28th Feb 2006 07:00
Embargoed until 7am28 February 2006Preliminary Results for the Year Ended 31 December 2005 STRONG RESULTS FROM A FOCUSED BUSINESSHeadline ResultsRevenue Up 21.3% to ‚£675.8m (‚£557.3m)Continuing operating profit* Up 27.3% to ‚£137.1m (‚£107.7m)Profit before tax** Up 7.2% to ‚£152.1m (‚£141.9m)EPS** Up 25.1% to 40.9p (32.7p)Dividend Up 25.0% to 15.0p (12.0p)- Underlying revenue up 4.1%- Margins steady at 19.6% (2004 - 19.1%)- Acquisitions performing in line with plan- ‚£105m invested in acquisitions in 2005- ‚£550m of capital returned via special dividend and share & bond buybacks- Net cash of ‚£246.8m at year end- New senior management team in place* Before non-recurring items and amortisation of intangible assets** Before amortisation of intangible assets, non-recurring items, other netfinancing cost other than interest and including discontinued operationsStatutory ResultsRevenue Up 21.3% to ‚£675.8m (‚£557.3m)EBIT Up 161.8% to ‚£241.1m (‚£92.1m)Profit before tax Up 129.7% to ‚£232.2m (‚£101.1m)EPS - continuing Up 15.3% to 67.8p (58.8p)David Levin, Chief Executive of United Business Media plc said:"In 2005 we have achieved strong financial results, and have made substantialprogress in reshaping UBM for the future. We achieved EPS growth of 25% andhave increased our dividend by 25%. In conjunction with these strong results,we have simplified UBM to focus on businesses that support buyers and sellers,through the distribution of market information (PR Newswire), and throughproviding media channels that support market activity (CMP's trade shows,print and online publishing).""We intend to accelerate the rate of acquisitions from the ‚£105m achieved in2005 towards the ‚£150m to ‚£250m level annually whilst maintaining our strictfinancial criteria for acquisitions. At the same time it is our intention tomove towards a prudent leveraged balance sheet over the next two years.Subject to our trading over these few years, we expect to be in a position toreturn in excess of ‚£300m of capital to shareholders during that period.""2006 has begun with a solid performance. PR Newswire is continuing to performwell. Our events business remains strong worldwide and forward bookings areahead of the prior year. Our performance in print is mixed, for example a goodperformance in France being offset by weaker revenue in the UK. Whilst ouronline revenues are growing rapidly (albeit from a small base) and we plan toaccelerate that growth through further investment, we will focus on improvingthe profitability of our online offerings."ContactsAnalystsCatherine Southgate Head of Investor RelationsEmail [email protected] telephone +44 20 7921 5031Mobile +44 771 046 8996 MediaPeter Bancroft Director of CommunicationsE-mail [email protected] telephone +44 20 7921 5961 Chris Barrie Citigate Dewe RogersonE-mail [email protected] telephone +44 20 7282 2943Mobile +44 796 872 72 89 Simon Rigby Citigate Dewe RogersonE-mail [email protected] telephone +44 20 7282 2847Mobile +44 777 178 4446 Interviews with David Levin, CEO, and Nigel Wilson, CFO, are available invideo, audio and text on http://www.unitedbusinessmedia.com andhttp://www.cantos.comUBM's results presentation will be webcast live from UBM's website from9.30am, 28th February 2006. To access the webcast please go towww.unitedbusinessmedia.com.A video recording of the webcast will also be accessible from UBM'swebsite. The presentation will also be available from UBM's website as apodcast.Notes to EditorsAbout United Business Media plcUnited Business Media is one of the world's leading global businessinformation companies. UBM brings together the world's buyers and sellers,helping their markets work effectively and efficiently through PR Newswire'snews distribution network and CMP's portfolio of events, print and on-linepublications.For more information, go to www.unitedbusinessmedia.comAbout PR Newswire - PR Newswire is the world's leading corporate newsdistribution service. Headquartered in New York, PR Newswire distributes newsglobally on behalf of over 40,000 customers, including many of the world's topcompanies and agencies, helping them take the latest news to the media, theinvestment community, and the general public. For more information, go towww.prnewswire.comAbout CMP - CMP's portfolio of more than 200 newspapers, magazines anddirectories, 200 websites and 300 events brings together buyers and sellersfrom a range of global sectors including technology, healthcare, the builtenvironment, lifestyle, fashion and ingredients. Our customers come to us fordirect access to their key audiences: business decision-makers.CMP operates globally through four divisions:- CMP Media - the USA's leading high tech B2B media company and provider ofhealthcare education and information. For more information, go towww.cmpmedia.com- CMP Information: the European magazine and events business, based in the UK.For more information, go to www.cmpinformation.com- CMP Asia: a leader in exhibitions and publications in key markets in Asia.For more information, go to www.cmpasia.com- CMPMedica: pharmaceutical marketing solutions including medical informationand trade press in Europe and Asia. For more information, go towww.cmpmedica.comCMP's key brands include:- InformationWeek magazine: US circulation of 500,000 IT professionalswww.informationweek.com- Vidal Pharmaceutical Dictionary: the top-selling medical dictionary inEurope- September Hong Kong Jewellery & Watch Fair: attracts more than38,000 visitors each year www.jewellerynetasia.com/exhibitions- LightReading.com: the world's largest online telecoms publication, with amonthly audience of more than 400,000 www.lightreading.comDisclaimerThis press release includes statements which are not historical facts and areconsidered "forward-looking" within the meaning of Section 27 of theSecurities Act of 1933, as amended. These forward-looking statements reflectUBM's current views about future events, business and growth strategy andfinancial performance. These forward-looking statements are identified bytheir use of terms and phrases such as "believe," "expect," "plan,""anticipate," "on target" and similar expressions identifying forward-lookingstatements. Investors should not rely on forward-looking statements becausethey are subject to a variety of risks, uncertainties and other factors thatcould cause actual results to differ materially from UBM's expectations. UBMexpressly does not undertake any duty to update forward-looking statements.Management does not attempt to update forecasts unless conditions materiallychange.PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005CONTENTS1. Chief Executive Review2. Summary Group Income Statement3. Summary of preliminary financial results for 20054. Divisional commentary5. Dividend6. Cash and cash conversion7. Investments8. Pensions9. Tax10. Interest and financing11. Return of capital in 200512. Non-recurring items13. IFRSAppendix 1 - Segmental analysis1. CHIEF EXECUTIVE REVIEWResults summary"In 2005 we have achieved strong financial results, and have made substantialprogress in reshaping UBM for the future.In 2005 revenues from our continuing operations grew by 21.3% to ‚£675.8m (2004- ‚£557.3m), with operating profit from continuing operations rising by 27.3%to ‚£137.1m (2004 - ‚£107.7m). Profit before tax was ‚£152.1m excluding profitson disposals, and ‚£501.4m including disposal profits. Margins were steady at19.6% (2004 - 19.1%). We ended the year with almost ‚£250m of net cash on theback of solid trading, coupled with strong balance sheet and cash flowmanagement. Earnings per share rose by 25.1% to 40.9p from 32.7p. The Board isproposing a final dividend of 11.0p, taking the total dividend for 2005 to15.0p, an increase of 25% from 12.0p in 2004.StrategyIn the course of 2005 we simplified UBM to focus on two principal businesses -PR Newswire, our global news distribution business, and CMP, our internationalevents, print and online publishing business. In achieving this, we disposedof assets for a total of nearly ‚£750m, including NOP for ‚£383m and our 35%stake in five for ‚£248m. We demonstrated our continuing commitment toshareholder value and returned ‚£550m of capital, including a special dividendof ‚£298m.UBM is well placed to capitalise on the new audience dynamics as the audiencefor media shifts from using horizontal media to vertical media. UBM is nowfocused on businesses that support buyers and sellers, through thedistribution of market information (PR Newswire), and through providing mediachannels within many specific vertical markets that support our customersactivity (CMP's trade shows, print and online publishing). We will grow thesebusinesses organically and by making `bolt-on' acquisitions, with a focus onB2B markets, on faster growing economies, on vertical markets where we alreadyhave a strong position, and in markets where we can leverage a leadingposition with an audiences in one medium into another, for example from printinto exhibitions or online.We intend to keep investing and acquiring to develop our business. We intendto accelerate the rate of acquisitions from the ‚£105m achieved in 2005 towardsthe ‚£150m to ‚£250m level annually whilst maintaining our strict financialcriteria. At the same time it is our intention to move towards a prudentleveraged balance sheet over the next two years. In so doing, and of coursesubject to our trading over these few years, we expect to be in a position toreturn in excess of ‚£300m to shareholders during that period.Business environmentOur customers increasingly look to reach their target audiences within a givenvertical market across multiple media, with online media taking a growingproportion of advertising spend. We are seeking to manage this structuralshift while recognising that there will continue to be very significant demandfor print in many markets.We look to meet our customers' needs to access their audiences by using ourthree main media forms (print, events, online), offering them a rich andintegrated mix of products each with distinct benefits and attributes. Wecontinue to see a critical role for print as a part of the media mix and wehave acquired and launched new titles, including the acquisition of LeQuotidien du Medecin (a daily newspaper for doctors in France) and the launchof Global Services (a monthly magazine for the global outsourcing andoffshoring industry). The underlying revenue of our print titles varied bygeography with aggregate underlying revenues falling in the US, flat in Europeand growing in Asia, resulting in a decline of 2% overall. At an aggregatelevel we did, however reduce our exposure to print by selling or closingtitles where we felt UBM was not able to develop or grow the franchise(including the disposal of Exchange & Mart). We will continue to review ourportfolio of all products (and indeed all media) and will maintain thediscipline of selling where we believe our ability to add value is unlikely.We are increasingly focused on further development of our portfolio of eventsand online assets alongside print. In doing so, we seek to drive profitablerevenue growth and to transition the business to revenue streams that aresustainable in the digital era that we foresee coming in the longer term.In the course of 2005 and early 2006, we acquired a range of new events,including, among others, Informex (chemical ingredients), Black Hat (ITsecurity), Bar Show, the Japan Jewellery Fair, and RFID World. During 2005 wealso acquired successful, innovative online media businesses through theacquisitions of Light Reading and TechOnLine.The need to do business face-to-face at exhibition and trade show eventsremains as strong as ever. Paradoxically in our increasingly digital world,the face-to-face meeting is becoming a more and more important part of doingbusiness. Our events business showed healthy growth in 2005 with totalrevenues rising by 21% to ‚£161.5m (and an underlying growth rate of around10%). The business will continue to be a major focus for organic developmentand acquisitions in the future.Revenues across UBM's online businesses grew to ‚£42.7m in 2005 with anunderlying growth rate of 24.4%. The online media business environmentcontinues to be highly dynamic as the new generation of broadband digitaltechnology and content media emerge and are adopted more widely. The currentimbalance of advertising spend between online and more traditional mediarelative to their respective audiences suggests there will be a substantialdemand for online advertising over the coming years. However, given theunproven profitability of many such business models, particularly incomparison to their print equivalents, we will continue to invest carefully inthe development of our online products and their associated business models.We will look particularly towards achieving more comprehensive integration ofour offerings across multiple media.Investments in acquisitions & organic growthIn 2005 we invested ‚£105m in `bolt-on' acquisitions of 11 businesses thatcomplemented existing market positions and enhanced our businesses' growthopportunities. We also continued to invest to support organic growthinitiatives. We remain committed to our record of delivering shareholder valueby effective financial and operational management of our owned businesses andour new acquisitions. Integration of acquisitions made in both 2004 and 2005has progressed well and the performance of these businesses has met ourexpectations.People & managementSince my arrival in 2005 we appointed Steve Weitzner as CEO of CMP Media andearly in 2006 Gary Hughes joined us as CEO of CMP Information. Charles Gregsonrelocated to New York to focus exclusively on the role as CEO of PR Newswire.Henry Elkington was also appointed Group Corporate Development Director.Outlook2006 has begun with a solid performance. PR Newswire is continuing to performwell. Our events business remains strong worldwide and forward bookings areahead of the prior year. Our performance in print is mixed, for example a goodperformance in France being offset by weaker revenue in the UK. Whilst ouronline revenues are growing rapidly (albeit from a small base) and we plan toaccelerate that growth through further investment, we will focus on improvingprofitability of our on line offerings.2. SUMMARY GROUP INCOME STATEMENTThe income statement set out below re-presents the group's full incomestatement (which accompanies this summary) in order to show more clearly theresults from operations. Year Ended 31 December 2005 2004 ‚£m ‚£m % Revenue 675.8 557.3 21.3 Operating profit* - continuing 137.1 107.7 27.3Operating profit* - discontinued 4.8 25.2Operating profit* 141.9 132.9 6.8 Net interest income 12.7 12.4 2.4Other financing costs - pension (2.5) (3.4)schemes (26.5) Profit before tax** 152.1 141.9 7.2 Net financing cost -other than (19.1) -interestAmortisation of intangible assets (11.4) (3.1)Non-recurring items 379.8 7.2 Profit/(loss) before tax 501.4 146.0 243.4Taxation (24.6) (28.6) (14.0)Share of taxation of JV's and 1.9 (0.8)associatesTaxation relating to (1.2) 121.0non-recurring items - Profit after tax 477.5 237.6 101.0Minority interest (1.9) (1.8) 5.6Retained profit for the period 475.6 235.8 101.7 Dividends paid in period 337.8 31.7 EPS ** (pence) 40.9 32.7 25.1 Basic EPS (pence) 157.1 70.4 * Before non-recurring items and amortisation of intangible assets** Before amortisation of intangible assets, non-recurring items, netfinancing cost other than interest and including discontinued operations3. SUMMARY OF PRELIMINARY FINANCIAL RESULTS FOR 2005Consistent with the Interim, the results presented below reflect continuingbusinesses under the new management structure. Revenue Operating Profit* Year ended 31 December Year ended 31 December 2005 2004 Change Underlying 2005 2004 Change Underlying ‚£m ‚£m (%) #(%) ‚£m ‚£m (%) #(%)PR Newswire 104.1 94.8 9.8 8.8 29.2 23.9 22.2 20.7CMP Asia 61.9 51.4 20.4 15.1 17.5 14.0 25.0 10.9CMP Media 225.9 220.3 2.5 0.0 24.9 27.1 (8.1) (16.2)CMPi 177.0 161.0 9.9 4.0 43.0 38.5 11.7 (4.0)CMPMedica 106.9 29.8 - 2.8 19.4 3.4 - 26.7Corporate+ - - - - 3.1 0.8 - -Total 675.8 557.3 21.3 4.1 137.1 107.7 27.3 3.2 # Underlying: adjusted for the effects of acquisitions, discontinuedoperations, biennial events and foreign exchange* before amortisation of intangible assets, non-recurring items+Corporate operations comprises net central operating costs, together withthose equity accounted investments which do not form part of one of thegroup's operating divisions.Underlying revenue was up 4.1% - after adjusting for the effects ofacquisitions, discontinued operations, biennials and foreign exchange. Grouprevenue increased by ‚£34.9m for acquisitions made in 2005 and operating profitincreased by ‚£5.9m. The net effect of biennial events was to increase revenueby ‚£4.8m and operating profit by ‚£2.9m in 2005.The movement in the US dollar and Euro has a direct translation impact - withapproximately two thirds of UBM revenue reported locally in US dollars orEuros, group revenue was increased by ‚£4.5m as a result of foreign exchange.The average rate of $:‚£ exchange for 2005 was $1.81(2004: $1.83); togetherwith the effects of other currency movements this increased operating profitby ‚£0.9m. A 1 cent movement in the US dollar against sterling is approximatelyequivalent to a move in profit of around ‚£300,000 to ‚£400,000 over the fullyear.4. DIVISIONAL COMMENTARYPR NEWSWIREPR Newswire delivered a strong performance in all main areas of operation.Underlying revenue was up 8.8% and underlying operating profit was up 20.7%,with the overall operating margin up from 25.2% to 28.0%. Increased traffic,improved mix and growth of revenue from non-wire products, particularlyMEDIAtlas and MultiVu, contributed to the overall revenue increase. Businessesin Europe and Asia achieved 5.3% revenue growth for the full year, with theEuropean operating margin up to 19.2% and a total Rest of the World operatingprofit of ‚£1.9m (‚£0.2m profit in 2004).CMP ASIACMP Asia delivered a strong performance. Underlying revenue was up 15.1%, withunderlying operating profits up 10.9%. Operating margins were 28.3% (27.2%)and the steady programme of new product launches continued - including moregeographic extensions into mainland China. In Japan, KSS continues to performwell, the Japan Jewellery Fair was acquired and further launches are planned.We plan to have our first exhibition in India in 2006.CMP MEDIAIn dollar terms, technology revenues of $282.8m excluding acquisitions weredown 1.8%, reflecting the continuation of recent trends across the differentmedia platforms - with print declining and events and online growing. During2005, we acquired two events businesses - Black Hat and ICMI and in January2006 we acquired two further events organisers, MediaLive and Shorecliff. Theacquisitions of Light Reading and TechOnLine, will assist the development ofour online businesses as well as the evaluation of alternative online businessmodels.On a proforma basis, the 2005 results reflect that the mix of revenue haschanged such that events now account for 34% and online for 16% of CMP Media'srevenue (compared to 23% and 14% in 2004).Healthcare revenue growth was re-established in the second half as the medicaleducation businesses' customers have now restructured themselves to address USregulatory concerns. Revenue increased to $67.1m for the full year, anincrease of 5.8%.Entertainment revenues were stable compared to 2004 and Princeton revenue wasup 4.3%.The decline in operating profits across CMP Media largely reflects thepreviously announced increased level of investment in new product development- in particular in online and the relaunch of certain titles includingInformation Week.CMP INFORMATIONWith revenue of ‚£177m and operating profit of ‚£43m, CMPi is our largest profitcontributor and has strong results from its events business. CMPi's resultsinclude the operations of the non motoring titles previously reported by UAP.Underlying revenue of the combined entity was up 4.0% while underlyingoperating profit was down 4.0%. The decline in profits from underlying tradingis due to investment in new product development. We have continued to makeacquisitions and disposals and rationalise the portfolio. The 2005acquisitions of ABI, The Publican, Theme & Bar and Informex are performing inline with expectations.CMPMEDICACMPMedica was acquired on 30 July 2004, with the acquisition of additionalMediMedia (France Medical Press and Services) assets completed on 31 March2005. The business has been trading in line with its acquisition case. Itsperformance reflects a strong seasonal weighting towards the first half of theyear. The drug information products have performed well, particularly inFrance, but there was some softness in the Asia-Pacific trade press markets.In 2006 we intend to make additional investment in DIS and CME products,strengthen our events portfolio and expand geographically.CORPORATECorporate operations comprises net central operating costs, together withthose equity accounted investments which do not form part of one of thegroup's operating divisions. Our share of operating profit from five prior todisposal was a ‚£1.9m pre tax profit compared to a loss of ‚£(1.8) million in H12004.5. DIVIDENDIn line with the progressive dividend policy, the Board is recommending afinal dividend of 11.0 pence (8.37 pence), bringing the total for the year to15.0 pence (12.0 pence), an increase of 25 per cent. This increase reflectsthe strong performance achieved in 2005 and the directors' confidence in thelong-term outlook for the business.The final dividend on the ordinary shares will be paid on 25 May toshareholders on the register on 28 April.The dividend on the 4,830,923 outstanding B shares will be 9.0 pence pershare. This dividend will be paid on 24 April to shareholders on the registeron 31 March.6. CASH AND CASH CONVERSIONOur balance sheet remains strong. Net cash at the end of the year was ‚£246.8mafter expenditure of ‚£115.6m on acquisitions during the year, receipts of‚£737.7m from disposals and a return of capital of ‚£550m to investors by meansof a special dividend and convertible and bond buybacks. Continuing operatingcash conversion was 103% of operating profit.7. INVESTMENTSDuring the year UBM disposed of its investment in five, SIS and SDN for ‚£302m,Under IFRS, these investments were equity accounted for the period untildisposal.8. PENSIONSAt 31 December 2005 the aggregate deficit under IAS 19 had decreasedsignificantly to ‚£52.3m from ‚£96.0m. This reflects the additionalcontributions of ‚£17.2m made by the group and strong asset returns offset by achange in mortality assumptions increasing expected life.The IAS 19 interest charge was ‚£2.5m (2004: ‚£3.4m).9. TAXThe UK GAAP effective tax rate in 2005 was 20.0% (2004: 21.8%). The effectivetax rate under IFRS was 17.1% (2004: 20.9%). Overall UBM'S tax creditor is‚£219.4m (2004: ‚£208.0m). No payments were made in respect of this creditor in2005 and we do not expect the tax cash outflow in respect of this creditor in2006 to exceed ‚£20.0m.In 2005 the total tax payments, net of refunds totalled ‚£17.4m.UBM are in dispute with HMRC with regards to a technical matter arising inrelation to the Sale of Regional Newspapers in 1998. It is expected that theissue will be heard by the Special Commissioners later in 2006, although nodate has been set. The tax in dispute is estimated at ‚£80m. We remainconfident that no tax will be ultimately be payable and have obtainedextensive and strong support for our technical position, both at the time ofthe transaction and subsequently. Due to the uncertainty of litigation, wecontinue to make a prudent assessment in the group accounts for this and othermatters. We do not expect the matter to be finally resolved until 2007 at theearliest.10. INTEREST AND FINANCINGNet interest income for the year was ‚£12.7m (‚£12.4m).Interest income of ‚£28.2m included ‚£21.6m of return on surplus cash balancesand investments and ‚£6.6m of interest on loans to five prior to disposal.Interest expense of ‚£15.5m included the cost of UBM's fixed rate borrowingsand drawings from the syndicated bank facility.Net financing cost other than interest of ‚£19.1m includes ‚£11.2m relating tothe fair value adjustment for the equity option embedded in the convertiblebond, ‚£4.8m accretion of the debt component of the convertible bond, ‚£11.5mpremium on the repurchase of bonds, net of an exchange gain of ‚£8.4m.11. RETURN OF CAPITAL IN 2005During 2005 a total of ‚£550m of capital was returned or repaid to shareholdersand bondholders by way of a special dividend, share and bond buybacks.In June a special dividend (with share consolidation) of ‚£298m was paidrepresenting 18% of share capital at that point. A buyback of a further ‚£15mof ordinary shares was undertaken during the summer.At the start of 2005 UBM had a $400m convertible bond containing options toconvert to 47.8m UBM shares before December 2006 at a dollar share price of$8.36. Between August and December, we bought back and cancelled $234.6m (59%)of the bond for an aggregate consideration of $285.4m. This has reduced thenumber of shares on conversion by 28.0m to 19.8m.UBM also tendered for the remaining $185m of the $250m 7.75% Yankee bond notalready owned. This successful tender resulted in the cancellation of all but$5.7m of these bonds, reducing UBM's interest expense on an ongoing basis.12. NON-RECURRING ITEMSThe Summary Group Income Statement shown on page 3 shows a non-recurringcredit of ‚£379.8m. This comprises: ‚£m Profit on disposal of businesses and equity accounted investments 417.0Restructuring and business reorganisation costs (37.2) 379.8During 2005, the group sold its market research business NOP World, and theExchange & Mart and Auto Exchange titles. We also sold our equity investmentsin five, SDN and SIS. Total profits on disposal amounted to ‚£417.0m aftercosts.As reported in the December trading update, we have implemented a number ofrestructuring and reorganisation projects across several of our businesses.The objectives of these projects are to simplify the group structure followingthe disposals referred to above, to achieve greater geographical alignment ofour publishing divisions and to achieve greater customer and product focuswhilst delivering lower operating costs. The charge also includes the costs ofintegrating businesses acquired during the year. The total cost of theprojects is ‚£37.2m, of which ‚£7.2m has been spent in 2005. With the exceptionof amounts relating to vacant property, which will be incurred over theremainder of the lease terms, we anticipate spending the balance of the chargein 2006.The total charge for restructuring and reorganisation may be analysed as: ‚£m Vacant property costs 8.8Redundancy 8.6Re-engineering of business processes 10.3Restructuring and business reorganisation costs 7.8Acquisition integration 1.7 37.213. INTERNATIONAL FINANCIAL REPORTING STANDARDS "IFRS"UK GAAP TO IFRS RECONCILIATION OF 2005 YEAR END RESULTSThe following table reconciles the adjusted group operating profit, PBT andEPS between the reported IFRS results and the `UK GAAP' numbers consistentwith UBM's historical reporting: Continuing Operating PBT* EPS* operating profit* profit* ‚£m ‚£m ‚£m Pence `UK GAAP' 132.7 138.5 146.3 38.0 Additional charge for share-based payments (2.3) (2.6) (2.6) (1.0)Movement in holiday pay accrual 0.3 0.3 0.3 0.1Accounting for equity inv pre tax 6.4 6.4 6.4 2.2Share of tax for JVs and associates - - - 1.0Adjustment to WIP overhead capitalisation - (0.7) (0.7) (0.2)IAS 32 & 39 adjustments - - 2.4 0.8IFRS 137.1 141.9 152.1 40.9APPENDIX 1Segmental analysisThe following table sets out the segmental analysis for turnover and operatingprofit for the half year. Note: The table below is after adjusting for thetransfers of UAP, UEM and CMP Princeton. Revenue Operating profit Margins 2005 2004 2005 2004 2005 2004 ‚£m ‚£m ‚£m ‚£m % %ContinuingoperationsCMP Media 225.9 220.3 24.9 27.1 11.0 12.3CMPMedica 106.9 29.8 19.4 3.4 18.1 11.4CMP Asia 61.9 51.4 17.5 14.0 28.3 27.2CMP Information 177.0 161.0 43.0 38.5 24.3 23.9News Distribution 104.1 94.8 29.2 23.9 28.0 25.2Corporate operations - - 3.1 0.8 675.8 557.3 137.1 107.7 19.6* 19.1DiscontinuedoperationsMarket Research 76.8 222.4 4.4 20.3 5.7 9.1UAP Motoring Titles 23.0 35.8 0.4 4.9 1.7 13.7Total 775.6 815.5 141.9 132.9 18.2 16.3* 2005 margin excludes equity accounted investments disposed of Consolidated income statement for the year ended 31 December 2005 As Before Before Restated Non-recurring Non-recurring Non-recurring Non-recurring items items Total items items Total 2005 2005 2005 2004 2004 2004Notes ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Continuing operations 3 Revenue 675.8 - 675.8 557.3 - 557.3 Other operating income 11.9 - 11.9 9.1 - 9.1 Operating expenses (575.8) - (575.8) (473.8) - (473.8) 4 Non-recurring reorganisation and - (37.2) (37.2) - - - restructuring costs Share of results from associates and 4.2 8.5 12.7 6.0 - 6.0 joint ventures (after tax) Income from investments 3.0 - 3.0 5.2 - 5.2 Group operating profit 119.1 (28.7) 90.4 103.8 - 103.8 Non-recurring items 4 Profit on disposal of equity accounted - 150.7 150.7 - - - investments Amounts written off investments - - - - (11.7) (11.7) - 150.7 150.7 - (11.7) (11.7) Earnings before interest and taxes 119.1 122.0 241.1 103.8 (11.7) 92.1 ("EBIT") Finance income/(costs) 5 Interest income 28.2 - 28.2 26.5 - 26.5 5 Interest cost (15.5) - (15.5) (14.1) - (14.1) 5 Financing income - other than interest 8.4 - 8.4 5 Financing cost - other than interest (13.8) (13.7) (27.5) - - - 5 Financing cost - pension schemes (2.5) - (2.5) (3.4) - (3.4) Profit before tax 123.9 108.3 232.2 112.8 (11.7) 101.1 6 Taxation (23.6) (1.2) (24.8) (23.1) - (23.1) 4 Non-recurring taxation credit - - - - 121.0 121.0 Profit for the year from continuing 100.3 107.1 207.4 89.7 109.3 199.0 operations Discontinued operations 14 Profit for the year from discontinued - 270.1 270.1 19.7 18.9 38.6 operations (after tax) Profit for the year 100.3 377.2 477.5 109.4 128.2 237.6 Attributable to: Equity shareholders - ordinary 475.2 235.4 Equity shareholders - B shares 0.4 0.4 Minority interests 1.9 1.8 477.5 237.6 Earnings per share - from continuing operations 7 - basic 67.8 p 58.8 p 7 - diluted 64.7 p 51.8 p Earnings per share - continuing and discontinued operations 7 - basic 157.1 p 70.4 p 7 - diluted 142.8 p 61.8 p Adjusted group operating 141.9 132.9 profit* Amortisation of intangible (11.4) (3.1) assets Non-recurring reorganisation (37.2) - and restructuring costs Share of taxation on profit in joint ventures 1.9 (0.8) and associates Operating profit from (4.8) (25.2) discontinued operations (before tax) Group operating profit from 90.4 103.8 continuing operations Dividends 8 - Interim dividend 11.0 12.1 8 - Special dividend 298.3 - 8 - Proposed year end dividend (equity 30.6 28.1 shareholders - ordinary) *Adjusted group operating profit represents group operating profit excludingnon-recurring items, amortisation of intangible assets, and includingoperating profit from discontinued operations.Consolidated balance sheetat 31 December 2005 As restated 31 December 31 December 2005 2004Notes ‚£m ‚£m Assets Non-current assets Goodwill 590.6 583.8 Intangible assets 79.9 50.4 Property, plant and equipment 36.7 45.0 Investments accounted for using the equity 22.2 54.2 method Other investments 5.0 47.9 734.4 781.3 Current assets Inventories 9.4 14.9 Trade and other receivables 172.5 306.1 Derivative financial assets 2.9 - 9 Cash and cash equivalents 489.4 339.4 674.2 660.4 Assets classified as held for sale - 5.1 Total assets 1,408.6 1,446.8 Liabilities Current liabilities Borrowings 145.6 142.8 Convertible bond 93.7 - Trade and other payables 318.8 295.4 Derivative financial liabilities 31.5 - Provisions 38.8 12.7 Current tax liabilities 219.4 208.0 847.8 658.9 Non-current liabilities Borrowings 3.3 96.1 Convertible bond - 208.7 Retirement benefit obligation 52.3 96.0 Trade and other payables 5.6 4.6 Provisions 31.2 35.9 Deferred tax liabilities 24.0 16.8 116.4 458.1 Total liabilities 964.2 1,117.0 Shareholders' equity 10 Share capital 84.9 84.5 11 Share premium 327.7 310.8 12 Other reserves 179.0 189.4 12 Retained earnings (149.9) (257.5) Total shareholders' equity 441.7 327.2 12 Minority interest in equity 2.7 2.6 Total equity 444.4 329.8 Total equity and liabilities 1,408.6 1,446.8These financial statements were approved by a duly appointed and authorisedcommittee of the Board of Directors on 28 February 2006 and were signed on itsbehalf by:Geoff Unwin DirectorDavid Levin DirectorConsolidated cash flow statementfor the year ended 31 December 2005 As restated 2005 2004Notes ‚£m ‚£m Cash flows from operating activities Reconciliation of profit to operating cash flows Profit for the period 477.5 237.6 Add back: Taxation 25.8 (92.3) Depreciation 10.4 12.9 Amortisation 11.4 3.1 Interest income (28.2) (26.5) Interest expense 15.5 14.1 Net financing costs - pension schemes 2.5 3.4 Net financing costs - other than interest 19.1 - Share in profits from associates and joint (13.2) (5.0) ventures Income from fixed asset investments (3.0) (5.2) Non-recurring items (379.8) (7.2) 138.0 134.9 Payments against provisions (19.9) (16.1) Additional pension contributions (17.2) (7.0) Other non-cash items 4.1 (0.6) (Increase)/decrease in inventories (6.2) 2.4 (Increase)/decrease in trade and other (17.1) (3.7) receivables Increase/(decrease) in trade and other 18.4 (2.4) payables Cash generated from operations 100.1 107.5 Interest received 19.9 27.4 Interest paid (16.4) (19.6) Taxation paid (17.4) (10.0) Dividend received from joint ventures and associates 2.8 4.8 Income from investments 3.0 4.8 Net cash flows from operating activities 92.0 114.9 Cash flows from investing activities Acquisition of interests in subsidiaries, net of cash acquired (115.6) (190.2) Sale of discontinued operations 437.4 - Purchase of property and equipment (9.7) (8.5) Proceeds on sale of property and equipment 6.3 1.9 Sale of interests in associated companies and joint ventures 300.3 (1.7) Proceeds from sale of investments 42.8 67.1 Net cash flows from investing activities 661.5 (131.4) Cash flows from financing activities Proceeds from issuance of ordinary share 18.2 1.5 capital Return of capital to shareholders (including (16.8) (1.9) costs) Dividend paid to shareholders (337.8) (31.2) Dividend paid to minority interests (1.9) - Investment in own shares - ESOP (7.4) (4.1) Decrease in borrowings - (98.9) Repurchase of bonds (273.2) - Net cash flows from financing activities (618.9) (134.6) Net decrease in cash and cash equivalents 134.6 (151.1) Net foreign exchange difference 11.4 (8.0) 9 Cash and cash equivalents at 1 January 336.6 495.7 9 Cash and cash equivalents at 31 December 482.6 336.6Consolidated statement of group total recognised income and expensefor the year ended 31 December 2005 2005 2004 ‚£m ‚£mProfit for the financial year 477.5 237.6 Currency translation differences on foreignoperations:Group (4.7) 2.6Joint ventures 0.8 (0.5)Minority interests 0.3 (0.2)Actuarial gain/(loss) recognised in the pension 25.0 (14.9)schemesOther recognised losses for the year 21.4 (13.0) Total recognised income 498.9 224.6 Attributable to:Equity shareholders 496.7 223.0Minority interests 2.2 1.6 498.9 224.6 Effects of changes in accounting policyEffect of adopting financial instruments standards (41.0) -IAS 32 & 39 (refer to note 16)Equity shareholders (41.0) -Minority shareholders - - (41.0) - Notes to the consolidated financial statements at 31 December 20051. General informationThe figures and financial information for the year ended 31December 2005 do not constitute the statutory financial statements for thatyear. Those financial statements have not yet been delivered to the Registrar,but include the auditors' report which was unqualified and did not contain astatement under Section 237 (2) or (3) of the Companies Act 1985. The figuresand financial information for the year ended 31 December 2004 included in thepreliminary announcement do not constitute the statutory financial statementsfor that year. Those financial statements have been delivered to the Registrarand included the auditors' report which was unqualified and did not contain astatement under Section 237 (2) or (3) of the Companies Act 1985.This preliminary announcement was approved by a duly appointed andauthorised committee of the Board of Directors on 28 February 2006.2. Significant accounting policiesBasis of preparationThe financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as adopted in the European Union and asapplied in accordance with the provisions of the Companies Act 1985. Thedisclosures required by IFRS 1 concerning the transition from UK GAAP to IFRSare given in note 16.The consolidated financial statements have been prepared on a historical costbasis, except for derivative financial instruments that have been measured atfair value.Changes in accounting policiesIn 2005 the Group has adopted IFRS for the first time. Previously the Groupreported under UK generally accepted accounting principles ("UK GAAP").The Group has applied IFRS 1 First-time Adoption of International FinancialReporting and Accounting Standards to provide a starting point for reportingunder IFRS. The date of transition to IFRS is 1 January 2004 and allinformation in these financial statements has been restated to reflect theGroup's adoption of IFRS.The adoption of IFRS has resulted in the following principal changes to theGroup's accounting policies:IFRS 2 `Share-based Payment'IFRS 2 `Share-based Payment' requires an expense to be recognised where theGroup buys goods or services in exchange for shares or rights over shares, orin exchange for other assets equivalent in value to a given number of sharesor rights over shares. The main impact of IFRS 2 on the Group is the expensingof employees' and directors' share options and other share-based incentives byusing an option-pricing model to calculate the fair value at date of grant.IFRS 3 `Business Combinations', IAS 36 `Impairment of Assets' and IAS 38`Intangible Assets'The group has adopted the exemption in IFRS 1 to apply IFRS 3 only toacquisitions after 31 March 2004.On acquisition, the Group measures the identifiable assets and liabilities ofacquired entities at their fair values at the acquisition date. This includesintangible assets which would not be capitalised had they been internallydeveloped. Under IFRS, more intangible assets will be recognised separatelyfrom goodwill.The adoption of IFRS has resulted in the Group ceasing goodwill amortisationfrom 1 January 2004 and instead testing for impairment at the level of thecash generating unit or group of cash generating units to which goodwill hasbeen allocated, annually and whenever there are indications of impairment.The useful lives of intangible assets other than goodwill are assessed at theindividual asset level. Where an intangible asset has a finite life, it isamortised over its useful life. Amortisation periods and methods forintangible assets with finite useful lives are reviewed annually.The Group has reassessed the useful lives of its intangible assets inaccordance with the provisions of IAS 38. No adjustment resulted from thisreassessment.IFRS 5 `Non-current Assets Held for Sale and Discontinued Operations'IFRS 5 requires an item to be classified as held for sale if its carryingvalue will be recovered principally through a sale transaction rather thancontinuing use. In addition, a component of an entity is classified asdiscontinued when the criteria to be classified as held for sale have been metor it has been disposed of and it represents a separate major line of businessor geographical area of operations, is part of a single co-ordinated majorline of business or geographical area of operations or is a subsidiaryacquired exclusively with a view to resale.The adoption of IFRS 5 has resulted in the profit from discontinued operationsbeing disclosed as a single line on the face of the income statementcomprising the profit after tax for the discontinued operations prior todisposal along with the related profit on disposal. The comparative period hasbeen restated accordingly.Notes to the consolidated financial statements at 31 December 20052. Significant accounting policies (continued)The group has adopted IFRS 5 from 1 January 2004. This resulted in ‚£5.1million of tangible assets reclassified as held for sale as at 31 December2004.IAS 18 `Revenue' and IAS 11 `Construction Contracts'Under IAS 18, the recognition of revenue on service contracts should followthe principles in IAS 11.Under IAS 11, the stage of completion method must be adopted for therecognition of revenue and expenditure on contracts where as under UK GAAPrecognition on a completed project basis is acceptable.IAS 12 `Income Taxes'Under IFRS, the basis for recording deferred tax moves to a balance sheetliability method. Under IAS 12, a deferred tax liability is recognised on thedifference between the balance sheet amount of intangible assets acquired aspart of the Group's acquisitions and the tax base of the intangible assets.IAS 32 Financial Instruments: Disclosure and Presentation' and IAS 39`Financial Instruments: Recognition and Measurement'IAS 39 `Financial Instruments: Recognition and Measurement' requires thatassets and liabilities are all classified into one of five categories, whichdictates the accounting treatment. Items are measured either at fair value, orat amortised cost using the effective interest rate method.The group has adopted the exemption to implement IAS 32 and 39 from 1 January2005, and has not restated its 2004 results.The main impact of IAS 32 and IAS 39 on the Group is to record the movement infair values through the income statement for all derivatives. The embeddedderivatives within the credit link notes and the convertible bond are bothrequired to be at fair value on transition.IAS 39 specifies three types of hedging relationships: fair value hedges, cashflow hedges, and hedges of a net investment in a foreign operation. IAS 39requires all hedges to be formally documented on transition, explaining thehedging relationship and the objectives and strategy for undertaking thehedge. The hedge must be expected to be highly effective, and effectivenessmust be able to be reliably measured. The Group is applying hedge accountingfor its hedges that qualify under IAS 39 on transition. For qualifying cashflow hedges and hedges of a net investment, the change in the fair value ofthe hedging instrument is deferred in equity to the extent the hedge iseffective. Accumulated fair value changes from qualifying hedges are releasedfrom equity to the profit and loss account in the period when the hedged cashflow effects the profit and loss account (for cash flow hedges) or on disposalof the foreign operation (for hedges of net investments). For qualifying fairvalue hedges the carrying value of recognised assets and liabilities that arehedged items are otherwise carried at cost and adjusted to record changes infair values attributable to the risks that are being hedged. All gains orlosses on the hedging instrument are recognised immediately in the profit andloss account.IAS 32 `Financial Instruments: Disclosure and Presentation' requiresconvertible bonds denominated in a foreign currency to be split into the debtcomponent and the component representing the embedded derivatives in the bond.IAS 39 requires the debt component to be measured at amortised cost, and theembedded derivatives to be measured at fair value with movements reported inthe income statement. The Group's convertible bond is denominated in USDollars, so must be split into its relevant debt and derivative components andmeasured accordingly.The impact of accounting for the convertible bond in this way, in accordancewith current IFRS interpretation, from 1 January 2005 compared to UK GAAP isto:- increase finance cost - other than interest in the income statement;- reduce the debt component of the bonds; and- introduce volatility to the income statement through the change in fairvalue of the embedded derivatives.The Group has adopted the amended versions of IAS 17 `Leases' and IAS 19`Employee Benefits', revised in 2004. The Group has decided not to adopt IFRS7 `Financial Instruments: Disclosure' early.At the date of authorisation of these financial statements, the followingstandards and interpretations, which have not been applied in these financialstatements but would be relevant for the group, were in issue but were not yeteffective. The date by which application is required is given in brackets.IFRS 7 Financial Instruments: Disclosures, and the related amendment to IAS 1on capital disclosures (1 January 2006)IFRIC 4 Determining whether an Arrangement contains a Lease (1 January 2006)The directors anticipate that the adoption of these standards andinterpretations in future periods will have no material impact on thefinancial statements of the group except for additional disclosures on capitaland financial instruments when the relevant standards come into effect for theperiods commencing on or after 1 January 2006.Notes to the consolidated financial statements at 31 December 20053. Segment informationBusiness segmentsAt 31 December 2005, the group is organised into five main business segments -CMP Media, CMPMedica, CMP Asia, CMP Information, and News Distribution. Thesesegments are the basis on which the group reports its primary segmentinformation.CMP Media's, CMPMedica's, CMP Asia's and CMP Information's main activities arethe production of magazines, trade press, directories, events and websites.The News Distribution segment operates in the distribution, targeting andevaluation of company information.The market research business is included in discontinued operations as it wasdisposed of on 1 June 2005. The main activities of this segment weresyndicated and custom market research. The motoring titles within CMPInformation are also included in discontinued operations, as they weredisposed of on 16 September 2005.The following tables represent the revenue and profit information and certainasset and liability information for the Group's business segments for the yearended 31 December 2005.Year ended 31 December 2005 Revenue Revenue Profit/(loss) Share of from from from results external other Total operating from equity Segment customers segments Revenue activities investments result ‚£m ‚£m ‚£m ‚£m ‚£m ‚£mContinuing operationsSegmentsCMP Media 225.9 - 225.9 16.0 0.9 16.9CMPMedica 106.9 - 106.9 9.4 (0.3) 9.1CMP Asia 61.9 0.3 62.2 17.0 - 17.0CMP Information 177.0 - 177.0 26.0 - 26.0News distribution 104.1 - 104.1 14.2 2.4 16.6Corporate operations** - - (4.9) 9.7 4.8 675.8 0.3 676.1 77.7 12.7 90.4 Non-recurring items*** - - - - - 150.7 EBIT - - - - - 241.1 Discontinued operations(note 14)Market research 76.8 0.1 76.9 4.4 - 4.4CMP Information 23.0 - 23.0 0.4 - 0.4 99.8 0.1 99.9 4.8 - 4.8 Eliminations - (0.4) (0.4) - - - 775.6 - 775.6 82.5 12.7 245.9Continuing operationsFinance income/(cost)Interest income 28.2Interest cost (15.5)Financing income - other 8.4than interestFinancing cost - other than (27.5)interestFinancing cost - pension (2.5)schemes (8.9)Taxation (24.8) Discontinued operationsTaxation (1.0)Non-recurring items (note 266.314)Profit for the year fromcontinuing and discontinuedoperations 477.5*Adjusted group operating profit represents group operating profit excludingnon-recurring items, amortisation of intangible assets, and includingoperating profit from discontinued operations.**Corporate operations comprises net central operating costs, together withthose equity accounted investments which do not form part of one of thegroup's operating divisions.***Non-recurring items include the profit on sale of businesses and equityaccounted investments during the year.Notes to the consolidated financial statements at 31 December 20053. Segment information (continued) Share of tax on profit from Non-recurring Amortisation *Adjusted equity items charged operating accounted to operating of Segment profit investments profit intangibles resultContinuing ‚£m ‚£m ‚£m ‚£m ‚£moperationsSegmentsCMP Media 24.9 - (7.2) (0.8) 16.9CMPMedica 19.4 - (2.0) (8.3) 9.1CMP Asia 17.5 - (0.4) (0.1) 17.0CMP Information 43.0 - (14.8) (2.2) 26.0News distribution 29.2 (1.4) (11.2) - 16.6Corporate 3.1 3.3 (1.6) - 4.8operations** 137.1 1.9 (37.2) (11.4) 90.4 Non-recurring - - - - 150.7items EBIT 137.1 1.9 (37.2) (11.4) 241.1 DiscontinuedoperationsMarket research 4.4 - - - 4.4CMP Information 0.4 - - - 0.4 4.8 - - - 4.8 141.9 1.9 (37.2) (11.4) 245.9 Share of results from equity Equity Equity investments Share of results investment: Investment: (pre from equity interest and investments Interest Tax tax) ‚£m ‚£m ‚£m ‚£mContinuingoperationsSegmentsCMP Media 0.9 - - 0.9CMPMedica (0.3) - - (0.3)CMP Asia - - - -CMP Information - - - -News distribution 2.4 - (1.4) 3.8Corporate 9.7 (6.9) 3.3 13.3operations** 12.7 (6.9) 1.9 17.7DiscontinuedoperationsMarket research - - - -CMP Information - - - - - - - - 12.7 (6.9) 1.9 17.7Notes to the consolidated financial statements at 31 December 20053. Segment information (continued) Adjusted group operating profit* Share of results from Adjusted group ( before equity equity investments operating profit* accounted (before tax and investments) amortisation) as reported ‚£m ‚£m ‚£mContinuingoperationsSegmentsCMP Media 23.5 1.4 24.9CMPMedica 19.7 (0.3) 19.4CMP Asia 17.5 - 17.5CMP Information 43.0 - 43.0News distribution 25.4 3.8 29.2Corporate (3.3) 6.4 3.1operations** 125.8 11.3 137.1 DiscontinuedoperationsMarket research 4.4 - 4.4Corporate 0.4 - 0.4operations** 4.8 - 4.8 130.6 11.3 141.9*Adjusted group operating profit represents group operating profit excludingnon-recurring items, and amortisation of intangible assets, and includingoperating profit from discontinued operations.**Corporate operations comprises net central operating costs, together withthose equity accounted investments which do no form part of one of the group'soperating divisions. Segment Investments Total Segment Total Net Assets in associates Liabilities Assets and joint ventures ‚£m ‚£m ‚£m ‚£m ‚£mContinuing operationsSegmentsCMP Media 276.2 5.6 281.8 (68.9) 212.9CMPMedica 302.7 1.4 304.1 (59.5) 244.6CMP Asia 45.6 - 45.6 (31.9) 13.7CMP Information 240.2 - 240.2 (103.5) 136.7News distribution 24.6 5.3 29.9 (50.7) (20.8)Corporate operations** 497.1 9.9 507.0 (406.3) 100.7 1,386.4 22.2 1,408.6 (720.8) 687.8Discontinued operationsMarket research - - - - -Corporate operations** - - - - - - - - - - Unallocated assets and - - - (243.4) (243.4)liabilities 1,386.4 22.2 1,408.6 (964.2) 444.4Notes to the consolidated financial statements at 31 December 20053. Segment information (continued) Capital Capital Depreciation Impairment Other expenditure expenditure losses (acquisition of (tangible non-cash businesses) assets) expenses ‚£m ‚£m ‚£m ‚£m ‚£mContinuing operationsSegmentsCMP Media 27.6 2.7 2.4 - 1.1CMPMedica 23.3 1.0 1.0 - 0.2CMP Asia 4.2 0.3 0.2 - 0.5CMP Information 51.3 2.2 1.9 - 1.2News distribution - 1.2 2.5 - 0.7Corporate operations** - 0.8 0.5 - 0.1 106.4 8.2 8.5 - 3.8 Discontinued operationsMarket research 9.2 1.5 1.2 - 0.3CMP Information - - 0.7 - - 9.2 1.5 1.9 - 0.3 115.6 9.7 10.4 - 4.1Geographical segmentsYear Ended 31 December 2005 Segment Segment Capital Capital revenue expenditure expenditure assets (acquisition (tangible of assets) businesses) ‚£m ‚£m ‚£m ‚£mSegmentsContinuing operationsUnited Kingdom 163.0 727.9 38.4 3.1North America 317.4 321.1 40.5 3.9Europe and Middle East 109.2 312.1 23.3 1.0Pacific 86.2 47.4 4.2 0.3 675.8 1,408.6 106.4 8.2 Discontinued operationsUnited Kingdom 39.9 - - 0.9North America 44.4 - 9.2 0.2Europe and Middle East 15.2 - - 0.4Pacific 0.3 - - - 99.8 - 9.2 1.5 775.6 1,408.6 115.6 9.7Notes to the consolidated financial statements at 31 December 2005Year ended 31 December 2004 Revenue Revenue Profit/(loss) Share of from from from results external other Total operating from equity Segment customers segments Revenue activities investments result ‚£m ‚£m ‚£m ‚£m ‚£m ‚£mContinuing operationsSegmentsCMP Media 220.3 - 220.3 25.9 1.2 27.1CMP Medica 29.8 - 29.8 0.3 - 0.3CMP Asia 51.4 0.3 51.7 14.0 - 14.0CMP Information 161.0 - 161.0 38.5 - 38.5News distribution 94.8 - 94.8 20.4 2.3 22.7Corporate operations** - - - (1.3) 2.5 1.2 557.3 0.3 557.6 97.8 6.0 103.8 Non-recurring items - - - - - (11.7) EBIT 557.3 0.3 557.6 97.8 6.0 92.1 Discontinued operationsMarket research 222.4 0.1 222.5 20.3 - 20.3CMP Information 35.8 - 35.8 4.9 - 4.9 258.2 0.1 258.3 25.2 - 25.2 Eliminations - (0.4) (0.4) - - - 815.5 - 815.5 123.0 6.0 117.3Continuing operationsFinance income/(cost)Interest income 26.5Interest cost (14.1)Financing cost - pension (3.4)schemes 9.0Taxation (23.1)Non-recurring taxation credit 121.0 Discontinued operationsInterest Income 0.1Taxation (5.6)Non-recurring items 18.9Net profit for the year 237.6 Share of tax on *Adjusted profit from Non-recurring Amortisation group equity items charged operating accounted to operating of Segment profit investments profit intangibles resultContinuing operations ‚£m ‚£m ‚£m ‚£m ‚£mSegmentsCMP Media 27.1 - - - 27.1CMPMedica 3.4 - - (3.1) 0.3CMP Asia 14.0 - - - 14.0CMP Information 38.5 - - - 38.5News distribution 23.9 (1.2) - - 22.7Corporate operations** 0.8 0.4 - - 1.2 107.7 (0.8) - (3.1) 103.8 Non-recurring items - - - - (11.7) EBIT - - - - 92.1 Discontinued operationsMarket research 20.3 - - - 20.3CMP Information 4.9 - - - 4.9 25.2 - - - 25.2 132.9 (0.8) - (3.1) 117.3Notes to the consolidated financial statements at 31 December 20053. Segment information (continued) Share of results from equity Share of Equity Equity investments results investment: Investment: (pre from equity interest investments Interest Tax and tax) ‚£m ‚£m ‚£m ‚£mContinuing operationsSegmentsCMP Media 1.2 - - 1.2CMPMedica - - - -CMP Asia - - - -CMP Information - - - -News distribution 2.3 - (1.2) 3.5Corporate operations** 2.5 (10.3) 0.4 12.4 6.0 (10.3) (0.8) 17.1 Discontinued operationsMarket research - - - -Corporate operations** - - - - - - - - 6.0 (10.3) (0.8) 17.1 Adjusted group operating Adjusted profit* Share of group results operating (before from equity profit* equity nvestments accounted (before as investments) tax) reported ‚£m ‚£m ‚£mContinuing operationsSegmentsCMP Media 25.9 1.2 27.1CMPMedica 3.4 - 3.4CMP Asia 14.0 - 14.0CMP Information 38.5 - 38.5News distribution 19.2 3.5 22.7Corporate operations** (0.1) 2.1 2.0 100.9 6.8 107.7 Discontinued operationsMarket research 20.3 - 20.3Corporate operations** 4.9 - 4.9 25.2 - 25.2 126.1 6.8 132.9*Adjusted group operating profit represents group operating profit excludingnon-recurring items, and amortisation of intangible assets, and includingoperating profit from discontinued operations.**Corporate operations comprises net central operating costs, together withthose equity accounted investments which do no form part of one of the group'soperating divisions.Notes to the consolidated financial statements at 31 December 20053. Segment information (continued) Segment Investments Total Segment Total Net Assets in Liabilities Assets associates & JVs ‚£m ‚£m ‚£m ‚£m ‚£mContinuing operationsSegmentsCMP Media 212.9 4.7 217.6 (43.5) 174.1CMPMedica 251.9 1.7 253.6 (25.0) 228.6CMP Asia 34.7 - 34.7 (23.5) 11.2CMP Information 198.3 - 198.3 (75.7) 122.6News distribution 25.5 4.9 30.4 (12.2) 18.2Corporate operations** 481.6 42.9 524.5 (652.0) (127.5) 1,204.9 54.2 1,259.1 (831.9) 427.2Discontinued operationsMarket research 178.8 - 178.8 (60.3) 118.5CMP Information 8.9 - 8.9 - 8.9 187.7 - 187.7 (60.3) 127.4 Unallocated assets and liabilities - - - (224.8) (224.8) 1,392.6 54.2 1,446.8 (1,117.0) 329.8 Capital Other expenditure Capital (acquisition expenditure non-cash of (tangible Impairment businesses) assets) Depreciation losses expenses ‚£m ‚£m ‚£m ‚£m ‚£mContinuing operationsSegmentsCMP Media - 1.5 2.3 - 0.6CMPMedica 199.3 0.4 0.4 - 0.1CMP Asia - 0.2 0.1 - 0.3CMP Information 0.2 2.3 3.1 - 0.6News distribution - 1.1 3.2 - 0.4Corporate operations** - 0.4 0.7 - (2.6) 199.5 5.9 9.8 - (0.6)Discontinued operationsMarket research 4.8 2.6 3.1 - 0.4CMP Information - - - - - 4.8 2.6 3.1 - 0.4 204.3 8.5 12.9 - (0.2)Notes to the consolidated financial statements at 31 December 20053. Segment information (continued)Geographical segmentsThe group's five business segments operate in four main geographical areas.The geographical segment analysis is based on the location of assets.Geographical segment analysis based on the location of customers or marketswould not be materially different. The following table provides an analysis ofthe group's revenue, assets, and capital expenditure by the four geographicalregions. Segment Segment Capital Capital revenue expenditure expenditure assets (acquisition (tangible of assets) businesses) ‚£m ‚£m ‚£m ‚£mSegmentsContinuing operationsUnited Kingdom 154.1 692.8 0.2 2.8North America 302.8 260.2 - 2.5Europe and Middle East 37.3 271.6 199.3 0.4Pacific 63.1 34.5 - 0.2 557.3 1,259.1 199.5 5.9Discontinued operationsUnited Kingdom 94.7 31.0 - 1.0North America 121.6 114.6 4.8 -Europe and Middle East 40.8 42.1 - 1.6Pacific 1.1 - - - 258.2 187.7 4.8 2.6 815.5 1,446.8 204.3 8.5The amounts shown against CMP Media, CMP Asia and CMP Information for 31December 2004 in the tables above have been restated to reflect theintra-group transfer of United Entertainment Media in the US from CMPInformation to CMP Media, the transfer of CMP Princeton from CMP Asia to CMPMedia, and the transfer of United Advertising Publications to CMP Information.For the year ended 31 December 2004, ‚£21.0 million of revenue and ‚£3.4 millionof operating profit for United Entertainment Media was transferred from CMPInformation to CMP Media, ‚£5.5 million of revenue and ‚£1.2 million ofoperating profit for CMP Princeton was transferred from CMP Asia to CMP Media,and ‚£58.5 million of revenue and ‚£13.2 million of operating profit for UnitedAdvertising Publications was included in CMP Information.Notes to the consolidated financial statements at 31 December 20054. Non-recurring items 2005 2004 ‚£m ‚£mCharged to operating profitVacant property costs (8.8) -Redundancy (8.6) -Re-engineering of business processes (10.3) -Restructuring and business reorganisation costs (7.8) -Integration of acquired businesses (1.7) -Total non-recurring reorganisation and restructuring costs (37.2) -Share of results from associates disposed of during the year 8.5 -Total charged to operating profit (28.7) - Credited/(charged) to EBITProfit on disposal of equity accounted investments 150.7 -Amounts written off investments - (11.7)Total credited/(charged) to EBIT 122.0 (11.7) Charged to profit before taxBond buybacks (13.7) -Total credited/(charged) to profit before tax 108.3 (11.7) (Charged)/credited to profit after taxTax on disposal of equity accounted investments (1.2) -Exceptional taxation credit - 121.0Total credited to profit after tax 107.1 109.3 Credited to discontinued operationsProfit on disposal of discontinued operations (note 14) 266.3 -Profit from discontinued operations (note 14) 3.8 -Additional profit on prior year disposals (note 14) - 18.9Profit for the year after discontinued operations 377.2 128.2During 2005, the group implemented a number of restructuring andreorganisation projects. The objectives of these projects are to simplify thegroup structure following the disposals of businesses in 2005, to achievegreater geographical alignment of our publishing divisions and to achievegreater customer and product focus within our operating businesses whilstdelivering lower operating costs.The total cost of the projects is ‚£37.2 million, which has been chargedseparately as a one off cost in the profit and loss account for the year ended31 December 2005. As indicated in the analysis above, the nature of the costsincurred is principally redundancy, vacant space provisions arising fromrelocation and consolidation, the re-engineering of business processes and thecosts of restructuring and business reorganisation. In addition, acquisitionintegration costs of ‚£1.6 million were incurred during the year. Of the amountcharged, ‚£7.2 million was incurred during 2005. With the exception of amountsrelating to vacant property, which will be incurred across the remainder ofthe unexpired lease terms, the balance of the costs is expected to be paid in2006.In 2004, the group had written down the carrying value of certain fixed assetinvestments by ‚£11.7 million to reflect their expected realisable value. Thegroup also resolved a number of outstanding items as a consequence of whichthere was a net exceptional tax credit of ‚£121 million.Notes to the consolidated financial statements at 31 December 20055. Finance income/(cost) Recurring Non-recurring Total 2005 2005 2005 2004 ‚£m ‚£m ‚£m ‚£mInterest incomeCash and cash equivalents 28.2 - 28.2 26.5 Interest costBorrowings and loans (14.0) - (14.0) (11.8)Other (1.5) - (1.5) (2.3) (15.5) - (15.5) (14.1) Financing income - other than interestNet foreign exchange gain (a) 8.4 - 8.4 - 8.4 - 8.4 - Financing cost - other than interestFair value loss on embedded derivative (b) (9.0) (2.2) (11.2)Buyback of bonds (c) - (11.5) (11.5) -Convertible bond (d) (4.8) - (4.8) - (13.8) (13.7) (27.5) - Financing cost - pension schemes (2.5) - (2.5) (3.4) Net finance income/(cost) 4.8 (13.7) (8.9) 9.0(a) Foreign exchange gain on US Dollar denominated balances held inUK accounts. The majority of this gain arose from the strengthening of the USDollar in the first half of 2005.(b) Accounting standards determine that UBM's US Dollar convertible bondcontains an embedded derivative, and this option is carried at fair value withchanges taken to the income statement. This charge is a result of the increasein UBM's share price. The non-recurring fair value loss on the embeddedderivative of ‚£2.2 million relates to the portion of the bond that wasrepurchased during the year.(c) In the second half of 2005, UBM repurchased $234.6 million of theprincipal of the US Dollar convertible bond, and $179.3 million of theprincipal of the US dollar fixed rate unsecured notes. This charge reflectsthe premium paid and fees relating to these repurchases, and unamortised costsbeing written off.(d) The convertible bond is separated into fixed rate debt and an equityderivative. This charge reflects the accretion of the debt to the value atmaturity.6. TaxationMajor components of income tax expense for the year ended 31 December 2005are: 2005 2004 ‚£m ‚£mConsolidated income statement Current tax:Current tax charge 29.0 29.2 Deferred tax:Origination and reversal of temporary differences (3.2) (0.5)Income tax expense in the consolidated income statement 25.8 28.7 Less: income tax expense for discontinued operations (1.0) (5.6)Income tax expense for continuing operations 24.8 23.1 Notes to the consolidated financial statements at 31 December 20056. Taxation (continued)Factors affecting tax charge for the yearA reconciliation of income tax expense applicable to accounting profit beforetax at the statutory tax rate to tax expense for the year ended 31 December2005 is as follows: 2005 2004 ‚£m ‚£m Profit before tax from continuing operations 232.2 101.0Profit before tax attributable to discontinued operations 271.1 44.2(note 14)Profit before tax 503.3 145.2 Profit before tax multiplied by standard rate of corporation 151.0 43.6tax in UK of 30% Effect of:Expenses not deductible for tax purposes 10.6 5.2Tax effect of items not recognised in consolidated financial (21.4) (19.0)statementsOrigination and reversal of temporary differences not 13.3 3.2recognisedHigher tax rates on overseas earnings 5.1 4.3Additional profit relating to prior year disposals not taxable - (5.7)Foreign exchange gains (2.5) -Share of results from associates and joint ventures (after (4.0) (1.8)tax)Profit on sale of discontinued operations and equity accounted (124.5) -investmentsOther (1.8) (1.1) 25.8 28.7 Income tax expense reported in the consolidated income 24.8 23.1statementIncome tax attributable to discontinued operations (note 14) 1.0 5.6 25.8 28.7Deferred income taxDeferred income tax at 31 December relates to the following: Consolidated balance Consolidated income sheet statement 2005 2004 2005 2004 ‚£m ‚£m ‚£m ‚£mDeferred tax liabilityFair value adjustments on acquisitions 22.6 15.4 (3.3) (0.9)Other temporary differences 1.4 1.4 0.1 0.4Deferred income tax income 24.0 16.8 (3.2) (0.5)At 31 December 2005, there was no recognised deferred tax liability for taxesthat would be payable on the unremitted earnings of certain of the group'ssubsidiaries as the group has determined that undistributed profits of itssubsidiaries will not be distributed in the foreseeable future.The temporary differences associated with investments in subsidiaries forwhich a deferred tax liability has not been recognised amount in aggregate to‚£1.8 billion (2004: ‚£1.6 billion).There are no income tax consequences to the group attaching to the payment ofdividends by the Company to its shareholders. 2005 2004 ‚£m ‚£mThe movement in the net deferred tax liability was as follows: Net liability at 1 January 16.8 -Acquisition of subsidiaries (note 13) 10.7 16.3Amounts charged to net profit (3.2) (0.5)Exchange differences (0.3) 1.0Net liability at 31 December 24.0 16.8The group has unrecognised deferred tax assets of ‚£55.2 million relating todeductible temporary differences and ‚£49.6 million relating to unused taxlosses (2004: ‚£47.1 million and ‚£38.5 million respectively). No deferred taxasset has been recognised in respect of these amounts due to theunpredictability of future taxable profit streams.Notes to the consolidated financial statements at 31 December 20057. Earnings per shareBasic earnings per share amounts are calculated by dividing net profit for theyear attributable to ordinary equity shareholders by the weighted averagenumber of ordinary shares outstanding during the year.Diluted earnings per share amounts are calculated by dividing the net profitattributable to ordinary shareholders (after deducting interest on theconvertible bond) by the weighted average number of ordinary sharesoutstanding during the year (adjusted for the effects of dilutive options anddilutive convertible bond).Adjusted earnings per share is calculated on the net profit for the yearattributable to ordinary equity shareholders, less non-recurring items anddeferred tax, divided by the weighted average number of ordinary sharesoutstanding during the year. Non-recurring items and deferred tax are excludedfrom this calculation, as due to their nature and the infrequency of theevents giving rise to them, separate presentation allows shareholders tounderstand better the elements of financial performance for the year, so as tofacilitate comparison with prior periods and to assess better the trends offinancial performance.The following reflects the income and share data used in the total operationsbasic and diluted earnings per share computations: 2005 2005 2005 2004 2004 2004 Weighted Weighted Average Earnings Average Earnings no. no. Earnings of shares per share Earnings of shares per shareFrom continuing and discontinued ‚£m million pence ‚£m million penceoperationsAdjusted group operating profit 141.9 132.9Net interest income 12.7 12.4Financing cost - pension schemes (2.5) (3.4)Adjusted profit before tax 152.1 141.9Taxation (26.0) (30.3)Minority interests (1.9) (1.8)B share dividend (0.4) (0.4)Adjusted earnings per share 123.8 302.5 40.9 109.4 334.4 32.7AdjustmentsAmortisation of intangible assets (11.4) (3.8) (3.1) (0.9)Deferred tax on amortisation of 3.3 1.1 0.9 0.3intangible assetsNon-recurring items 379.8 125.6 128.2 38.3Taxation relating to (1.2) (0.4) - -non-recurring itemsNet financing income - other than (19.1) (6.3) - -interestBasic earnings per share 475.2 302.5 157.1 235.4 334.4 70.4DilutionOptions - 3.3 (1.6) - 4.6 (1.0)Convertible bond 19.1 40.4 (12.7) 3.5 47.8 (7.6)Diluted earnings per share 494.3 346.2 142.8 238.9 386.8 61.8From continuing operationsAdjusted group operating profit 141.9 132.9Operating profit from (4.8) (25.3)discontinued operationsNet interest income 12.7 12.4Financing cost - pension schemes (2.5) (3.4)Adjusted profit before tax 147.3 116.6Taxation (25.0) (24.7)Minority interests (1.9) (1.8)B share dividend (0.4) (0.4)Adjusted earnings per share 120.0 302.5 40.0 89.7 334.4 26.8AdjustmentsAmortisation of intangible assets (11.4) (3.8) (3.1) (0.9)Deferred tax on amortisation of 3.3 1.1 0.9 0.3intangible assetsNon-recurring items 113.5 37.2 109.3 32.6Taxation relating to (1.2) (0.4) - -non-recurring itemsNet financing income - other than (19.1) (6.3) - -interestBasic earnings per share 205.1 302.5 67.8 196.8 334.4 58.8DilutionOptions - 3.3 (0.7) - 4.6 (0.8)Convertible bond 19.1 40.4 (2.4) 3.5 47.8 (6.2)Diluted earnings per share 224.2 346.2 64.7 200.3 386.8 51.8Notes to the consolidated financial statements at 31 December 20057. Earnings per share (continued)The group has two categories of dilutive potential ordinary shares: thoseshare options granted to employees where the exercise price is less than theaverage market price of the company's ordinary shares during the year, andshares attributable to convertible debt. The impact of dilutive securities in2005 would be to increase the profit by ‚£19.1 million (2004: ‚£3.5 million) forconvertible debt and to increase weighted average shares by 3.3 million shares(2004: 4.6 million shares) for employee share options and 40.4 million shares(2004: 47.8 million shares) for convertible debt.The weighted average number of shares excludes ordinary shares held by theESOP and the QUEST. The weighted average number of shares was affected by theshare consolidation on 20 June 2005, where 17 existing ordinary shares wereconverted to 14 new ordinary shares (refer to note 10).8. Dividends 2005 2004 ‚£m ‚£mDeclared and paid during the yearEquity dividends on ordinary sharesFinal dividend for 2004 of 8.37p (2003: 5.7p) 28.1 19.2Special dividend for 2005 of 89.0p 298.3 -Interim dividend for 2005 of 4.00p (2004: 3.63p) 11.0 12.1Equity dividends - B shares 0.4 0.4 337.8 31.7 Proposed for approval at 2006 Annual General Meeting (not recognised asa liability at 31 December)Equity dividends on ordinary sharesFinal dividend for 2005 of 11.0 p (2004: 8.37p) 30.6 28.1The proposed final dividend is subject to approval by shareholders at theAnnual General Meeting and has not been included as a liability in thesefinancial statements.The B shares have a fixed coupon, and the dividends of ‚£0.4 million owing asat 31 December 2005 have been accrued for accordingly.9. Cash and cash equivalents 2005 2004 ‚£m ‚£mCash at bank and in hand 99.0 147.2Short term liquid funds 0.6 192.2Current asset investments 389.8 - 489.4 339.4The effective interest rate on the short-term liquid funds range between 0%and 5% for 2005 and 2004, and these liquid funds have an average maturity ofless than 3 months. The carrying amount of these assets approximates to fairvalue.For the purposes of the consolidated cash flow statement, cash and cashequivalents comprise the following at December: 2005 2004 ‚£m ‚£mCash at bank and in hand 99.0 147.2Short term liquid funds 0.6 192.2Current asset investments 389.8 - 489.4 339.4Bank overdrafts (6.8) (2.8) 482.6 336.6Notes to the consolidated financial statements at 31 December 200510. Share capital 2005 2004 ‚£m ‚£mAuthorised400,936,636 (2004: 486,851,630) Ordinary shares of 30 and 5/14 121.7 121.7pence each375,417,690 (2004: 375,417,690) B shares of 8 and 23/44 pence each 32.0 32.0 153.7 153.7 Ordinary Ordinary B B shares Shares Shares Shares Total Number ‚£m Number ‚£m ‚£mIssued and fully paidAt 1 January 2005 336,185,328 84.1 5,446,789 0.4 84.5Allocated in respect of shareoption 1,996,673 0.5 - - 0.5schemes and other entitlementsShares repurchased and cancelled (250,000) (0.1) - - (0.1)At 20 June 2005 (Pre-share 337,932,001 84.5 5,446,789 0.4 84.9consolidation)Share consolidation (59,635,059) - - - -B shares purchased by the - - (615,866) - -companyShares repurchased and cancelled (2,760,000) (0.8) - - (0.8)Allocated in respect of shareoption 2,685,178 0.8 - - 0.8schemes and other entitlementsAt 31 December 2005 278,222,120 84.5 4,830,923 0.4 84.9The return of capital to shareholders undertaken in 2001 took the form of asubdivision and consolidation of the existing United ordinary shares. On 23April 2001, each of the existing 507,901,885 ordinary shares of 25 pence thenin issue were sub-divided into one share of 8 23/44 pence (B Shares) and oneshare of 16 21/44 pence and immediately following such sub-division everyissued share of 16 21/44 pence was sub-divided into 29 shares of 25/44 pence.Every 44 shares of 25/44 pence each resulting from such sub-division were thenconsolidated into one ordinary share of 25 pence. The subdivision created aclass of B shares with a total value of approximately ‚£1.25 billion. UKshareholders had the option to sell these shares for 245 pence per share, toreceive a single dividend of 245 pence per share, or to retain the B sharesand receive a continuing dividend linked to LIBOR. During the year ended 31December 2004, 766,030 B shares were purchased by the company forconsideration of ‚£1.8 million. Cumulatively to 31 December 2005, 370,586,767 Bshares have been purchased by the company for consideration of ‚£907.9 million.At 31 December 2005, 4,830,923 B shares remain in issue.The B shares are irredeemable however, the company has the authority toconvert into ordinary shares, at its option, all remaining B shares in issueafter 23 April 2011, if the number is less than 125 million. The conversioninto ordinary shares will be based on the market price of ordinary shares atthe time of the conversion.B sharesB shareholders are entitled to a non-cumulative preference dividend based onthe principal of 245 pence per share. The dividend is the lower of 25 per centper annum or 75 per cent of the 12 month LIBOR rate of 5.03% (2004: 4.77%). Onwinding up, the B shareholders are entitled to 245 pence per share and therelevant proportion of the dividends outstanding. B shareholders do not haveany voting entitlements except in a resolution relating to a winding up of thecompany or if the B share dividend has been outstanding for more than sixmonths.The group repurchased and cancelled 3,010,000 of its own ordinary sharesduring the year at an average price of 508.3p. The total amount paid toacquire the ordinary shares was ‚£15.3 million, and ‚£1.5 million was paid toacquire B shares.On 20 June 2005, in conjunction with the special dividend of 89.0 pence pershare, a share consolidation was carried out to convert 17 existing ordinaryshares to 14 new ordinary shares. The share consolidation converted the337,932,001 existing issued and fully paid ordinary shares into 278,296,942new issued and fully paid ordinary shares. The weighted average number ofshares used in the calculation of earnings per share reflects the shareconsolidation (refer to note 7).Notes to the consolidated financial statements at 31 December 200511. Share premium 2005 2004 ‚£m ‚£mIn issue at 1 January 310.8 309.4Premium on shares issued, net of costs 16.9 1.4In issue at 31 December 327.7 310.8The company received ‚£16.9 million (2004: ‚£1.4 million) on the issue of sharesin respect of the exercise of options awarded under various share optionplans, of which ‚£16.9 million (2004: ‚£1.4 million) is payable by employees tothe group for the issue of these shares.12. Other reserves Capital Foreign Total redemption currency other Merger reserve translation ESOP Other reserves Retained Minority reserve reserve Reserve reserve earnings interests Total ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£mBalance at 1 January 31.3 42.9 - (7.8) 125.0 191.4 (461.6) 1.0 (269.2)2004Changes in accounting - - - - - - 15.2 0.3 15.5policy relating tofirst-time adoption ofIFRS (note 16)Restated balance at 1 31.3 42.9 - (7.8) 125.0 191.4 (446.4) 1.3 (253.7)January 2004 Total recognised - - 2.1 - - 2.1 220.9 1.6 224.6income and expense forthe year B shares purchased by - - - - - - (1.8) - (1.8)the company Share-based payment - - - - - - 1.5 - 1.5Equity dividend - - - - - - (31.7) - (31.7)Minority interest - - - - - - - (0.3) (0.3)dividendOwn shares purchased - - - (4.1) (4.1) - - (4.1)by the company - Restated balance at 31 31.3 42.9 2.1 (11.9) 125.0 189.4 (257.5) 2.6 (65.5)December 2004Changes in accounting - - - - - - (41.0) - (41.0)policy relating tofirst-time adoption of IAS 32 and 39 Restated balance at 1 31.3 42.9 2.1 (11.9) 125.0 189.4 (298.5) 2.6 (106.5)January 2005 Total recognised - - (3.9) - - (3.9) 500.6 2.2 498.9income and expense forthe year Shares repurchased and - 0.9 - - - 0.9 (16.8) - (15.9)cancelled by thecompany Share-based payment - - - - - - 2.6 - 2.6Special dividend - - - - - - (298.3) - (298.3)Equity dividend - - - - - - (39.5) - (39.5)Minority interest - - - - - - - (2.1) (2.1)dividendOwn shares purchased - - - (7.4) - (7.4) - - (7.4)by the companyBalance at 31 December 31.3 43.8 (1.8) (19.3) 125.0 179.0 (149.9) 2.7 31.82005Notes to the consolidated financial statements at 31 December 200513. Acquisitions and disposalsUBM has completed 12 acquisitions during the year.On 1 February 2005, UBM acquired Tissue World, an events andpublication company, from Paperloop.com, Inc. The purchase price was $4.8million.On 7 February 2005, UBM acquired the licensed trade sectorpublishing and events assets of Quantum Business Media (`Quantum') for ‚£21.0million.On 31 March 2005, UBM acquired the medical trade press and other professionalhealthcare business information services in France from MediMedia. Thepurchase price was ¢â€š¬36.0 million in cash.On 4 April 2005, UBM acquired DotNetJunkies.com and SqlJunkies.com for $0.2million.On 10 May 2005, UBM acquired ABI Building Data Limited for ‚£12.0 million.On 7 July 2005, UBM acquired ICMI for cash consideration of $3.75 million.On 18 August 2005, UBM acquired Light Reading Inc, Informex, and Tech Onlinefor $27 million, $24 million, and $5.5 million respectively.On 23 August 2005, UBM completed the acquisition of "Theme" magazine and the"Bar" exhibition from Mondiale Publishing. The purchase price was ‚£5 millionin cash.On 16 November 2005, UBM acquired Black Hat and Japan Jewellery Fair for cashconsideration of $10 million and $2.7 million respectively.The following table sets out the book values of the identifiable assets andliabilities acquired and their fair value to the group in respect of theacquisition of businesses during the year: 2005 2005 Fair Acquiree's Value Carrying to Group Value ‚£m ‚£mIntangible assets 41.3 22.8Property, plant and equipment 1.5 1.5Other non-current assets 0.2 0.2Cash and cash equivalents 3.5 3.5Stocks 0.6 0.6Debtors and other current assets 21.9 21.5 69.0 50.1 Creditors and other current liabilities (37.0) (36.0)Deferred tax liability (10.7) -Pension liability (1.1) - (48.8) (36.0)Fair value of net assets 20.2Goodwill arising on acquisition 93.5 113.7 2005 ‚£mConsideration:Cash paid 109.9Deferred consideration 3.8Total consideration 113.7The group also paid ‚£9.2 million of deferred consideration during the year, inrelation to the 2001 acquisition of Allison-Fisher International, Inc. Underthe earn out arrangement, if certain profit targets over the period ofacquisition until 30 June 2004 were met, additional consideration was payable.Notes to the consolidated financial statements at 31 December 200413. Acquisitions and disposals (continued)The aggregate cash flow effect of acquisitions was as follows: 2005 ‚£mNet cash acquired with the subsidiary (3.5)Cash paid 109.9Deferred consideration on 2001 9.2acquisitionsNet cash outflow on acquisitions 115.6The intangible assets acquired as part of the acquisition can be analysed asfollows: 2005 ‚£mBrands 20.8Software 0.4Customer contracts and relationships 16.5Subscription lists 0.1Trademarks 2.1Databases 1.4Total 41.3DisposalsOn 27 April 2005, UBM completed the sale of its associate SDNLimited for net proceeds of ‚£31.5 million (‚£35.4 million consideration less‚£3.9 million repayment of loan). A profit of ‚£26.5 million arose on thedisposal of SDN Limited, being the proceeds of disposal less the carryingamount of the associate's net assets and costs of disposal.On 2 September 2005, UBM announced the sale of its 20% shareholdingin Satellite Information Services (Holdings) Ltd to Catalyst Media Group plcfor ‚£23 million, and the sale of its 35.4% shareholding in Channel 5Television Group Ltd to the RTL Group for ‚£247.6 million. Profits on sale forthese disposals were ‚£11.9 million and ‚£112.3 million respectively.The profits from these disposed investments have been included in`Corporate operations' for segmental reporting purposes.The assets and liabilities disposed as part of the disposals can be analysedas follows: SDN SIS Channel 5 Total ‚£m ‚£m ‚£m ‚£mNon-current assets 3.3 10.9 29.1 43.3Current assets - - 105.0 105.0Net assets 3.3 10.9 134.1 148.3The group also disposed of its market research business, and Exchange and Martand Auto Exchange titles, during the year. Refer to note 14.14. Discontinued operationsOn 15 April 2005, UBM announced the sale of its market researchbusiness, NOP World, to GfK Aktiengesellschaft for ‚£383.0 million. Thedisposal was completed on 1 June 2005, on which date control of NOP Worldpassed to the acquirer. A profit of ‚£235.8 million arose on the disposal ofNOP World, being the proceeds of disposal less the carrying amount of thesubsidiary's net assets, attributable goodwill and directly attributablecosts.On 16 September 2005, UBM announced the sale of Exchange & Mart andAuto Exchange to Newsquest Media Group Ltd for ‚£50.25 million. A profit of‚£30.5 million arose on the sale of these titles.Notes to the consolidated financial statements at 31 December 200514. Discontinued operations (continued)The results of the discontinued operations which have been includedin the consolidated income statement were as follows: Exchange Exchange & Mart & Mart and Auto and Auto NOP Exchange Total NOP Exchange Total 2005 2005 2005 2004 2004 2004 ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Revenue 76.9 23.0 99.9 222.4 35.8 258.2Share of profit fromequity accountedinvestments - - - - - -Operating expenses (72.5) (22.6) (95.1) (202.1) (30.9) (233.0)Profit before tax 4.4 0.4 4.8 20.3 4.9 25.2 Interest income - - - 0.1 - 0.1Profit before taxattributable todiscontinued operations 4.4 0.4 4.8 20.4 4.9 25.3 Attributable taxation (0.9) (0.1) (1.0) (4.5) (1.1) (5.6)Profit after taxattributable todiscontinued operations 3.5 0.3 3.8 15.9 3.8 19.7 Profit from disposal of 235.8 30.5 266.3 - - 18.9discontinued operationsAttributable tax expense - - - - - - Net profit attributable todiscontinued operations 239.3 30.8 270.1 15.9 3.8 38.6 Earnings per share fordiscontinued operationsBasic 89.3 p 11.5 pDiluted 78.0 p 10.0 pIn December 2004, UBM agreed a settlement of ‚£32 million fromGranada in respect of outstanding items relating to the 2000 disposals of thetelevision assets. The additional profit on disposal taken in 2004 representsthis settlement, after deduction of interest, costs, and the offset ofrecorded receivables. This amount was received in January 2005. Exchange & Mart and Auto NOP Exchange Total At date of At date of At date of disposal disposal disposal ‚£mGoodwill 94.9 6.3 101.2Property, plant and equipment 6.6 1.7 8.3Trade and other receivables 53.1 - 53.1Inventories 23.4 - 23.4Cash and cash equivalents - - - 178.0 8.0 186.0Trade and other payables 60.4 - 60.4Provisions 0.6 - 0.6 61.0 - 61.0Net assets attributable to discontinued operations 117.0 8.0 125.015. Post balance sheet eventsOn 11 January 2006, UBM also announced that it acquired the events assets ofMediaLive International, Inc. for a cash consideration of US$65 million. Thetransaction adds more than 20 IT and telecoms-related events in the US, Japan,and Europe.On 11 January 2006, UBM announced it has acquired Shorecliff CommunicationsLLC, a US events business, for a cash consideration of US$12.3 million.Shorecliff's four principal events focus on the high growth technology marketsof radio frequency identification, broadband services, wireless infrastructureand telecoms television/internet protocol television.Notes to the consolidated financial statements at 31 December 200516. First-time adoption of International Financial Reporting and AccountingStandardsIn the current year, the Group has adopted International Financial andReporting Standards for the first time.The Group has applied IFRS 1 First Time Adoption of International FinancialReporting and Accounting Standards to provide a starting point for reportingunder International Financial Reporting and Accounting Standards. The date oftransition to International Financial Reporting and Accounting Standards wasselected as 1 January 2004 and all comparative information in these financialstatements has been restated to reflect the Group's adoption of InternationalFinancial Reporting and Accounting Standards.The adoption of International Financial Reporting and Accounting Standards hasresulted in changes to the Group's accounting policies, as stated in note 2.Reconciliation of equity at 1 January 2004 As reported Effect of Reported under transition under UK GAAP to IFRS IFRS Footnote ‚£m ‚£m ‚£mAssetsNon-current assetsGoodwill 14 430.8 0.7 431.5Intangible assets - - -Property, plant and equipment 54.5 - 54.5Investments accounted for using the 4,14 11.4 45.8 57.2equity methodOther investments 4,9 168.9 (36.8) 132.1Deferred tax assets - - - 665.6 9.7 675.3Current assetsInventories 5,12 20.4 (8.8) 11.6Trade and other receivables 4,12,14 158.5 112.9 271.4Cash and cash equivalents 9,14 611.1 (112.7) 498.4 790.0 (8.6) 781.4 Non-current assets classified as held - - -for sale Total assets 1,455.6 1.1 1,456.7 Current liabilitiesBorrowings 241.6 - 241.6Convertible bond 221.1 - 221.1Trade and other payables 8,10,14 305.4 (15.3) 290.1Current tax liabilities 308.5 - 308.5 1,076.6 (15.3) 1,061.3Non-current liabilitiesBorrowings 101.9 - 101.9Convertible bond - - -Retirement benefit obligation 6 83.9 0.9 84.8Deferred tax liabilities - - -Trade and other payables 5.4 - 5.4Provisions 63.1 - 63.1 254.3 0.9 255.2Total liabilities 1,330.9 (14.4) 1,316.5 Shareholders' equityOrdinary shares 84.5 - 84.5Share premium 309.4 - 309.4Other reserves 191.4 - 191.4Retained earnings 5,6,8,10 (461.6) 15.2 (446.4)Minority interest 14 1.0 0.3 1.3Total equity 124.7 15.5 140.2Total liabilities and equity 1,455.6 1.1 1,456.7 Notes to the consolidated financial statements at 31 December 200516. First-time adoption of International Financial Reporting and AccountingStandards (continued)Reconciliation of equity at 31 December 2004The effect of the changes to the Group's accounting policies on the equity ofthe Group at the date of the last financial statements presented underprevious GAAP, 31 December 2004, was as follows. As reported Effect of Reported under transition under UK GAAP to IFRS IFRS Footnote ‚£m ‚£m ‚£mAssetsNon-current assetsGoodwill 2,14 495.8 88.0 583.8Intangible assets 2 - 50.4 50.4Property, plant and equipment 50.1 (5.1) 45.0Investments accounted for using the 4,14 10.7 43.5 54.2equity methodOther investments 4,9 146.8 (98.9) 47.9 703.4 77.9 781.3Current assetsInventories 5,12 22.8 (7.9) 14.9Trade and other receivables 4,12 198.0 108.1 306.1Cash and cash equivalents 9 378.8 (39.4) 339.4 599.6 60.8 660.4 Non-current assets classified as held 13 - 5.1 5.1for sale Total assets 1,303.0 143.8 1,446.8 Current liabilitiesBorrowings 142.8 - 142.8Trade and other payables 8,10,14 317.3 (21.9) 295.4Current tax liabilities 208.0 - 208.0 668.1 (21.9) 646.2Non-current liabilitiesBorrowings 96.1 - 96.1Convertible bond 208.7 - 208.7Retirement benefit obligation 6 95.2 0.8 96.0Deferred tax liabilities - - -Trade and other payables 4.6 - 4.6Provisions 48.6 - 48.6Deferred tax liabilities 7 1.4 15.4 16.8 454.6 16.2 470.8Total liabilities 1,122.7 (5.7) 1,117.0 Shareholders' equityOrdinary shares 84.5 - 84.5Share premium 310.8 - 310.8Other reserves 11 187.3 2.1 189.4Retained earnings 1,2,3,4,5,6,8,10,11 (404.5) 147.0 (257.5)Minority interest 14 2.2 0.4 2.6Total equity 180.3 149.5 329.8Total liabilities and equity 1,303.0 143.8 1,446.8 Notes to the consolidated financial statements at 31 December 200516. First-time adoption of International Financial Reporting and AccountingStandards (continued)Reconciliation of profit or loss for year ending 31 December 2004The changes in accounting policies had the following effect on the profitreported for the year ended 31 December 2004. As reported Effect of Reclassification Reported under transition to discontinued under UK GAAP to IFRS operations IFRS Footnote ‚£m ‚£m ‚£m ‚£mContinuing operationsRevenue 12,14 809.6 5.9 (258.2) 557.3Other operating income 9.1 - - 9.1Operating expenses 1,2,3,5,12,14 (822.1) 115.3 233.0 (473.8)Income from investments 4 6.0 (0.8) - 5.2Share of profit from associates 4,14 3.7 2.3 - 6.0and joint venturesOperating profit 6.3 122.7 (25.2) 103.8 Additional profit on prior year 18.9 - - 18.9disposalsAmounts written off investments (11.7) - - (11.7)Net interest income 12.5 - (0.1) 12.4Financing costs - pension (3.4) - - (3.4)schemesProfit before tax 22.6 122.7 (25.3) 120.0 Tax expense 4,7 (30.8) 2.1 5.6 (23.1)Exceptional taxation credit 121.0 - - 121.0 Profit for the year from 112.8 124.8 (19.7) 217.9continuing operations Discontinued operationsProfit for the year from - - 19.7 19.7discontinued operations Net profit/(loss) for the year 112.8 124.8 - 237.6 Attributable to:Equity shareholders - ordinary 1,2,3,4,5,7,12 110.9 124.5 - 235.4Equity shareholders - B shares 0.4 - - 0.4Minority interests 14 1.5 0.3 - 1.8 112.8 124.8 - 237.6 Notes to the IFRS adjustments1. GoodwillUnder IFRS 3, goodwill on acquisitions is no longer amortised, but is held atits UK GAAP carrying value at the transition date and is then subject to anannual impairment review. No impairment was identified as at 1 January 2004 oras at 31 December 2004 following our review. An adjustment of ‚£126.0 millionwas made to the income statement to reflect the reversal of amortisation underUK GAAP during 2004. Of the ‚£126.0 million adjustment, ‚£124.5 millionincreased the carrying value of goodwill on the balance sheet, and the ‚£1.5million of amortisation relating to goodwill in joint ventures increased thecarrying value of investments accounted for using the equity method on thebalance sheet.2. Intangible assetsIFRS 3 requires separable intangible assets that are acquired as part of abusiness acquisition to be identified separately from goodwill. These assetsare amortised over their useful lives. United has taken advantage of thetransition exemption which allows the identification of intangible assets tobe applied only to those acquisitions which have taken place since thetransition date.The adjustment made represents the ‚£53.5 million of intangible assets acquiredas part of the CMPMedica acquisition, transferring this amount from goodwillto intangible assets. Amortisation of ‚£3.1 million has been charged on theseintangible assets during 2004.Notes to the consolidated financial statements at 31 December 200516. First-time adoption of International Financial Reporting and AccountingStandards (continued)3. Share-based paymentsUnder IFRS 2, the fair value of share options and other share-based paymentsis recognised as an expense through the profit and loss account over theexpected period through to the expected date of exercise. The Standardrequires recognition of the fair value of all share-based payments grantedfrom November 2002 onwards. In determining the impact on the profit and lossaccount for 2004, the cost of ‚£4.0 million as calculated under IFRS 2 has beenpartially offset by the reversal of the ‚£2.5 million charge made in respect ofthe group's incentive plans under UK GAAP, leaving a net adjustment of ‚£1.5million.4. Investments accounted for using equity methodCertain investments, which have been accounted for by the Group as fixed assetinvestments under UK GAAP since 2001, will be equity accounted under IAS 28.IAS 28 defines an associate based on the ability to exert significantinfluence, in contrast to UK GAAP where the influence has actually to beexerted.Due to the change in treatment for certain investments, a reclassification of‚£151.3 million was made to `Other investments' at transition date toreclassify amounts relating to investments that are now equity accounted underIAS 28. This amount was reclassified to `Investments accounted for using theequity method', and `Trade and other receivables', for ‚£46.4 million and‚£104.9 million respectively. This adjustment groups long-term loans with thehistorical cost of investment in accordance with IAS 28. The UK GAAP carryingvalue of these investments becomes deemed cost on transition under IFRS, andclassifies short-term loans separately in receivables. The net share of profitin these associates of ‚£2.5 million was also recorded an as adjustment in2004, which increases the carrying value of the investment on the balancesheet at 31 December 2004.For equity accounted investments, IAS 28 requires the share of post tax profitor loss to be shown in a separate line on the face of the income statement,compared to UK GAAP, which recognises the share of pre tax profit or loss andthe share of taxation separately. An adjustment of ‚£1.2 million was made onthe income statement, to transfer the share of tax for investments equityaccounted under UK GAAP, from the taxation line to the share of profit fromassociates and joint ventures line on the face of the income statement.5. Work in progress valuationUnder UK GAAP, it is acceptable for the valuation of work in progress toinclude attributable overheads. Under IAS 11, the valuation of work inprogress is restricted to direct costs incurred. An adjustment of ‚£1.3 millionwas made on transition, to transfer the attributable overheads included in thework in progress balance as at 1 January 2004 to retained earnings. A furtheradjustment of ‚£0.4 million was made at 31 December 2004, to transfer theattributable overheads at year-end to operating expenses in the incomestatement.6. Pension liabilityThere are differences between the methodologies for the valuation of pensionscheme assets under IAS 19 compared to FRS 17; under IAS 19, equityinvestments are valued on a bid value basis, whereas FRS 17 uses the mid-pointvaluation. The adjustment of ‚£0.9 million was made to the transition balancesheet at 1 January 2004, to recognise the additional pension costs under theIAS 19 valuation on transition compared to the FRS 17 valuation under UK GAAP.An adjustment of ‚£0.1 million was also made as at 31 December 2004, to reducethe retired benefit obligation liability as at 31 December 2004 to recognisethe difference in the 2004 pension charge.7. Deferred TaxationUnder IAS 12, a deferred tax liability is recognised on the difference betweenthe balance sheet amount of intangible assets acquired as part of the Group's2004 acquisitions and the tax base of the intangible assets. Goodwill isgrossed up by an equivalent amount and there is therefore no adjustment to netassets on recognition.The adjustment of ‚£15.4 million was made in 2004, to recognise a deferred taxliability on the intangible assets acquired as part of the CMPMedicaacquisition and gross up goodwill accordingly. ‚£0.9 million of the deferredtax liability was then released to the profit or loss, for the tax effect onthe amortisation of the CMPMedica intangible assets in 2004.8. Dividend creditor not accrued under IFRSUnder IAS 37, the liability for dividends is not recognised until a formalobligation arises. As a result, the final dividend in 2004 of ‚£28.1 millionthat was accrued under UK GAAP has been reversed under IFRS.Notes to the consolidated financial statements at 31 December 200516. First-time adoption of International Financial Reporting and AccountingStandards (continued)9. Cash and cash equivalentsUnder IAS 1, cash comprises cash on hand and demand deposits with banks orother financial institutions. This is the same as UK GAAP.However, under IFRS the cash balance also includes amounts for `cashequivalents'. Cash equivalents are short-term liquid investments, and IFRSdefines that cash equivalents are normally held for the purpose of meetingshort-term commitments rather than investment purposes, and normally have amaturity date less than 3 months. UK GAAP does not recognise the concept of`cash equivalents', or the requirement for a maturity date of less than 3months.As at 1 January 2004 and as at 31 December 2004, adjustments of ‚£114.5 millionand ‚£42.0 million respectively, were made to reclassify the credit link noteswith maturities greater than 3 months at the acquisition date from cash andcash equivalents to other investments.10. Holiday pay accrualUnder IAS 19, all accumulating employee compensated absences that are unusedat the balance sheet date must be recognised as a liability. There is nosimilar requirement under UK GAAP. An adjustment of ‚£1.8 million was made atthe transition date to recognise the holiday pay obligation at 1 January 2004,and a further ‚£1.3 million was recognised on the acquisition of CMPMedica, torecognise the holiday pay obligations at the acquisition date. This adjustmentincreased the CMPMedica goodwill on acquisition. An accrual of ‚£3.1 millionwas held at 31 December 2004.11. Translation of foreign operationsUnder IAS 21, the assets and liabilities of foreign operations are translatedat the closing rate at the balance sheet date, and the income and expenses foreach income statement are translated at the average rate for the period. Theresulting exchange differences must be recognised as a separate component ofequity, until disposal of the foreign operation when the accumulated exchangedifferences will be recognised in profit or loss when the gain or loss ondisposal is recognised. This is different from UK GAAP, where all exchangedifferences are taken directly to retained earnings.An adjustment of ‚£3.1 million was made at 31 December 2004, to reclassify thetranslation differences for foreign operations from retained earnings to otherreserves. An adjustment was also made to recognise the translation differenceon the deferred tax liability recognised for the CMPMedica acquisition of ‚£1.0million. This translation difference increased the deferred tax liability andreduced the total translation differences in other reserves.12. Recognition of revenue on market research contractsUnder IAS 11, the stage of completion method must be adopted for therecognition of revenue and expenditure on contracts where the outcome of thecontract can be estimated reliably.The adjustments of ‚£7.5 million and ‚£7.0 million as at 1 January 2004 and 31December 2004 respectively relate to the revenue and corresponding expenditureto be recognised in the profit or loss on short-term market researchcontracts.13. Non-current assets classified as held for saleThe group adopted IFRS 5 early, from 1 January 2004.Under IFRS 5, if the sale of a non-current asset is highly probable within oneyear from the balance sheet date, and the asset is available for immediatesale in its present condition, then it must be classified as held for sale.There is no requirement for this type of reclassification under UK GAAP.The adjustment relates to a property with a carrying value of ‚£5.1 million asat 31 December 2004 that is expected to be sold within the next 12 months.14. Consolidation of investment equity accounted under UK GAAPUnder UK GAAP, control is defined as the ability to direct the financial andoperating policies of an entity with the view to gaining economic benefitsfrom activities. Under IAS 27, control is presumed to exist when the parentowns more than half of the voting power of an entity, unless there areexceptional circumstances to demonstrate that control does not exist.An adjustment has been made to consolidate one of the group's subsidiaries,which was treated as an equity accounted investment under UK GAAP.Notes to the consolidated financial statements at 31 December 200516. First-time adoption of International Financial Reporting and AccountingStandards (continued)Explanation of material adjustments to the cash flow statement for 2004Due to the reclassification of credit link notes with a maturity date ofgreater than 3 months at 31 December 2004, from `cash and cash equivalents' to`other investments', the movement in these credit link notes is now shown inthe cash flow statement under investing activites.There are no other material differences between the cash flow statementpresented under IFRSs and the cash flow statement presented under UK GAAP.Financial InstrumentsThe effect of the changes to the Group's accounting policies on the equity ofthe Group at 1 January 2005 was as follows: As restated Effect of under IFRS adoption of IFRS 31 December IAS 32 and 1 January 2004 2005 IAS 39 Footnote ‚£m ‚£m ‚£mAssetsNon-current assetsGoodwill 583.8 - 583.8Intangible assets 50.4 - 50.4Property, plant and equipment 45.0 - 45.0Investments accounted for using the 54.2 - 54.2equity methodOther investments 47.9 - 47.9 781.3 - 781.3Current assetsInventories 14.9 - 14.9Trade and other receivables 306.1 - 306.1Derivative financial assets a - 5.2 5.2Cash and cash equivalents 339.4 - 339.4 660.4 5.2 665.6 Non-current assets classified as held 5.1 - 5.1for sale Total assets 1,446.8 5.2 1,452.0 Current liabilitiesBorrowings 142.8 - 142.8Convertible bond - - -Trade and other payables 503.4 - 503.4 646.2 - 646.2Non-current liabilitiesBorrowings b 96.1 5.1 101.2Convertible bond c 208.7 (9.9) 198.8Retirement benefit obligation 96.0 - 96.0Trade and other payables 4.6 - 4.6Provisions 48.6 - 48.6Derivative financial liabilities d - 51.0 51.0Deferred tax liabilities 16.8 - 16.8 470.8 46.2 517.0Total liabilities 1,117.0 46.2 1,163.2 Shareholders' equityShare capital 84.5 - 84.5Share premium 310.8 - 310.8Other reserves 189.4 - 189.4Retained earnings e (257.5) (41.0) (298.5)Total shareholders' equity 327.2 (41.0) 286.2Minority interests 2.6 - 2.6Total equity 329.8 (41.0) 288.8 Total equity and liabilities 1,446.8 5.2 1,452.0Notes to the consolidated financial statements at 31 December 200516. First-time adoption of International Financial Reporting and AccountingStandards (continued)Financial instrumentsThe Group adopted IAS 32 Financial Instruments: Disclosure and Presentationand IAS 39 Financial Instruments: Recognition and Measurement on 1 January2005 and undertook the exemption not to restate its comparative informationfor IAS 32 and IAS 39.The following notes explain the adjustments made at 1 January 2005 to theGroup's balance sheet at 31 December 2004 to reflect the adoption of IAS 32and IAS 39.Adjustment to recognise listed investments at fair value. Under UK GAAP, theseinvestments were recorded at cost. ‚£m(a) Derivative financial assets - non-currentRecognition of interest rate swaps 5.1Recognition of derivative financial assets at fair value 0.1Total adjustment to derivative financial assets 5.2 ‚£m(b) BorrowingsRecognition of interest rate swaps 5.1Total adjustment to borrowings 5.1Separation of the convertible bond into the debt component (fair valued ontransition) and embedded derivative component (measured at fair value throughprofit and loss). Under UK GAAP, the bond was recorded as a liability at fairvalue. ‚£m(c) Convertible bond Separation of embedded derivative component (9.9)Total adjustment to convertible bond (9.9)Recognition of fair values of derivative financial liabilities. These were notrecognised under UK GAAP. ‚£m(d) Derivative financial liabilities - non-currentRecognition of swaps at fair value on transition 2.9Recognition of the derivative component of the convertible bond at 48.1fair valueTotal adjustment to derivative financial liabilities 51.0(e) The cumulative effect of all of the above adjustments has resulted in anincrease in retained earnings at 1 January 2005 of ‚£41.0 million.ENDSUNITED BUSINESS MEDIA PLCRelated Shares:
UBM