function of the lower EBITDA in 2020. As that reinflates, you will see the leverage, I think, come back down again alongside the lower debt. Technically, our ratio, our limits are 2x-2.5x leverage, going up to 3x to use the balance sheet efficiently and effectively for an acquisition. That is kind of clearly our current stated range. I think if the range had been a turn lower, I do not think we would have been in any different position, really, in the pandemic, simply because of the lower EBITDA levels that you have seen in the business. So actually, having that range in that place, I do not think was inappropriate or wrong for the business. It is just the one-off nature and the size of the pandemic that has really delivered the impact we have seen in the leverage. To cut to the chase in terms of your question, going forward, as a matter of record, we have not really discussed it at a board level yet because the board's focus to us has been on reducing the leverage, getting it back down into the range. We will do it at the right time. As I say, I do not think being half a turn or a turn lower in terms of our range would have materially changed the outcome in COVID times. Therefore, I am not going to commit to a change in the range now. We need to have that conversation when we are out the other side of the disruption. Thank you very much. Thank you. We now take our next question from Tom Singlehurst from Citi. Please go ahead. Thanks very much. It is Tom here from Citi. Firstly, I was going to disagree with Patrick and say that I thought you sounded more bullish. The reason being, you are delaying shows. As you say, you have got confidence that they could happen in 2022 and at a bigger scale. The question is, can you just quantify what proportion of the 2019 level of shows you will be running in 2021? I think on the Informa Markets website, you talk about 500 branded events. How many are going to be taking place in 2021? Just so we can make an assumption that all 500 or equivalent would be running in 2022. What proportion of those are taking place in 2021? That was the first question. Then the second question, very simply on Taylor & Francis. Just going into the downturn, you bought F1000, which as I say, didn't necessarily get a huge amount of focus because it happened about 20 minutes before COVID struck. But it seems to have won a relatively big mandate from the European Commission and is opening up, as you say, a sort of new beachhead of potential revenue. I'm just interested in the context of the long-term revenue development of Taylor & Francis. You've given us a long-term target for Intelligence. Should we assume a similar level of growth for Taylor & Francis into the longer term, or at least a better level of growth than you've delivered over the last five or 10 years? Thank you. Thanks, Tom. Interesting questions. Well, you're a braver man than me to disagree with Patrick, is where I'd start. On the proportion of shows, I don't know the exact number. I think on the current forecast, I'm trying to remember the forecast numbers of currently, potentially scheduled shows, it's around 75%-80%. But the question is, how many of them will actually happen? And as you know as well as I do, the rule of thumb is three months out. It's not as hard as that, but it roughly is. And so if you ask me that question in three months' time, how many of those actually come to pass, because it's not clear where. Because we operate in so many markets, there are quite a lot of variables. I think where the rubber really hits the road, that's what we're trying to explain today, on the 2021 upside to the baseline is what happens in North America, because that's where the scale shows, with the exception of CPHI and two or three others, really happen. On T&F, you're right. I like your phraseology. It pretty much was 20 minutes before COVID hit us. You should be reassured, it's had huge amounts of focus inside our company, as you would expect. And it's been a great addition. And it's been part of building out our open access capability, in that case, more open science and open research. And as you say, part of their offer is providing a neutral platform or white label platform in a way, for other parties, and well spotted on the European Commission contract, which we were delighted to land. And there are others. And you're correct. We are using this time to further expand the service offering to sit alongside traditional subscription. That's not disappearing. It might have to be more flexible. The contracts might have to be more bespoke. But are a range of open access products and services going to be a scale part of that business? In the timeline we're talking about today, 2021 to 2024, for sure. Are we ready today to commit to a hard upgrade number for Taylor & Francis? No. Whereas we are in Informa Intelligence. But let's return to that at another time. But the fundamentals, I think we feel good about, and F1000 has been a great addition to the portfolio, much like Dove was actually two or three years ago. Just one very quick follow-up. You said 75%-80%, roughly, and we are not holding you to the exact number. Of those that are not taking place, what proportion are deferred and what proportion have just sort of been de-emphasized, some of those smaller brands that you talked about? Most of those would be deferred. I will not say all, but most would be deferred because frankly, we would not have stood them up as the first one to bring back if they were a potential for cancellation. Got it. Very clear. Thank you very much. Thanks, Tom. Our next question comes from Matthew Walker from Credit Suisse. Please go ahead. Thanks. Hi, Stephen. Hi, Gareth. I have got one question for Stephen and one for Gareth. The question for Stephen is, can you give us a sense of the breakdown of your U.S. events revenue by location? How much Nevada, California, Florida, New York, et cetera. Do you want to comment on the fact that the governor in Nevada said that they could open up to 100% capacity from 1st of June onwards? Then for Gareth, on your events costs, you had about GBP 850 million of costs in the events business in 2020. How much of that was direct versus indirect? Then what do you think of the direct versus indirect split for events in 2021? Maybe you want to give us your baseline on the 1.7. That would be helpful. Then with the 1.7 of revenue, what would be the equivalent free cash flow that would ally to that 1.7? Should I go first? Okay. If I understand the question, Matthew, I do not think we are going to give by GBP revenue by location guidance. If you look at the slide in the pack or on the screen on Slide 12, those bubbles are indicative of relative size. Nevada is a big bubble, and New York, New Jersey is a smaller bubble. That is not simply graphic design. It is a key. Not surprisingly, therefore, Florida and Nevada, and actually, for very specific reasons, Pennsylvania moved the dial because in Pennsylvania, slightly to go back to the earlier question from Patrick Wellington. That was an example where in very active consultation with the industry, we decided to cancel our Natural Products Expo show in Anaheim in the spring. Whilst we normally run a secondary show on the East Coast, this year that secondary show on the East Coast will be a more material potential for the industry to meet that has not been able to do so for some time. That might be a slightly bigger bubble in Pennsylvania than might ordinarily be the case, if you get my point. If that helps. You had a second-order question on that, which was. Oh, yeah. Sorry. Yeah. Sorry, Matthew, I am losing my train. I do not know if that has been confirmed. It has certainly been indicated, but I do not believe it has as yet been confirmed. I am sure this is clear to you, but just in case it is not to others, the 50% capacity is a fire marshal capacity on absolute numbers of people in the location. Actually, given the size of that location, we can work comfortably actually at 50% and still have a very significant event, which was touched on earlier on potential attendees at World of Concrete in June. If it goes to 100% and sort of as normal, that is great because it speaks to confidence, but it is not going to materially change our ability to drive numbers, if that is clear. Do you want to deal with Yeah. Those are the other ones. In terms of the cost base, yeah, I would say the split between directs and indirects in Markets is kind of 50/50. You have, Stephen touched on it earlier, quite a bit of venue cost in there in the directs. Then a bit more in the indirects is primarily the cost of colleagues. Connect and Tech is probably more like 40/60, 40% direct, 60 indirect. They have a bit less in the way of venue costs for running smaller events in some of the cases in Connect in particular. That is the kind of split I would be thinking about in terms of the numbers that we did in 2019 and in 2020. In terms of the free cash flow, at GBP 1.7, what we've done is we've reset the cost base, or right-sized the cost base to be cash flow neutral to cash flow positive at the GBP 1.7 figure. So at that level of revenue performance, the cash flow would be relatively small, but positive as we've done in Q1. I think we'd be positive across the remaining quarters of the year. It wouldn't be a material figure because we've looked to only take the costs down to the level where you get to that kind of neutrality, slightly positive position. We haven't looked to go beyond that to protect the business for recovery in 2022. Right. Thank you. Can I just have a quick check? Just a quick check question, which is, you said, I think, back in the last time you spoke that you were going to run 90% of the shows, and that was going to be between June and December. Are you now saying 75%-80% of the shows are running June to December? Is that what you're saying? What percentage of the normal schedule of the U.S. shows are you running specifically? Sorry, what was your last question there, Matthew? The last question was really, compared to the 90% of shows that you said you were going to run when you last updated the market, you said you were going to run 90% of your shows between June and December of 2021. Are you now saying it's basically 75%-80% of the shows you're going to run? What is that number specifically for the U.S. for 2021? Okay. I think if I understand the question, I'm looking for help here. I think what we meant, and apologies if we weren't clear, was that it was 90% of the 75%-80% was going to run on the back end of the year, if you see what I mean. Is that clearer, Matthew? I'm not sure I'm not following the right thing. We materially, I mean, it rather speaks to why our Q1 revenue number for events was relatively low, is effectively we pivoted. Our postponement program shifted most of our event profile from June onwards, of which the vast majority of that is in the back six months. The overall number of events that we're planning on running is about 75%-80% of the normal portfolio. Is that clearer, Matthew? Sorry. Yeah. I guess the question would then be, of what you would normally run in the normal portfolio in the U.S., what proportion are you intending to run in 2021? I don't have that number to my fingertips, but I know a man called Richard who will provide you with an answer shortly after we're finished. Then I'm sure Richard will be on the phone straight away. Thank you. Thanks, Matthew. Sorry, I don't have that to hand. Next question. Our final question comes from Sarah Simon from Berenberg. Oh, God, I haven't thought of anything clever to say, and I've also got drilling next door, so I'll try and keep it short. The focus obviously has been mostly on the trade show side of things, because that is the larger bit. But as you think about the long tail and the kind of impact of COVID on that, do you think, inevitably, that when we look out a few years, it's going to be conferences that have taken the majority of the hit in terms of the trim, or do you think it's a kind of equally spread impact? That's the first question. The second one, just on China, you talked about domestic really being back at pre-COVID levels. Can you just give us an idea? You gave us a split across the portfolio as a whole in terms of domestic versus international, but can you give us an idea of how that lies for the Chinese market specifically? Thanks. Thanks, Sarah. Interesting questions. China, you're right. It's a good question, because the index is higher in China, in mainland China. Hong Kong obviously is quite different because index is way higher on international by the nature of the products and the location. I don't know the exact number, but it's probably nearer 85% in mainland China is domestic. On conferences, well, there are quite a few nuances in there that we've discovered. As it speaks to our own portfolio, in both our Tech business and our Connect business, which is really where our conference product is, we had already gone through quite a material long tail reduction. I mean material in Tech. So actually, most of our conference or conference product in Tech, these are sizable brands and events. Black Hat, on any level, is an industrial product. It is a content product, so it is technically a conference rather than a transaction product, like a trade show. We believe it has significant value as a physical product and is therefore likely to remain. Will there be some further trimming in Connect on the smaller end of their conference program? Yes, probably. The other nuance is, if we look at those products, those meeting products, if you want to call it that transfer to hybrid or virtual, the learning, networking, knowledge-only product lent itself more naturally to hybrid or virtual than the transaction trade show product. It does not mean you cannot do a transaction trade show product virtually. You can, but it is nowhere near as compelling for the customer, the buyer-seller community, as some of the conference product. Using alternative digital service delivery for the conference product is a bit easier. That might be a place where the so-called long tail might hang out more comfortably, leaving the bigger conferences to be more physical, if that makes sense. Great. That is helpful. Thanks. I think there are no more questions. That concludes today's questions and answers. I would now like to hand the call back to Stephen for any closing remarks. Okay. Well, look, we've taken a lot of people's time. It's half past the hour. I think that's when we scheduled to finish. I appreciate the attendance. I can see from the numbers that we've had a high degree of participation. I hope it has been useful. Thank you very much for your continued interest in the company, and I hope everyone is keeping and staying well.

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