Final Results

4 March 2015

Tarsus Group plc

Final results for year ended 31 December 2014

Strong results and strategic progress

Tarsus Group plc (LSE: TRS, "Tarsus" or "the Group"), the international business-to-business media group, announces its results for the year ended 31 December 2014.

Tarsus continued to concentrate on the execution of its "Quickening the Pace" strategy, which is focused on accelerating the pace of financial returns to shareholders. Despite strong currency headwinds for much of 2014, the Group made good progress in strengthening and investing in its portfolio of events to drive organic growth.

Financial results

Financial highlights

· Revenue up 18% compared with 2012

· Group like-for-like revenues* up 10%

· Proposed final dividend of 5.4p - total for year up 7% to 7.8p (2013: 7.3p)

· Cash flow from operations up 31% against 2012

· Banking facilities extended to 2019

Operational highlights

· Combined emerging markets and US revenues comprised 80% of Group revenue

· Good visitor growth across the portfolio of 6%

· Major events performed well

· Five strategic acquisitions in key geographical markets

· Two brand replications successfully launched with editions of AAITF and Zuchex held in Jakarta

· US medical business successfully repositioned for renewed growth

Current trading and outlook

· Good performances from major shows in January and February 2015

· Forward bookings for 2015, on a like-for-like basis, are currently over 10% ahead of those for 2014 (adjusted for biennials and acquisitions)

· Planned launch of 13 brand replications in 2015 in targeted geographies

· Outlook for the Group's two largest exhibitions, Labelexpo Europe and the Dubai Airshow, is very promising

· Outlook for 2015 increasingly positive

Douglas Emslie, Group Managing Director of Tarsus, commented:

"Our 'Quickening the Pace' growth strategy gained further traction in 2014. Visitor numbers were up by 6%, our major events performed well and we made good progress with our brand replication strategy to drive organic growth.

"The quality of our assets and the geographical positioning of our portfolio, targeted at faster-growing economies, is a key differentiator for the Group. In addition, our ability to offer our partners an entrepreneurial culture in which to further expand their business has enabled us to capture attractive strategic opportunities in 2014.

"Owing to the timing of our large exhibitions trading is heavily biased in favour of odd years. Forward bookings for the Group's major events in 2015 are strong across the board and the two largest exhibitions, Labelexpo Europe and the Dubai Airshow, are well ahead of their previous editions. Given the current global geopolitical environment we have been deliberately cautious in our budgeting for 2015 but are increasingly positive about our trading prospects."

 For further information contact:

Tarsus Group plc:

Douglas Emslie, Group Managing Director 020 8846 2700

Dan O'Brien, Group Finance Director

Neville Harris, Investor Relations 07909 976 044

The Company will be hosting a presentation to analysts at 11.00am today at the offices of Deloitte LLP, 2 New Street Square, EC4A 3BZ. A webcast of the presentation will be made available on Tarsus's website (www.tarsus.com) from 9.30 am on 5 March 2015.

Glossary *

Like-for-like revenue:

Constant exchange rates adjusted for biennial events, excluding acquisitions impacting for the first time in 2014, prior year disposals and non-recurring products and items.

Adjusted profit before tax:

Profit before tax adjusted for exceptional items, share option charges / credits, amortisation charges, impairment of intangibles, profit / loss on disposal of intangibles and tangible fixed assets, profit on sale of subsidiary and unwinding of discount for contingent consideration.

Adjusted EPS:

Profit after tax attributable to equity shareholders adjusted for exceptional items, share option charges / credits, amortisation charges, impairment of intangibles, profit / loss on disposal of intangibles and tangible fixed assets, profit on sale of subsidiary and unwinding of discount - contingent consideration. 

Strategic overview

The Group made further progress in delivering its "Quickening the Pace" strategy which is focused on accelerating financial returns to shareholders. This is being achieved through a combination of organic growth from the existing portfolio, geographical replications of major brands across faster growth economies and the identification of small strategic acquisitions in our selected geographies.

Tarsus made five strategic acquisitions in the year and these additions were aided by the attractiveness of the Group's entrepreneurial culture to the vendors of those businesses. The Group's size, flexibility and willingness to work with vendors to develop their businesses in partnership with Tarsus is becoming increasingly attractive to partners and helps accelerate the overall strategy.

The Group assesses its performance against three KPIs:

1. Accelerating EPS growth

Through targeting underlying growth at its exhibitions in growth markets, the Group aims to deliver enhanced financial returns to its shareholders. By proactively managing its portfolio of events, adjusted EPS grew (on a constant currency basis over the biennial cycle) 5% to 12.7p, against a 5-10% growth target.

2. Increasing share of revenues from emerging markets and the US

The Group has identified geographies (certain emerging markets and the US) which it believes provide higher potential for growth. For the year ended 31 December 2014 the Group recorded 80% of revenues from its emerging markets and US events, ahead of its 75% target.

3. Driving visitor growth

The Group aims to drive visitor attendance at its events and growth of 6% in 2014 compares favourably with the CEIR index (a key barometer of the US exhibition industry) where visitor attendance was up just 1.8% in 2014.

Financial results

The financial results were in line with Board's expectations. Group revenues for the full year were £60.6m (2013: £75.9m), up 18% on a biennial basis (2012: £51.5m). Like-for-like revenues, at constant exchange rates, increased by 10%. Revenues were 7% adversely impacted by foreign exchange in 2014.

Group adjusted profit before tax was £17.0m (2013: £24.2m), up 15% on a biennial basis (2012: £14.8m). Net interest expense of £1.7m (2013: £1.5m) reflected increased debt levels across 2014 as a result of acquisitions. Reported profit before tax was £8.2m (2013: £15.9m).

The adjusted tax charge of £2.5m (2013: £3.6m) represents 15% (2013: 15%) of the Group's adjusted profit before tax. The reported tax charge is £1.4m (2013: £2.7m). The Group continues to focus on tax efficiency and generates nearly all of its profits outside of the UK, including markets with significantly lower tax rates.

Adjusted earnings per share were 12.7p (2013: 20.0p), 4% up on a biennial basis (2012: 12.2p). Basic earnings per share for 2014 were 5.0p (2013: 12.2p).

The Group generated £16.0m (2013: £24.5m) of cash from operations, an increase of 31% against 2012, the comparative biennial year (2012: £12.2m). The Group's net debt as at 31 December 2014 increased to £38.4m (2013: £28.6m).

The board is proposing a final dividend of 5.4p per share, bringing the total for the year to 7.8p per share (2013: 7.3p per share), up 7%.

The final dividend, subject to Shareholder approval, will be paid on 8 July 2015 to Shareholders on the Register of Members on 29 May 2015. A scrip dividend will continue to be offered as an alternative.

Corporate activity

Five strategic acquisitions were completed during the year.

In December 2013, the Group agreed to acquire 50% of China (Shenzhen) International Brand Underwear Fair ("SIUF"), which runs the leading Asian show for underwear. The acquisition completed in March 2014.

Early in 2014, the Group purchased 60% of Komatek, which runs Turkey's leading construction equipment event, thereby expanding the Group's existing construction portfolio into a dominant position in Ankara. The first event under Tarsus' ownership will take place in May 2015 and bookings tracking in-line with management expectations.

In March 2014, the Group purchased 100% of the assets of HealthScienceMedia Inc. in the US, which organises the Cardiometabolic Health Congress ("CMHC"). In November 2014, Tarsus bought 100% of the South Beach Symposium ("SBS"), a leading dermatology event based in Florida. Both of these acquisitions will further accelerate the development and repositioning of the medical business in the US.

In July 2014, the Group acquired 60% of 3D Printshow, which owns a portfolio of market leading annual events in London, Paris and New York. 3D Printshow is in a fast developing sector and has strong growth opportunities.

The Group also agreed to sell up to 18% of its French business to its French management, in line with a previously stated strategy to reduce its exposure to France.

Operating Review

Emerging Markets

Dubai 

The two principal events in 2014 were GESS (education) and MEBA (business aviation). Both produced strong performances in terms visitor numbers and revenues. In 2015, the GESS brand is being extended with two replications in Mexico and Indonesia, while MEBA is launching the first ever business aviation event into Morocco.

Turkey

This portfolio of events performed well. The larger shows, Zuchex, Ideal Home, The Flower Show and Sign, again recorded strong performances. Zuchex (housewares and gifts) was launched into Jakarta in November 2014 attracting over 150 exhibitors.

Looking ahead, 2015 will feature the first edition under Tarsus' ownership of Komatek (construction) as well as the next biennial edition of Asansor (lifts).

China

Hope, the Group's Central China operation has continued to perform well with revenues significantly ahead of 2013, led by its medical equipment events.

As previously announced, AAITF, held in February 2014, was behind the previous edition owing to protracted venue discussions. This event was moved to Shenzhen in January 2015 where it performed well. With an increasing focus on in-car electronics and vehicle customisation, forward bookings for 2016 are encouraging and a return to growth is expected. The brand was successfully launched into Indonesia in 2014. 2015 will see a further launch of the AAITF brand into Thailand.

The Group's presence in China was strengthened by the acquisition of 50% of SIUF, the leading Asian show for underwear. The first edition under Tarsus' ownership in May 2014 performed well.

Mexico

In Mexico, the Group established a 50% joint venture ("JV") with EJ Krause in late 2013, based initially around Expo Manufactura, the country's premier metalworking/manufacturing exhibition and Plastimagen (plastics). Both produced strong results in 2014 and the latest Expo Manufactura edition held in February 2015 also performed well.

This JV provides a foothold for Tarsus in Mexico and an opportunity to expand EJ Krause's brands into Tarsus' territories. This initiative began with Expo Comm being launched in Jakarta in November 2014. The JV plans to launch two further shows in 2015, replicating GESS and Industrial Print Expo (IPE) into Mexico.

Indonesia

The Group's infrastructure event showed good progress. Construction accounts for approximately 10% of Indonesian GDP representing a market in transition with strong growth potential. The Group has formed a JV with DMG Events to launch a "Big 5 Construct" building materials exhibition in Jakarta in May 2015. DMG Events currently organize similar events using this major brand in Dubai, Saudi Arabia, Kuwait and India.

In line with its "Quickening the Pace" strategy two replicated events were launched in Jakarta in 2014, AAITF in May and Zuchex in November - both events were well received by customers.

US

Medical

The Group's established anti-aging events in Orlando (May) and Las Vegas (December) were both strong shows with record attendances in 2014.

Overall, 2014 was a year of transition for the medical business. Changes to its end markets, including the introduction of Obamacare, have created some uncertainty owing to a lack of visibility over reimbursements to doctors. The Group has embarked on its stated strategy of broadening its preventative medical education offering by moving into the mainstream medical market with the launch of the Metabolic Medical Institute ('MMI'). Tarsus made two strategic acquisitions addressing different areas of preventative medicine. In February 2014, CMHC (cardiology) was purchased and in November 2014 SBS (dermatology) was added.

The Group took the opportunity to reposition its educational offering with the assistance of highly regarded medical universities, such as George Washington. In 2015, Tarsus intends to launch new education products, leveraging the databases acquired with CMHC and SBS. In addition it will look to replicate CMHC events regionally within the US to drive organic growth.

Labelexpo

Labelexpo Americas, the Group's largest event in 2014, took place in September 2014 in Chicago and produced an excellent performance with revenues up by 13%, strong visitor attendance and record re-bookings for the 2016 event.

Offprice

Both Offprice events in Las Vegas during 2014 performed well with solid revenue growth. Importantly, given increased competition for exhibition space in Las Vegas, the Group extended its venue contract to 2019.

Europe

France

Trading in the Group's French business ended the year in line with Board expectations. In January 2014 agreement was reached to sell up to 18% of the French business for €1.5m to its French management. This is in line with the Group's strategy of reducing its exposure in France.

UK

The Group purchased the 3D Printshow in July 2014 giving exposure to a rapidly transitioning market which has synergies with Tarsus' existing business. The events in London and Paris were very successful and the business has in place an aggressive launch plan for 2015 which will see the addition of four new events worldwide.

Outlook

Trading for the first two months of 2015 has been strong. AAITF performed well in its new venue in Shenzhen and we are very encouraged by the move. Offprice produced another good show and Expo Manufactura performed well. In Dubai, AIME, MRO and GESS were succesful. In addition, we are beginning to see some early benefit from the broadening of our position into the mainstream medical market.

Forward bookings for the Group's major events in 2015 are strong and the two largest exhibitions, Labelexpo Europe and the Dubai Airshow, are well ahead of their previous editions. Across the portfolio, bookings are tracking 10%+ ahead on a like-for-like basis.

Tarsus' revenues are very heavily US dollar orientated and we are currently benefiting from its strength. This current strength, if maintained, will be beneficial to the Group's reported results for 2015.

Given the current global geopolitical environment we have been deliberately cautious in our budgeting for 2015 but are increasingly positive about our trading prospects.

Neville Buch, Chairman 

Douglas Emslie, Group Managing Director

4 March 2015

Financing

The geographical composition of Tarsus' international event portfolio means that revenues and profits are generated in a range of currencies, principally US Dollars, Euros, Turkish Lira and Sterling. In 2014 approximately 49% of revenues were generated in US Dollars, 16% in Euros, 13% in Turkish Lira, 7% in Sterling and 11% in Chinese Renminbi. As a result, the Group's Sterling translated trading results are significantly affected by any changes in prevailing exchange rates during the year. The average exchange rates applicable for 2014 were:

• US$: 1.61 - a weakening against Sterling of 2% compared with 2013

• Euro: 1.24 - a weakening against Sterling of 5% compared with 2013

• Turkish Lira: 3.53 - a weakening against Sterling of 16% compared with 2013

2015 budgeted exchange rates are US$: 1.60, Euro: 1.25 and Turkish Lira: 3.60.

Cash flows

Tarsus continues to generate strong cash flows from its operations. The larger events in the Group's portfolio typically have a positive working capital cycle and the business in general has a low capital investment requirement.

The biennial nature of the Group's event portfolio results in a decrease in working capital (excluding cash) in even years, including 2014, which do not include the Group's two largest events. This occurs as deferred income relating to these events builds up in the Statement of Financial Position ahead of the events in the following year.

During 2014, the Group generated £16.0m of cash from operations (2013: £24.5m; 2012: £12.2m).

The key non-operating cash flows in 2014 included:

• Dividends paid of £7.0m

• Deferred consideration payments totaling £5.1m

• Tax and interest paid totaling £3.4m

• Acquisition of SIUF, 3D Print, Komatek, Cardio and SBS £17.9m

• Net proceeds from issue of shares £9.6m

• Proceeds from agreement to part dispose of France £0.8m

Net debt

The Group's funding objective is to ensure that the business has sufficient resources, secured on competitive terms, to meet its various financial commitments as they arise. It achieves this objective by actively monitoring its cash flows and requirements on both an historic and forward looking basis. The Group is cautious in its approach, applying appropriate sensitivities to both the quantum and timing of its projections.

In July 2014 Tarsus' external bank debt facility of £60m was extended to remain in place until September 2019. At 31 December 2014 93% of all borrowings were denominated in Sterling with the remainder denominated in US dollars. The Group has entered into interest rate swaps to fix the interest rates payable under its banking facilities.

The Group's net debt was £38.4m at 31 December 2014 (31 December 2013: £28.6m).

Net assets

As at 31 December 2014, the Group had net assets of £37.5m (31 December 2013: £40.2m).

Intangible assets

Intangible assets comprise goodwill, trademarks and customer lists. The carrying value of intangible assets at 31 December 2014 was £126.8m (31 December 2013: £98.0m).

Working capital

It is the Group's policy to recognise profits upon the completion of an event. Until completion, revenues and costs are held on the Statement of Financial Position. Included in net current liabilities as at 31 December 2014 is deferred income of £28.5m (2013: £18.4m; 2012: £25.3m). Prepaid event costs of £3.7m (2013: £2.8m; 2012: £2.5m) are included in Trade and other receivables. 

Dan O'Brien

Group Finance Director

4 March 2015

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The results for the year ended 31 December 2014 have been prepared using accounting policies and methods of computation consistent with those used in the Group's annual report for the year ended 31 December 2013 and to be adopted for the financial year ended 31 December 2015. The results have also been presented and prepared in a form consistent with that which will be adopted in the Group's annual report for the year ended 31 December 2014 and in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted by the European Union.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2014 or 2013 but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Jersey Financial Services Commission Companies Registry. Those for the year ended 31 December 2014 will be delivered following the Company's Annual General Meeting on 22 June 2015.

This financial information has been extracted from the Group's Annual Report and Accounts for the year ended 31 December 2014. The auditors have reported on these accounts; their reports were unqualified, did not draw attention to any matters by the emphasis without qualifying their report and did not contain statements under s.113B(3) or (4) Companies (Jersey) Law 1991 or equivalent preceding legislation. The Group intends to publish its 2014 Annual Report and Accounts in March 2015.

2. SEGMENTAL ANALYSIS

As at 31 December 2014, the Group was organised into three main segments - Europe, USA and Emerging Markets.

The main activities of all segments are the production of exhibitions supported by other media activities related to those exhibitions.

The following table sets out the revenue and profit information and certain asset and liability information for the Group's reportable segments:

3. PROFIT AND LOSS ANALYSIS

The following analysis illustrates the performance of the Group's activities and reconciles the Group's pre-tax profit to adjusted profit. Adjusted results are presented to provide an indication of underlying financial performance and to reflect how the business is managed and measured on a day-to-day basis. The adjusted profit before tax excludes exceptional costs, share option charges, amortisation and impairment charges, profit on sale of subsidiary, profit or loss on disposal of tangible and intangible assets, tax on joint venture profits and adjustments to contingent consideration.

In 2014, debits include exceptional one-off costs of £1.3 million resulting from acquisitions or potential acquisitions, £0.3 million of one-off joint venture costs, and £0.7 million from bank refinancing. A £0.2 million credit was booked against the carrying value of put/call option liabilities.

4. INCOME TAX EXPENSE

The tax charge below differs from the tax at the effective rate on the profit for the year. The differences are explained below:

5. DIVIDENDS

An interim dividend of 2.4p per share (2013: 2.3p) was paid on 15 January 2015 to shareholders on the Register of Members of the Company as at 5 December 2014.

The directors announced the proposed final dividend for 2014, of 5.4p per share, on 4 March 2015. Subject to approval at the Annual General Meeting on 22 June 2015, the proposed date of payment is 8 July 2015 to Shareholders on the Register of Members as at 29 May 2015.

Dividends are recognised as a liability in the period in which they are appropriately authorised and are no longer at the discretion of the entity.

6. EARNINGS PER SHARE

Basic earnings per share

Basic earnings per share has been calculated on profit after tax attributable to ordinary shareholders for the year (as shown on the Consolidated Income Statement) and the weighted average number of ordinary shares in issue during the period (see below table).

Diluted earnings per share

Diluted earnings per share has been calculated on profit after tax attributable to ordinary shareholders for the year (as shown on the Consolidated Income Statement) and the diluted weighted average number of ordinary shares in issue during the period (see below table):

Weighted average number of ordinary shares (diluted):

Dilutive and anti-dilutive share options were determined using the average closing price for the period. The average share price used was 212.68 pence.

Adjusted earnings per share

Adjusted earnings per share is calculated using adjusted profit after tax as reconciled in note 3 and the weighted average number of ordinary shares (as above) in issue in the year.

Adjusted diluted earnings per share

Adjusted diluted earnings per share is calculated using adjusted profit after tax as reconciled in note 3 and the weighted average number of diluted ordinary shares (as above) in issue in the year.

7. OVERDRAFTS AND OTHER INTEREST-BEARING LOANS AND BORROWINGS

8. ACQUISITION OF SUBSIDIARY

i) On 7 February 2014, the Group acquired 100% of the trade and assets of Cardiometabolic Health Congress ("CMHC"), an exhibition business.

The following table sets out the book values of the identifiable assets and liabilities acquired and their fair value to the Group, in respect of this acquisition: