Informa to raise £242m and move tax base to Switzerland

FTSE-250 listed publisher and conference organiser Informa has made a May Day announcement that it intends raising £242m through a ‘two for five rights issue’ and also will move its tax domicile to Switzerland to avoid tax changes in the UK effective from July.

A new parent company ‘New Informa’ will be UK listed, incorporated in Jersey and tax resident in Switzerland.

Informa’s smaller events are suffering more than the larger ones which, according to the 1 May interim management statement, “show more resilience”.

The rights issue should help Informa reduce debt and the company’s shares rose 16 per following the news.

Informa follows Regus and UBM, which also moved their tax base out of the UK in the past year.

Informa says it needs to maintain a tax rate of about 26-27 per cent, but predicts a rise to 30-31 per cent if it stays in the UK because of a change to the taxation of foreign profits due to come into force in July.

The group’s rights issue will be at 150p per share and, although it remains within its banking covenants, Informa chief executive Peter Rigby says an issue would give it more flexibility to run the business in the long-term “in an economic environment that shows no signs of improvement”.

Rigby says the board considered disposals as a route to increase covenant headroom but concluded “any asset sales would likely be at depressed prices”. He hopes any future asset sales would be from a position of strength.

A trading update released alongside the news of the corporate restructure and rights issue said business continued to perform in line with expectations.

First-quarter sales were ahead of last year, reflecting in part sterling’s decline.

Informa says its publishing business is growing.

As for events, the interim management statement notes: “While the group continues to see reasonable growth across its telecoms and Middle East businesses, the group has cut event volumes further across the rest of the small events portfolio to defend profitability. Although the group will run fewer events in 2009 than in 2008, adjusted operating margin will be reasonably protected by aggressive management of the cost base. The group’s larger events are demonstrating greater resilience.”

The admits to a £17m hit in restructuring charges in order to generate £33m of expected annualised cost savings, with further cost savings to be implemented in 2009.

Paul Colston

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Paul Colston

Managing Editor, Conference News & Conference & Meetings World.

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