The Investment column: Informa

IN ITS first results statement to fully reflect its formation via the merger of LLP Group and IBC late last year, Informa has gone some way to justifying the 75 per cent rise in its share price since the merger. The publisher and trade show producer saw margins gain a point to 15 per cent and pre-exceptional interim pre-tax profits rise 36 per cent on sales up by 15 per cent.

The merger's logic was based on leveraging the publishing business into new trade show opportunities, while using the existing exhibition business as a platform to develop new publications, both printed and electronic.

The telecoms business division provides a model - it combines a number of established trade publications as well as one of the mobile phone industry's leading trade shows. The trick will be to use the division's performance as a template to develop other synergies in areas ranging from finance and insurance to sea transport and commodities.

The second aspect of Informa's potential concerns the shift from print to Internet distribution. The evidence here is encouraging; electronic publishing earnings rose 29 per cent and now account for one-third of the publishing side's 40 per cent share of total group profit.

Indeed Lloyd's List, the daily insurance and shipping newspaper, saw its Internet subscription base double in the half year. However, despite that success, management still has to articulate a winning e-commerce strategy, although it may be right to take its time in doing so.

Analysts expect full-year pre-tax profits of pounds 32m, growing to pounds 37m in 2000, putting Informa on a forward p/e of 23, falling to below 20. That marks a massive discount to the media sector's p/e of 38. Speculation that Informa rates as a bid target should underpin the share price. Informa is demonstrating its investment case, and the shares are a buy.