24th Nov 2005 07:02
Euromoney Institutional InvestorPLC24 November 2005 Euromoney Institutional Investor PLC Preliminary Announcement September 30 2005 Euromoney Institutional Investor PLC 2005 Record Profits and Dividend Highlights 2005 2004 change Turnover £196.3m £174.7m +12%Profit before tax, goodwill, exceptional items and £37.1m £28.0m +33%Capital Appreciation Plan expenseProfit before tax £29.1m £20.5m +42%Adjusted diluted earnings a share before goodwill 35.6p 26.7p +33%and exceptional itemsDiluted earnings a share 28.0p 18.2p +54%Net debt £65.8m £62.5m +5% •Record profit driven by strong organic growth •Profits increase across group: publishing, events and electronic information •Group operating margin improves from 17.5% to 20.5% •Net cash inflows from operating activities increase by 29% to £43.5m •Recent acquisitions performing above management expectations •Record dividend 16.2p, against 15p •Results reflect early benefits of Capital Appreciation Plan RECORD RESULTS Euromoney Institutional Investor PLC, the international publishing, events andelectronic information group, reports a record profit before tax* of £37.1million for the year to September 30, a 33% increase on the previous 12 months.Profit before tax rose 42% to £29.1 million. Adjusted diluted earnings a share**increased 33% to 35.6p and the directors recommend a 10% increase in the finaldividend to 11p, making a total for the year of 16.2p, a record. These results reflect the key elements of the company's strategy for growingprofit before tax* towards a target of £50m by 2008: driving top line growthfrom both new and existing products; reducing the dependence on advertising bybuilding more robust subscription and repeat revenues; a focus on improving theoperating margin; and acquisitions to strengthen the company's market positionin key areas. Commenting on the results, Padraic Fallon, Chairman said: "These results reflect excellent progress in line with the company's strategy toachieve target profit before tax* of £50m by 2008, compared to the £21m reportedin 2003. Our focus remains on driving organic growth through new and existingproducts; diversifying our revenue base while improving the operating margin;and strategic acquisitions that strengthen the company's market position." TRADING BACKGROUND Turnover increased by 12% to £196 million. This improvement comes against arobust trading background. Strong financial markets have generated recordprofits for the global financial institutions and emerging markets remainattractive to capital flows and investment. While the company's key customerscontinue to hold back advertising spend, many are refocusing their marketingefforts on face-to-face events, a key growth area for the group. Moreover, thefinancial success of these customers is driving an increase in demand fortraining and information. The events and training businesses now contributemore than 53% of operating profits* compared to 37% three years ago. ORGANIC GROWTH The company's focus on organic growth has been a key driver in increasingturnover. This comes largely from launching new products under existing brandsand the geographical extension of existing products. Some of the successesduring the year have included Euromoney's coverage of real estate, theInstitutional Investor hedge fund institute, new conference and seminarbusinesses in Asia, and expansion of ISI into 18 sub-Saharan Africa countries. The focus with events is on quality rather than quantity. The group now hasmore than 10 market-leading annual events with revenues in excess of $1 million,and the strategy is to continue to grow these events by both investing in thecontent and building new revenue streams such as vendor exhibitions, awardsdinners and business meetings. In addition successful new events were launchedcovering such diverse areas as Native American finance, condo hotels, renewableenergy and inflation-linked bonds as well as conferences in London and New Yorkbringing together investors targeting key emerging markets such as China, Indiaand Russia. MARGIN The company's operating margin improved from 17.5% to 20.5%. The company hastraditionally maintained a policy of tight cost control and the marginimprovement in 2005 reflects the high operational gearing of the business. Theheadcount, excluding acquisitions, was largely unchanged year-on-year. Althoughthis positive gearing effect is likely to moderate in future, the company'sfocus remains the building of high margin, repeat annual revenues and theelimination of low margin products. During the year the group closed or mergedseveral magazines and newsletters and in May it sold the loss-making BusinessTraveller group of titles, generating an exceptional loss on disposal of nearly£1 million. ACQUISITIONS The company's acquisition programme concentrates on small, specialised mediacompanies which fill gaps in or enhance its own product/sector offering,preferably with entrepreneurial management who wish to remain with and growtheir business under earn-out arrangements. Often these businesses havereached a stage in their development where they would benefit from the branding,marketing and infrastructure benefits of being part of a larger group. Therecent acquisitions of the niche hedge fund publisher, HedgeFund Intelligence("HFI"), and Information Management Network ("IMN"), the world leader inconferences for the securitisation and indexation sectors, demonstrate thesuccess of this strategy, where both have exceeded growth expectations sinceacquisition. In September, the company completed the acquisition of a 40% interest in TelCapat a cost of £2.1 million. TelCap is the publisher of Capacity, the leadingwholesale telecommunications magazine, and also runs nine annual conferences inthe sector. In addition, the group has targeted a number of informationbusinesses which fit well with its existing data products and in March theacquisition of a 49% interest in CEIC was completed at a cost of £4.0 million.CEIC is one of the leading providers of time-series macro-economic data for Asiaand provides an excellent fit with ISI's emerging markets information service. MANAGEMENT INCENTIVE In February, shareholders approved a new long-term incentive plan to replace thecompany's executive share option scheme. The Capital Appreciation Plan ("CAP")is a highly geared equity incentive designed to drive the company's profitbefore tax* towards a target of £50 million by 2008, compared to £21 million inthe base year 2003. Almost 150 managers participate in the CAP. The incentivewill directly reward each participant for the profit growth achieved by his orher business and has been a significant factor this year in motivating seniormanagers to drive organic growth and launch new products. If the £50 millionCAP profit before tax* target is achieved in 2008, it will lead to the issue ofup to 7.5 million new shares in the company between 2008 and the end of 2010.The cost of the CAP will be amortised over the life of the plan, and the 2005results include a charge of £1.3 million. BUSINESS REVIEW Revenues and operating profits from publishing improved by 5% and 10%respectively. In general advertising markets remain tough as customers,particularly the global financial institutions, continue to withhold marketingspend on traditional display advertising. Nevertheless, advertising revenuesincreased by 6%, helped by the launch of new products such as roundtables, pollsand research, as well as a focus on specialized areas such as hedge funds,private banking, real estate and project finance. Euromoney, Asiamoney andEuroweek all achieved above average increases in advertising revenues. The fastest growing part of the business is events, including conferences,seminars and awards dinners. Revenues increased by 31% to £67.3 million andoperating profits* by 55% to £18.8 million. This growth underpins the company'sstrategy of reducing its exposure to advertising and developing more robustrevenue streams from sponsored conferences and membership organizations. Withthe exception of Adhesion (where the biennial wine exhibition Vinisud next runsin 2006), all of the group's event businesses increased profits through acombination of new products and a continued focus on building high margin,market leading events for their various sectors. IMN was particularlysuccessful in both growing its market-leading securitization conferences as wellas launching new events, and its performance since acquisition has significantlyexceeded expectations. IMN's results also benefited from the timing of its ABSEast conference which was moved from October to September for 2005 and 2006. Training continued the strong growth seen in 2004 with revenues up 13% andoperating profits* increasing 25%. In general the improvement was driven bygrowth in the volume of courses delivered, particularly in emerging markets,helped by increased demand for new hires in the financial sector. In addition,new legislation and compliance requirements in the United States helped MIS, theBoston-based audit and information security business, to grow. Operating profits* from databases and information services increased 15% to £3.9million. The main driver of the growth was ISI's Emerging Markets InformationService where gross sales were the highest since launch. ISI's subscriptionrevenues increased by 20% to $22.1 million and the revenue retention rateimproved to an all-time high of 91%. In addition, CEIC, which was acquired inMarch, has performed ahead of expectations. CEIC is benefiting from operatingin ISI's global sales environment while the cross-selling of both ISI's andCEIC's products has exceeded expectations. CASH FLOW Net debt at September 30 was £65.8 million, an increase of £3.3 million sincethe previous year end. The group continues to generate strong cash flows withnearly 50% of its revenues generated from subscriptions and delegates. Net cashinflows from operating activities increased by 29% to £43.5 million, helpingfinance acquisitions and investments of more than £23 million. These includedthe acquisitions of CEIC (£4.0 million) and TelCap (£2.1 million); furtherinvestments under deferred consideration agreements in HFI (£5.5 million) andIMN (£5.4 million); and £3.7 million on a head lease and capital improvementsfor the group's London offices. TAX The company has traditionally had a low rate due to the tax amortization ofgoodwill available on US acquisitions and the availability of brought forwardtax losses for use against its US profits. The significant improvement in theprofits of the US businesses has led to the recognition in 2005 of a deferredtax credit of £5.3 million for unused US tax losses. This, combined with recentchanges in UK tax legislation which reduce the tax benefit from US acquisitions,means the company's underlying tax rate is likely to increase from 20% in 2005to approximately 25% in 2006. DIVIDEND The increase in the final dividend is consistent with the company's strategy ofmoving gradually to a dividend cover of two times, while still delivering realdividend growth. The total payment to shareholders for the 2005 financial yearwill be £14.4 million, bringing the dividends returned to shareholders over thepast five years to £66 million, all financed from operating cash flows. MANAGEMENT Under the terms of his service contract, the company's chairman is due to retireat age 60, in September 2006. Following an independent recommendation from theNominations Committee, the board has resolved to extend the chairman'sretirement date under his service contract to the date of the Annual GeneralMeeting following his 63rd birthday. OUTLOOK The outlook for financial markets in 2006 remains positive, and the company willcontinue to focus on implementing its plans for organic growth, improvedoperating margin, and strategic acquisitions that create value forshareholders. For the new financial year the first quarter is the leastsignificant in profit terms, and visibility for the second quarter is alwayslimited at this stage. However, current trading is pleasing with advertising,sponsorship and delegate sales all ahead of the same period in 2004. The CapitalAppreciation Plan is beginning to deliver results in terms of execution, and thecompany remains committed to implementing its stated strategy. END NOTE TO EDITORS About Euromoney Institutional Investor PLC Euromoney Institutional Investor PLC is listed on the London Stock Exchange anda member of the FTSE-250 share index. It is a leading internationalbusiness-to-business media group focused primarily on the international financesector. It publishes more than 100 magazines, newsletters and journals,including the leading financial market titles Euromoney and InstitutionalInvestor. It also runs an extensive portfolio of conferences, seminars andtraining courses and is a leading provider of electronic information and datacovering international finance and emerging markets. Its main offices arelocated in London, New York and Hong Kong and nearly half its revenues andprofits are derived from the United States. Euromoney Institutional InvestorPadraic Fallon, Chairman 020 7779 8556 [email protected] Ensor, Managing Director 020 7779 8845 [email protected] Jones, Finance Director 020 7779 8556 [email protected] The Company AgencyAlex Money or Tom Allison 020 7670 7451 [email protected] Or visit our website at: www.euromoneyplc.com * Before goodwill amortization, goodwill impairment, exceptional items, CapitalAppreciation Plan expense as set out in the attached profit and loss account andnote 2. ** Before goodwill amortization, goodwill impairment and exceptional items asset out and reconciled in note 6. Euromoney Institutional Investor PLC Group Profit and Loss Account for the year ended September 30 2005 2005 2004 Note £000's £000'sTurnover 2----------------------------- --------- -------- --------Closed businesses 2,295 5,155Other continuing operations (including share of joint 194,970 169,757ventures) -------- -------- 197,265 174,912Less: share of turnover of joint ventures (999) (258)----------------------------- --------- -------- --------Total turnover from continuing operations 196,266 174,654 -------- -------------------------------------Operating profit before goodwill amortization 2and impairment and capital appreciation planClosed businesses (416) (907)Other continuing operations 40,727 31,513 -------- -------- 40,311 30,606Goodwill amortization (5,747) (6,357)Capital appreciation plan expense (1,289) -Exceptional goodwill impairment 3 - (1,177)----------------------------- --------- -------- --------Operating profit 2----------------------------- --------- -------- --------Closed businesses (416) (907)Other continuing operations 33,691 23,979----------------------------- --------- -------- --------Total operating profit 33,275 23,072Share of operating profit in associates and joint 585 373venturesExceptional loss on disposal of business 3 (972) -Profit on ordinary activities before interest and tax 32,888 23,445----------------------------- --------- -------- --------Interest receivable and similar income 345 422Interest payable and similar charges (4,183) (3,376)----------------------------- --------- -------- --------Net interest (3,838) (2,954) -------- -------- --------Profit on ordinary activities before tax 29,050 20,491Tax on profit on ordinary activities 4 (2,258) (3,899) --------- -------- --------Profit on ordinary activities after tax 26,792 16,592Equity minority interests (2,006) (578) -------- --------Profit for the financial year 24,786 16,014Dividends paid and proposed 5 (14,344) (13,186) -------- --------Retained profit for the financial year 10,442 2,828 ======== ========Basic earnings per share 6 28.08p 18.22pDiluted earnings per share 6 28.01p 18.16pAdjusted diluted earnings per share before 6 35.60p 26.71pgoodwill amortization and exceptional itemsDividend per share 5 16.20p 15.00p Euromoney Institutional Investor PLC Group Balance Sheet as at September 30 2005 2005 2004 £000's £000'sFixed assetsIntangible assets 60,678 60,989Tangible assets 11,179 7,576Investments 6,760 190 ------------ ------------ 78,617 68,755 ------------ ------------ Current assetsDebtors 63,844 37,670Cash at bank and in hand 25,680 23,563 ------------ ------------ 89,524 61,233 Creditors: amounts falling due within one year (84,915) (127,326) ------------ ------------Net current assets/(liabilities) 4,609 (66,093) ------------ ------------Total assets less current liabilities 83,226 2,662 Creditors: amounts falling due after more than one (71,207) (10,611)yearProvisions for liabilities and charges (1,125) (575)---------------------------- ------------ ------------Accruals (23,225) (18,569)Deferred income (37,491) (35,317)---------------------------- ------------ ------------Accruals and deferred income falling due within one (60,716) (53,886)year ------------ ------------Net liabilities (49,822) (62,410) ============ ============ Capital and reservesCalled up share capital 222 220Share premium account 37,351 34,393Capital redemption reserve 8 8Own shares (74) (74)Profit and loss account (89,258) (97,697) ------------ ------------Equity shareholders' deficit (51,751) (63,150)Equity minority interests 1,929 740 ------------ ------------ (49,822) (62,410) ============ ============ Euromoney Institutional Investor PLC Group Cash Flow Statement for the year ended September 30 2005 2005 2004 Note £000's £000'sNet cash inflow from operating activities A 43,525 33,751Dividends received from associate - 570Returns on investments and servicing of financeInterest received 345 422Interest paid (3,756) (3,120)Dividends paid to minorities (943) (150) -------- -------- (4,354) (2,848) -------- --------TaxationUK tax paid (5,155) (3,530)Overseas tax paid (2,047) (955)UK tax received 16 319Overseas tax received 389 308 -------- -------- (6,797) (3,858) -------- --------Capital expenditure and financial investmentPurchase of tangible fixed assets (5,387) (1,240)Sale of tangible fixed assets 20 78 -------- -------- (5,367) (1,162) -------- --------Acquisitions and disposalsPurchase of subsidiary undertakings (11,846) (17,567)Purchase of additional interests in subsidiary (385) (1,810)undertakingsCash acquired with subsidiary undertakings - 2,507Purchase of associates and joint ventures (6,097) -Proceeds on sale of business 500 - -------- -------- (17,828) (16,870) -------- -------- Equity dividends paid (13,385) (12,949) -------- --------Cash outflow before financing (4,206) (3,366)FinancingIssue of shares for cashNew ordinary share capital and share premium 2,960 645Redemption of secured loan stock - (37)Revolving credit facilities:Increase in borrowings 42,932 2,468Repayment of borrowings (39,540) (8,411)Loan paid to DMGT group company (15,384) (26,003)Loan received from DMGT group company 15,622 47,108 -------- -------- 6,590 15,770 -------- --------Increase in cash during the year B 2,384 12,404 ======== ======== Euromoney Institutional Investor PLC Notes to the Group Cash Flow Statement A - Reconciliation of operating profit to net cash inflow from operatingactivities 2005 2004 £000's £000'sGroup operating profit 33,275 23,072Amortization of goodwill 5,747 6,357Exceptional impairment of capitalized goodwill (note 3) - 1,177Capital appreciation plan expense 1,289 -Depreciation of tangible fixed assets 1,745 1,960Loss/(profit) on sale of tangible fixed assets 87 (23)Increase in debtors (4,151) (3,095)Increase in creditors 5,681 4,303Utilization of property rental provision (148) - -------- --------Net cash inflow from continuing operating activities 43,525 33,751 ======== ======== B - Reconciliation of net cash flow to movement in net debt 2005 2004 £000's £000'sIncrease in cash during the year 2,384 12,404 ------- -------Cash inflow from change in debt finance (18,907) (285)Increase/(decrease) in net amounts due from DMGT group 15,384 (14,840)undertakings ------- ------- (1,139) (2,721)Other non-cash items:Currency translation differences (2,098) 7,703Other non-cash changes (106) (357) ------- -------Movement in net debt in the year (3,343) 4,625Net debt at October 1 (62,478) (67,103) ------- -------Net debt at September 30 (65,821) (62,478) ======= ======= C - Analysis of changes in net debt At October Cash Exchange Other At 1 2004 flow movements non-cash September changes 30 2005 £000's £000's £000's £000's £000'sCash at bank and in 23,563 1,961 156 - 25,680handBank overdrafts (553) 423 (9) - (139) --------- ------- --------- -------- -------- 23,010 2,384 147 - 25,541 --------- ------- --------- -------- --------Debt due within one (85,488) (12,225) (1,126) 53,546 (45,293)yearDebt due in more - (6,682) (1,851) (53,985) (62,518)than one year --------- ------- --------- -------- -------- (85,488) (18,907) (2,977) (439) (107,811) --------- ------- --------- -------- --------Amounts owed by DMGT - 15,384 732 333 16,449group undertakings --------- ------- --------- -------- -------- Total (62,478) (1,139) (2,098) (106) (65,821) ========= ======= ========= ======== ======== Other non-cash changes represent accrued interest charged on debt and areclassification of the DMGT loan. Euromoney Institutional Investor PLCGroup Statement of Total Recognized Gains and Lossesfor the year ended September 30 2005 2005 2004 £000's £000'sProfit for the financial year 24,786 16,014Foreign exchange translation differences (2,660) 6,866 --------- ---------Total recognized gains and losses for the year 22,126 22,880 ========= ========= Reconciliation of Movements in Equity Shareholders' Funds for the year ended September 30 2005 2005 2004 £000's £000'sProfit for the financial year 24,786 16,014Dividends paid and proposed (14,344) (13,186) --------- --------- 10,442 2,828Proceeds from issue of shares for cash 2,960 645Reinstatement of goodwill on disposal 657 -Other recognized gains and losses relating to the year (2,660) 6,866Net decrease in equity shareholders' deficit 11,399 10,339Opening equity shareholders' deficit (63,150) (73,489) --------- ---------Closing equity shareholders' deficit (51,751) (63,150) ========= ========= Euromoney Institutional Investor PLCNotes to the Accounts 1. Basis of Preparation The financial information set out in this announcement does not constitute thecompany's statutory accounts for the year ended September 30 2005 but is derivedfrom those accounts. Statutory accounts for 2004 have been delivered to theRegistrar of Companies, and those for 2005 will be delivered following thecompany's annual general meeting. The auditors have reported on those accounts;their report was unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. The financial information for the year ending September 30 2005 has beenprepared in accordance with the accounting policies set out in the group's 2004annual report. 2. Segmental analysis United Kingdom North America Rest of World Total 2005 2004 2005 2004 2005 2004 2005 2004 £000's £000's £000's £000's £000's £000's £000's £000'sTurnoverBydestination: Other 31,604 28,457 90,245 71,720 72,122 69,322 193,971 169,499continuingbusinessesClosed 570 1,142 432 1,852 1,293 2,161 2,295 5,155businesses -------- ------- ------- ------- ------- ------- -------- --------Group 32,174 29,599 90,677 73,572 73,415 71,483 196,266 174,654turnoverJoint 229 258 - - 770 - 999 258ventures -------- ------- ------- ------- ------- ------- -------- -------- 32,403 29,857 90,677 73,572 74,185 71,483 197,265 174,912 ======== ======= ======= ======= ======= ======= ======== ======== United Kingdom North America Rest of World Total 2005 2004 2005 2004 2005 2004 2005 2004 £000's £000's £000's £000's £000's £000's £000's £000'sTurnoverBy activityand source: Financial 30,169 26,790 28,848 29,748 1,501 1,195 60,518 57,733publishingBusiness 17,023 16,415 7,038 6,688 1,155 1,067 25,216 24,170publishingTraining 16,296 14,965 6,421 5,215 2,133 1,887 24,850 22,067Conferences 22,685 19,457 37,531 22,314 7,060 9,555 67,276 51,326andseminarsDatabases 4,938 4,396 3,829 3,488 7,344 6,319 16,111 14,203andinformationservicesClosed 1,122 1,885 340 1,671 833 1,599 2,295 5,155businesses -------- -------- -------- -------- -------- -------- -------- --------Group 92,233 83,908 84,007 69,124 20,026 21,622 196,266 174,654turnoverJoint 229 258 - - 770 - 999 258ventures -------- -------- -------- -------- -------- -------- -------- -------- 92,462 84,166 84,007 69,124 20,796 21,622 197,265 174,912 ======== ======== ======== ======== ======== ======== ======== ======== The Joint venture turnover of £999,000 (2004: £258,000) can be allocated as follows; Businesspublishing £229,000 (2004: £258,000); Databases and information £770,000 (2004: £nil). United Kingdom North America Rest of World Total 2005 2004 2005 2004 2005 2004 2005 2004 £000's £000's £000's £000's £000's £000's £000's £000'sOperatingprofitBy activityand source: Financial 9,221 7,800 2,851 3,494 130 (142) 12,202 11,152publishingBusiness 4,334 3,924 1,464 1,269 121 76 5,919 5,269publishingTraining 3,894 3,356 1,623 962 634 588 6,151 4,906Conferences 5,316 4,401 13,294 5,709 195 2,028 18,805 12,138andseminarsDatabases 2,769 2,531 1,551 871 (427) (27) 3,893 3,375andinformationservicesClosed (111) (597) (232) (310) (73) - (416) (907)businessesUnallocated (5,554) (5,700) (561) 383 (128) (10) (6,243) (5,327)corporate -------- -------- -------- -------- -------- -------- -------- --------costs 19,869 15,715 19,990 12,378 452 2,513 40,311 30,606Capital (739) - (508) - (42) - (1,289) -appreciationplanexpenseGoodwill (2,058) (3,358) (3,654) (4,107) (35) (69) (5,747) (7,534)amortization -------- -------- -------- -------- -------- -------- -------- --------andimpairmentOperating 17,072 12,357 15,828 8,271 375 2,444 33,275 23,072profit after ======== ======== ======== ======== ======== ======== ======== ========goodwillamortizationandimpairment The goodwill amortization and impairment and capital appreciation plan expenseof £7,036,000 (2004: £7,534,000) can be allocated as follows; Financialpublishing, £1,661,000 (2004: £1,666,000); Business publishing, £1,251,000(2004: £2,222,000); Conferences and seminars, £2,257,000 (2004: £1,191,000);Databases and information services, £477,000 (2004: £2,072,000); Closedbusinesses, £101,000 (2004: £383,000); Unallocated corporate costs £1,289,000(2004: £nil). 3. Exceptional items Exceptional loss on disposal of business In April 2005, the group sold the UK and German companies that formed part ofthe Business Traveller group for £500,000. After writing off goodwill of£931,000 and re-instating £657,000 of goodwill previously written off throughreserves, the exceptional loss on sale was £972,000. There is no tax effect. Prior year exceptional impairment The group regularly performs a review of its portfolio and in 2004, the reviewresulted in additional goodwill write offs of £1,177,000. In 2005, no suchwrite off was required. 4. Tax on profit on ordinary activities 2005 2004 £000's £000'sUnited KingdomCorporation tax at 30% (2004: 30%) 5,319 4,514Associates 126 114Under provision in respect of prior years 494 165 ---------- ---------- 5,939 4,793Foreign taxOverseas taxation 1,531 1,063Under provision of overseas taxation in respect of prior 50 59years ---------- ----------Total current tax 7,520 5,915Deferred taxOrigination and reversal of asset timing differences (5,116) (1,658)Origination and reversal of liability timing 2,454 2,505differencesIncrease in discount (2,449) (2,529)Over provision of deferred taxation in respect of prior (151) (334)years ---------- ----------Total deferred tax (5,262) (2,016) ---------- ----------Tax on profit on ordinary activities 2,258 3,899 ========== ========== The standard rate of current tax for the year, based on the UK standard rate ofcorporation tax is 30% (2004: 30%). The current tax charge for the year isdifferent from 30% of profit before tax for the reasons set out in the followingreconciliation: 2005 2004 £000's £000'sProfit on ordinary activities before tax 29,050 20,491 --------- --------Tax at 30% 8,715 6,147Factors affecting tax charge:UK goodwill amortization 1,724 2,260Non-taxable items and additional deductible UK items (489) (1,032)US goodwill amortization and losses (2,277) (2,402)Utilisation of tax losses brought forward (2,758) -US state taxes 1,283 418Disallowable expenditure 561 -Movement in other timing differences 686 374Capital allowance in excess of depreciation (55) 45Lower rates of tax on overseas profits (414) (119)Under provisions in prior years 544 224 --------- --------Current tax charge for the year 7,520 5,915 ========= ======== 5. Dividends 2005 2004 £000's £000's Interim paid 5.2p per share (2004: 5p) 4,587 4,397Final proposed 11.00p per share (2004: 10.00p) 9,767 8,798 ----------- --------- 14,354 13,195Employees' Share Ownership Trust dividend (10) (9) ----------- --------- 14,344 13,186 =========== ========= The final dividend of 11.00p (2004: 10.00p) will be paid on January 27 2006 toshareholders on the register on December 2 2005. It is expected that the shareswill be marked ex-dividend on November 30 2005. Holders of InternationalDepositary Receipts can receive their dividend on January 27 2006 bypresentation of coupon number 37 to Banque Internationale a Luxembourg or to oneof their agents. 6. Earnings per share 2005 2004 £000's £000's Basic earnings 24,786 16,014Goodwill amortization 5,747 6,357Exceptional goodwill impairment (note 3) - 1,177Exceptional loss on disposal of business (note 3) 972 - ------------ -----------Adjusted earnings before goodwill amortization and 31,505 23,548exceptional items ============ =========== Number Number 000's 000's Weighted average number of shares 88,336 87,910Shares held by the Employees' Share Ownership Trust (59) (59) ------------ ----------- 88,277 87,851Effect of dilutive share options 231 309 ------------ -----------Diluted weighted average number of shares 88,508 88,160 ============ =========== Pence per Pence per share share Basic earnings per share 28.08 18.22Effect of dilutive share options (0.07) (0.06) ------------ -----------Diluted earnings per share 28.01 18.16Effect of goodwill amortization 6.49 7.21Effect of exceptional goodwill impairment - 1.34Effect of loss on disposal of business 1.10 - ------------ -----------Adjusted diluted earnings per share before goodwill 35.60 26.71amortization and exceptional items ============ =========== The adjusted diluted earnings per share figure has been disclosed since thedirectors consider it to give a meaningful indication of the underlying tradingperformance. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ERM.LDMGT.L