AGM 2024 & Trading update

Jun 21, 2024

Summary

Trading update highlighted 10.1% growth, stronger cash generation and a £500 million share buyback this year. Plans include completing TechTarget by year-end 2024, expanding AI use over 3–5 years and continuing progressive dividends.

It's great to see everyone. The company is in good shape. We've themed this short presentation Continuing Momentum and Growth, and I think that's a good way to think about the company. As the chair said, it's not so long ago, and I don't exaggerate or overstate, that we were sitting around the board table. In fact, we weren't actually sitting around the board table. That was the point. We were sitting around a Teams call, debating whether or not the world would ever come back together again in any physical form. That was really only four years ago. It feels like a heartbeat, but it was only four years ago. I won't reprise that whole experience, but the company, and for those of you who are shareholders, your company, has come out the other side in a different shape and a different structure. I'll touch a little bit on that. Actually, a considerably stronger business, and with the real live experience of its customers being, in many instances, unable to buy or use the products and services. What we discovered through that process was that they really missed those products and services. So we've had a very live stress test. We were not a net COVID beneficiary, as the market would have described us. We were a net loser during COVID. Here in spring 2024, you find the company with real momentum and real growth, and I'll touch on that. Before we go inside Informa, a little bit on the world. There are plenty of people who are doing geopolitical and indeed individual political summaries of the world, so you don't need another one from me. As it affects our business and our company, and for those of you who are shareholders, how does that make us think about the company? There's no doubt that geopolitics is on the agenda in a way that, certainly for periods or chapters of my own professional life, has not been so much the case, for good or for bad. Trade routes around the world are getting slightly redrawn. Boundaries are getting drawn in different ways. The so-called rise of the East or the shift of the center of economic and political power from what has been known as the Western-based rules order is changing. Actually, for our business, whilst we're sitting here in London, standing here in London, we're listed on the London Stock Exchange. We have many colleagues based in the U.K. It's not where the majority of our colleagues are, and it's certainly not where the majority of our business is. We are truly an international business. If you look at our expansion and our growth, the two geographies where we are seeing not double digit, but beyond double digit, sorry, not high single digit, but double-digit growth is in what we call IMEA, India, the Middle East and Africa, and in Southeast Asia. So we are facing into the markets geographically where there are growth as well as the sectors where there are growth. We are also a business that specializes in niches, in specialties. Our mission statement is to champion the specialist. Specialist content, unique content, individual sectors, individual industry categories. The advantage of that is we don't really have many single points of large-scale weakness. The downside is you have got to run a lot harder to pick up a contract here, a sale here, a relationship here. But the upside is we are not as a business exposed to a GBP 200 million exposure here or a GBP 500 million exposure here. There is strength in that gold of small things, as I call it. We have international exposure. We genuinely operate facing the world. We may be based out of the U.K., but we think of ourselves very much as an international business. Underpinning that, the value of specialist content, unique knowledge, truth, and live experience has gone up. One of the perverse beneficiaries, or consequences rather, of increased digitization is the enhanced value of live, as long as your live experience has real differentiation and value. The world is a choppy, changy place, but the Informa company actually is not in a bad place, both geographically and in the types of businesses that we are in and how we face in to the world that we live in. At the heart of our business are those two things in the, I am sure if our brand director was here, he could give me the Pantone reference, the kind of light pale blue color, specialist knowledge and live experiences. Those are the two fundamental pillars of our business, specialist knowledge and live experience. We are not a mile wide. We are a mile deep in subject areas, in research areas, in industry categories. We are now at a point whereby where we are adding, we are adding depth of knowledge, depth of market position, depth of expertise. In and amongst that, we also own intellectual property. We are not an intermediary. We are an owner of intellectual property, whether that be brands or assets or media properties or audience or data or locations or calendar dates. All those things are moats. They are all points of defense, things that give us value, intrinsic value, that give you more certainty and visibility about the long-term position of the company. Around that, we are adding more activities. I can see a few colleagues here from our scholarly publishing business today. I looked down our revenue table the other day in scholarly publishing, and so we now have 10 individual sources of revenue in that business. In the old days, really, we were a format business. Now there are multiple ways in which we are providing service offerings to our customers, and the same is true in our B2B Markets business. We are expanding, providing data services, product discovery services, buyer intent services, demand, B2B advertising services, connection services, and space access. All valuable. At its core, the value of this business is in specialism and in live. Those two things have got real long-term value. They are big markets, too. We are maybe a bigger company than we were last year. We are a bigger company than we were 10, 12 years ago by some margin. But actually relative to the markets that we face in, there is plenty of runway ahead, as the saying goes, for us to grow. Whether it be by geography, whether it be by organic growth, whether it be by service offering, diversification of the products and services we offer our customers, whether it be by acquiring new brands or new assets, or new capabilities to further expand our capabilities. We're not in a tussle for market share in a market where prices are coming down and the market is commoditizing. That again, is a strong place for the business to find itself in. This is a sort of snapshot of where the Informa Group is today. If you're an owner of a share, I won't embarrass the Informa colleagues that are here to ask for a show of hands if you are a shareholder in the company. If you're not a shareholder in the company, please do consider it. We have a very compelling colleague share plan. If you buy one share in the company, the company will give you two for free. Today's maths, that means you give me GBP 8.50 and I give you GBP 17. I'm not a betting person, but that's a reasonable deal. You have to hold that share for a while. You can hold it and watch it grow, and you can watch it accumulate dividends. More importantly, you can be an owner of the company. That's value. When I joined this company as Chief Executive, less than 1% of colleagues in the company owned shares. We're now at north of 30. I've always wanted us to be north of 50. For those of you who are shareholders in the company, what do you own a share in? This is what you own a share in. In our B2B business, we have Informa Markets and Informa Connect. In simple terms, we say the difference between those businesses is that Informa Markets, the business run by Patrick Martell, is focused on providing events around which transactions, buyers meet sellers, or more accurately, sellers meet buyers. They don't meet random buyers, they meet qualified buyers. The value to the seller is in the quality of the qualification of the buyer. That's where data, market knowledge, and specialism comes to play. Actually, the same is also true in our more content-led events inside Informa Connect. Alongside that, oftentimes, those events are also offering professional development, continuous accreditation points, active networking, maybe activity networking or connectivity. They're richer in content, so generally the margins in those business are a little lighter than they are in the Markets business. Andrew Mullins and his team who are at the back of the hall, are doing a powerful job of improving both the quality of the brands and the product experience and the depth of the margins. We've added to that business or in the process of adding an adjacent business, TechTarget. What will be an Informa Group company, we'll own the majority of that. We will be the controlling shareholder. That is providing adjacent services to the B2B digital marketer, product manager, or service offering, who's trying to identify which buyers to find, where they are, what's their level of interest, what's their level of intent, what's their level of budget, what's their level of budget authority. A significant growth market underpinned by a mixture of content and data today focused on the enterprise, technology end market. Actually, as we all know, technology is becoming a horizontal in all markets. The truth of the matter is it's a place which can become a market leader in servicing the enterprise technology end market, but there is further growth there. We're also in the academic markets in what was a pure play scholarly publishing business. There, we're offering peer-reviewed content in academic journals, digitally, in a range of subject areas. The journal comes in a multiple set of different formats. You can pay to read it, you can pay to publish in it. It can be a pure journal, it can be a hybrid journal, it can be a pure open access journal. It comes increasingly in multiple geographies. This is probably the business where the deployment of AI, I will come onto that in a second, is most center stage. I think the biggest opportunity lies in the evolution of translation capability from first language commissioning, which will allow us, I think, an explosion of access from around the world in research contribution. We have a big reference business inside the scholarly publishing business. Actually, we have long believed, but we have realized that there is a real value in owning primary content. We have seen that value most recently in our licensing deal with one of the big LLM operators, but more to come. It is a business rich in proprietary content. It is a business rich in independence. It is a business rich in the recognition of veracity, quality, validation, and independent authority. In a world where everything is available on Google or ChatGPT, actually, the value of those things is going up and not down. We also are an investor in a series of businesses, what we call our portfolio. We have a shareholding in the business we used to own 100% of in providing intelligence data in the pharmaceutical market, in maritime. We have a position in a tech business, which is providing us with tech event capability. We have some minor shareholdings in some other content businesses. We are the majority owner of a business called Curinos, run by Craig Woodward, an ex-Informa Intelligence colleague, which specializes in providing specialist data to retail financial institutions, primarily in the U.S. We have built strength, we have built market position, we have built sector capability, we have built an international footprint. That gives, I think, the business some real depth and security. Hopefully you saw our trading update today. No new news to the market, other than a number that actually, if I am allowed in a private session, just a moment to reflect on. We posted 10.1%. I often say to colleagues inside this business that small numbers matter. It is the first time ever, certainly in my history around the company, that we have been a double-digit growth business. Do not take that lightly. That takes a hell of a lot to do. That is a mixture of ambition, capacity, volume, product innovation, pricing, inorganic growth, hard work, sweat, tears, luck. You put that all together in the blender, you end up with a business delivering high double-digit growth, and in a strong financial position. That is what we mean when we say this is a business with growth and momentum. It also increasingly is a business with forward visibility on your revenues. That allows us to plan. It is sort of a jargon description, but it means we can see the company we are going to be for the next 12 months. That allows us to make some forward decisions on investment, on technology, on people, on talent, on acquisition. You are planning with some sense of what is coming at you, both in the macro and in the micro. We have got a strong balance sheet. We've slightly readjusted our leverage tolerance post-COVID, but we have a very strong balance sheet, and that's allowing us to have sensible conversations with additions to the business. We, like every company in the knowledge market, are looking at what does AI mean for us. I'm an AI optimist. I think basically, AI suitably deployed is going to remove things that you don't want to do that frankly can be automated, and free up time to do things that can't be automated, where you can create more value. That works well if you're in a business that is in growth, that works well if you're in a market that's in growth. Because it might mean a change of role, but it doesn't mean a disappearance of an opportunity. In our business, we want to reach for machine tools. We want to reach for AI capability. We want to learn where we can deploy it so we can free up more time to be a better version of ourselves. We're in the process of creating New TechTarget. I don't know why I say that, because it's not going to be called New TechTarget. We're in the basis of creating TechTarget, an Informa Group company, which is going to be a combination of a large part of what was Informa Tech and all of what is today TechTarget. That'll be a market leader in its field with an ambition to double in size in five years. It'll be listed in North America. It'll be run by Gary Nugent, who many of you know, who has been the CEO of Informa Tech for the last five or six years. Creating a new company is not an easy thing to do, even if you're stitching together bits and pieces that you know well. The opportunity there is to create something fresh and distinctive and take advantage of its position in the North American market. Gives us a further foothold in America, and that's a big advantage, I think, in the geopolitics of the world today. We're improving returns for shareholders. Obviously, we're demonstrating capital growth. Our shares today are trading around 850. At the low point in COVID, they were below 350. We're back to paying dividends. We're doing a share buyback. This year, we'll spend GBP 500 million on buying back our shares. Why are we buying back our shares? Because we believe at these prices, that's a very effective way to deploy our capital because we're getting a return for our shareholders. It has the practical effect of lowering the share count, and therefore increasing the earnings per share for existing shareholders. If you're a shareholder, you've got a business in growth and a business that is delivering increasing returns. We're a business of talent. There's a lot of talent in this room today. We have circa 13,000 colleagues around the world. We probably operate at whatever you might define at scale in 40 countries. We probably have about 10,000 plus contractors, actually, who oftentimes it's difficult to tell whether or not they're contractors or whether they're in fact Informa colleagues. The key is the quality of the talent. Part of that is the quality of the leadership. We added three new leaders to the company recently. Penny Ladkin-Brand, who is joining us from Future PLC, which some of you may know is a U.K. commercial publisher, to lead our Taylor & Francis business. She will join us at the end of the month. She is a deeply experienced commercial publisher, coming into a market that is primarily today a scholarly publisher, but who knows what we could do with that business as well as being a better version of that. Maybe we could be a better version of it in some other markets, too. Spot the hint. Jill Dougan, who is joining us as our Chief Marketing Officer. That is a new role and a new colleague. We do marketing in the company. We have many hundreds of outstanding marketeers around the business. But given my own history, we have always been a bit of a, what is the word? Reserved marketing engine as a company. We do it in the brand or in the business or in the location. A combination of our reach, our scale, the increasing value of data, and the opportunity to use our brands and our IP in different ways seem now is a chance to really put leadership at the top of the company, in that area of audience and brand and data management and data exploitation. Jill is now already in the business and has been here for 3 weeks, and she already feels like she has been here for 3 years. Claire is responsible for all of us, for talent. How do you build a business that is a specialist business operating in, I do not know, in T&F, what, 70, 80 subject areas in the reference business? Probably 30, 40 specialist areas in journals. In Connect, probably in a dozen sub-sectors, in Markets, probably in 25 sub-sectors. You have to have diversity of smarts because you need specialist capability. How do you operate at scale in 40 countries where you do not export people just from one geography with one set of cultural affectations and expectations? You have to become Informa in Egypt, Informa in Saudi Arabia, Informa in Brazil, Informa in Turkey, Informa in Indonesia. So you need to be a diverse business, you need to be an inclusive business, and you need to have the best talent that is available in the market. Claire takes over that leadership role on diversity and inclusion from Linda Blackaby, who many people inside the company would know. She is going to bring, I think, some fresh energy, some fresh ideas, and some further focus on how do we accelerate our approach to having the best talent and providing the best development opportunities for the talent we have got inside the business. AI is the subject of the day. We already use AI in many ways. Many of the colleagues here will be able to speak to that, particularly in marketing, particularly in content, particularly in summary, particularly in discovery, particularly in validation, particularly in authentication. There are many places where we are using machine learning capability. Are we doing it at scale in the best form possible? Are we avoiding enough duplication? Probably not. Is there more we could do? Yes. Does that create product innovation opportunity? 100% it does. Are we concerned about it as a company? We should not be. I am not. Should colleagues be concerned about it? Don't be. Embrace it. It speaks to how we spend our CapEx and our OpEx. It speaks to some of the choices we need to make on platforms and on technology. But over the next 3-5 years, if you take 3-5 years, this business needs to become a business where machine capability in these areas is as instinctive as it is hanging out on Outlook or Excel or PowerPoint. That will come, and we will be good at it. For those people who are concerned about that, my plea is, don't be. For those people who are excited about it and are innovating with gay abandon, a bit less of the abandon, a bit more of the discipline. But we will get there. TechTarget will be done by the end of the year. We're in the process of finalizing the filings for the U.S. process because this will be a listed company, then it will emerge as one company, TechTarget, an Informa Group company. It will have its own board. It'll have its own independent chair. There will be minority shareholders. There'll be some Informa colleagues, including myself, who will sit on the board. So Gary will have the delight of having me as a non-executive director. I know he's looking forward to that. Our ambition with that company is to further accelerate and to further grow. Coming back to today, here's where we are. Momentum is a really valuable thing. Don't ever give it up. If you've got it in your brand, you've got it in your business, you've got it in your geography, you've got it in your team, don't give it up. Often say it's like driving a car. When you're driving at 70 miles an hour and then you put the brakes on because you see a flashing blue light in the back of your rearview mirror, getting back up from 20 to 50, it just takes a long time. Same is true in business. We have momentum. We need to really use that. We've seen that pretty much every quarter for the last 4, 5 quarters, and we want to keep seeing it for the next 4, 5 quarters and beyond. I'm very confident we can do that, but that really boils down to the sum of the efforts inside the company, as well as some of the factual data that I've shared today. I'm very confident on the markets we're facing and the position we're in. But the good thing is, I'm even more confident on the sum of the effort from inside the company. Couple of bits of factual news that were buried in the statement for those who haven't noticed it, particularly the shareholders in the room, you'll have seen we've had the credit agencies have re-rated our credit standing, which is always a good thing. Makes it a bit easier in the world of raising debt. Maybe lowers its price, and if we are heading into a world where interest rates come down, we might see some benefit flow from that. We are improving our cash flows. Cash is king in business. First rule of business, look after your cash. These are very cash generative businesses. That allows us to make choices and make investments. We're investing as a company organically in people, in talent, in geographies, in locations, in technology and data. We will continue to do that. We are paying progressive dividends. As the company grows, the dividend will grow. If you are a shareholder, you can get both capital growth if the markets reward us and some dividend growth. We are investing inorganically. We are buying smaller businesses in the sectors, in the areas, in the categories, in the subjects in which we operate, and we are buying our shares. We are targeting a leverage, which basically is a fancy word for how much debt versus how much money we earn of around 1.5 to 2.5 times. Imagine going to the bank and asking for a mortgage. We are saying, we earn this amount of money. We think we can borrow between 1.5 to 2.5 times our income. That is a kind of disciplined place for us to be. We have become, I think, very focused rightly on capital allocation. We are spending our shareholders' money, and these are the ways in which we allocate that through the single lens of delivering sustainable and profitable growth. In summary, this is where we are. We have got high underlying top-line double-digit growth. That is a great thing to be able to say if you do what I do for a living. We are expanding internationally. We are facing into high growth markets. We have got specific growth in academic at the moment for very particular reasons which we need to take maximum advantage of. We can see our revenue future, and that gives us some more planning comfort. We got a strong balance sheet, and most of all, we have got an increasing sense of the power of the company in a human sense to do more together as one team, as well as being specialist teams where we are operating. This is the least interesting chart of all, so I will stop there. Thank you very much.