28th Feb 2012 07:00
Record results in strong biennial year
Results for the year ended 31 December 2011
- Revenues up 9.3% to £972.3m - underlying revenue(a) growth of 7.9%
- Adjusted operating profit(b) up 17.5% at £201.9m
- Margin(c) up to 20.8% from 19.3%
- Fully diluted adjusted EPS(d) up to a record of 56.8p, 6.6p (13.1%) up on
2010
- Full year dividend up to a record of 26.3p, (2010: 25.0p)
- Cash generation from operating activities up 31.7% to £203.7m (100.7% cash
conversion(e))
- Events profits up 44.6% to £135.2m, 62.5% of total excluding corporate costs
- Emerging Markets(f) revenues up 24.4% to £207.1m
- Emerging Markets operating profit up 33.4% to £65.6m representing 30.4% of
total
- £71.2m invested in eight acquisitions
- Debt profile improved with maturities extended, net debt of 2.4x EBITDA
David Levin, UBM's Chief Executive Officer, commented:
"2011 has been a strong year for UBM, with EPS up over 13% to a record 56.8p.An outstanding performance from our Q4 biennial events capped off a year ofconsistent delivery in which all our businesses met or exceeded their targetsfor the year. On the back of these results, the Board has declared a finaldividend of 20p, up 1p over 2010, resulting in a record dividend for the year.These results are the fruit of our consistent strategy to focus on providingmarketing, communications and data services, in winning formats, to thrivingbusiness communities. Our Emerging Markets revenues grew by more than 24%during 2011 and contributed just under a third of our overall profits: in 2011we generated more revenue in China than in Europe for the first time. OurEvents business performed particularly well and 1.7 million people attendedUBM events in 2011, up from 1.3 million in 2010 with profits growing by 45%.The solid performance of Data Services and PR Newswire in 2011 reflects theinitial benefits of our continuing investment in these businesses. OurMarketing Services businesses also continue to develop well, with the combinedeffects of continuing strong digital growth and print disposals likely toresult in online revenues outstripping print revenues in 2012.
2012 trading has started well. We anticipate continued underlying growth and a positive performance across the business whilst recognising the continuing uncertainties of the global economy."
Business performance Full Year Full Year Change Change Underlying 2011 2010 % at CC Change % %Revenue £972.3m £889.2m 9.3 11.3 7.9Adjusted operating profit £201.9m £171.8m 17.5 19.8 2.3Adjusted operating profit 20.8% 19.3% 1.5%ptsmarginEBITDA £218.7m £188.2m 16.2Adjusted PBT £177.4m £156.4m 13.4Adjusted EPS 57.8p 51.0p 13.3 56.8p 50.2p 13.1Fully diluted adjusted EPSDividend per share 26.3p 25.0p 5.2Cash generated from £203.7m £154.7m 31.7Operations IFRS Statutory Full Year Full Changeresults 2011 Year %(£m) 2010Revenue 972.3 889.2 9.3Operating profit 155.4 132.3 17.5Profit after tax 86.1 99.4 (13.4)EPS (p) 31.1 37.3 (16.6)Net Debt 526.4 484.6 Operational HighlightsSegmental results Full Year Full Year Change Change Underlying at CC Change£m 2011 2010 % % %RevenueEvents 396.9 310.0 28.0 30.8 14.6PR Newswire 187.8 181.2 3.6 6.6 4.2Data Services 187.0 184.7 1.2 2.3 3.0Marketing Services - Online 88.5 69.2 27.9 31.7 16.4Marketing Services - Print 112.1 144.1 (22.2) (22.0) (4.6)Total Revenue 972.3 889.2 9.3 11.3 7.9 Adjusted Operating ProfitEvents 135.2 93.5 44.6 47.9PR Newswire 41.0 42.1 (2.6) 0.2Data Services 30.3 34.1 (11.1) (11.1)Marketing Services - Online 3.6 1.3 176.9 200.0Marketing Services - Print 6.1 10.0 (39.0) (40.2)Net corporate costs (14.3) (9.2) (55.4) (55.4)
Total Adjusted Operating Profit 201.9 171.8 17.5 19.8
Adjusted Operating Profit MarginEvents 34.1% 30.2% 3.9%ptsPR Newswire 21.8% 23.2% (1.4)%ptsData Services 16.2% 18.5% (2.3)%pts
Marketing Services - Online 4.1% 1.9% 2.2%pts Marketing Services - Print 5.4% 6.9% (1.5)%pts Total Adjusted Operating Profit 20.8% 19.3% 1.5%pts Margin
Strong performance in Events (40.9% of revenues and 62.5% of adjusted operating profit)
- Revenue up 28.0% to £396.9m, with underlying growth up 14.6%
- Strong performance by high margin biennial events, notably in Q4, which
contributed £36.2m in revenue, up from £18.5m in 2010
- Margin up to 34.1% (2010: 30.2%) reflecting positive biennial contribution
- Eight events-related acquisitions contributed £7.9m to 2011 revenues -
c.£23.3m pro forma 2011
- Forward bookings for our top 20 events(g) as at 31 January 2012 are up 13.7%
on prior year (the equivalent for 31 January 2011 was +18.3%)
- Deferred revenue for events up 44.4% to £147.1m as at 31 December 2011
- 2012: we expect underlying growth, excluding biennials, of between 7% and
9%, with margin likely to be between 31% to 32% reflecting a lower
contribution from biennials and continued investment in the business
Resilient PR Newswire performance (19.3% of revenues and 19.0% of adjusted operating profit)
- Revenue up 3.6% with underlying growth of 4.2%
- Margin stabilised, at 21.8% for the full year
- Robust US distribution performance, with an underlying revenue increase of
4.6%
- Within US distribution, US wire underlying growth was 4.3%
- Broadening reach online and across social media with first of new generation
of products in beta
- Continued expansion in PR Newswire's European business where underlying
revenue growth was 17.9%
- Good growth in Europe and Emerging Markets
- Significant growth in revenues under contract with deferred revenues at year
end of £17.0m (2010: £13.0m)
- 2012: we expect underlying revenue growth of between 3% and 5% with stable
margins
Solid revenue performance in Data Services (19.2% of revenues and 14.0% of adjusted operating profit)
- Revenue growth of 1.2% with underlying growth of 3.0% principally driven by
UBM TechInsights
- Online conversion continues with digital and service revenues now 69.5% of
total Data Services (2010: 66.7%)
- Margin of 16.2% (2010: 18.5%) reflecting continued investment, together with
weakness in Trade and Transport, notably UBM Aviation
- 2012: as online conversion continues, we expect that revenue overall will be
stable with margin improvement of around 1%
Marketing Services - Online & Print (20.6% of revenues and 4.5% of adjusted operating profit)
- Marketing Services - Online & Print revenue combined declined 6.0% while
margin reduced to 4.8% (2010: 5.3%) reflecting print portfolio rationalisation
and investment in online product development
- Underlying Online revenue growth of 16.4% driven principally by successful
product innovation and development, especially around higher engagement
products
- Investment in new products continued throughout the year, notably in
building virtual environments, for which investment totalled £2.7m, with over
250 virtual events hosted during 2011 (2010: 103) for global communities
- Print underlying revenues declined by 4.6%. Print activities with revenues
totalling £46.6m in 2010 were divested during 2010 and portfolio
rationalisation continues with further print disposals announced in 2012
accounting for £17.9m of revenue in 2011
- Print margin reduced to 5.4% from 6.9% as the online integration process
progressed, with disposals diluting margins
- 2012: for Marketing Services - Online & Print, we expect the combined
marketing services segments to achieve underlying revenue growth of between 2%
and 4% and for online revenue to exceed print for the first time. Margin for
Marketing Services - Online & Print, is expected to be between 4% and 6%
Corporate costs
- Corporate costs including non-cash share based payment charges of £3.4m were
£19.3m in 2011, up from £15.9m in 2010 (of which £1.3m were non-cash share
based charges). The increase reflects an investment in a strengthened
headquarters team
- As in prior years, corporate costs for 2011 were partially offset by
disposal gains and other sundry income not attributable to any reporting
segments' operations. These offsetting gains totalled £3.8m in 2011, down from
£6.4m in 2010
- These offsets are by their nature unpredictable but we expect them to become
immaterial going forwardStrategic progress
Our consistent strategy of offering products in winning formats, targeting attractive business communities in growing economies, is building a strong platform for growth. Our Emerging Markets revenues grew 24.4% during 2011 (20.0% underlying) and now account for 21.3% of UBM's revenues (2010: 18.7%) and 30.4% of total adjusted operating profit (2010: 27.2%).
We continue to build the business through organic development and acquisition.Initiatives to strengthen UBM's foundations have included the furtherapplication of the `GEM' best practice initiatives across all events;successful development of the geographic footprint for PR Newswire;strengthening Data Services through new products, core database developmentand geographic expansion; and enhancing our Marketing Services business withinvirtual events and by offering advanced high engagement products. Meanwhileour strategy of managing the contraction of the Print element of MarketingServices continues.
During the year we acquired full control of, or majority interests, in eight events businesses for an aggregate consideration of £71.2m. These include Rotaforte, Ecobuild and Renewable Energy India. These acquisitions are in attractive vertical sectors and have further increased our exposure to the attractive events industry - which now accounts for 62.5% of UBM's adjusted operating profit (2010: 51.7%).
We now employ 1,935 people across our Emerging Markets businesses out of a total of 6,634 people (2010: 1,773 in Emerging Markets out of a total of 6,590).
OutlookThe outlook for UBM overall remains positive and we expect underlying growthof between 4% and 5%, and adjusted operating profit margin to exceed the 19.3%we reported in 2010. We believe that our global platform serving attractivecommunities is well positioned in what remains a challenging macro-economicback drop.
Please see the Segmental review below for more detailed information about our outlook for each of UBM's business segments.
Throughout this announcement:
(a) Where quoted, underlying growth rates exclude currency movements,
discontinued revenues, proforma revenues from acquisitions and biennial
events.
(b) Adjusted operating profit represents operating profit excluding
amortisation of intangible assets arising on acquisitions, exceptional items
and share of taxation on profit from joint ventures and associates.
(c) Adjusted operating margin relates to our adjusted operating profit. It is
adjusted operating profit expressed as a percentage of revenues.
(d) Adjusted earnings per share is before amortisation of intangible assets
arising on acquisitions, certain exceptional items, deferred tax on intangible
assets, share of taxation on profit from joint ventures and associates,
taxation relating to exceptional items and net financing expense - other.
(e) Cash conversion is the ratio of adjusted cash generated from operations to
adjusted operating profit. Adjusted cash generated from operations represents
adjusted operating profit, before depreciation and profit from associates and
joint ventures, after capital expenditure, movements in working capital,
dividends from associates and joint ventures and non cash movements.
(f) UBM's Emerging Markets comprise the non-G10 countries - most notably:
China, Brazil, India, Thailand, Singapore, Indonesia, Malaysia, Philippines,
Mexico and UAE.
(g) Refers to the top 20 annual events based on revenue achieved during the 12
month period to 31 December 2011.
ContactsMedia Investors Peter Director of Communications James Davies Acting Head of InvestorBancroft Relations E-mail [email protected] E-mail [email protected] +44 20 7921 5961 Directtelephone telephone +44 20 7921 5963 Chris Barrie Citigate Dewe Rogerson James Investor
Relations Manager
O'Shaughnessy
E-mail [email protected] E-mail [email protected]
Direct +44 20 7282 2943 Direct +44 20 7921 5023telephone telephoneUBM will be hosting an analyst and investor presentation at 9.30am at theLondon Stock Exchange. A live webcast of the results presentation will be madeavailable from UBM's website from around 9.30am, 28 February 2012. To accessthe webcast please go to www.ubm.com.
An on demand recording of the webcast will also be accessible from UBM's website, www.ubm.com after midday.
Notes to Editors
About UBM plc
UBM plc is a leading global business media company. We inform markets andbring the world's buyers and sellers together at events, online, in print andprovide them with the information they need to do business successfully. Wefocus on serving professional commercial communities, from doctors to gamedevelopers, from journalists to jewellery traders, from farmers to pharmacistsaround the world. Our 6,634 staff in more than 31 countries are organised intospecialist teams that serve these communities, helping them to do business andtheir markets to work effectively and efficiently.
For more information, go to www.ubm.com;
Follow us at @UBM_plc to get the latest UBM news.
CEO Operational Review Full Year Full Year Change Change Underlying at CC Change£m 2011 2010 % % %RevenueEvents 396.9 310.0 28.0 30.8 14.6PR Newswire 187.8 181.2 3.6 6.6 4.2Data Services 187.0 184.7 1.2 2.3 3.0Marketing Services - Online 88.5 69.2 27.9 31.7 16.4Marketing Services - Print 112.1 144.1 (22.2) (22.0) (4.6)Total Revenue 972.3 889.2 9.3 11.3 7.9 Adjusted Operating ProfitEvents 135.2 93.5 44.6 47.9PR Newswire 41.0 42.1 (2.6) 0.2Data Services 30.3 34.1 (11.1) (11.1)Marketing Services - Online 3.6 1.3 176.9 200.0Marketing Services - Print 6.1 10.0 (39.0) (40.2)Net Corporate costs (14.3) (9.2) (55.4) (55.4)
Total Adjusted Operating Profit 201.9 171.8 17.5 19.8
Adjusted Operating Profit MarginEvents 34.1% 30.2% 3.9ptsPR Newswire 21.8% 23.2% (1.4)ptsData Services 16.2% 18.5% (2.3)pts
Marketing Services - Online 4.1% 1.9% 2.2pts Marketing Services - Print 5.4% 6.9% (1.5)pts Total Adjusted Operating Profit 20.8% 19.3% 1.5pts Margin
We have made great progress across all our businesses in the course of 2011.Further acquisitions, notably of events businesses, and disposals of printassets together with organic growth initiatives continue our strategy offocussing on attractive communities and growing economies. Product investmentaround PR Newswire and our Data Services businesses will raise the value ofour business in the coming years.EVENTS Full Year Full Year Change Change Underlying at CC Change£m 2011 2010* % % %Annual Events Revenue 360.7 291.5 23.7% 26.5% 14.6%Biennial Events Revenue 36.2 18.5 95.7% 96.7% n/aTotal Revenue 396.9 310.0 28.0% 30.8% 14.6%
Total Adjusted Operating Profit 135.2 93.5 44.6% 47.9% Total Adjusted Operating Profit 34.1% 30.2% 3.9pts Margin
*Restated for Annual event previously reported as a Biennial
We are delighted by the progress of our events business which, following encouraging growth in revenues and an improved margin performance, now accounts for 40.8% of UBM's revenues (2010: 34.9%) and 62.5% of total adjusted operating profit, excluding corporate costs (2010: 51.7%).
During 2011 we organised over 400 events including over 250 tradeshows. The total number of events has increased since 2010 as a result of 24 launches (including 11 geo-adaptations) and over 60 events acquired (including the majority of the Canon events where we did not report the financial results in 2010).
Total reported revenues for events grew by 28.0% to £396.9m (2010: £310.0m)partly driven by the positive biennial effect. In 2011 we organised 20biennial events (2010: 16 events) which contributed £36.2m of revenue (2010:£18.5m). Versus the 2009 editions these events grew by 27.0% or 28.5% on aconstant currency basis.Annual event revenues grew by 23.7% to £360.7m (2010: £291.5m) driven by anincrease in floor space (m2). We saw stand revenues rise by 26.9% to £247.8m(2010: £195.3m), attendee revenues rise by 13.0% to £41.6m (2010: £36.8m) andsponsorship and other revenues increase by 20.3% to £71.4m (2010: £59.4m).A total of 49,000 exhibitors attended our annual events during the year whichis an increase of 32% (2010: 37,000) with square metres for our annualportfolio increasing by 30% to 1,204,000 (2010: 925,200) and visitor numbersincreasing by 25% to 1,520,000 (2010: 1,220,000).
We continue our drive to ensure events organised by UBM are best in class and our events best practice initiative, `Global Events Momentum' (GEM), is expanding with company-wide engagement and focus in areas such as customer value, technology innovation, new revenue, sustainabilty and financial insight.
In 2011, we continued to expand through both geo-adaptations and acquisitions.We held events in 31 different countries (2010: 21 countries) includingTurkey, Malaysia and Vietnam. We launched 11 geo-adapted events around theworld, with notable expansions in Indonesia and India as well as in the USA.During 2011 we invested a total of £71.2m in buying 100% of, or majorityinterests in, eight events related businesses which contributed £7.9m to the2011 reported events revenues. Had they been owned since 1 January 2011 theywould have contributed approximately a further £15.4m. In 2011, we haverealised the full year benefit of our significant acquisition in 2010 of CanonCommunications which contributed £31.8m of event revenue in 2011 (2010:£1.1m).Five of our 2011 acquisitions operate events in high growth sectors inEmerging Markets. We have significantly expanded our business in South EastAsia through the acquisition of AMB Exhibitions with events in Malaysia,Vietnam and the Philippines serving the water, livestock, energy, andmechanical/electrical industries. We continue to invest in India withacquisitions including SATTE, which is India's largest travel & tourism event,Renewable Energy and a majority stake in Index Fairs, which is India's largestinteriors tradeshow.
The UK Ecobuild acquisition reflects our strategy in action: a fast-growing world leading event
in the attractive sustainable design and building construction sector whichhas performed consistently, has excellent geo-adaptation opportunities (Chinaevent already announced for 2012) and has global synergies with our existingBuilt Environment business.
On an underlying basis revenues grew by 14.6% during the year. This figure represents the constant currency organic growth of our continuing annual events portfolio (stripping out biennials, discontinued activities and acquired businesses). Our 2011 top 20 annual trade shows represented 47% of our events business in terms of revenue, and 63% of Events adjusted operating profit.
The table below shows annual event revenues by geography. Emerging Markets revenues remain 40% of our annual event portfolio despite growth of 22.8% since 2010. The geographical split is impacted by the addition of the Canon events in North America. The positive Emerging Markets growth has been driven by our acquisitions made in the year, and by strong underlying growth (including new launches) of 24.6%.
North America performance is largely driven by Canon along with strong underlying events such as Black Hat (IT Security) and Interop (Technology) where revenues grew by 25.4% and 22.1% respectively. Game Developer Conference celebrated its 25th anniversary with record attendees.
Our business in Europe has grown by 51.9%. This is partly due to the additionof the Canon European events but also strong growth in CPhI Worldwide of 10.4%(this is our second largest event in revenue terms and accounts for 40% of our2011 European revenues for annual events).
Revenues from our UK events have decreased by 1.7% partly due to tougher macro economic conditions together with the decision to discontinue some events.
Adjusted operating profit increased by 44.6% to £135.2m (2010: £93.5m) with anincrease in operating margin to 34.1% (2010: 30.2%). This is partly impactedby the biennial effect as our biennials in 2011 operated at a higher margin.We continue to invest in new launches and geo-adaptations which have notmaterially impacted our overall margin performance. Full Year Full Year Change Change at Underlying 2011 2010* % CC Change£m % %Annual Events RevenueEmerging Markets 142.5 116.0 22.8% 26.8% 24.6%N. America 104.1 80.0 30.1% 39.7% 10.2%UK 47.4 48.2 (1.7%) (0.4%) 6.1%Europe 55.3 36.4 51.9% 37.9% 11.7%RoW 11.4 10.9 4.6% 8.6% (4.4%)Annual Events Revenue 360.7 291.5 23.7% 26.5% 14.6%
* Restated for a biennial event now classified as an annual event
Outlook
Following another excellent trading performance in 2011, combined withpositive forward booking trends, we expect our Events business to maintain itsstrong momentum into 2012 and beyond. At 31 January 2012, forward bookings ofour 2011 top 20 events were up 13.7% compared to last year.
We expect underlying growth, excluding biennials, of between 7% and 9% with margin likely to be between 31% to 32% reflecting a lower contribution from biennials and continued investment in the business.
PR Newswire Full Year Full Year Change Change at Underlying 2011 2010 % CC Change£m % %RevenueUS Distribution 88.7 88.2 0.6% 4.6% 4.6%US Other 21.4 23.0 (7.0%) (2.7%) (2.6%)US Vintage 17.9 17.0 5.3% 9.1% 9.3%PR Newswire Europe 18.7 13.5 38.5% 38.5% 17.9%Canada Newswire 30.8 29.7 3.7% 3.0% (0.2%)PR Newswire Asia & LatAm 10.3 9.9 4.0% 8.4% 14.8%Total Revenue 187.8 181.2 3.6% 6.6% 4.2%
Total Adjusted Operating Profit 41.0 42.1 (2.6%) Total Adjusted Operating Profit 21.8% 23.2% (1.4pts) Margin
PR Newswire generated solid results in 2011. The full year saw a 3.6% increasein headline revenue to £187.8m (2010: £181.2m), and 6.6% growth on a constantcurrency basis. Operating profit declined to £41.0m (2010: £42.1m), whilemargin was 21.8%.US distribution revenue increased 4.6% to £88.7m, on a constant currencybasis, due in large part to a 2.6% increase in press release volumes to195,700 releases (2010:190,700). We estimate that the overall press releasemarket in the US increased by 5.4% in terms of volumes, driven largely bysmaller competitors who focus largely on small and medium-sized entities. Ourenhanced release offerings have been significantly aided by the growth insocial media and the increasing widespread practice of using multi-mediacontent in company communications and marketing. Enhanced releases enable usto better service customers' evolving needs. Statistics continue to suggestthat we are the clear market leader in the multi-media press release market.In 2011, we launched iReach, our competitively priced offering aimed atcapturing a greater portion of the small and medium-size enterprise space.We have increased efforts to migrate our US customer base from pay-as-you-goarrangements to long term committed revenue contracts. In 2011, revenues fromlong term contracts were approaching £20m and now account for about 15% oftotal US revenues.US Other revenue (comprised of Engagement and Workflow/Data) decreased by 2.7%to £21.4m, on a constant currency basis, reflecting the reduced marketingeffort associated with our legacy Workflow/Data products as we prepare for thelaunch of Agility (our new integrated workflow platform) offset partially byincreased volumes from MultiVu's broadcast and production business. US Vintagerevenues were up 5.3%, reflecting in large part the roll-out of XBRL servicesto our filing and financial printing customers.
The drive to diversify our revenue base has led to a strong performance outside US where revenue grew 12.6% to £59.8m.
PR Newswire Europe revenues rose by 38.5% to £18.7m primarily due to theOctober 2010 acquisition of the French data provider, Hors Antenne and growthin distribution revenues in the UK, the Nordic countries and Germany. Europe'sdisclosure and news distribution business is evolving rapidly and consequentlyexhibits attractive growth opportunities.Revenues from emerging businesses in Asia and Latin America increased 4.0% to£10.3m due in large part to expansion across China. Revenues from CanadaNewswire increased 3.7% to £30.8m due to an increase in distribution revenuesand the roll-out of the MediaVantage workflow platform.Our margin was 21.8% as compared to 23.2% in 2010, and in line with guidance.We have made significant investments in our products, our technology, and insales and marketing to drive continued growth in the changing competitive andtechnological environment. In addition, growth in new businesses, includingVintage and in Emerging Markets, was dilutive to our operating margin as apercentage of revenues.In summary, 2011 was characterised by growth in our core wire distributionbusiness, the development and successive beta launches of new products such asAgility and iReach, and expansion into high growth markets such as China. Ourstrategy of migrating pay-as-you-go customer relationships to committed longterm contracts has resulted in further enhancement of the quality of earnings,particularly in terms of improved visibility and stability.
Outlook
We expect underlying revenue growth for 2012 to be between 3% and 5% andmargins to be stable.DATA SERVICES Full Year Full Year Change Change Underlying 2011 2010* % at CC Change£m % %RevenueSubscription & listing fees 117.9 118.5 (0.5%) 1.0%Professional Services 54.0 48.5 11.3% 11.8%Advertising 15.1 17.7 (14.7%) (15.2%)Total Revenue 187.0 184.7 1.2% 2.3% 3.0%
Total Adjusted Operating Profit 30.3 34.1 (11.1%) (11.1%) Total Adjusted Operating Profit 16.2% 18.5% (2.3pts) Margin
*2010 has been restated to move SharedVue revenues from "other" to "subscription"
Data Services demonstrated a solid performance in 2011 generating revenues of£187.0m (2010: £184.7m) up 1.2%, and adjusted operating profit of £30.3m(2010: £34.1m) down 11.1%. Adjusting for acquisitions, discontinued items andthe impact of currency changes, underlying revenues increased 3.0%.
In 2011, we continued to manage the transition from print directories to online digital products and workflow solutions to enhance the value of our data. The overall market trend from print to digital is exemplified in the healthcare vertical where we have seen significant demand for our digital subscription services as hospitals and healthcare providers across Europe and Asia increasingly adopt the use of sophisticated data in their information systems.
As the use of healthcare data services grows and matures within EmergingMarkets we expect to see increased demand for our products. Preliminaryindications of demand are very encouraging with initial orders for healthcaredata services already in from various Latin American markets including Brazil.We continue to make progress in the Middle East.
Demand for reference and integrated drug information systems grew in 2011 on the back of new customer wins in the hospital market.
Trends seen in 2011 included the ongoing migration from print to digital andthe evolution of web and smartphone interfaces for data services. We remaincommitted to continually maintaining the utmost quality of our data sets inorder to better serve key communities while expanding into new geographiessuch as Latin America. We strive to maximise the growth potential of keyverticals and to invest where a competitive advantage can be maintained whilemaking improvements to internal process efficiency through automation andback-office system development.
Subscription and listing fee revenues declined 0.5% to £117.9m (2010: £118.5m) principally reflecting the weakness in the Trade & Transport sector. Professional Services revenues remained strong in 2011 at £54.0m (2010: £48.5m). Revenue growth of 11.3% was principally driven once again by increasing demand for our Technical Intelligence and Intellectual Property (IP) services.
Advertising revenues decreased by 14.7% to £15.1m (2010: £17.7m) largely driven by the ongoing decline in print advertising within the healthcare and transport verticals, specifically in certain print directory products.
Full Year Full Year Change Change at Underlying % CC Change£m 2011 2010 % %RevenueHealth 71.1 70.4 1.0% (0.1%) 1.0%Technology & IP 49.0 43.7 12.1% 16.4% 22.4%Trade & Transport 38.5 43.0 (10.5%) (9.2%) (11.9%)Paper 14.5 13.5 7.4% 11.5% 10.1%Built Environment 12.8 12.7 0.8% 0.8% 1.5%Other 1.1 1.4 (21.4%) (21.4%) (15.4%)Total Data Services revenue 187.0 184.7 1.2% 2.3% 3.0%The table above highlights how the performance of our Data Services productsand services varies between different communities. Revenues from Health rose1.0% to £71.1m reflecting growth in our online data products and EmergingMarkets, partially offset by declines in our print directory businesses andnegative currency movements.Our Technology & IP related revenues grew 12.1% to £49.0m, with the majorityof the increase attributable to growth in UBM TechInsights. This business hasbenefitted from increased sales to new and existing customers in the IP andcustom technical intelligence market spaces. On top of this the number oflarge customers served has substantially increased.
The Trade & Transport community remains under economic pressure and this is reflected in the 10.5% decline in revenues to £38.5m. While print products remain in structural decline, we have seen solid demand for digital products from our core institutional customers. We made important strides in further enhancing both the quality of our products, and their distribution, with expansion in the financial information sector.
The revenue of our Paper related products and services rose 7.4% to £14.5m helped by our pulp & paper economic analysis product and some currency appreciation.
Despite challenging conditions faced by UK construction, Data Services revenues in our Built Environment vertical increased by 0.8% to £12.8m (2010: £12.7m) largely underpinned by a good performance in ABI's data business, incorporating the newly acquired Lead in Research product.
Adjusted operating profit for Data Services fell 11.1% to £30.3m (2010: £34.1m). As expected, there was a decline in the margin to 16.2% (2010: 18.5%). As described at our Investor Day in November 2011, there is a high level of focus on margin improvement. These steps include product rationalisation, cost reduction and product enhancement along with the launch of new products.
OutlookFor 2012, we expect that revenue for the Data Services segment will be stableoverall, reflecting the continuing shifts in its business mix, with marginimprovement of around 1%.MARKETING SERVICES - Online Full Year Full Year Change Change Underlying at CC Change£m 2011 2010* % % %RevenueAdvertising 56.6 45.5 24.4% 28.6%Lead Generation & other 28.9 21.8 32.6% 35.7%Subscriptions 3.0 1.9 57.9% 57.9%Total Revenue 88.5 69.2 27.9% 31.7% 16.4%
Total Adjusted Operating Profit 3.6 1.3 176.9% 200.0% Total Adjusted Operating Profit 4.1% 1.9% 2.2pts Margin
2011 saw continued favourable market trends. Revenue increased 27.9% to £88.5m(2010: £69.2m). On a constant currency basis, revenue increased by 31.7%.Whilst profitability improved significantly in 2011, we continue to invest tocapture future growth opportunities. Adjusted operating profit was £3.6m(2010: £1.3m) and margins improved to 4.1% (2010: 1.9%).
Advertising primarily in our Technology vertical, grew 24.4% in 2011 driving overall underlying Online revenue growth of 16.4%. The Healthcare vertical generated revenue growth of 40.0% over 2010 levels. This was driven predominantly by increasing budgets for digital marketing services among pharmaceutical clients.
We are seeing growing demand from marketers for products which help themdevelop and sustain online communities. These products attracted an increasingproportion of corporate marketing budget spend in 2011. UBM has capitalised onthis trend by launching Marketing as a Service (MaaS). MaaS leverages UBM'sexisting online platforms, systems and content management approach and servesmarketers through lead generation, banner and sponsorship models. Online brokenew ground this year in selling its new MaaS programs to the medical,electronics and financial markets, contributing significantly to the 2012forward order book.Lead generation revenues grew to £28.9m (2010: £21.8m). The number of virtualevents more than doubled, with over 250 events organised (2010: 103). Thevirtual events market is evolving to encompass broader digital environmentsincluding webinars, virtual trade shows, recruitment events and e-learningprogrammes. Comdex Virtual was UBM's highest grossing virtual event for thesecond year running and generated increasing levels of customer participationand interaction. Full Year Full Year Change Change at Underlying % CC Change£m 2011 2010 % %RevenueTechnology 68.0 54.6 24.5% 30.3% 11.4%Health 9.8 7.0 40.0% 38.0% 36.2%Built Environment 3.2 2.2 45.5% 23.1% 30.0%Trade & Transport 1.3 1.2 8.3% 8.3% (7.5%)Other 6.2 4.2 47.6% 51.2% 84.4%Total Online Revenue 88.5 69.2 27.9% 31.7% 16.4%
The biggest contributor to 2011 Online revenues continues to be our technology community which generated headline growth of 24.5%.
As in 2010, the Online segment launched a number of new products andinnovations to deliver higher audience engagement. The business also continuesto refresh and improve the existing product set to maintain its competitiveadvantage. Despite this development spend, especially in the progression ofour virtual events environment (where our investment amounted to approximately£2.7m), adjusted operating profit for Online more than doubled to £3.6m (2010:£1.3m) with an improved margin of 4.1% (2010:1.9%).MARKETING SERVICES - Print Full Year Full Year Change Change Underlying at CC Change£m 2011 2010 % % %Total Revenue 112.1 144.1 (22.2) (22.0) (4.6)
Total Adjusted Operating Profit 6.1 10.0 (39.0) (40.2)
Total Adjusted Operating Profit 5.4% 6.9% (1.5)pts Margin
In 2011, Print as a proportion of total revenues declined to 11.6% (2010: 16.2%), and 2.8% (2010: 5.5%) of Group adjusted operating profits, excluding corporate costs.
Print revenue declined by 22.2% to £112.1m (2010: £144.1m) and adjustedoperating profit decreased by 39.0%, reflecting ongoing portfoliorationalisation. In 2011 we closed, exited or divested 31 titles predominantlyin the healthcare vertical but also in technology and lifestyle, and due tothe dilutive effect of these disposals in aggregate, Print margin declined to5.4% (2010: 6.9%). Underlying revenues decreased by 4.6%.
Our strategic objective remains to leverage both the strength of existing brands and the value of our registration databases to drive a profitable `paid for content' model and to develop integrated Marketing Services offerings.
Outlook
Looking at our Online and Print businesses as a combined marketing servicesoffering, 2012 is expected to be the first year where the revenue contributionfrom Online will exceed that of Print. Online is expected to show double digitgrowth with improving margins while Print revenue will continue to berationalised, albeit at a slower pace, although ongoing margins for Print areexpected to stabilise. Overall, we expect our combined marketing servicesbusinesses to achieve underlying revenue growth of between 3% and 5% and amargin of between 4% and 6%.
CFO Financial Review
2011 has been a successful year for UBM, demonstrating significant progress inrepositioning our business portfolio through organic development and ouracquisition programme. Revenues in 2011 were £972.3m, 9.3% higher than in 2010(2010: £889.2m) driven by strong underlying performance of the Events, PRNewswire, and Online segments and the revenue contribution from acquisitions,particularly UBM Canon, acquired in October 2010. Adjusted operating profit1for 2011 was 17.5% higher at £201.9m (2010: £171.8m). Higher margins1reflected the particularly strong performance of our Events business,partially offset by higher net corporate costs due to lower offsetting incomeat the centre.
Our balance sheet remains strong, with net debt at 31 December 2011 of £526.4m (the equivalent of 2.4 times 2011 EBITDA1 (2010: 2.6 times)) - an increase from the net debt of £484.6m reported at the end of 2010, reflecting the substantial cash investment in acquisitions during the year of £62.5m.
*UBM uses a range of business performance indicators to help measure itsdevelopment against strategy and financial objectives. All non-IFRS measureshave been noted with a 1 and additional information on these measures has beenprovided at the end of this section.
Summary of Income Statement
IFRS Measures As adjusted(b) % %£m FY 2011 FY 2010 Change FY 2011 FY 2010 ChangeRevenue 972.3 889.2 9.3 972.3 889.2 9.3Operating expenses (excluding (a)line items below) (753.6) (701.0) (753.6) (701.0)Share of tax on profit in JV &associates (a) (0.7) (0.8) (b) (b)Exceptional reorganisation andrestructuring costs (a) - (5.8) (b) (b)Other exceptional items (a) (4.6) (5.1) (b) (b)Impairment charges (a) (3.7) - (b) (b)EBITDA 209.7 176.5 18.8 218.7 188.2 16.2Depreciation (a) (16.8) (16.4) 2.4 (16.8) (16.4) 2.4EBITA 192.9 160.1 20.5 201.9 171.8 17.5
Amortisation - intangible assets (b) (b)arising on acquisition (a) (37.5) (27.8)Operating profit 155.4 132.3 17.5 201.9 171.8
17.5
Net interest expense (27.6) (18.7) (27.6) (18.7)Exceptional finance expense - (a) (29.4) - (b) (b)Financing income - pension schemes 3.1 3.2 3.1 3.2Financing income - FX gain on - 0.1 - 0.1
forward contractsFinancing income - other 1.2 1.2 (b) (b)Financing expense - other (0.7) (2.6) (b) (b)PBT 102.0 115.5 (11.7) 177.4 156.4 13.4Taxation (15.9) (16.1) (26.3) (23.5)PAT 86.1 99.4 (13.4) 151.1 132.9 13.7Non-controlling interest (10.4) (8.6) (10.4) (8.6)Attributable profit 75.7 90.8 140.7 124.3
Weighted average no. of shares 243.5 243.4 243.5 243.4(million)Fully diluted weighted average no. 247.8 247.6 247.8 247.6of shares (million)Earnings per share (pence) 31.1 37.3 (16.6) 57.8 51.0
13.3
Earnings per share (diluted) (pence) 30.6 36.7 (16.6) 56.8 50.2
12.7
Dividend per share (pence) 26.3 25.0 5.2 26.3 25.0
5.2
(a) Expenses not included within profit before tax figure
(b) All non-IFRS measures and business performance measures have been notated
with a `1' and additional information on these measures has been provided at
the end of this section.
Corporate Costs
Total corporate costs for 2011 were £19.3m (2010: £15.9m). These corporatecosts are partially offset by gains on disposals and other sundry income notattributable to segmental results resulting in net corporate costs of £14.3m(2010: £9.2m).Exceptional itemsImpairment
We have reviewed the carrying value of our intangible assets (including goodwill) in light of current trading conditions and expectations and consider that no provision for impairment is required at 31 December 2011.
The carrying value of investments in joint ventures and associates and equity investments have been impaired by £3.1m and £0.6m, respectively.
Exceptional items relating to acquisitions
The exceptional charge for integration costs of £3.6m is related to the integration of UBM Canon, acquired in October 2010. This includes £2.0m relating to redundancy costs and £1.6m relating to business reorganisation costs.
Following the adoption of IFRS 3 (revised) from 1 January 2010, acquisitioncosts of £2.9m for 2011 have been expensed, rather than included in thecalculation of goodwill on acquisition. For the year ended 31 December 2011 anexceptional credit of £1.9m was recognised, relating to the revision of thecontingent consideration estimates for acquisitions made.
Exceptional finance expense
Exceptional finance expense comprises:
- In September 2011, UBM redeemed the £75m Floating Rate Reset Bonds. As
provided under their terms, UBM has paid the fair market value of the options
associated with the bonds, totalling £19.1m, which has been reflected as an
exceptional financing charge (further information provided in Note 5).
- An exceptional interest expense of £8.5m due to the reassessment of the
amortised cost carrying amount of the €53.1m Structured Reset Loans 2012.
Further details are given in the Capital Structure section below.
- £1.8m relating to fair value movement on put options over non-controlling
interests.InterestNet interest expense represents interest payments on UBM's bonds and bankloans, net of interest receipts on cash holdings. Net interest expense in 2011was £27.6m, compared with £18.7m in 2010. This is mainly a result of a higheraverage debt for the year and higher costs from lengthening debt maturity.Further information is set out in the Capital Structure section below.
Financing income includes an IAS 19 pension interest credit of £3.1m (2010: £3.2m).
Net financing income - other includes net income of £0.5m (2010: net financingexpense - other £1.4m) taken in respect of ineffective fair value hedges andnet investment hedges and foreign exchange gain on forward contracts.£m 2011 2010 Interest income - Cash and cash equivalents 1.1 0.7Interest expense (28.7) (19.4) Financing income: 3.1 3.3IAS 19 pension interest credit 3.1 3.2Foreign exchange gain on forward contracts - 0.1Net financing income/ (expense) - other 0.5
(1.4)
Net finance expense before exceptional items (24.0)
(16.8)
Exceptional finance expense (29.4) -Reassessment of amortised cost carrying value (8.5) -FV loss on redemption of £75m floating rate reset (19.1) -
bonds
FV movement on put options over non-controlling (1.8) -interests Net finance expense (53.4) (16.8)Income tax
UBM's effective rate of taxation1 for the year was 14.8% (2010: 15.0%).
Movements in our tax creditor balance during 2011 were as follows:
£m
Current tax liability at 1 January 2011 69.6Acquisitions 1.1Current tax charge 25.6Tax paid (29.9)Foreign Exchange and other movements (0.5)Current tax liability at 31 December 2011 65.9Overall our current tax liability decreased from £69.6m as at 31 December 2010to £65.9m as at 31 December 2011. The tax creditor includes provisions for taxsettlements in various jurisdictions in which UBM operates.We have necessarily made judgements as to the outcome of tax matters notconcluded. This creditor has been consistently classified as a short termliability in accordance with our accounting policy although we do not expectthe tax cash outflow in respect of the year end balance sheet creditor in 2012to exceed £10m. The total cash paid in respect of income taxes was £29.9m in2011.
Current tax liability analysed:
By Country: By Year % %Europe (incl.UK) 47 Through 2007 12US including state and 35 2008 25localOther 18 2009 18Total 100 2010 23 2011 22 Total 100Foreign Currency Exposure
The following table outlines the currency profile of our revenues and adjusted operating profits for 2011:
2011 Revenue % Adjusted operating profit1 %US Dollar 52.6 56.7Euro 12.3 18.5UK Pound Sterling 15.3 5.0Canadian Dollar 3.8 6.0Japanese Yen 2.7 2.0Renminbi 3.2 4.6Indian Rupee 1.4 0.8Brazilian Real 3.8 2.3Other 4.9 4.1Total 100.0 100.0Our income statement exposure to foreign exchange risk is shown for our mostimportant foreign currency exposures in the sensitivity analysis below, basedon 2011:2011 Average Currency Effect on Effect on adjusted exchange rate in value rises/ revenue + / - operating profit1 2011 falls by £m + / - £mUS Dollar USD 1.60504 1 cent 3.2 1.1Euro EUR 1.15178 1 cent 0.7 0.3
The average exchange rates used in our 2010 income statement were US Dollar: 1.5444 and Euro: 1.1649.
Recent guidance released by the FRC requires the Group to comment on its exposure to risks from the Eurozone crisis.
Euro revenues are a relatively small part of UBM's total revenue, accountingfor 12.3% total revenue in 2011, of which over 75% is intra-county andapproximately 7% relates to customers in Spain and Portugal. Given our largeand diverse customer base, there are no significant concentrations of creditrisk.The Group's liquidity risk is considered low - whilst the Group's revolvingcredit facility is normally at least partially drawn in Euros (£24.2m at 31December 2011) this could alternatively be drawn in other currencies, andthere is headroom of £212.2m on the Group's borrowing facilities at 31December 2011. The Group's treasury policy does not allow significantexposures with counterparties that are rated less than A by Standard & Poor's,Moody's or Fitch and we monitor the concentration of risk constantly.
Capital Structure
Balance sheet
UBM's consolidated net debt at 31 December 2011 stood at £526.4m, up from£484.6m at the end of 2010. During 2011, cash generated from operations roseto £203.7m (2010: £154.7m). UBM paid £62.5m for acquisitions (net of cashacquired) and earnout payments in relation to acquisitions made in prioryears, together with £61.5m of dividends to shareholders (excluding dividendspaid to non-controlling interests).
Pensions
UBM operates a number of defined benefit and defined contribution schemes, based primarily in the UK. The most recent actuarial funding valuations for the majority of the UK scheme liabilities were carried out in 2011, and updated to 31 December 2011 using the projected unit credit method.
At 31 December 2011, the aggregate deficit under IAS 19 was £31.5m, an increase of £18.8m compared to the deficit of £12.7m at the previous year end.
The IAS 19 pension interest credit was £3.1m, representing the excess of expected asset growth during 2011 over the interest accretion on the scheme liabilities.
Debt and Liquidity
Our funding strategy is to maintain a balance between continuity of fundingand flexibility through the use of capital markets, bank loans and overdrafts.To facilitate access to these sources of funds we seek to maintain a long terminvestment grade credit rating with Moody's (current rating Baa3 - with astable outlook) and Standard & Poor's (current rating BBB - with a stableoutlook).At the end of 2011, we had a strong liquidity position including undrawnfacilities of £212.2m and cash on hand of £106.6m. In May 2011, we enteredinto a five year £300m variable rate multi-currency credit facility to replacethe £325m variable rate multi-currency facility due to expire on 27 July 2012;the new facility matures in May 2016. At 31 December 2011, all conditionsprecedent were met and UBM had drawn £87.8m from the syndicated bank facilityleaving £212.2m available. Details of the new facility are given in Note 11.We also have £250m of Sterling bonds with a November 2016 maturity and anannual interest coupon of 6.5% and $350m of US bonds with a November 2020maturity and an annual interest coupon of 5.75%.£m Facility Drawn Undrawn Maturity Fair value hedges Margin %Syndicated bank 300.0 87.8 212.2 May-16 LIBOR + 1.0facilityFloating rate reset 44.4 44.4 - Mar-12 LIBOR + 1.8loan *£250m fixed rate 250.0 250.0 - Nov-16 6.5% fixed Floating rate swapsterling bond for £150m US$ LIBOR + 3.14%$350m fixed rate 225.7 225.7 - Nov-20 5.75% fixed Floating rate swapdollar bond for $150m US$ LIBOR + 2.63%Total 820.0 607.9 212.2
* Excludes reassessment of amortised cost carrying value of £8.5m.
In September, UBM redeemed the £75m Floating Rate Reset Bonds issued in September 2008 (the 'Bonds'). UBM paid the fair market value of the Bonds (£75m) and the option value (£19.1m) with the proceeds of a drawdown under UBM's £300m 2016 Revolving Credit Facility and existing group cash resources.
In March 2009, UBM raised €53.1m (£44.4m) through two Floating Rate ResetLoans (the `Loans'). The Loans bear interest for the first three years at sixmonth EURIBOR plus 1.80% (currently 3.48%). Under the terms, the lender hasthe option to put them back to UBM at par (€53.1m) in March 2012 and everythree years until maturity in March 2024.
If the Loans are not put then one of three events will occur:
1. The interest rate on the loans are reset to 4.16%, respectively, plus UBM's
3 year credit spread until the next put date;
2. UBM exercises its call option and pays the fair value of the instruments at
date of exercise to the current holders;
3. There is no credit spread quote available and UBM pays the fair
value of the swap at the next interest date.
Since the onset of the 2008/2009 credit crisis, long term swap rates havefallen below the reset interest rate of 4.16%. This combined with a materialincrease in market volatility has increased the fair value of the loans as at31 December 2011 to €64.0m (£52.9m). It is probable the instruments will berepaid in March 2012. We have therefore reassessed the future estimatedcashflows associated with the loan and adjusted the carrying amount of theloan accordingly. This results in an expense of £8.5m which has beenrecognised as an exceptional financial expense in the income statement.The following table summarises our estimated payment profile for contractualobligations, provisions and contingent consideration as of 31 December 2011:£m 2012 2013 2014 2015 ThereafterLong-term debt **52.9 - - - 563.4Interest payable* 32.7 31.4 31.4 31.4 83.1Derivative financial liabilities 0.4 6.0 6.0 6.0 6.0Operating lease payments 28.7 24.7 21.7 8.4 20.2Pension contributions 3.1 3.1 3.1 3.1 26.1Trade and other payables 72.0 1.6 - - -Provisions 15.1 5.6 5.3 3.0 0.4Contingent and deferredconsideration 30.9 9.2 1.2 1.7 -Put options over non-controllinginterests - 3.6 2.6 - 7.3Total 235.8 85.2 71.3 53.6 706.5
*Interest payable based on current year rates.
**Subject to renegotiation in 2012
The table includes the Loans, redeemed at par on the earliest date the holders can redeem. The put and call option over the loans are explained in Note 11.
Capital management
UBM maintains conservative capital ratios in order to support its businessesand maximise shareholder value. At the end of 2011, the net debt to adjustedearnings before interest, taxation, depreciation and amortisation was 2.4times as shown below:£m 2011 2010Financial liabilities 633.0 610.5Financial assets (106.6) (125.9)Net debt1 526.4 484.6
Adjusted earnings before interest, taxation, depreciation and amortisation1 218.7 188.2 Net debt to EBITDA ratio 1
2.4 times 2.6 times
1 Refer to the Explanation of UBM's business measures section below for additional information on these non-IFRS financial measures.
Our policy is to maintain investment grade ratings from each of Moody's and Standard and Poor's. In assessing the leverage ratios of net debt to adjusted earnings before interest, taxation, depreciation and amortisation, both Moody's and Standard and Poor's take account of a number of other factors, including future operating lease obligations and any pension deficit.
Cash flow
Cash generated from operations rose to £203.7m from £154.7m in 2010,reflecting lower restructuring payments and increase in profits. Cashconversion1 was 100.7% of adjusted operating profit1 (2010: 97.9%). Free cashflow prior to cash invested in acquisitions was £127.3m, £76.3m ahead of 2010,reflecting the additional tax payment to HMRC of £46.5m in 2010.
A reconciliation of net cash inflow from operating activities to free cash flow is shown below:
£m 2011 2010
Adjusted cash generated from operating 222.3 182.9 activities1 Restructuring payments
(14.2) (24.5)Other adjustments (4.4) (3.7)
Cash generated from operations (IFRS) 203.7 154.7
Dividends from JVs and associates 1.3 0.6Net interest paid (27.8) (23.1)Taxation paid (29.9) (62.1)Capital expenditure (20.0) (19.1) 127.3 51.0Acquisitions (62.5) (240.7)Proceeds from asset disposals 12.1 1.7Free cash flow1 76.9 (188.0)Net share issues 1.1 1.9Dividends (72.1) (64.8)Other (0.1) - 5.8 (250.9)Net debt as at 31 December1 (526.4) (484.6)Net debt/EBITDA as at 31 December1 2.4 2.6
(times)
1 Refer to the Explanation of UBM's business measures section below for additional information on these non-IFRS financial measures
We expect to continue to generate significant free cash flow in 2012 becauseof our business model and believe that our cash on hand, cash from ouroperations and available credit facilities will be sufficient to fund our cashdividends, debt service and acquisitions in the normal course of business.
Capital Expenditure
Capital expenditure for the year was £20.0m. The largest capital investmentswere to enhance PR Newswire's existing products and to upgrade its ITinfrastructure. We do not expect that the capital expenditure levels for 2012will be significantly different to those of 2011.
Acquisitions and disposals
We invested £46.7m in the acquisition of eight new businesses (£71.6mincluding expected contingent and deferred consideration). These acquisitionswere closely aligned to our strategic priorities, increasing our exposure toattractive communities and geographies. We also generated £12.1m in net cashproceeds from asset disposals, providing additional resources to invest in ourstrategic priorities.Our investment comprised cash of £46.7m (including cash acquired) and expectedcontingent and deferred consideration of £24.9m. We also made payments inrespect of earnouts relating to acquisitions made in prior years, totalling£20.8m. Expected Contingent Estimated2011 Acquisitions Initial and Deferred total£m consideration consideration considerationEventsRotaforte 1.0 3.5 4.5Satte 2.5 0.6 3.1AMB Exhibitions 4.1 3.1 7.2Catersource 2.7 0.3 3.0Ecobuild 30.7 14.2 44.9Index Fairs (70%) 1.0 1.3 2.3OMS 1.0 0.3 1.3Renewable Energy 3.4 1.5 4.9Total Event 46.4 24.8 71.2acquisitionsOther intangibles 0.3 0.1 0.4Total 46.7 24.9 71.6
Contingent and deferred consideration £m Contingent Deferred Total At 1 January 2011
39.7 1.3 41.0Change in estimate - goodwill 0.1 - 0.1Change in estimate - exceptional items (1.9) - (1.9)Acquisitions during the year 19.1 5.7 24.8Consideration paid (19.5) (1.3) (20.8)Foreign exchange gain (0.2) - (0.2)At 31 December 2011 37.3 5.7 43.0
The 2011 acquisitions contributed adjusted operating profit of £1.2m since acquisition and achieved a pre-tax return on investment1 of 8.3% on a pro forma basis. The following table shows the performance of our acquisitions since 2009 relative to our target pre-tax cost of capital threshold of 10%:
Consideration Return on Investment1£m 2009 2010 20112009 acquisitions 26.5 14.8% 4.5% 9.6%2010 acquisitions 258.9 - 10.6% 12.2%2011 acquisitions2 71.6 - - 8.3%Total 357.0 11.3%(3)
1 Refer to the Explanation of UBM's business measures section below for
additional information on these non-IFRS financial measures.
2 2011 Return on investment calculated on a full year pro forma basis.
3 2011 Return on 3 year initial (cash) consideration is 13.4%.
Since the year end, we have announced the acquisitions of Dentech, 4G World, Airport Cities and the Malaysian International Furniture Fair (events businesses in China and Malaysia respectively) and the disposal of Farmers' Guardian and Pulse, continuing our progress on our strategic objectives.
Return on average capital employed
The return on average capital employed1 for 2011 was 14.6% (2010: 14.7%). The table below shows our performance over time:
£m 2007 2008 2009 2010 2011
Operating profit before exceptional items 145.7 146.7 143.7 143.2 163.7 (£m) Average capital employed (£m)
642.5 815.9 910.6 971.1 1,124.1
Return on average capital employed1 22.7 18.0 15.8 14.7 14.6 (ROACE) (%) 1 Refer to the Explanation of UBM's business measures section below for additional information on these non-IFRS financial measures.
The downward trend over the longer term reflects the dilutive effect of returns on acquisitions, relative to returns on historic balance sheet values.
Dividends
The Board has announced a second interim dividend of 20.0p (2010:19.0p),bringing the total dividend for the year to 26.3p (2010: 25.0p), representingan increase of 5.2% in the full year dividend. The second interim dividend onordinary shares will be paid on 17 May 2012 to shareholders on the register
on13 April 2012.Related Party TransactionsRelated party transactions, other than those relating to Directors'remuneration, are disclosed in the Annual Report and Consolidated FinancialStatements for the financial year ended 31 December 2011. Also, there havebeen no changes in related party transactions from those described in theGroup's Annual Report and Financial Statements for the financial year ended 31December 2010 that could have a material effect on the financial position orperformance of the Group in the financial year ended 31 December 2011.
Going concern
After making enquiries, the directors have a reasonable expectation that UBM has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
In reaching this conclusion, the directors have had due regard to the following:
- After taking account of available cash resources, committed bank facilities,
short term borrowings none of UBM's borrowings fall due within the next two
years that require refinancing from resources not already available. Further
information is provided in Note 11.
- The strong cash generated from operations, committed facilities and UBM's
ability to access debt capital markets, taken together, provide confidence
that UBM will be able to meet its obligations as they fall due.
- Further information on the financial position of UBM, its cash flows,
financial risk management policies and available debt facilities are described
in the Financial Review on the preceding pages. UBM's business activities,
together with the factors likely to impact its future growth and operating
performance are set out in the Operational Review.
Conclusion
The 2011 results reflect notable achievement against our strategic andfinancial objectives. Supporting strategic change - while maintaining strongfinancial disciplines - has required outstanding effort from the Group as awhole and the finance function in particular. I would like to close bythanking my colleagues for their contribution to the success in 2011, and tothe confidence with which we enter 2012.
Explanation of UBM's business measures
Financial Measure How we define it Why we use itUnderlying revenue and Underlying measures are The Group believesunderlying operating adjusted for the estimated underlying revenueprofit effects of acquisitions, and underlying discontinued products, operating profit foreign exchange and assists investors in biennial events. their assessment and understanding of our underlying business trends, without distortion from the effect of acquisitions, discontinued products, biennial events and foreign currency movements during the period.Adjusted operating profit Operating profit excluding The Group believesand EBITDA amortisation of intangible adjusted operating assets arising on profit, adjusted acquisitions, exceptional operating margin and items and share of taxation adjusted EBITDAAdjusted Margin on joint ventures and assists investors in associates. their assessment and EBITDA is adjusted group understanding of our operating profit before earnings and is also depreciation. a measure commonly Margin relates to our used by shareholders adjusted operating margin. to measure our It is adjusted operating performance. profit expressed as a percentage of total revenuesAdjusted profit before tax Before amortisation of The Group believesand adjusted EPS intangible assets on adjusted profit acquisitions, exceptional before tax and items, share of taxation on adjusted EPS assists profit from joint ventures investors in their and associates, net assessment and financing income/ (expense) understanding of our - other. EPS also excludes earnings and is also deferred tax on the a measure commonly amortisation of intangible used by shareholders assets. Diluted EPS to measure our includes the impact of performance. share options.Net debt Net debt is current and Provides a measure of non-current borrowings less indebtedness in cash and cash equivalents. excess of the current cash available to pay down debt.Net debt to EBITDA Net debt divided by Provides a measure ofNet debt to LTM EBITDA adjusted EBITDA. financial leverage. EBITDA adjusted to include a full year of pro forma operating profit from acquisitions made during 2010.Free cash flow Net cash provided by Helps assess our operating activities after ability, over the meeting obligations for long term, to create interest, tax, dividends value for our paid to non controlling shareholders as it interests, capital represents cash expenditures and other available to repay investing activities. debt, pay dividends and fund future acquisitions.Adjusted operating cash Adjusted to exclude The Group believesflow non-operating movements in adjusted operating working-capital, such as cash flow assists expenditure against investors in theirCash Conversion reorganisation and assessment and restructuring provisions. understanding of our Cash conversion is the operating cash flows. ratio of adjusted cash generated from operations to adjusted operating profit.Pre-tax return on Attributable adjusted Helps us assess theinvestment operating profit divided by performance of our the cost of acquisitions. acquisitions relative Calculated on a pro forma to our target pre-tax basis, as if the acquired cost of capital business were owned threshold of 10%. throughout the year.Estimated total Estimated total Provides a measure ofconsideration consideration includes total consideration initial consideration (net for businesses of cash acquired), the acquired. latest estimate of expected earnouts and deferred consideration.Return on average capital ROACE is operating profit Provides a measure ofemployed (ROACE) before exceptional items the efficiency of divided by average capital profitability of our employed. Average capital capital investment. employed is the average of opening and closing total assets less current liabilities for each period.Effective tax rate The effective tax rate on Provides a more adjusted profit before tax comparable basis to reflects the tax rate analyse our tax rate. excluding movements on deferred tax balances on the amortisation of intangible assets.
SUMMARY OF RISKS & UNCERTAINITES
The principal risk factors that the directors believe could materially affect UBM include the following:
The risks listed do not necessarily comprise all those associated with UBM, and are not set out in any order of priority.
- Marketplace risk
- In times of economic slowdown or recession, some companies spend less,
particularly on advertising.
- Ability to respond to changes in technological innovation.
- A disaster or natural catastrophe, terrorism, political instability or
disease could affect our ability to continue to do business if it renders
offices unavailable or curtails travel (which will have an impact on the
running of an event).
- Mergers & Acquisitions
- The availability of suitable acquisition candidates, obtaining regulatory
approval and changes in the availability or cost of financing may affect our
ability to execute on this strategy.
- Delays in integration or unexpected costs or liabilities, as well as the
risk of failing to realise operating benefits or synergies from completed
transactions may mean that the financial impact is less beneficial than
expected.
- Attracting and retaining key management personnel
- Operational
- Operations in new territories may present logistical and management
challenges due to different business cultures, laws and languages.
- The failure to manage and execute significant projects successfully could
lead to increased costs, delays or erosion of UBM's competitive position.
- Unfavourable legislation changes may have a negative impact.
- Financial
- Liquidity issues may curtail the ability to make certain acquisitions, while
local liquidity issues could have a negative reputational impact, particularly
with suppliers.
- We seek to limit interest rate and foreign exchange risk by the use of
financial instruments. As a result we have an unsecured credit risk from the
potential non-performance by counterparties to these financial instruments.
- Tax risk - failure to comply with the necessary tax legislation or
challenges to legal structures.
- Pension fund risk - risk that asset returns are insufficient to cover
changes in the schemes liabilities over time.
Statement of Directors' Responsibility
UBM's annual report and accounts for the year end, to be published in due course, will contain a responsibility statement as required under Disclosure and Transparency Rule 4.1.12, regarding responsibility for the financial statements and the annual report. This responsibility statement is repeated here (below) solely for the purposes of complying with Disclosure and Transparency Rule 6.3.5. It is not connected to the extracted and unaudited information presented in this results announcement.
Each of the Directors confirm that, to the best of their knowledge:
- the Group financial statements, which have been prepared in accordance with
International Financial Reporting Standards (`IFRS'), as issued by the
International Accounting Standards Board (`IASB') and IFRIC interpretations,
give a true and fair view of the assets, liabilities, financial position and
profit of the Group; and
- the management report includes a fair review of the development and
performance of the business and the position of the Group and the undertakings
included in the consolidation taken as a whole, together with a description of
the principal risks and uncertainties they face.
The Directors of UBM plc will be listed in the annual report and are listed on the UBM plc's corporate website: ubm.com.
Consolidated income statement
for the year ended 31 December 2011
Notes Before Before exceptional Exceptional exceptional Exceptional items items Total items items Total 2011 2011 2011 2010 2010 2010 £m £m £m £m £m £m Continuing operations 3 Revenue 972.3 - 972.3 889.2 - 889.2 Other operating income 9.8 - 9.8 7.0 - 7.0 Operating expenses (783.8) - (783.8) (728.0) - (728.0) Amortisation of (37.5) - (37.5) (27.8) - (27.8) intangible assets arising on acquisitions 4 Exceptional - - - - (5.8) (5.8) reorganisation and restructuring costs 4 Exceptional items - (4.6) (4.6) - (5.1) (5.1) relating to acquisitions 4 Impairment charge - (3.7) (3.7) - - - Share of results from 2.9 - 2.9 2.8 - 2.8 joint ventures and associates (after tax) Group operating profit 163.7 (8.3) 155.4 143.2 (10.9) 132.3 Finance income/(expense) 5 Interest income 1.1 - 1.1 0.7 - 0.7 4, 5 Interest expense (28.7) (8.5) (37.2) (19.4) - (19.4) 5 Financing income 3.1 - 3.1 3.3 - 3.3 5 Financing income - other 1.2 - 1.2 1.2 - 1.2 4, 5 Financing expense - (0.7) (20.9) (21.6) (2.6) - (2.6) other Profit before tax 139.7 (37.7) 102.0 126.4 (10.9) 115.5 6 Taxation (15.9) - (15.9) (16.1) - (16.1) Profit for the year 123.8 (37.7) 86.1 110.3 (10.9) 99.4 Attributable to: Owners of the parent 75.7 90.8 entity - ordinary shares Non-controlling 10.4 8.6 interests 86.1 99.4 Earnings per share (pence) 7 Basic 31.1p 37.3p 7 Diluted 30.6p 36.7p £m £m Adjusted Group operating 201.9 171.8 profit* Amortisation of (37.5) (27.8) intangible assets arising on acquisitions 4 Exceptional - (5.8) reorganisation and restructuring costs 4 Exceptional items (4.6) (5.1) relating to acquisitions 4 Impairment charge (3.7) - Share of taxation on (0.7) (0.8) profit in joint ventures and associates Group operating profit 155.4 132.3 £m £m Dividends 8 Interim dividend of 6.3p 15.3 14.6 (6.0p) 8 Proposed second interim 48.7 46.2 dividend of 20.0p (19.0p) * Adjusted Group operating profit represents Group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional itemsand share of taxation on profit in joint ventures and associates.
Consolidated statement of comprehensive income
for the year ended 31 December 2011
Notes 2011 2010 £m £m Profit for the year 86.1 99.4 Other comprehensive income/(losses) Currency translation differences on foreign 1.3 6.6 operations - Group 13 Net investment hedge (0.7) (14.6) Actuarial (losses)/gains recognised in the pension (27.3) 9.0 schemes Irrecoverable element of pension surplus (1.0)
(2.4)
Share of other comprehensive income of joint ventures and associates: Currency translation differences on foreign 0.1 0.4 operations Movement recognised in the pension schemes of (0.4) - associates (0.3) 0.4 6 Income tax relating to components of other - - comprehensive income
Other comprehensive losses for the year net of tax (28.0) (1.0)
Total comprehensive income for the year net of tax 58.1 98.4 Attributable to: Owners of the parent entity - ordinary shares 47.3
89.3
Non-controlling interests 10.8 9.1 58.1 98.4
Consolidated statement of financial position
at 31 December 2011Notes 31 December 31 December 2011 2010 £m £m Assets Non-current assets 9 Goodwill 1,088.0 1,044.1 Intangible assets 162.8 177.4 Property, plant and equipment 40.8
41.2
Investments in joint ventures and associates 18.3
19.8
Retirement benefit surplus 10.9 9.1 Other investments - 0.6 Derivative financial instruments 23.3 6.8 1,344.1 1,299.0 Current assets Inventories 6.3 7.8 Trade and other receivables 227.8
208.6
Derivative financial instruments - 0.1 10 Cash and cash equivalents 106.7
125.9 340.8 342.4 Total assets 1,684.9 1,641.4 Liabilities Current liabilities 11 Borrowings 53.0 75.3 Derivative financial instruments 0.2
0.1
Trade and other payables 407.8 378.4 Provisions 15.0 12.9
6 Current tax liabilities 65.9 69.6 541.9 536.3 Non-current liabilities 11 Borrowings 580.1 535.2 Derivative financial instruments 35.6
34.7
Trade and other payables 13.7 22.3 Provisions 14.3 22.2 Retirement benefit obligation 42.4
21.8
6 Deferred tax liabilities 44.9 49.7 731.0 685.9 Total liabilities 1,272.9 1,222.2 Equity attributable to owners of the parent entity 12 Share capital 24.5 24.4 Share premium 4.1 3.1 13 Other reserves (605.1) (608.7) Retained earnings 973.9 986.7 Put options over non-controlling interests (12.4)
(8.5)
Total equity attributable to owners of the parent 385.0 397.0 entity Non-controlling interests 27.0
22.2 Total equity 412.0 419.2 Total equity and liabilities 1,684.9
1,641.4
These financial statements were approved by the Board of Directors and were signed on its behalf on 28 February 2012 by:
Robert Gray Director
Consolidated statement of changes in equity
for the year ended 31 December 2011
Notes Total equity Put options attributable over to owners of Non- Share Share Other Retained non-controlling parent controlling Total capital premium reserves earnings interests entity interests equity £m £m £m £m £m £m £m £m At 1 January 24.4 3.1 (608.7) 986.7 (8.5) 397.0 22.2 419.2 2011 Profit for the - - - 75.7 - 75.7 10.4 86.1 year Other - - 0.3 (28.7) - (28.4) 0.4 (28.0) comprehensive income/(losses) 13 Total - - 0.3 47.0 - 47.3 10.8 58.1 comprehensive income/(losses) for the year 8 Equity - - - (61.5) - (61.5) - (61.5) dividends Non-controlling - - - - - - (10.6) (10.6) interest dividends 14 Non-controlling - - - - (3.9) (3.9) 4.7 0.8 interest arising on business combinations 14 Acquisition of - - - - - - (0.1) (0.1) non-controlling interests 12 Issued in 0.1 1.0 - - - 1.1 - 1.1 respect of share option schemes and other entitlements Share-based - - - 5.0 - 5.0 - 5.0 payments 13 Shares awarded - - 3.3 (3.3) - - - - by ESOP At 31 December 24.5 4.1 (605.1) 973.9 (12.4) 385.0 27.0 412.0 2011 At 1 January 24.4 1.2 (597.7) 948.4 - 376.3 9.5 385.8 2010 Profit for the - - - 90.8 - 90.8 8.6 99.4 year Other - - (8.1) 6.6 - (1.5) 0.5 (1.0) comprehensive (losses)/income 13 Total - - (8.1) 97.4 - 89.3 9.1 98.4 comprehensive (losses)/income for the year 8 Equity - - - (58.9) - (58.9) - (58.9) dividends Non-controlling - - - - - - (5.9) (5.9) interest dividends Non-controlling - - - - (8.5) (8.5) 9.5 1.0 interest arising on business combinations 12 Issued in - 1.9 - - - 1.9 - 1.9 respect of share option schemes and other entitlements Share-based - - - 3.2 - 3.2 - 3.2 payments 13 Shares awarded - - 3.4 (3.4) - - - - by ESOP 13 Own shares - - (6.3) - - (6.3) - (6.3) purchased by the company At 31 December 24.4 3.1 (608.7) 986.7 (8.5) 397.0 22.2 419.2 2010
Consolidated statement of cash flows
for the year ended 31 December 2011
Notes 2011 2010 £m £m Cash flows from operating activities Reconciliation of profit to operating cash flows Profit for the year 86.1 99.4 Add back: 6 Taxation 15.9 16.1 Depreciation 14.4 15.6 Amortisation of website development costs 2.4
0.8
Amortisation of intangibles arising on acquisitions 37.5 27.8 5 Interest income (1.1) (0.7) 5 Interest expense 28.7 19.4 5 Financing income (3.1) (3.3) 5 Financing income - other (1.2)
(1.2)
5 Financing expense - other 0.7 2.6 Share of results from joint ventures and associates (2.9) (2.8) (after tax) 4 Exceptional items and charges to provisions 39.6
11.9
4, 14 Fair value adjustments of contingent considerations (1.9) (1.0) Other non-cash items 5.8 3.5 220.9 188.1 Payments against provisions (14.2)
(24.5)
Pension deficit contributions (3.1)
(3.1)
Decrease/(increase) in inventories 1.0
(0.3)
Increase in trade and other receivables (23.8)
(14.0)
Increase in trade and other payables 22.9 8.5 Cash generated from operations 203.7
154.7
Interest and finance income received 1.0 0.8 Interest and finance costs paid (28.8) (23.9) 6 Taxation paid (29.9) (62.1) Dividends received from joint ventures and associates 1.3 0.6 Net cash flows from operating activities 147.3 70.1 Cash flows from investing activities 14 Acquisition of interests in subsidiaries, net of cash (62.4) (239.6) acquired Purchase of interests in joint ventures and - (1.1) associates Purchase of property, plant and equipment and (20.0) (19.1) intangible assets 15 Proceeds from sale of businesses, net of cash 12.1 - disposed Proceeds from sale of joint ventures and associates - 1.7 Net cash flows from investing activities (70.3)
(258.1)
Cash flows from financing activities Proceeds from issuance of ordinary share capital 1.1 1.9 14 Acquisition of non-controlling interests (0.1) - Dividends paid to shareholders (61.5)
(58.9)
Dividends paid to non-controlling interests (10.6)
(5.9)
Investment in own shares - ESOP - (6.3) Increase in borrowings 68.5 4.4 Repayment of £75m floating rate reset bonds (94.1) - Issue of $350m fixed rate dollar bonds 2020 -
214.2
Net cash flows from financing activities (96.7)
149.4
Net decrease in cash and cash equivalents (19.7)
(38.6)
Net foreign exchange difference 0.5 5.6 10 Cash and cash equivalents at 1 January 125.8
158.8
10 Cash and cash equivalents at 31 December 106.6
125.8
Notes to the consolidated financial statements
at 31 December 2011
1. General information
UBM plc (formerly United Business Media Limited) is a public company limited byshares incorporated in Jersey under the Companies (Jersey) Law 1991. Theaddress of the registered office is Ogier House, The Esplanade, St. Helier, JE49WG, Jersey. UBM plc is tax resident in the Republic of Ireland. The nature ofthe Group's operations and its principal activities are set out in Note 3.
The preliminary announcement was approved by the Board of directors on 28 February 2012.
The figures and financial information for the year ended 31 December 2011 donot constitute the statutory financial statements for that year. Thosefinancial statements have not yet been delivered to the Jersey Registrar ofCompanies, but include the auditor's report which was unqualified. The figuresand financial information for the year ended 31 December 2010 included in thepreliminary announcement do not constitute the statutory financial statementsfor that year. Those financial statements have been delivered to the Registrarand included the auditor's report which was unqualified.
Principal risks and uncertainties
Principal risks and uncertainties affecting the Group will be detailed withinthe Annual Report and Accounts for the year ended 31 December 2011, a copy ofwhich will be made available on the Group's website at www.ubm.com.
2. Significant accounting policies
Basis of preparation
The consolidated financial statements of the Group have been prepared inaccordance with International Financial Reporting Standards (`IFRS') as issuedby the International Accounting Standards Board (`IASB') and IFRICinterpretations. The financial statements are in compliance with the provisionsof the Companies (Jersey) Law 1991.The consolidated financial statements have been prepared under the historicalcost basis, except for derivative financial instruments and hedged items thathave been measured at fair value. The carrying values of recognised assets andliabilities that are designated as hedged items in fair value hedges that wouldotherwise be carried at amortised cost are adjusted to record changes in thefair values attributable to the risks that are being hedged in effective hedgerelationships.
The preparation of financial statements in conformity with IFRS requires the use of accounting estimates and assumptions. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. Management continually evaluate these estimates, assumptions and judgements based on available information and experience.
Going concern
After making enquiries, the directors have a reasonable expectation that theGroup has adequate resources to continue in operational existence for theforeseeable future. The Group therefore continues to adopt the going concernbasis in preparing its consolidated financial statements for the year ended 31December 2011.
Changes to accounting policies
The accounting policies adopted are consistent with those of the previous financial year except for the adoption from 1 January 2011 of the following new, revised and improved IASs, IFRSs and IFRIC interpretations:
Improvements to IFRSs 2010 - the IASB issued its third collection of minor amendments to standards, each adopted by the Group from 1 January 2011. None of the amendments are considered to have an immediate impact on the financial position or performance of the Group, although the following amendment may impact the accounting for future transactions:
* IFRS 3 `Business Combinations' (Measurement of non-controlling interests) -
the choice of measuring non-controlling interests at fair value or at the
proportionate share of the acquiree's net assets applies only to
instruments that represent present ownership interests and entitle their
holders to a proportionate share of the net assets in the event of
liquidation. All other components of non-controlling interest are measured
at fair value unless another measurement basis is required by IFRS.
The following improvements have affected the disclosures in these financial statements:
* IFRS 3 `Business Combinations' (Contingent consideration arising from a
business combination prior to the adoption of IFRS 3 (revised 2008)) - the
improvement clarifies that IFRS 7, `Financial instruments: Disclosures',
IAS 32, `Financial instruments: Presentation', and IAS 39, `Financial
instruments: Recognition and measurement', continue to apply to contingent
consideration that arose from business combinations whose acquisition dates
precede the application of IFRS 3 (revised in 2008) on 1 January 2010. * IFRS 7 `Financial Instruments: Disclosures' - the amendment reduces the volume of disclosures around collateral held and requires qualitative information to provide context to quantitative information.
Other amendments resulting from Improvements to IFRSs 2010 to the following standards did not have any impact on the accounting policies, financial position or performance of the Group or the disclosures in the financial statements:
* IFRS 1 `First time adoption of IFRS 1' * IFRS 3 `Business combinations' (un-replaced and voluntarily replaced share-based payment awards) * IAS 1 `Presentation of Financial Instruments' * IAS 27 `Consolidated and Separate Financial Statements' * IAS 34 `Interim Financial Reporting' * IFRIC 13 `Customer loyalty programmes'
The following new, revised and amended standards and interpretations have also been adopted from 1 January 2011, but have had no impact on the financial position or performance of the Group for 2011 or presentation of these financial statements. The changes may impact the accounting for future transactions.
* IAS 24 `Related Party Disclosures' (revised), effective for annual periods
beginning on or after 1 January 2011. The revision amends the definition of
a related party. * IAS 32 `Financial Instruments: Presentation - classification of rights issues' (amended), effective for annual periods beginning on or after 1
February 2010. The amendment alters the definition of a financial liability
to allow rights, options or warrants to acquire a fixed number of the
entity's own equity instruments for a fixed amount of any currency to be
classified as equity instruments provided the entity offers the rights, options or warrants pro rata to all of its existing owners of the same class of its own non-derivative equity instruments. * IFRIC 14 `The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction' (amended), effective for annual periods
beginning on or after 1 January 2011. The amendment permits prepayments of
future service costs where there is a minimum funding requirement, by
permitting recognition as a pension asset.
* IFRIC 19 `Extinguishing Liabilities with Equity Instruments', effective for
annual periods beginning on or after 1 July 2010. This interpretation
clarifies the requirements of IFRSs when a lender agrees to accept the
entity's shares or other equity instruments in settlement of a financial
liability in part or in full.
3. Segment informationOperating segmentsThe chief operating decision maker (`CODM') for the purpose of reporting underIFRS 8 `Operating segments' is the executive management team - the Group ChiefExecutive Officer and the Group Chief Financial Officer. The Group operates ina number of different markets and communities and considers that presentationof financial results on a products and services basis is the most appropriateway to demonstrate the performance of the Group. For the purpose of resourceallocation and assessment of performance, the CODM regularly reviewsinformation based on the products and services at a revenue and adjustedoperating profit level (as detailed below).
Consistent with reporting for the year ended 31 December 2010, the Group considers there to be five reportable operating segments organised around products and services:
* Events which provide face to face interaction in the form of exhibitions,
trade shows, conferences and other live events;
* PR Newswire (formerly Targeting, Distribution and Monitoring) which
operates in the targeting and distribution of company information and the
evaluation of its impact on targeted audiences; * Data Services which provide a range of services including data-based workflow products, intellectual property consultancy and analytical services and sales lead generation programmes;
* Marketing Services - Online (formerly Online - Marketing Services) which
provides website sponsorships and banner advertising as well as online directory products; and * Marketing Services - Print (formerly Print - Magazines) which publishes magazines and trade press to specialist markets.
No operating segments have been aggregated to form the above reportable segments. The Group's management reporting and controlling systems use the accounting policies that are the same as those referred to in Note 2.
Segment measures
The Group measures the performance of its operating segments through revenueresults and a measure of segment profit or loss which is referred to asadjusted operating profit. Adjusted operating profit represents operatingprofit excluding amortisation of intangible assets arising on acquisitions,exceptional items and share of taxation on results of joint ventures andassociates. This measure is reported to the CODM for the purposes of resourceallocation and assessment of performance.
Finance income/expense and taxation are not included in the adjusted operating profit measure which is reviewed by the CODM. Tax and treasury balances are managed centrally.
Segment assets and liabilities are not regularly provided to the CODM. TheGroup has elected, as provided under IFRS 8 `Operating segments' (amended 2009)not to disclose a measure of segment assets or liabilities where these amountsare not regularly provided to the CODM.
Intersegment revenue is recorded at values that represent estimated third-party selling prices.
With respect to geographical regions, revenue is generally allocated tocountries based on the location where the products and services are provided.Non-current assets are disclosed according to the location of the businesses towhich the assets relate.Year ended 31 December 2011 Depreciation Share or (including pre-tax Segment amortisation results adjusted of website from JVs operating External Intersegment Total development and profit/ revenue revenue revenue costs) associates (loss) £m £m £m £m £m £m Events 396.9 0.5 397.4 (5.5) 1.2 135.2 PR Newswire 187.8 0.5 188.3 (5.6) 0.9 41.0 Data Services 187.0 - 187.0 (2.6) 0.6 30.3 Marketing Services - 88.5 - 88.5 (1.2) - 3.6 Online Marketing Services - 112.1 - 112.1 (1.6) (0.3) 6.1 Print Total segments 972.3 1.0 973.3 (16.5) 2.4 216.2 Corporate costs - - - (0.3) 1.2 (18.1) Internal cost - - - - - 3.8 recoveries and sundry income Eliminations - (1.0) (1.0) - - - 972.3 - 972.3 (16.8) 3.6 201.9
Amortisation of intangibles arising on
(37.5)acquisitions
Exceptional items relating to acquisitions
(4.6) Impairment charge (3.7)
Share of taxation on profit in joint
(0.7)ventures and associates Group operating 155.4 profit Interest income 1.1 Interest expense (28.7) Financing income 3.1 Financing income - 1.2 other Financing expense - (0.7)other
Exceptional items relating to financing
(29.4)income/expense Profit before tax 102.0 Total corporate costs for 2011 were £19.3m (2010: £15.9m), before share ofpre-tax results from JVs and associates. The corporate costs are offset byinternal cost recoveries from the Group's operating businesses and by sundryincome which is not attributable to any of the Group's operations.Year ended 31 December 2010 Depreciation Share or (including pre-tax Segment amortisation results adjusted of website from JVs operating External Intersegment Total development and profit/ revenue revenue revenue costs) associates (loss) £m £m £m £m £m £m Events 310.0 0.5 310.5 (4.5) 2.0 93.5 PR Newswire 181.2 0.4 181.6 (5.7) 1.0 42.1 Data Services 184.7 - 184.7 (2.7) 0.3 34.1
Marketing Services - 69.2 - 69.2 (1.0) -
1.3 Online
Marketing Services - 144.1 - 144.1 (2.1) - 10.0 Print Total segments 889.2 0.9 890.1 (16.0) 3.3 181.0 Corporate costs - - - (0.4) 0.3 (15.6) Internal cost - - - - - 6.4 recoveries and sundry income Eliminations - (0.9) (0.9) - - - 889.2 - 889.2 (16.4) 3.6 171.8 Amortisation of intangibles arising on
(27.8)acquisitions
Exceptional reorganisation and restructuring
(5.8)costs
Exceptional items relating to acquisitions
(5.1)
Share of taxation on profit in joint
(0.8)ventures and associates Group operating profit 132.3 Interest income 0.7 Interest expense (19.4) Financing income 3.3 Financing income - 1.2 other Financing expense - (2.6)other Profit before tax 115.5
Revenue by products and services
Revenue from external customers analysed by products and services is given inthe above segment tables. The Group's reportable segments are organised aroundproducts and services provided to external customers. There are no revenuesderived from a single external customer which are significant.
Geographic information
Revenues from external customers
Year ended Year ended 31 December 31 December 2011 2010 £m £m United Kingdom 122.1 129.4 Foreign countries United States and Canada 466.8 413.8 Europe 143.2 145.7 China 146.0 112.2 Emerging markets* 61.1 54.4 Rest of the world 33.1 33.7 850.2 759.8 Total revenue 972.3 889.2 * Emerging markets constituents are the non-G10 countries - most notably forthe Group: Brazil, India, Thailand, Singapore, Indonesia, Malaysia,Philippines, Mexico and UAE.Non-current assets 2011 2010 £m £m United Kingdom 286.8 262.3 Foreign countries United States and Canada 672.8 684.3 Europe 220.8 244.0 China 31.7 29.1 Emerging markets 90.9 56.5 Rest of the world 6.9 6.9 1,023.1 1,020.8 Total non-current assets 1,309.9 1,283.1
Non-current assets for this purpose consist of goodwill, intangible assets, property, plant and equipment, investments in joint ventures and associates and other investments.
4. Exceptional itemsExceptional items are presented separately as, due to their nature or for theinfrequency of the events giving rise to them, this allows shareholders tounderstand better the elements of financial performance for the year, tofacilitate comparison with prior periods, and to assess better the trends offinancial performance. 2011 2010 £m £m
(Charged)/credited to operating profit
Vacant property costs - (1.1) Redundancy - (3.0) Restructuring and business reorganisation costs -
(1.7)
Exceptional reorganisation and restructuring costs - (5.8) Integration costs (3.6) - Acquisition costs on business combinations (2.9)
(6.1)
Changes in estimates of contingent consideration 1.9
1.0
Exceptional items relating to acquisitions (4.6)
(5.1)
Impairment of joint ventures and associates (3.1)
-
Impairment of other investments (0.6)
- Impairment charge (3.7) - Total charged to operating profit (8.3) (10.9) Charged to profit before tax
Re-assessment of amortised cost carrying amount of €53.1m (8.5) - floating rate reset loans (Note 11) Fair value movement on put options over non-controlling (1.8)
- interests (Note 5)
Fair value loss on redemption of £75m floating rate reset (19.1)
- bonds (Note 5)
Total charged to profit before tax (29.4)
-
Total charged to profit for the year (37.7)
(10.9)
(Charged)/credited to operating profit
Year ended 31 December 2011
In 2011, the Group made significant progress in the integration of UBM Canon(formerly Canon Communications LLC), acquired in October 2010. The exceptionalcharge of £3.6m includes £2.0m relating to redundancy and £1.6m relating tobusiness reorganisation costs.Following the adoption of IFRS 3 (revised) from 1 January 2010, acquisitioncosts of £2.9m have been expensed, rather than included in the calculation ofgoodwill on acquisition. For the year ended 31 December 2011 a furtherexceptional credit of £1.9m was recognised, relating to the revision of thecontingent consideration estimates for acquisitions made in 2010 and 2011.Details of the acquisitions made in the year ended 31 December 2011 are givenin Note 14.
The carrying value of investments in joint ventures and associates and other investments have been impaired by £3.1m and £0.6m respectively.
Year ended 31 December 2010
During 2010 the Group continued to actively manage its product portfolio,closing or exiting 13 print magazine titles and reducing the frequency of twoothers. The Group also made further progress in the restructuring of a numberof its businesses, particularly within the Data Services segment. Theexceptional charge of £5.8m included £3.0m relating to redundancy, £1.7mrelating to restructuring and business reorganisation costs and £1.1m relatingto vacant property. Of the redundancy and restructuring costs charged, £3.2mwas incurred in 2010 and the balance was committed to be incurred in 2011. Theproperty costs of £1.1m related to vacant property and other property costs,which will be incurred over the remainder of the lease terms.Following the adoption of IFRS 3 (revised) from 1 January 2010, acquisitioncosts of £6.1m were expensed, rather than included in the calculation ofgoodwill on acquisition as previously required by the standard. Of this cost, £3.3m related to the costs incurred in respect of the acquisition of CanonCommunications LLC. For the year ended 31 December 2010 a further exceptionalnet credit of £1.0m was recognised, relating to revised contingentconsideration estimates for acquisitions made in 2010.
5. Finance income/(expense)
Before Before exceptional Exceptional Total exceptional Exceptional Total 2011 2011 2011 2010 2010 2010 £m £m £m £m £m £m Interest income Cash and cash 1.1 - 1.1 0.7 - 0.7 equivalents Interest expense Borrowings and loans (27.8) (8.5) (36.3) (18.2) - (18.2) Other (0.9) - (0.9) (1.2) - (1.2) Total interest expense (28.7) (8.5) (37.2) (19.4) - (19.4)for financial liabilities not classified at fair value through profit or loss Financing income Pension schemes 3.1 - 3.1 3.2 - 3.2 Foreign exchange gain - - - 0.1 - 0.1 on forward contracts 3.1 - 3.1 3.3 - 3.3 Financing income - other Foreign exchange gain 1.2 - 1.2 - - - on forward contracts Fair value movement on - - - 8.9 - 8.9 interest rate swaps Fair value movement on - - - (7.9) - (7.9)£250m bond Ineffectiveness on fair - - - 1.0 - 1.0 value hedges Other fair value - - - 0.2 - 0.2 adjustments 1.2 - 1.2 1.2 - 1.2 Financing expense - other Foreign exchange loss - - - (0.2) - (0.2)on forward contracts Ineffectiveness on net - - - (2.3) - (2.3)investment hedges Fair value movement on 7.8 - 7.8 - - - interest rate swaps Fair value movement on (8.1) - (8.1) - - - £250m bond Ineffectiveness on fair (0.3) - (0.3) - - - value hedges Fair value movement on 11.2 - 11.2 (3.0) - (3.0)interest rate swaps Fair value movement on (11.6) - (11.6) 2.9 - 2.9 $350m bond Ineffectiveness on fair (0.4) - (0.4) (0.1) - (0.1)value hedges Fair value movement on - (1.8) (1.8) - - - put options over non-controlling interests (Note 4) Fair value loss on - (19.1) (19.1) - - - redemption of £75m floating rate reset bonds (Note 4) (0.7) (20.9) (21.6) (2.6) - (2.6) Net finance expense (24.0) (29.4) (53.4) (16.8) - (16.8)
The ineffectiveness on fair value hedges represents the difference between thefair value movement of the interest rate swaps designated as hedge instrumentsand the fair value movement of the hedged portions of the £250m fixed ratesterling bonds and the $350m fixed rate dollar bonds.
The exceptional interest expense within borrowings and loans relates to the re-assessment of amortised cost carrying amount of the €53.1m floating rate reset loans. Further details are provided in Note 11.
Exceptional financing expense - other comprise:
* £1.8m relating to the fair value movement on put options over non-controlling interests. * In September 2011, UBM redeemed the £75m floating rate reset bonds. As
provided under their terms, the Group has also paid the fair market value
of the options associated with the bonds, totalling £19.1m. This resulting
loss has been included in exceptional financing expense - other.
6. Taxation
Major components of income tax charge for the year are:
2011 2010 £m £m
Consolidated income statement
Current tax: Current tax charge (25.6) (22.7) Deferred tax:
Origination and reversal of temporary differences 9.7
6.6 Income tax charge (15.9) (16.1)
Consolidated statement of other comprehensive income
Current tax - - Deferred tax - -
Income tax recognised in other comprehensive income -
-
The amounts relating to current tax recognised in the statement of financialposition are: 2011 2010 £m £m At 1 January 69.6 109.0 Acquisitions (Note 14) 1.1 - Current tax charge 25.6 22.7 Tax paid (29.9) (62.1)
Foreign exchange and other movements (0.5)
- At 31 December 65.9 69.6
The Group does not expect the tax cash outflow in respect of this creditor in 2012 to exceed £10.0m.
Factors affecting tax charge for the year
A reconciliation of income tax expense applicable to profit before tax at thestatutory tax rate to tax expense for the year ended 31 December is as follows: 2011 2010 £m £m Profit before tax 102.0 115.5
Profit before tax multiplied by standard rate of corporation 12.8 14.4 tax in Republic of Ireland of 12.5% (2010: 12.5%)
Effect of: Expenses not deductible for tax purposes 14.8
10.3
Origination and reversal of temporary differences not (17.7) (20.0)recognised Different tax rates on overseas earnings 25.8
25.3
Share of results from associates and joint ventures (after (0.9) (0.7)tax) Tax effect of items not recognised in consolidated financial (17.7) (11.5)statements Non-taxable income (1.2) (1.7) Income tax charge reported in the consolidated income 15.9 16.1 statement
The Group has assessed the impact of changes in tax rates in various jurisdictions in which it operates and has determined that the changes do not have a significant impact on the current or future tax charges.
Deferred tax
The amounts relating to deferred tax recognised in the financial statementsare: Consolidated statement of Consolidated income financial position statement 2011 2010 2011 2010 £m £m £m £m Intangible assets acquired 43.4 48.2 (9.7) (6.6) Other temporary differences 1.5 1.5 - - 44.9 49.7 (9.7) (6.6)
At 31 December 2011, there was no recognised deferred tax liability for taxes that would be payable on the unremitted earnings of certain of the Group's subsidiaries as the Group has determined that profits of these subsidiaries will not be distributed in the foreseeable future.
The temporary differences associated with investments in subsidiaries for whicha deferred tax liability has not been recognised amount in aggregate to £6.0bn(2010: £5.6bn). There are no income tax consequences to the Group arising fromthe payment of dividends by the Company to its shareholders.
The movement in the net deferred tax liability was as follows:
2011 2010 £m £m Net liability at 1 January 49.7 27.7 Acquisition of subsidiaries (Note 14) 7.0
28.9
Disposal of subsidiaries (Note 15) (2.2)
-
Amounts credited to net profit (9.7) (6.6) Currency translation 0.1 (0.3) Net liability at 31 December 44.9 49.7 The Group has unrecognised deferred tax assets of £55.6m relating to deductibletemporary differences and £148.1m (of which £102.7m will expire between 2019and 2031) relating to unused tax losses (2010: £76.8m and £134.9m (of which £90.5m will expire between 2019 and 2030) respectively). No deferred tax assethas been recognised in respect of these amounts due to the unpredictability offuture taxable profit streams. The Group also has unrecognised deferred taxassets of £51.6m (2010: £55.4m) relating to unused capital losses which canonly be utilised against future capital gains.
7. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for theyear attributable to owners of the parent entity by the weighted average numberof ordinary shares outstanding during the year (reflecting the movements setout in Note 12).Diluted earnings per share amounts are calculated by dividing the net profitattributable to owners of the parent entity by the weighted average number ofordinary shares outstanding during the year (adjusted for the effects ofdilutive options).The Group has one category of dilutive potential ordinary shares: those shareoptions granted to employees where the exercise price is less than the averagemarket price of the Company's ordinary shares during the year. The impact ofdilutive securities in 2011 would be to increase weighted average shares by 4.3million shares (2010: 4.2 million shares) for employee share options.
The weighted average number of shares excludes ordinary shares held by the Employee Share Ownership Plan (the `ESOP') and the Qualifying Employee Share Ownership Trust (the `QUEST').
Adjusted earnings per share is calculated on net profit for the yearattributable to equity holders of the parent entity before amortisation ofintangible assets arising on acquisitions, deferred tax on amortisation ofintangible assets, exceptional items and net financing income/(expense) -other, divided by the weighted average number of ordinary shares outstandingduring the year. Amortisation of intangible assets arising on acquisitions,deferred tax on amortisation of intangible assets, exceptional items and netfinancing expense - other are excluded from this calculation, as due to theirnature and the infrequency of the events giving rise to them, separatepresentation allows shareholders to understand better the elements of financialperformance for the year, so as to facilitate comparison with prior periods andto assess better the trends of financial performance.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Weighted Weighted average Earnings average Earnings no of per no of per Earnings shares share Earnings shares share 2011 2011 2011 2010 2010 2010 £m million pence £m million pence Adjusted Group operating 201.9 171.8 profit Net interest expense (27.6) (18.7) Financing income 3.1 3.3 Adjusted profit before tax 177.4 156.4 Taxation (26.3) (23.5) Non-controlling interests (10.4) (8.6) Adjusted earnings per share 140.7 243.5 57.8 124.3 243.4 51.0 Adjustments Amortisation of intangible (37.5) (15.4) (27.8) (11.4)assets arising on acquisitions Deferred tax on amortisation 9.7 4.0 6.6 2.8 of intangible assets Adjustments in respect of (37.7) (15.5) (10.9) (4.6)non-tax exceptional items Net financing income/ 0.5 0.2 (1.4) (0.5)(expense) - other Basic earnings per share 75.7 243.5 31.1 90.8 243.4 37.3 Dilution Options - 4.3 (0.5) - 4.2 (0.6) Diluted earnings per share 75.7 247.8 30.6 90.8 247.6 36.7 Adjusted earnings per share 140.7 243.5 57.8 124.3 243.4 51.0 (as above) Options - 4.3 (1.0) - 4.2 (0.8) Diluted adjusted earnings 140.7 247.8 56.8 124.3 247.6 50.2 per share 8. Dividends 2011 2010 £m £m
Declared and paid during the year Equity dividends on ordinary shares
Second interim dividend for 2010 of 19.0p (2009 of 18.2p) 46.2 44.3
Interim dividend for 2011 of 6.3p (2010: 6.0p) 15.3 14.6 61.5 58.9
Proposed (not recognised as a liability at 31 December) Equity dividends on ordinary shares
Second interim dividend for 2011 of 20.0p (2010: 19.0p) 48.7 46.2
The proposed second interim dividend has not been recognised as a liability in these financial statements.
Pursuant to the Dividend Access Plan (`DAP') arrangements put in place as partof the Scheme of Arrangement, shareholders in the Company are able to elect toreceive their dividends from a UK source (the `DAP election'). Shareholders whoheld 50,000 or fewer shares (i) on the date of admission of the Company'sshares to the London Stock Exchange and (ii) in the case of shareholders whodid not own the shares at that time, on the first dividend record date afterthey become shareholders in the Company, unless they elect otherwise, will bedeemed to have elected to receive their dividends under the DAP arrangements.Shareholders who hold more than 50,000 shares and who wish to receive theirdividends from a UK source must make a DAP election. All elections remain inforce indefinitely unless revoked. Unless shareholders have made a DAPelection, or are deemed to have made a DAP election, dividends will be receivedfrom an Irish source and will be taxed accordingly.
9. Goodwill
Goodwill is allocated and monitored by management at a cash generating unit(`CGU') level, consisting of the 13 business units operating within each of theGroup's operating segments. Not all business units are active in all segments;there are 31 CGUs at 31 December 2011 (2010: 31 CGUs). For reporting purposes,the CGUs have been aggregated into the reportable segments, as shown in thetables below. The 31 CGUs have been individually tested for impairment in 2011. 31 December 2011 Marketing Marketing Data Services Services Events PR Newswire Services - Online - Print Total £m £m £m £m £m £m Cost
At 1 January 2011 560.5 89.5 307.4 63.7 174.6 1,195.7
Acquisitions (Note 54.5 - - - - 54.5 14) Disposals (Note 15) - - - - (11.6) (11.6) Transfer 34.7 - - (21.0) (13.7) - Currency 3.2 0.4 (3.1) 0.3 (0.6) 0.2 translation At 31 December 2011 652.9 89.9 304.3 43.0 148.7 1,238.8 Impairment At 1 January 2011 14.1 - 11.3 - 126.2 151.6 Currency (0.5) - 0.1 - (0.4) (0.8)translation At 31 December 2011 13.6 - 11.4 - 125.8 150.8 Carrying value At 1 January 2011 546.4 89.5 296.1 63.7 48.4 1,044.1
At 31 December 2011 639.3 89.9 292.9 43.0 22.9 1,088.0
Goodwill transferred between segments of £34.7m relates to UBM Canon, acquiredin October 2010. The purchase price allocation exercise was completed in 2010;in 2011 the allocation of goodwill to CGUs has been finalised due to the accessto more detailed information on the constituent parts of the business.Within the aggregate Events goodwill above, the Group considers the UBM TechWebEvents and UBM Live Events CGUs to be significant. The carrying value ofgoodwill attributed to these CGUs at 31 December 2011 was £171.5m and £339.0mrespectively (2010: £168.9m and £292.5m respectively). Within the aggregateData Services goodwill above, the Group considers the UBM Medica Data ServicesCGU to be significant. The carrying value of UBM Medica Data Services goodwillat 31 December 2011 was £192.0m (2010: £196.0m). The PR Newswire CGU asreported above is also considered to be significant.31 December 2010 Marketing Marketing Data Services Services Events PR Newswire Services - Online - Print Total £m £m £m £m £m £m Cost At 1 January 2010 412.9 72.4 305.5 22.3 157.4 970.5 Acquisitions 141.9 15.4 4.9 40.7 16.5 219.4 Currency 5.7 1.7 (3.0) 0.7 0.7 5.8 translation At 31 December 2010 560.5 89.5 307.4 63.7 174.6 1,195.7 Impairment At 1 January 2010 13.7 - 11.1 - 125.0 149.8 Currency 0.4 - 0.2 - 1.2 1.8 translation At 31 December 2010 14.1 - 11.3 - 126.2 151.6 Carrying value At 1 January 2010 399.2 72.4 294.4 22.3 32.4 820.7 At 31 December 2010 546.4 89.5 296.1 63.7 48.4 1,044.1
Impairment tests for goodwill
A summary of the goodwill allocation to the Group's CGUs is given in the abovetables. Management tests goodwill annually for impairment as at 30 Septembereach year or more frequently if there are indicators that goodwill may beimpaired.
31 December 2011
The carrying amount of each CGU is compared with its estimated value in use. Incalculating the value in use of its CGUs, management is assisted by the work ofexternal advisors.31 December 2010
The carrying amount of each CGU was compared with its fair value less costs tosell. In addition, the carrying amount of each CGU: UBM Medica Data Services,UBM TechWeb Events and UBM Aviation Data Services was compared with its valuein use.Value in use impairment testThe value in use of a CGU is measured by discounting the estimated future cashflows of the CGU to its present value using a pre-tax discount rate thatreflects management's estimate of the weighted average cost of capital of theCGU. The following key assumptions used by management in the value in usecalculation for the above mentioned CGUs: Pre-tax Perpetuity discount rate growth rate % % Cash flow forecasts Events 11.5 - 14.3 1.3 - 3.5 * Event revenue is expected to continue to grow strongly with continued expansion in Emerging markets. PR Newswire 11.7 2.0 * Continued steady growth of the core wire distribution, engagement and workflow/data businesses. * Continued expansion in high growth markets such as China * Continued investment in products, technology and in sales and marketing to drive continued growth in the changing competitives and technological environments. Data Services 11.5 - 14.8 1.3 - 3.2 * The continued rebalancing of the product portfolio with migration from print to digital. * Margin improvements due to restructuring and business reorganisation plans, that have taken place or which have been committed to in 2011. Each restructuring programme aims to either rebalance the product portfolios to better meet the needs of customers and audiences, or to ensure the support platforms and divisional structures are cost efficient. Improvements are undertaken by a combination of cost reductions and ongoing expenditure to continue to enhance the data products. The cash flow projections take into account these margin improvements. They do not include any cash flows relating to restructuring not carried out or committed at the time of the impairment test. Marketing Services 11.4 - 12.0 1.3 - 1.7 * The continued rebalancing of - Online the product portfolio, away from print to digital. Marketing Services 11.5 - 12.3 1.3 - 2.5 * The continued rationalisation- Print and optimisation of the print portfolio with a number of non-core titles now either closed or sold expected to result in stabilisation of print margins. Forecast cash flows
For each CGU, the forecast cash flows for the first five years are based on themost recent financial budgets and forecasts approved by management. Theforecast cash flows, budgets and forecasts based on assumptions that reflectpast experience, long term trends, industry forecasts and growth rates andmanagement estimates. The table above summarises the key assumptions specificto each group of CGUs.For each CGU, the forecast cash flows beyond the period covered by the mostrecent financial budgets and forecasts approved by management are based uponthe weighted average projected real gross domestic product growth rate in 2015of each of the territories in which the CGUs operate (2010: 2014). Growth ratesfor each territory have been weighted based on contribution to 2012 budgetedrevenue (2010: contribution to 2011 budgeted revenue). The growth rates used inthe value in use calculation range from 1.3% to 3.5%, depending on theterritories and industries in which each CGU operates.
Discount rate
The discount rate for each CGU is based on the risk-free rate for 30-year USgovernment bonds in the respective market, adjusted for a risk premium toreflect the increased risk of investing in equities, the systematic risk of thespecific CGU and taking into account the relative size of the CGU and thespecific territories in which it operates.The increased risk of investing in equities is assessed using an equity marketrisk premium which reflects the increased return required over and above a riskfree rate by an investor who is investing in the whole market. The equitymarket risk premium used is based on studies by independent economists andhistorical equity market risk premiums.
The risk adjustment for the systematic risk, beta, of the CGU reflects the risks specific to the CGU for which the forecast cash flows have not been adjusted. The adjustment to the rate has been determined by management using an average of the betas of comparable companies within respective sectors.
Details of the pre-tax discount rates used for each CGU are provided in the table above.
Sensitivities
Other than as disclosed below, management believes that no reasonably possiblechange in any of the above key assumptions would cause the carrying amount ofany CGU to exceed its recoverable amount. The estimated recoverable amounts ofthe following CGUs are not significantly higher than the carrying amounts. Thetable shows the carrying amount of each CGU with limited headroom, the amountby which recoverable amount exceeds carrying amount (the headroom) and thereasonably possible percentage changes needed in isolation in each of the keyassumptions that would cause the recoverable amount of each CGU to be equal
toits carrying amount.31 December 2011 Change
needed in assumption to reduce
recoverable amount to carrying value
Applied Cash Goodwill Headroom cash Applied Applied flow Perpetuity 30 above flow pre-tax perpetuity five Pre-tax growth September carrying forecast discount growth year discount rate 2011 amount * rate rate forecast percentage percentage £m £m % % % % points points UBM Medica 5.0 2.0 22.5 14.0 3.5 (28.0) 3.4 (3.9) Events UBM Medica Data 200.0 31.5 4.9 11.8 3.2 (13.0) 1.3 (1.3) Services UBM Aviation 27.0 5.0 9.4 13.9 2.8 (15.0) 2.0 (2.1) Data Services UBM Global 26.0 4.5 17.7 14.8 1.3 (16.0) 2.0 (2.6) Trade Data Services
\* The cash flow forecasts are expressed as the compound average growth rates in the initial five year forecasts of the plans used for impairment testing.
31 December 2010
Change
needed in assumption to reduce
recoverable amount to carrying value
Applied Cash Goodwill Headroom cash Applied Applied flow Perpetuity 30 above flow pre-tax perpetuity five Pre-tax growth September carrying forecast discount growth year discount rate 2010 amount * rate rate forecast percentage percentage £m £m % % % % points points UBM Medica Data 196.3 36.2 1.1 10.5 3.5 (15.0) 2.1 (1.5)Services UBM TechWeb 167.9 16.5 0.4 11.5 3.5 (9.0) 1.5 (2.0)Events UBM Aviation 26.9 18.0 1.8 11.9 2.8 n/a n/a n/a Data Services
Fair value less costs to sell impairment test
The fair value less costs to sell of each CGU was measured in 2010 based on anearnings multiple approach using revenue and EBITA multiples obtained fromcomparable businesses and transactions in comparable businesses in theprofessional media sector. A discount to the multiples from the peer group hasbeen applied due to the smaller size of the CGUs compared to the peer group.The multiples ranged from 0.1 to 3.3 for revenue and 0.7 to 12.3 for EBITA.The calculation used actual sales and EBITA results for 2010 and forecast salesand EBITA for 2011, based upon financial budgets approved by management. Coststo sell are estimated to be 3% of the value of a CGU, based on experience ofprior disposals by the Group.In the determination of fair value less costs to sell in 2010, the calculationsof fair value are most sensitive to the precedent transaction multiples used.Based on the conditions at the balance sheet date, management determined that areasonably possible change in any of the key assumptions would not cause animpairment to be recognised in respect of each CGU.
10. Cash and cash equivalents
Cash and short term deposits
2011 2010 £m £m Cash at bank and in hand 28.2 37.7 Short term deposits 78.5 88.2 106.7 125.9 Cash at bank earns interest at floating rates based on daily bank depositrates. Short term deposits are made for varying periods of between one day andthree months and earn interest at the respective short-term deposit rates. TheGroup classifies all its cash and short term deposits as loans and receivables.The majority of the Group's surplus cash is deposited with major banks withrating of A (Standard and Poor's) or A2 (Moody's).
The fair value of cash and cash equivalents at 31 December 2011 is £106.7m (2010: £125.9m).
For the purposes of the consolidated statement of cash flows, cash and cash equivalents comprise the following at 31 December:
2011 2010 £m £m Cash at bank and in hand 28.2 37.7 Short term deposits 78.5 88.2 106.7 125.9 Bank overdrafts (Note 11) (0.1) (0.1) 106.6 125.8 11. Borrowings 2011 2010 £m £m Current Bank overdrafts 0.1 0.1
£75m floating rate reset bonds -
75.0
Current instalments due on bank loans 52.9
0.2 53.0 75.3 Non-current Non-current instalments due on bank loans 87.8
65.8
£250m fixed rate sterling bonds 2016 262.4
254.0
$350m fixed rate dollar bonds 2020 229.9 215.4 580.1 535.2 The Group classifies all its derivative financial instruments and put optionsover non-controlling interests at fair value through profit and loss and itsbank overdrafts, bank loans and bonds as financial liabilities at amortised
cost.Bank loans 2011 2010 £m £m
€53.1m floating rate reset loans 2012 52.9
45.5
£325m variable rate multi-option facility 2012 -
20.3
£300m variable rate multi-currency facility 2016 87.8
- Other loans - 0.2 140.7 66.0
€53.1m floating rate reset loans 2012
In March 2009, UBM raised €53.1m through two floating rate reset loans. Theloans bear interest for the first three years at six month EURIBOR plus 1.80%(currently 3.48%). Under the terms, the lender has the option to put the loansback to the Group at par (€53.1m) in March 2012 and every three years untilmaturity in March 2024.
If the loans are not put then one of three events will occur:
1. The interest rate on the loans are reset to 4.16%, respectively, plus the
Group's 3 year credit spread until the next put date;
2. The Group exercises its call option and pays the fair value of the
instruments at date of exercise to the current holders;
3. There is no credit spread quote available and the Group pays the fair value
of the swap at the next interest date.
Since the 2008/2009 credit crisis, long term swap rates have fallen below thereset interest rate of 4.16%. This, combined with a material increase in marketvolatility, has increased the fair value of the loans and the associated calloptions as at 31 December 2011 to €64.0m (£53.5m). As it is likely that theGroup will exercise its call options and repay the loans in March 2012, thefuture estimated cash flows have been re-assessed to include the cost ofsettling the option. This results in an expense of £8.5m which has beenrecognised as an exceptional interest expense in the income statement.
£325m variable rate multi-option facility 2012
The £325m multicurrency unsecured revolving facility (repayable on 27 July2012) was cancelled by the Group in May 2011 and replaced by the £300m variablerate multi-currency facility 2016, detailed below. The facility interest ratewas LIBOR plus 0.325%. Drawings under the facility at 31 December 2010 were:Currency of borrowing 2010 2010 m £m Canadian dollar 31.5 20.3 20.3
The undrawn portion of this facility at 31 December 2010 was £304.7m.
£300m variable rate multi-currency facility 2016
On 11 May 2011, the Group arranged a five year £300m variable ratemulti-currency facility to replace the cancelled £325m variable ratemulti-currency facility detailed above. The £300m facility currently bearsinterest of LIBOR plus 1.0% whilst the UBM plc rating is BBB-/Baa3. The futureinterest rate is dependent on the credit rating of UBM plc: the rate will berevised to LIBOR plus 1.35% for a downgrade to BB+/Ba1; LIBOR plus 1.75% fordowngrade to BB/Ba2 or lower; LIBOR plus 0.85% for an upgrade to BBB/Baa2; orLIBOR plus 0.75% or an upgrade to BBB+/Baa1 or higher. The new facility willmature on 11 May 2016. Drawings under the facility are as follows:Currency of borrowing 2011 2011 m £m Canadian dollar 17.3 11.0 Euro 29.0 24.2 Sterling 40.0 40.0 Japanese yen 1,510.0 12.6 87.8
The undrawn portion of this facility is £212.2m.
Bonds
£75m floating rate reset bonds
On 26 September 2011, the Group redeemed the £75m floating rate reset bondsissued in September 2008. As provided under their terms, the Group also paidthe fair market value of the options associated with the bonds, totalling £19.1m. This resulting loss has been included in exceptional financing expense(Note 5). The bonds incurred interest at six month LIBOR plus 0.68%.
£250m fixed rate sterling bonds 2016
Issued at 99.384% of par, the bonds pay an annual interest coupon of 6.5% on 23November until maturity in 2016. The coupon of 6.5% would be increased by 1.25%in the event the Group's long term credit rating were to be reduced belowinvestment grade by either Standard and Poor's (below BBB-) or Moody's (belowBaa3). The Group entered into currency and interest rate swaps so thatapproximately £150m has been swapped into floating rate US Dollars, at a rateof US LIBOR plus 3.14%. The group also entered into currency swaps so thatapproximately £100m has been swapped into fixed rate US Dollars, at a rate of6.34%.
$350m fixed rate dollar bonds 2020
On 3 November 2010, the Group issued $350m fixed rate dollar bonds at 98.295%of par. The bonds pay a 5.75% coupon on a semi annual basis on 3 May and 3November until maturity in 2020. The coupon of 5.75% would be increased in theevent the Group's long term credit rating were to be reduced below investmentgrade by either Standard and Poor's (below BBB-) or Moody's (below Baa3). Theincrease to the coupon would be 0.25% per `ratings notch' per agency. Theproceeds were primarily used to repay outstanding bank debt drawn to financethe acquisition of Canon Communications LLC. The Group entered into interestrate swaps so that $150m of the bonds has been swapped into floating rate USDollars, at a rate of US LIBOR plus 2.63%.12. Share capitalAuthorised 2011 2010 £m £m 1,217,124,740 (2010: 1,217,124,740) ordinary shares of 10 121.7 121.7pence each Issued and fully paid Ordinary Ordinary shares shares Number £m At 1 January 2010 244,174,488 24.4
Issued in respect of share option schemes and other 379,118
- entitlements At 31 December 2010 244,553,606 24.4
Issued in respect of share option schemes and other 225,429
0.1 entitlements At 31 December 2011 244,779,035 24.5 Company share schemes
The ESOP Trust and QUEST Trust own 0.43% (2010: 0.55%) of the issued sharecapital of the Company in trust for the benefit of employees of the Group andtheir dependents. The voting rights in relation to these shares are exercisedby the trustees.13. Other reserves Foreign currency Total Merger translation ESOP Other other reserve reserve reserve reserve reserves £m £m £m £m £m
Balance at 1 January 2010 (732.2) 15.1 (5.9) 125.3 (597.7)
Total comprehensive losses for - (8.1) - - (8.1)the year* Shares awarded by ESOP - - 3.4 - 3.4 Own shares purchased by the - - (6.3) - (6.3)Company Balance at 31 December 2010 (732.2) 7.0 (8.8) 125.3 (608.7) Total comprehensive losses for - 0.3 - - 0.3 the year** Shares awarded by ESOP - - 3.3 - 3.3
Balance at 31 December 2011 (732.2) 7.3 (5.5) 125.3 (605.1)
* The amount included in the foreign currency translation reserve for 2010represents the currency translation difference on foreign operations on Groupsubsidiaries of £6.1m (excluding £0.5m relating to non-controlling interests),on net investment hedges of £(14.6)m and on joint ventures and associates of £0.4m.** The amount included in the foreign currency translation reserve for 2011represents the currency translation difference on foreign operations on Groupsubsidiaries of £0.9m (excluding £0.4m relating to non-controlling interests),on net investment hedges of £(0.7)m and on joint ventures and associates of £0.1mMerger reserve
The merger reserve is used to record entries in relation to certain reorganisations that took place in previous accounting periods. The majority of the balance on the reserve relates to the capital reorganisation that took place in 2008 which created a new holding company which is UK-listed, incorporated in Jersey and with its tax residence in the Republic of Ireland.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differencesarising from the translation of the financial statements of foreignsubsidiaries. It is also used to record the effect of hedging net investmentsof foreign operations.ESOP reserve
The ESOP reserve records ordinary shares held by the ESOP to satisfy future share awards. The shares are recorded at cost. During the year ended 31 December 2011, no shares were purchased by the ESOP (2010: 1,200,000 shares).
Other reserve
This reserve includes the unrealised gains and losses reserve which records theportion of the gain or loss on a hedging instrument in a cash flow hedge thatis determined to be an effective hedge.
14. Acquisitions
The Group completed eight acquisitions during 2011 of which InternationalBusiness Events Limited, owner of the Ecobuild exhibition business,(`Ecobuild') was significant. Details of all other acquisitions have beenprovided below by reportable segment. The Group also acquired the remaining 25%of the voting rights of Building Services Publications Limited, detailed in theEquity transactions section below.The following table sets out the fair value of the identifiable assets andliabilities acquired in respect of acquisitions (excluding equity transactions)made in 2011: Other All Ecobuild acquisitions acquisitions 2011 2011 2011 £m £m £m Intangible assets 17.2 9.8 27.0 Property, plant and equipment - 0.1 0.1 Trade and other receivables 2.5 0.6 3.1 Cash and cash equivalents 5.1 - 5.1 Total assets 24.8 10.5 35.3 Trade and other payables (4.1) (1.2) (5.3) Current tax liability (1.1) - (1.1) Provisions (0.1) - (0.1) Deferred tax liability (4.3) (2.7) (7.0) Total liabilities (9.6) (3.9) (13.5) Identifiable net assets 15.2 6.6 21.8
Goodwill arising on acquisition 29.7 24.7
54.4
Net changes in estimates of pre 1 January - 0.1
0.1 2010 contingent consideration Non-controlling interests - (4.7) (4.7) 44.9 26.7 71.6 Trade and other receivables acquired have been recognised at fair value whichequates to the gross contractual amounts receivable. All amounts recognised areexpected to be collected.
The total consideration paid and payable after working capital adjustments on acquisitions (excluding equity transactions) is shown below:
Other All Ecobuild acquisitions acquisitions 2011 2011 2011 £m £m £m Cash 30.7 16.0 46.7
Fair value of contingent consideration 11.1 8.0
19.1 Deferred consideration 3.1 2.6 5.7
Contingent consideration adjustments on pre 1 - 0.1
0.1 January 2010 acquisitions
Total consideration transferred 44.9 26.7
71.6
The Group has acquired 100% of the voting rights in all cases whereacquisitions involved the purchase of companies unless otherwise stated below.All 2011 acquisitions where less than 100% of the voting rights of a companywere purchased have been accounted for using the full goodwill method, aspermitted by IFRS 3 (revised 2008). As none of these companies are listed, nomarket information is available. Therefore, the fair value of thenon-controlling interest for each acquisition has been estimated using amultiples approach with assumed adjustments for the lack of control that marketparticipants would have by reference to the purchase price paid by the Group.
Acquisition costs of £2.9m have been expensed as exceptional items in the income statement (Note 4) and are included in operating cash flows in the statement of cash flows. £0.5m of these costs relate to the acquisition of Ecobuild.
Ecobuild
On 19 July 2011, the Group acquired International Business Events Limited -owner of the Ecobuild exhibition business - for initial cash consideration of £31.2m and further performance-based consideration of up to a maximum of £20.0mpayable over the following 12 months. Contingent consideration of £11.1m wasincluded in the acquisition accounting and calculation of goodwill, based onthe projected financial performance at the time of acquisition. This estimatehas been subsequently revised to £12.7m, reflecting improved performance andprojections for the March 2012 event. The movement of £1.6m is reported withinexceptional items relating to acquisitions within the income statement.Ecobuild is the world's largest exhibition dedicated to sustainable buildingproducts and is the fastest-growing trade event in the UK. The acquisition isan excellent fit with UBM Built Environment's existing UK media portfolio whichincludes industry-leading online and print publications such as Property Weekand Building, as well as a range of events such as Interiors, Sleep, BSEC andRESI. Ecobuild is also a strong complement to the Group's existinginternational construction portfolio which includes Expobuild in China, theConcrete Show in Brazil and India as well as Building Future Education in UAE.These media platforms will support Ecobuild and the Group's global eventsinfrastructure will support the expansion of Ecobuild to other countries,building on the event's existing international audience.
The goodwill of £29.7m arising from the acquisition of Ecobuild relates to the following factors:
* the acquisition gives the Group a market leading position in the growing UK
sustainable construction market; * expected increases in customers and revenues resulting from increased market penetration; * buyer specific cost and tax synergies; and * acquired assembled workforce.
None of the goodwill recognised on acquisition of Ecobuild is expected to be deductible for tax purposes.
Other acquisitionsThe goodwill of £24.8m recognised above for other acquisitions relates tocertain intangible assets that cannot be individually separated. These includeitems such as customer loyalty, market share, skilled workforce and synergiesexpected to arise after the acquisition completion. Of the goodwill arising, anamount of £1.0m is expected to be deductible for tax purposes.On 24 January 2011, the Group completed the acquisition of a 65% stake inRotaforte International Trade Fairs & Media (`Rotaforte'), the owner ofTurkey's largest jewellery exhibitions, for initial cash consideration of $1.7m(£1.1m) and further performance-related consideration of up to $8.1m (£5.1m)payable over the next two years. The acquisition of Rotaforte adds a furtherindustry-leading exhibition to the Group's jewellery portfolio within theEvents segment, and is in line with the Group's strategy to enhance and expandits international presence in geographic regions of significant growth. Thereare put and call options over a further 15% of the equity priced at 5.5x EBITA(capped at $4m (£2.5m)). The Group's call option is exercisable afterfinalisation of the 2013 accounts, and the vendor's put option between 2014 and2021. The vendor also has a second put option over the remaining 20%exercisable between 2014 and 2021 priced at 5.5x EBITA (capped at $10m (£6.3m)). The fair value of both put options including exercise prices atacquisition date was £1.9m. The fair values have increased to £2.6m at 31December 2011 following revised forecasts. The put options are included inderivative financial instruments. The value of the call option is not materialto the Group.On 27 January 2011, the Group acquired the trade and assets of SATTE, India'slargest travel and tourism exhibition, for initial cash consideration ofINR182m (£2.5m) and further performance-related consideration of up to INR168m(£2.3m) payable over the next three years. The SATTE event provides the Groupwith a leading position in the rapidly-growing Indian travel and tourismindustry. Included in the purchase consideration is the event's supportingcontrolled circulation monthly publication, T3, which will be reported in theGroup's Marketing Services - Print division.On 7 May 2011, the Group acquired the business and assets of AMB ExhibitionsSdn Bhd and AMB Events Sdn Bhd (together `AMB') in Malaysia, Vietnam and thePhilippines, for initial cash consideration of MYR26.8m (£5.5m) and a furtherperformance-related consideration of up to MYR8.2m (£1.7m) payable over thenext two years. The acquisition of AMB accelerates the expansion of the Group'sEvents business into South East Asia.On 17 June 2011, the Group acquired a 70% equity interest in UBM CatersourceLLC, a limited liability company which owns the trade and assets of theCatersource catering conference and exhibition and its sister show EventSolutions, for initial consideration of $5.0m (£3.1m). The acquisition willstrengthen the Group's portfolio of events serving the Food & Leisureindustries both in the USA and internationally. The Group has a call optionover the remaining 30% interest exercisable for a three-month period after the2013 events and for a three-month period after each subsequent event. Thevendor also has a put option over their 30% interest exercisable after 17 June2013. Both put and call options are priced at priced at 6x EBITA (capped at$7.2m (£4.5m)). The fair value of the put option including exercise price atacquisition date and at 31 December 2011 was £2.0m. The put option is includedin derivative financial instruments. The value of the call option is notmaterial to the Group.On 13 October 2011, the Group acquired a 70% equity interest in Index FurniturePrivate Limited for initial cash consideration of INR81.5m (£1.0m) with furtherperformance-related consideration of up to INR150.0m (£1.9m) payable over thenext three years. The company owns the three Index Fairs tradeshows heldannually in Mumbai, Bengaluru and Hyderabad. The acquisition of a majoritystake in the Index Fairs provides the Group's Events segment with a leadingposition in this growing market and provides a significant addition to theGroup's product portfolio in India.On 15 November 2011, the Group acquired the Online Marketing Summit (`OMS'), anannual conference for online/digital marketers, for initial cash considerationof $2.1m (£1.3m) and further performance-related consideration of up to $0.9m(£0.6m) based on 2012 results. The conference will expand the ability of theEvents segment to serve the digital marketing community both throughprofessional conferences and the marketing-as-a-service business.On 18 November 2011, the Group acquired the business and assets of RenewableEnergy India (`REI'), an annual exhibition focused on the Indian market fornon-depleting and environmentally-friendly renewable energy sources, forinitial cash consideration of INR320.0m (£3.9m) with furtherperformance-related consideration of up to INR80m (£1.0m) payable over the nextyear. The event provides the Group with an established presence in a highgrowth sector.
Equity transactions
On 20 October 2011, the Group acquired the remaining 25% of the voting rightsof Building Services Publications Limited for a total cash consideration of £86,000, giving the Group 100% ownership. As the Group already had control ofthe company on acquisition of the remaining 25%, the transaction is accountedfor as an equity transaction in accordance with IAS 27 `Consolidated andseparate financial statements'. 2011 £m Cash paid 0.1 Carrying amount of non-controlling interest at (0.1)acquisition date Recognised in equity - Other transactionsOn 1 March 2011, the Group also announced it has entered into a frameworkagreement to acquire 60% of the Famdent dental exhibition and conference. Ascompletion has not occurred at the balance sheet date, the Famdent acquisitionhas not been included in these consolidated financial statements. Thecompletion is subject to regulatory approvals, and will enable the Group toexpand its offering in the Indian medical exhibition and conference market.
Intangible assets
The intangible assets acquired as part of the acquisitions are detailed in thefollowing table: Other Ecobuild businesses Total 2011 2011 2011 £m £m £m Brands 9.0 5.1 14.1 Software - - - Order backlog 1.4 1.4 2.8 Customer relationships 6.5 2.5 9.0 Customer contracts and relationships 7.9 3.9 11.8 Subscription lists - - - Databases 0.3 0.8 1.1 Total 17.2 9.8 27.0
Identification and measurement of intangible assets acquired as part of business combinations requires the use of judgments by management. For significant acquisitions, management is assisted by the work of external advisors in identifying and calculating the valuation of any intangible assets.
Contingent and deferred consideration
The potential undiscounted amount for all future payments that the Group couldbe required to make under the contingent consideration arrangements for 2011acquisitions are between nil and the maximum amounts disclosed by acquisitionon the previous pages; £32.6m in aggregate (maximum remaining at 31 December2011 for 2010 acquisitions: £52.9m). The contingent consideration for eachacquisition made during the year is based on the terms set out in the relevantpurchase agreements. The amounts recognised in the consideration tables as thefair values of contingent considerations have been determined by reference tothe projected financial performance in relation to the specific contingentconsideration criteria for each acquisition.The movement in the contingent and deferred consideration payable during theyear was: Contingent Deferred Total 2011 2011 2011 £m £m £m Balance at 1 January 39.7 1.3 41.0 Acquisitions 19.1 5.7 24.8 Consideration paid (19.5) (1.3) (20.8)
Changes in estimates (goodwill) 0.1 -
0.1
Changes in estimates (income statement) (1.9) - (1.9) Currency translation (0.2) - (0.2) Balance at 31 December 37.3 5.7 43.0
Cash flow effect of acquisitions
The aggregate cash flow effect of acquisitions was as follows:
2011 £m Net cash acquired with the subsidiaries
(5.1)
Cash paid to acquire subsidiaries
46.7
Contingent consideration on 2007 acquisitions
3.4
Contingent consideration on 2008 acquisitions
3.1
Contingent consideration on 2009 acquisitions
0.7
Contingent consideration on 2010 acquisitions
12.2
Contingent consideration on 2011 acquisitions
0.1
Deferred consideration on 2010 acquisitions
1.3
Net cash outflow on acquisitions
62.4
The Group paid £19.5m of contingent consideration during 2011 in relation tothe 2007 acquisitions of Vintage Filings LLC, Notilog and Portelligent Inc.,the 2008 acquisitions of Aerostrategy's aviation business and SanguineMicroelectronics, the 2009 acquisition of Virtual Press Office, and the 2010acquisitions of Game Advertising Online, Sign China, SharedVue, CenTradeX Inc.,PR Newswire do Brazil, Sienna Interlink, Corporate360, the ShanghaiInternational Children-Baby-Maternity Products Expo, Lead-In Research Limited,Astound LLC, Shanghai Leadway E-Commerce Co. Limited, Hors Antenne and the 2011acquisition of SATTE. The Group also paid £1.3m of deferred considerationduring 2011 in relation to the 2010 acquisitions of Game Advertising Online,Sign China, Sienna, Navalshore, OBGYN and Publishing Expo.
Acquisition performance
From the date of acquisition to 31 December 2011, Ecobuild contributed £(0.5)mto operating profit and nil to revenue of the Group. From their respectivedates of acquisition to 31 December 2011, the other acquisitions completed in2011 contributed £1.7m to operating profit and £7.9m to revenue of the Group.If all acquisitions had taken place at the beginning of 2011, the acquisitionswould have contributed £6.6m of operating profit and £23.3m to revenue of
theGroup.15. Disposals
On 15 March 2011, the Group disposed of its UK licensed trade portfolio for initial cash consideration of £1.5m and further performance-related consideration of up to £0.2m, payable over the next year. The portfolio comprises The Publican print magazine title, websites and awards event, together with the Theme and Bar Show brands. A loss of £0.7m arose on disposal of the UK licensed trade portfolio, including directly attributable costs.
On 28 February 2011, the Group sold its French medical newspaper and magazinebusiness, retaining a 34.55% equity share, for initial cash consideration of €4.2m (£3.6m) and extended vendor finance of €6.0m (£5.1m) to the management buyout team. The business publishes weekly, bi-weekly, monthly and othersubscription and controlled circulation titles for the French healthcareprofessional community and was part of the Group's Marketing Services - Printsegment. The transaction further rationalises the Group's print portfolio andcontinues its progression towards a portfolio of integrated cross-mediamarketing services designed to serve specific commercial and professionalcommunities. A profit of £0.1m arose on the sale of this business. The profitrepresents the disposal proceeds less the carrying amount of the businesses netassets, attributable goodwill and directly attributable costs, plus the fairvalue of the retained interest. The Group accounts for the remaining interestas an associate, valued at £0.3m.On 1 April 2011, the Group transferred Canon Communications Asia Pte. Limitedand Beijing Reed Advertising Services Co., Limited (which together own EDNChina, EDN Asia and certain associated titles) to eMedia Asia Limited, theGroup's joint venture with Global Sources Limited, for consideration of $4.0m(£2.4m). The Group acquired the EDN titles as part of its acquisition of CanonCommunications LLC on 21 October 2010. A profit of £0.7m arose on the sale,representing the portion of the gain which is attributable to the interest heldby Global Sources Limited, including directly attributable costs.
On 27 April 2011, the Group received $0.4m (£0.2m) in relation to its investment in The Dolan Company which has been dissolved.
On 24 May 2011, the Group disposed of France Optique, a print/online supplierdirectory for opticians in France, for total consideration of €0.6m (£0.5m). Aprofit of £0.1m was recognised on disposal, including directly attributablecosts.On 15 April 2011, the Group sold its print titles Consultant and Consultant ForPaediatricians for total consideration of $2.3m (£1.4m). A profit of £0.4m wasrecognised on disposal, including directly attributable costs.
On 2 June 2011, the Group sold a portfolio of domain names for total consideration of $4.5m (£2.8m). Profit after directly attributable costs of £ 2.5m was recognised on disposal.
On 1 July 2011, the Group disposed of the online business of EDN Japan for total consideration of $0.3m (£0.2m). Including directly attributable costs, a loss of £0.1m was recognised on disposal.
On 29 July 2011, the Group disposed of its UK entertainment and technologyproduct portfolio for total consideration of £2.4m. The sale of the portfoliocomprises Pro Sound News Europe, TVB Europe, Installation Europe and Music Weekprint magazine titles and related websites and events. A profit of £1.9m aroseon disposal, including directly attributable costs.On 30 December 2011, the Group completed the sale of the business and assets ofDaltons Media and associated titles tor initial cash consideration of £0.1m andfurther performance-related consideration of up to £0.6m. A loss of £1.6m aroseon disposal, including directly attributable costs.
The net profit on disposal of the above titles and businesses is £3.5m, reported within corporate operations.
The following table sets out the aggregate effect of the disposals on the Group's assets and liabilities:
All disposals 2011 £m Goodwill (11.6) Intangible assets (7.1) Property, plant and equipment (0.3) Trade and other receivables (14.0) Inventories (0.4) Cash and cash equivalents (2.9) Total assets (36.3) Trade and other payables 20.8 Deferred tax liability 2.2 Total liabilities 23.0 Identifiable net assets (13.3) Costs associated with disposal
(4.2)
Fair value of retained interest
0.3 Gain on disposal (3.5) Consideration received 20.7 Less cash disposed and deferred consideration (8.6) Net cash inflow 12.1
16. Events after the reporting period
On 9 January 2012, the Group and Roularta Media Group each contributed theirBelgian medical print activities to their joint venture, ActuaMedica.ActuaMedica will be the market-leading provider of media-based marketingservices for Belgian healthcare professionals. By merging the media assets,both groups are able to offer their clients unparalleled access and reach tohealthcare professionals.On 1 February 2012, the Group acquired the annual 4G World telecoms andwireless trade show and conference for consideration of $4.0m (£2.6m). 4G Worldis the largest independent telecoms and wireless event serving the US market.The acquisition will expand the Group's offering in the rapidly-acceleratingmobile broadband market, bringing a valuable brand to the Group's portfolio andtapping into online communities serving global communications providers,enterprise technology executives, developers and the 4G marketers tasked withreaching them.On 6 February 2012, the Group announced the disposal of its UK agriculture andmedical general practitioner portfolios - including the Farmers Guardian andPulse titles - for total cash consideration of £10.0m (subject to workingcapital adjustment at completion). Subject to completion of two separateconsultation processes under the Transfer of Undertakings (Protection ofEmployment) Regulations, the transaction is expected to close within the nextmonth.On 14 February 2012, the Group completed the acquisition of a 75% interest inInsight Media Limited - which owns the Airport Cities World Exhibition &Conference (`ACE') - for cash consideration of £1.7m. Together with itsexisting 25% stake in the company, the Group now owns 100% of the business. ACEis a logical fit with the Group's growing aviation events business and supportsthe strategy to establish a leadership position within the airportinfrastructure development sector.
On 20 February 2012, the Group completed the acquisition of the Malaysian International Furniture Fair for cash consideration of MYR47.0m (£9.9m). Following the acquisition the Group will be one of the largest organisers of international furniture trade shows in Asia.
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