2nd Mar 2007 07:00
Strong results from a more balanced and predictable business
Preliminary Results for the Year Ended 31 December 2006
Headline results
Continuing revenue Up 16.6 % to ‚£739.1m (‚£633.7m)
Continuing operating profit1 Up 17.6 % to ‚£149.0m (‚£126.7m) Profit before tax2
Up 5.5 % to ‚£160.5m (‚£152.1m)EPS2 (diluted) Up 19.7 % to 43.8p (36.6p) Dividend per share Up 20 % to 18.0p (15.0p)
Special Dividend of 72p per share totalling ‚£203m payable in March 2007
PR Newswire, events, exhibitions and data performing well
Acquisitions ahead of plan
Online and print in line with expectations
Underlying revenue up 4.3% (2005 - 4.1%)
Margins maintained: 20.3% (2005 - 20.1%)
‚£163m invested in acquisitions in 2006
‚£60m received from disposals in 2006
‚£161m of capital returned through convertible and share buybacks
Net cash of ‚£131m at year end
1 Before amortisation of intangible assets on acquisitions, exceptional itemsand share of taxation on profit from joint ventures and associates2 Before amortisation of intangible assets on acquisitions, exceptional items,share of taxation on profit from joint ventures and associates, net financingcost - other than interest adjusted to include operating profits fromdiscontinued operations and operating profits of equity accounted investmentssold in 2005. EPS also excludes deferred tax on the amortisation of intangibleassets. Diluted EPS includes the impact of share options and the convertible bond. Statutory results Revenue ‚£739.1m (‚£633.7m)Group operating profit ‚£118.4m (‚£83.9m) Profit before tax ‚£113.5m (‚£225.7m)EPS 50.7p (157.1p) EPS (diluted) 49.8p (142.8p)
David Levin, Chief Executive Officer of United Business Media plc said:
2006 was a successful year for UBM. We delivered a strong financialperformance, increasing revenue, operating profit and returns to shareholders. We made important progress in our strategic development. UBM is a focused setof professional B2B media and service businesses that connect buyers andsellers across complementary media - events, data, online, print and newsdistribution - helping buyers and sellers to do business, and their markets tooperate effectively and efficiently.In 2006 we continued to rebalance UBM's media portfolio towards events, onlinemedia and data-based products in order to take advantage of shifting patternsof market growth, media consumption and advertising spend. We continue todirect UBM's businesses towards those markets which offer higher growth, morepredictable revenue streams, more reliable profitability and markets which willbe sustainable into the future as the digital revolution advances.Having made 18 acquisitions in 2006 for a total of ‚£163m, we expect to meet thetarget we set in February 2006 of investing ‚£300m-‚£500m in acquisitions by theend of 2007, whilst maintaining our strict financial criteria foracquisitions. The pipeline of potential acquisitions is currently good and ourcapacity to manage and integrate our acquisitions has grown.We will fulfil the commitment we gave in February 2006 to return capital inexcess of ‚£300m to shareholders by the end of 2007. We will do this by payinga special dividend totalling more than ‚£200m to shareholders in March 2007,subject to shareholder approval. This will meet our capital return commitmenta year early and will take the total of capital returned to shareholders sinceMarch 2006 to more than ‚£360m.
Outlook
By reshaping UBM through acquisitions, disposals and investments, our revenuesand profitability have become more predictable and less dependent on printclassified and display advertising. To date we have chosen only to provideanalysis of our revenue in terms of media type (events, data, online, print). However the effect of reshaping UBM has been more pronounced on thepredictability of our profitability than of our revenues. We expect to earnmore than 85% of our expected 2007 profits from PR Newswire, from exhibitionsand events, and from online workflow data products and print directories. PR Newswire's underlying revenue growth is on track to exceed last year's 6.8%,with a strong flow through into profits. This, coupled with cost reductionsderived from our investment in editorial systems and in new acquisitions, isexpected to result in another strong performance from the business in 2007,both in terms of revenue and profit growth. Forward bookings for 2007 are upmore than 10% across all our main exhibition and event businesses in CMPTechnology, CMP Asia and CMP Information.We are launching a number of new events in 2007 - the first InterOp event inGermany (www.interop.eu), Think07 in the UK (www.think07.co.uk), a variety ofnew events in India (notably IFSEC, www.ifsecindia.com) and our first events inBrazil and Abu Dhabi. The scale of the new launch programme itself poses somerisks - first events are hard to predict.
Certain of our directory and subscription data businesses, for example CMPMedica's Vidal directories, have already substantially achieved their targeted 2007 revenues and profits while other businesses are showing good forward orders. For example, subscriptions to Commonwealth's PIERS online data products are approximately 10% ahead year-on-year.
However we also note a number of factors which will partially offset the growthanticipated above. As customers continue to redistribute their spend acrossmedia types, we expect further deterioration in certain magazines and otherprint titles. Furthermore, although now profitable, we have not yet achievedsatisfactory margins from our online businesses. The performance in CMPMedicais mixed; its media portfolio in several key markets, including the US and UK,requires rebalancing. We anticipate that in 2007 UBM will achieve underlying revenue growth in excessof 5%. With the combination of improvements in the underlying business, activebalance sheet management and further acquisitions, we believe our shareholderscan look forward to further good performance in 2007.David LevinContactsMedia Peter Bancroft Director of Communications E-mail [email protected] Direct telephone +44 20 7921 5961 Chris Barrie Citigate Dewe Rogerson E-mail [email protected] Direct telephone +44 20 7282 2943 Mobile +44 796 872 72 89 Analysts / Investors E-mail [email protected] telephone +44 20 7921 5095 Nigel Wilson +44 20 7921 5019 Andrew Crow +44 20 7921 5940
A webcast of the results presentation will be made available from UBM's website from 9.30am, 2 March 2007. To access the webcast please go to www.unitedbusinessmedia.com.
A video recording of the webcast will also be accessible from UBM's website. The presentation will also be available from UBM's website as a podcast.
1. Chief Executive's Review
1.1. Results Overview
UBM enjoyed a successful year in 2006. Revenues from continuing operations grew by 17% to ‚£739.1m (2005 - ‚£633.7m) and operating profit1 from continuing operations rose by 18% to ‚£149.0m (2005 - ‚£126.7m).
Profit before tax2 was ‚£160.5m excluding profits on disposals, and ‚£185.3m including disposal profits. In 2006 margins improved to 20.3% (2005 - 20.1%).
Earnings per share2 rose by 20% to 43.8p from 36.6p on a fully diluted basis and by 11% to 45.5p from 40.9p on a headline basis.
We ended the year with ‚£130.9m of net cash on the back of solid trading.
The Board is proposing a final dividend of 13.6p, taking the total dividend for 2006 to 18.0p, an increase of 20% from 15.0p in 2005.
(1) Before amortisation of intangible assets on acquisitions, exceptional items and share of taxation on profit from joint ventures and associates (2) Before amortisation of intangible assets on acquisitions, exceptional items, share of taxation on profit from joint ventures and associates, net financing cost - other than interest, adjusted to include operating profits from discontinued operations and operating profits of equity accounted investments sold in 2005. EPS also excludes deferred tax on the amortisation of intangible assets. Diluted EPS includes the impact of share options and the convertible bond.
1.2. 2006 Performance
In 2006 UBM performed strongly against its key strategic priorities and in delivering value to shareholders - growing diluted Earnings Per Share2 and dividends by 20% - whilst continuing to develop our businesses for long term success.
PR Newswire and CMP Asia both delivered excellent performances in 2006. CMPInformation produced good results and the newly-acquired Commonwealth performedin line with its acquisition business case. CMP Technology's rebalanced andrefocused media portfolio delivered improved results. CMPMedica had a mixedperformance.In order to position UBM's businesses to take advantage of shifting patterns ofmarket growth, media consumption and advertising spend, a key strategicpriority has been to rebalance UBM's aggregate media portfolio towards events,online media, data-based products and news distribution. Our aim is to directUBM's businesses towards markets which offer higher growth, more visiblerevenue streams, more reliable profitability and which will prove sustainableinto the future as the digital revolution advances.Following the acquisition of a number of events businesses, notably MediaLive,by the end of 2006 the proportion of UBM revenues and profits generated fromevents was 29.0% (2005 - 23.9%) and 43.3% (2005 - 33.8%) respectively, anincrease in revenue of 12.2% on an underlying basis. Revenues derived fromonline businesses grew by 18.5% on an underlying basis, to account for 5.6% ofoverall UBM revenues. Following the acquisition of Commonwealth Business Mediain July, the proportion of revenues and profits derived from data-basedproducts (including online workflow products and print data products such asdirectories), also grew to 11.9% and 14.3% respectively with underlying revenuegrowth of 3.0%. PR Newswire accounted for 17.1% of revenues (2005 - 14.9%) and28.0% of profits (2005 - 21.7%) with underlying revenue growth of 6.8% forthe year. The proportion of revenues attributable to our advertising-basedmagazines fell from 46.4% in 2005 to 36.3% in 2006, a decline of 2.5% on anunderlying basis. The proportion of UBM profits derived from these magazinesfell from 31.1% in 2005 to 14.6% in 2006.UBM accelerated the process of rebalancing its media portfolio throughacquisitions and disposals. In 2006 UBM invested ‚£163m in 18 acquisitions anddisposed of businesses and assets for a total of ‚£60m. With the exception ofCommonwealth Business Media, the acquisitions made in the year were all'bolt-on' acquisitions intended to complement existing market positions and toprovide enhanced growth opportunities for existing UBM businesses. Theacquisitions were principally of event, online and data businesses. UBMmaintains strict financial discipline in targeting an 8% post-tax return oncapital for acquired businesses or assets in their first full year ofownership. We anticipate that all of the acquisitions made in 2006 will meetor surpass our target return rate.UBM made its largest acquisition of 2006 and entered a new market with theacquisition of Commonwealth Business Media in July for ‚£83m. Commonwealth is aleader in the international trade and transportation business intelligencemarket, a substantial market offering significant growth potential as worldtrade continues to expand. Commonwealth's Chief Executive Officer, Alan Glass,joined UBM's senior management team. As a predominantly data-based business,Commonwealth complements very well UBM's other event and print mediabusinesses. Following its acquisition by UBM, Commonwealth expanded itsaviation-related business with the acquisition of two complementary businesses,Official Airline Guides and Aviation Industry Group for a total of ‚£9m.
In 2006, UBM increased its investment in organic business development across all its businesses. This investment has been made in the development of new products particularly online and event products, as well in evolving and extending existing products into new markets.
1.3. People & Management
We have been active in building leadership and management development programmes. Over the coming years these programmes will thoroughly renew and refresh the management cadre within all of UBM's businesses, helping us to identify and accelerate the careers of our most talented people.
The structure and organisation of UBM's businesses evolved significantly during2006 with the formation of two dedicated worldwide businesses focusing onspecific markets. Serving the needs of the global pharmaceutical market, allUBM's healthcare-related businesses were consolidated under the umbrella ofCMPMedica. Similarly, CMP Media divested itself - either by disposal or bytransfer to other UBM businesses - of a range of non-technology-related assetsin order to focus exclusively on serving global technology markets.
1.4. Strategy Summary
UBM is a focused, profitable and growing professional B2B media and service business that connects buyers and sellers across the best possible mix of complementary media - events, data, online, print and news distribution - helping them to do business and their markets to operate effectively and efficiently.
UBM's strategy to achieve profitable growth explicitly recognises the macrochanges taking place in the media business environment, especially those drivenby the digital revolution. In particular, UBM seeks to take advantage of thefragmentation of broad media markets into many more smaller, narrower, morespecialist communities of interest.Each of UBM's businesses aims to position itself at the heart of fast-growing,business-to-business, professional communities of interest, offering aportfolio of complementary premium media products that serves the needs of eachcommunity's buyers and sellers.
UBM aims to own the 'must attend' event, the 'must read' publication or website, the 'must have' market analysis or information resource for each community of buyers and sellers that we serve. These media products command a premium for advertising space, information and analysis, and for making face-to-face introductions at events.
1.5. OutlookBy reshaping UBM through acquisitions, disposals and investments, our revenues and profitability have become more predictable and less dependent on print classified and display advertising. To date we have chosen only to provide analysis of our revenue in terms of media type (events, data, online, print). However the effect of reshaping UBM has been more pronounced on the predictability of our profitability than of our revenues. We expect to earn more than 85% of our expected 2007 profits from PR Newswire, from exhibitions and events, and from online workflow data products and print directories. PR Newswire¢â‚¬â„¢s underlying revenue growth is on track to exceed last year¢â‚¬â„¢s 6.8%, with a strong flow through into profits. This, coupled with cost reductions derived from our investment in editorial systems and in new acquisitions, is expected to result in another strong performance from the business in 2007, both in terms of revenue and profit growth. Forward bookings for 2007 are up more than 10% across all our main exhibition and event businesses in CMP Technology, CMP Asia and CMP Information.We are launching a number of new events in 2007 ¢â‚¬â€œ the first InterOp event in Germany (www.interop.eu), Think07 in the UK (www.think07.co.uk), a variety of new events in India (notably IFSEC, www.ifsecindia.com) and our first events in Brazil and Abu Dhabi. The scale of the new launch programme itself poses some risks ¢â‚¬â€œ first events are hard to predict.Certain of our directory and subscription data businesses, for example CMPMedica¢â‚¬â„¢s Vidal directories, have already substantially achieved their targeted 2007 revenues and profits while other businesses are showing good forward orders. For example, subscriptions to Commonwealth¢â‚¬â„¢s PIERS online data products are approximately 10% ahead year-on-year.However we also note a number of factors which will partially offset the growth anticipated above. As customers continue to redistribute their spend across media types, we expect further deterioration in certain magazines and other print titles. Furthermore, although now profitable, we have not yet achieved satisfactory margins from our online businesses. The performance in CMPMedica is mixed; its media portfolio in several key markets, including the US and UK, requires rebalancing. We anticipate that in 2007 UBM will achieve underlying revenue growth in excess of 5%. With the combination of improvements in the underlying business, active balance sheet management and further acquisitions, we believe our shareholders can look forward to further good performance in 2007.
2 Summary group income statement
The income statement set out below re-presents the group's full income statement (which accompanies this summary) in order to provide a better understanding of the results from operations.
Year Ended 31 December 2006 2005 ‚£m ‚£m %Revenue 739.1 633.7 16.6
Continuing operating profit1 149.0 126.7 17.6 Discontinued operating profit3 0.7 11.3 Investments sold in 20053 - 3.9 Net interest income 8.3 12.7 Other financing income/(costs) - pension 2.5 (2.5) schemes Profit before tax2 160.5 152.1 5.5
Net financing cost -other than interest (20.0) (19.1) Amortisation of intangible assets
(15.0) (11.4) Other exceptional items 9.9 379.8 Profit before tax 135.4 501.4 Taxation (24.9) (22.7) Exceptional taxation credit 35.9 -
Taxation relating to exceptional items - (1.2) Profit after tax 146.4 477.5 Minority interest (4.5) (1.9) Retained profit for the period 141.9 475.6
Proposed dividend (pence) 18.0 15.0 20.0 EPS2 (pence) 45.5 40.9 11.3 Fully diluted EPS2 43.8 36.6 19.7 (1) Before amortisation of intangible assets on acquisitions, exceptionalitems and share of taxation on profit from joint ventures and associates(2) Before amortisation of intangible assets on acquisitions, exceptionalitems, share of taxation on profit from joint ventures and associates, netfinancing cost - other than interest, adjusted to include profits fromdiscontinued operations and results of equity accounted investments sold in2005. EPS also excludes deferred tax on the amortisation of intangibleassets. Diluted EPS includes the impact of share options and the convertiblebond. (3) Discontinued businesses comprise NOP World, CMP Entertainment, UK Motoringtitles, and UK Classified titles. Investments sold in 2005 comprise five, SISand SDN
Summary of preliminary financial results for the year ended 31 December 2006
Consistent with the Interim, the results presented below and the related divisional commentary reflect continuing businesses under the new management structure.
Note: As previously notified the amounts shown against CMP Technology (formerlyCMP Media), CMP Information and CMPMedica in the table below have beenrestated to reflect the intra-group transfer of the US Healthcare titles andCME events from CMP Media to CMPMedica, the transfer of the Healthcare titlesof CMP Information in the UK to CMPMedica and the transfer of two US eventsfrom CMP Media to CMP Information. The amounts transferred are stated indetail in the business segments section of the financial statements. Revenue Operating Profit1 Year ended 31 December Year ended 31 December 2006 2005 Change Underlying4 2006 2005 Change U'lying4 ‚£m ‚£m (%) (%) ‚£m ‚£m (%) (%) PR Newswire5 129.9 104.1 24.8 6.8 41.9 29.2 43.5 33.8CMP Asia 66.8 61.0 9.5 19.2 18.5 17.5 5.7 15.3CMP Information 169.8 157.7 7.7 4.9 40.8 40.7 0.2 0.1CMP Technology 186.2 156.6 18.9 (2.0) 22.5 16.0 40.6 (20.5)CMPMedica 169.5 154.3 9.9 2.6 22.8 24.1 (5.4) (11.4)Commonwealth 16.9 - - - 3.4 - - - 739.1 633.7 16.6 4.3 149.9 127.5 17.6 5.7Corporate6 - - - (0.9) (0.8) - Continuing 739.1 633.7 16.6 149.0 126.7 17.6 businesses Investment sold in - - - - 3.9 - 2005 - corporate 739.1 633.7 16.6 149.0 130.6 - (1) Before amortisation of intangible assets on acquisitions, exceptionalitems, share of taxation on profit from joint ventures and associates(4) Underlying: adjusted for the effects of acquisitions, disposals,discontinued operations, FX, biennial events and consolidation of CanadaNewswire.(5) Our 50% share of Canada Newswire has been consolidated in 2006 increasingreported revenues by ‚£21.0m, operating profit by ‚£3.7m and minority interest by‚£2.6m. (6) Corporate operations comprises net central operating costs, together withthose equity accounted investments which do not form part of one of the group'soperating divisions.Underlying revenue was up 4.3% after adjusting for the effects of acquisitions,disposals, discontinued operations, biennials, foreign exchange andconsolidation of Canada Newswire. Revenue from 2005 and 2006 acquisitions
was‚£132.7m (2005 - ‚£39.8m). Operating profit from these acquisitions was ‚£25.0m(2005 - ‚£7.8m).
The movement in the US dollar and the Euro has a direct translation impact -with approximately two thirds of UBM revenue reported locally in US dollars orEuros, group revenue decreased by ‚£7.0m as a result of foreign exchange. Theaverage rate of ‚£:$ exchange for the year was $1.85 (2005 - $1.81), togetherwith the effects of other currency movements this decreased operating profit by ‚£1.4m. The average Euro exchange rate was ¢â€š¬1.46 (2005 - ¢â€š¬1.46). A 1 cent movement in the US dollar against Sterling is approximately equivalent to a move in profit of around ‚£400,000 to ‚£500,000 in 2007.
Divisional commentary
PR NewswirePR Newswire delivered a strong performance in all areas of operation. Underlying revenue was up 6.8% and underlying operating profit was up 33.8%,with the overall operating margin up from 28% to 32.3%. PR Newswire's strongperformance is driven by increased international traffic, increased demand fromUS customers for PR Newswire's premium US1 news distribution service and growthin added value services - MultiVu, eWatch and MediaRoom and cost reductions. The European operating margin was 33.3%. The Rest of the World grew operatingprofit to ‚£3m (‚£1.8m profit in 2005). In October, PR Newswire strengthenedits position in the US non-regulatory news distribution market with theacquisition of US Newswire for consideration of $22m (‚£12m) including earnout. This was PR Newswire's first acquisition in four years and is performingahead of expectations. CMP AsiaCMP Asia delivered a strong performance; underlying revenue was up 19.2% andunderlying operating profits up 15.3%. CMP Asia had another successful yearwith growth from its established business, new launches and acquisitions. Continuing events such as the jewellery, beauty and fashion fairs in Hong Kong,the natural health fairs in Japan and the Sinoexpo fairs in China havecontinued to grow strongly. The Japan Jewellery fair, acquired in 2005,performed well. Operating margins of 27.7% (2005 - 28.9%) reflect additionalinvestment in new product development - including India, China and online. CMP Asia generates around 90% of its revenues from exhibitions. It continuesto achieve excellent results, driving profitable organic growth, throughlaunching and expanding its events and investing in new products, including itsfirst online products. During 2006 it continued to make acquisitions andexpand its operations in the fast-growing economies of China and India.CMP InformationCMP Information's performance has been good. Underlying revenue was up 4.9%and underlying profit was up 0.1%. Exhibitions, particularly its internationalexhibitions, performed strongly achieving 9.4% underlying growth. The impactof this growth was offset by increased investment in new online, exhibition anddata products which reduced margins by 2%.We have continued to make acquisitions and disposals to reshape CMPInformation's product portfolio. In 2006 CMP Information acquired three events- The National Venue Show, The Thames Gateway Forum and the ATC (Air TrafficControl) Maastricht Conference - for a total of ‚£4.8m and in 2007 acquiredQuest, an events business, for ‚£5m. The acquisitions are performing in linewith expectations. We disposed of a number of UK titles, whose revenues werepredominantly classified advertising, for ‚£16.7m. CMP TechnologyCMP Technology increased revenue by 18.9% and operating profit by 40.6%. Thiswas principally driven by the strong performance of its 2005 and 2006acquisitions. Acquisitions included MediaLive and Shorecliff in 2006 for atotal of ‚£50.4. Light Reading, TechOnline, Black Hat and ICMI were acquired in2005 for ‚£37.0m. Including these acquisitions, proforma underlying revenue wasup 1.5% and profora underlying profit increased by 12.6%. Through this activeacquisition programme, CMP Technology has significantly strengthened andfocused its product portfolio in order to serve its customers' needs across allour media channels. The business has been restructured and decentralised so as to orientate it moredirectly towards its three key markets - the builders (Technology InnovatorsGroup), the buyers (Business Technology Group) and the sellers of technology (Channel Group). There is an exceptional charge of ‚£14.9m related to this restructuring. The business's senior management and sales force have also beenstrengthened, with a number of important new recruits joining the company during the second half.CMP Technology is successfully changing the mix of its portfolio largelythrough the acquisition of events and online businesses, and through theredevelopment of its online products. CMP Technology now has an eventsbusiness which generated revenues of some $115m (‚£63m) - more than double thatof 2005 and which is achieving underlying growth of more than 10%. Online hasmoved into profit.
In 2006 CMP Technology also disposed of its largely print-based US Entertainment business for $51m (‚£28m).
CMPMedica
CMPMedica's overall performance was mixed. Underlying revenue increased 2.6%although operating profit declined 11.4%. This reflected investment in newproduct development particularly in online, event and data products.CMPMedica's France-based operations - from which the business derives morethan 50% its profits - performed well in 2006. The performance in othergeographies was mixed. Online investment included the Virtual IndustrySponsored Symposia (webcasts of Continuing Medical Education sessions),Hoptimal, a subscription-based online drug reference tool for French hospitalsand in the specialist search product, SearchMedica. Events investment includeda number of new meetings such as Advances in Oncology, Pulse Seminars andPrimary Care Clinics. During 2006 CMPMedica made four acquisitions for a total of ‚£4.1m - MediWorld(India) , MeXi Solutions (Belgium), MediReach Healthcare Communication (China)and The Care Show (UK).
Commonwealth
Commonwealth Business Media was acquired in July for $152m (‚£83m) and hasperformed well. Commonwealth provides data, news and analytical contentintegral to the everyday workflow of professionals working in the internationaltrade and transportation industry. Commonwealth gives UBM a strong position ina new vertical with a business that derives its revenues principally fromdata. The business has significant growth potential through acquisition,internationalisation of its existing products and through expansion of itsevents portfolio. Since the acquisition of Commonwealth, we have strengthenedand expanded the business through the acquisition of OAG Holdings (for ‚£2.5m)and Aviation Industry Group (for ‚£7m). Both these acquisitions are highlycomplementary additions to Commonwealth's existing BACK Aviation Solutionsbusiness. We expect the expanded Commonwealth business to generate in excessof $110m (‚£56m) of revenue in 2007.
Corporate
Corporate operations comprise net central operating costs, together with thoseequity accounted investments which do not form part of one of UBM's operatingdivisions. The 2005 profit includes ‚£3.9m operating profit from equityinvestments disposed of in 2005 including five, SIS and SDN. 4 Acquisitions and return of capitalThe Board has previously announced its intention to move to a prudentlyleveraged balance sheet by the end of 2007 by seeking to invest ‚£300m - ‚£500min acquisitions in 2006 and 2007, subject to maintaining UBM's strict financialcriteria for acquisitions. We are on track to achieve this target havinginvested a total of ‚£163.0m in acquisitions by the end of 2006. Theavailability of potential acquisitions is currently good. 5 Return of capitalThe Board expected to be in a position to return more than ‚£300m of capital toshareholders by the end of 2007. By the end of 2006, we had returned ‚£161.3mof capital. In the light of our strong balance sheet and our continuingcommitment to delivering shareholder value, we are seeking approval fromshareholders to return approximately ‚£203m of capital by way of a specialdividend of 72p per share and share consolidation. This would increase thecapital returned to shareholders since March 2006 to approximately ‚£363m. Thiswill also reduce the number of shares in issue by approximately 29 million.6 DividendThe Board is recommending a final dividend of 13.6 pence (2005 - 11.0 pence),bringing the total for the year to 18.0 pence (2005 - 15.0 pence), an increaseof 20 per cent. This increase reflects the strong performance achieved in2006 and the directors' confidence in the long term outlook for the business.The dividend cover is 2.5 times for 2006.Subject to shareholder approval, the final dividend on the ordinary shares willbe paid on 24 May 2007 to shareholders on the register on 27 April 2007. Thedividend on the B shares will be 8.0 pence per share. This dividend will bepaid on 24 April 2007to shareholders on the register on 23 March 2007.7 Cash and cash conversionOur balance sheet remains strong. The group had net cash at 31 December 2006of ‚£130.9m.
Continuing operating cash conversion remains strong at 95.5% of operating profit (2005 - 103.0%).
8 InvestmentsDuring 2006, we continued to hold investments in ITN (20%), the Press Association(17.01%) and RISI (50%). On 19 January 2007, UBM announced that it had purchased a controlling interest in RISI from our joint venture partner. RISI's revenue in 2006 was $21.6m and operating profit was $1.2m. 9 PensionsAt 31 December 2006 the aggregate deficit under IAS 19 decreased significantlyto ‚£6.9m from ‚£52.3m, reflecting strong asset returns together with ‚£7.3m ofadditional contributions made by the group. On a funding basis the UK schemes have a surplus of around ‚£8m. The IAS 19 interest credit was ‚£2.5m, being the excess of expected asset growth during 2006 over the scheme liabilities.
The UK liability calculations are based on the mortality tables PA92B1936 for pensioners and PA92B1954 for non-pensioners. For UK schemes, PA92B1936
indicates an average remaining life expectancy for a 65-year old male of 20.6 years.
10 TaxThe effective tax rate in 2006 was 18.0% (2005 - 17.1%).UBM'S tax creditor was reduced to ‚£205.7m from ‚£219.4m. This was partly aconsequence of reaching a number of settlements with different RevenueAuthorities which resulted in an exceptional tax credit to the profit and lossaccount of ‚£35.9m.As previously disclosed UBM is in dispute with HMRC with regards to a technicalmatter arising in relation to the sale of our Regional Newspapers business in1998. The tax in dispute is estimated at ‚£80m. The company's appeal was heardat the Special Commissioners on 21 July 2006. The decision of the tribunal wentagainst UBM and UBM lodged an appeal with the High Court. The appeal was heardon 22 February 2007 and we are awaiting the outcome. It is unlikely that thematter will be resolved in 2007.
Excluding potential payments in respect of the Regional Newpapers dispute discussed above, we do not expect the tax cash outflow in respect of this creditor in 2007 to exceed ‚£10m.
11 Interest and financingNet interest received was ‚£8.3m, ‚£4.4m less than the prior year as a result oflower net cash due to acquisitions and capital returns. Net interest incomerepresents receipts due to our net cash holding, reduced by interest paymentson the group's notes and facilities.
Other financing income relating to the pension schemes of ‚£2.5m (2005 - a charge of ‚£2.5m) represent the financing credit on the pension schemes calculated in accordance with IAS 19.
Net financing costs other than interest of ‚£20.0m largely relates to the'accounting' cost from fair valuing the equity option of the convertible bond,‚£20.3m, accretion of the convertible bond, ‚£0.7m, net of an exchange gain
of ‚£1.0m. 12 Exceptional itemsProfit on disposal of assets
During 2006 we continued to review our portfolio of titles which led to thedisposal of several consumer and enthusiast titles by CMP Technology for $51.3m(‚£27.7m) and a number of classified print titles by CMP Information for ‚£16.7m. In addition, we disposed of a property no longer used within thebusiness. Total profits on disposal amounted to ‚£24.8m after costs.Exceptional Taxation CreditThe group has resolved a number of outstanding items as a consequence of whichthere is a net exceptional tax credit of ‚£35.9m.Restructuring and business reorganisation costsAs discussed above, an exceptional charge relating to CMP Technology'sreorganisation has been recognised. The total charge is ‚£14.9m, of which ‚£13.7m relates to vacant property and will be incurred over the remainder of
thelease term.Consolidated income statementfor the year ended 31 December 2006 As restated As restated As restated Before Before Exceptional Exceptional Exceptional Exceptional items items Total items items Total 2006 2006 2006 2005 2005 2005Notes ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Continuing operations 3 Revenue 739.1 - 739.1 633.7 - 633.7 Other operating 12.5 - 12.5 11.9 - 11.9 income Operating expenses (622.0) - (622.0) (540.2) - (540.2) 4 Exceptional - (14.9) (14.9) - (37.2) (37.2) reorganisation and restructuring costs Share of results 3.7 - 3.7 4.2 8.5 12.7 from joint ventures and associates (after tax) Income from - - - 3.0 - 3.0 investments Group operating 133.3 (14.9) 118.4 112.6 (28.7) 83.9 profit Exceptional items 4 Profit on disposal - 4.3 4.3 - - - of property, plant and equipment 4 Profit on disposal - - - - 150.7 150.7 of equity accounted investments - 4.3 4.3 - 150.7 150.7 Earnings before 133.3 (10.6) 122.7 112.6 122.0 234.6 interest and taxes ("EBIT") Finance income/ (costs) 5 Interest income 14.9 - 14.9 28.2 - 28.2 5 Interest cost (6.6) - (6.6) (15.5) - (15.5) 5 Financing income - 1.0 0.4 1.4 8.4 - 8.4 other than interest 5 Financing cost - (0.7) (20.7) (21.4) (13.8) (13.7) (27.5) other than interest 5 Financing income/ 2.5 - 2.5 (2.5) - (2.5) (cost) - pension schemes Profit before tax 144.4 (30.9) 113.5 117.4 108.3 225.7 4,6 Taxation (24.0) 35.9 11.9 (22.3) (1.2) (23.5) Profit for the year 120.4 5.0 125.4 95.1 107.1 202.2 from continuing operations Discontinued operations 16 Profit for the year - 21.0 21.0 - 275.3 275.3 from discontinued operations (after tax) Profit for the year 120.4 26.0 146.4 95.1 382.4 477.5 Attributable to: Equity shareholders 141.5 475.2 - ordinary Equity shareholders 0.4 0.4 - B shares Minority interests 4.5 1.9 146.4 477.5 Earnings per share - from continuing operations (pence) 7 - basic 43.2p 66.1p 7 - diluted 42.4p 63.3p Earnings per share - continuing and discontinued operations (pence) 7 - basic 50.7p 157.1p 7 - diluted 49.8p 142.8p ‚£m ‚£m Adjusted group 149.7 141.9 operating profit1 Amortisation of (15.0) (11.4) intangible assets arising on acquisitions Exceptional (14.9) (37.2) reorganisation and restructuring costs Share of taxation on profit in (0.7) 1.9 joint ventures and associates Operating profit (0.7) (11.3) from discontinued operations (before tax) Group operating 118.4 83.9 profit from continuing operations Dividends 8 - Interim dividend 12.3 11.0 of 4.4p (4.0p) 8 - Special dividend - 298.3 of nil (89.0p) 8 - Proposed special 202.5 - dividend of 72.0p (nil) 8 - Proposed year end dividend of 34.5 31.9 13.6p (11.0p) (1) Adjusted group operating profit represents group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations and pre tax profits of equityaccounted investments sold in 2005. Consolidated balance sheetat 31 December 2006 31 December 31 December 2006 2005Notes ‚£m ‚£m Assets Non-current assets Goodwill 691.5 590.6 Intangible assets 105.8 79.9 Property, plant and equipment 30.2
36.7
Investments in joint ventures and associates 23.9 22.2 Other investments 2.7 5.0 Current assets Inventories 6.7 9.4 Trade and other receivables 172.1
172.5
Derivative financial assets 5.8
2.9
10 Cash and cash equivalents 316.2 489.4 500.8 674.2 9 Assets classified as held for sale 3.4 - Total assets 1,358.3 1,408.6 Liabilities Current liabilities 11 Borrowings 188.0 145.6 11 Convertible bond - 93.7 Trade and other payables 331.8
318.8
Derivative financial liabilities 0.2 31.5 Provisions 24.8 38.8 Current tax liabilities 205.7 219.4 750.5 847.8 Non-current liabilities 11 Borrowings 2.9 3.3 Retirement benefit obligation 6.9
52.3
Trade and other payables 4.0
5.6
Provisions 27.4
31.2
Deferred tax liabilities 28.9 24.0 70.1 116.4 Total liabilities 820.6 964.2 Shareholders' equity 12 Share capital 85.9 84.9 13 Share premium 354.6 327.7 14 Other reserves 205.8 179.0 14 Retained earnings (113.4) (149.9) Total shareholders' equity 532.9
441.7
14 Minority interest in equity 4.8
2.7
Total equity 537.7
444.4
Total equity and liabilities 1,358.3
1,408.6
These financial statements were approved by a duly appointed and authorised committee of the Board of Directors on 2 March 2007 and were signed on its behalf by:
David Levin DirectorNigel Wilson DirectorConsolidated cash flow statementfor the year ended 31 December 2006 2006
2005
Notes ‚£m ‚£m Cash flows from operating activities Reconciliation of profit to operating cash flows Profit for the period 146.4 477.5 Add back: Taxation (11.0) 25.8 Depreciation 8.6 10.4 Amortisation 15.0 11.4 Interest income (14.9) (28.2) Interest expense 6.6 15.5 Net financing (income)/cost - pension schemes (2.5) 2.5 Net financing costs - other than interest 20.0 19.1 Other non-cash items 5.7 4.1
Share in profits from associates and joint ventures (4.4) (13.2)
Income from fixed asset investments -
(3.0)
Profit on disposal (24.8)
(417.0)
Exceptional reorganisation and restructuring costs 14.9 37.2
159.6
142.1
Payments against provisions (27.9)
(19.9)
Additional pension contributions (7.3)
(17.2)
Increase in inventories (0.7)
(6.2)
Decrease/(increase) in trade and other receivables 0.9
(17.1)
(Decrease)/increase in trade and other payables (32.0)
18.4
Cash generated from operations 92.6 100.1 Interest received 15.1 19.9 Interest paid (4.9) (16.4) Taxation paid (6.2) (17.4)
Dividends received from joint ventures and associates 5.1 2.8 Income from investments - 3.0 Net cash flows from operating activities 101.7 92.0 Cash flows from investing activities Acquisition of interests in subsidiaries, net of cash acquired (155.8)
(115.6)
Sale of discontinued operations 44.4
437.4
Purchase of property and equipment (13.1)
(9.7)
Proceeds of sale of property and equipment 16.9
6.3
Sale of interests in joint ventures and associates -
300.3
Purchase of interest in joint ventures and associates (4.1) - Purchase of other investments (0.6) - Proceeds from sale of investments 0.3
42.8
Net cash flows from investing activities (112.0)
661.5
Cash flows from financing activities Proceeds from issuance of ordinary share capital 29.1
18.2
Return of capital to shareholders (including costs) (95.4) (16.8)
Dividend paid to shareholders (44.6)
(337.8)
Dividend paid to minority interests (4.5)
(1.9)
Investment in own shares - ESOP (13.9) (7.4) Increase in borrowings 45.8 - Repurchase of bonds (68.1) (273.2) Net cash flows from financing activities (151.6)
(618.9)
Net decrease in cash and cash equivalents (161.9)
134.6
Net foreign exchange difference (7.9)
11.4
10 Cash and cash equivalents at 1 January 482.6
336.6
10 Cash and cash equivalents at 31 December 312.8
482.6
Consolidated statement of recognised income and expense for the year ended 31 December 2006
2006
2005
‚£m
‚£m
Profit for the financial year 146.4
477.5
Currency translation differences on foreign operations:
Group (38.1) (4.7) Joint ventures (0.7) 0.8 Minority interests (0.5) 0.3
Actuarial gain recognised in the pension schemes 32.5
25.0 (6.8) 21.4 Total recognised income 139.6 498.9 Attributable to: Equity shareholders 135.6 496.7Minority interests 4.0 2.2 139.6 498.9
Effects of changes in accounting policy Effect of adopting financial instruments standards IAS 32 & 39 - (41.0)Equity shareholders - (41.0)Minority shareholders - - - (41.0) Notes to the consolidated financial statementsat 31 December 2006
1. General information
The figures and financial information for the year ended 31 December 2006 donot constitute the statutory financial statements for that year. Thosefinancial statements have not yet been delivered to the Registrar, but includethe auditors' report which was unqualified and did not contain a statementunder Section 237 (2) or (3) of the Companies Act 1985. The figures andfinancial information for the year ended 31 December 2005 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 and authorised committee of the Board of Directors on 2 March 2007.
Changes to composition of group
Effective from 1 January 2006 the group has consolidated its 50% interest inCNW Group Limited. The remaining 50% is held by PA Group Limited (in which thegroup holds an interest of 17.01%). The change results from the groupexercising control over CNW Group Limited from this date. The impact of theconsolidation of CNW Group Limited is to increase News Distribution revenue by‚£21.0 million, operating profit by ‚£3.7 million, minority interest in theincome statement by ‚£2.0 million, total assets by ‚£7.9 million, totalliabilities by ‚£2.1 million, minority interest in the balance sheet by ‚£2.6million and reduce investments in joint ventures by ‚£3.2 million.
Effective from 1 January 2006 the group has equity accounted for its 17.01% share of PA Group Limited as a result of an increase in the levels of influence exerted over PA Group Limited. The impact has been to increase corporate operations operating profit by ‚£0.4 million.
The group has made a number of acquisitions in the year as disclosed in note 15 and has also made some disposals as disclosed in note 16.
2. Significant accounting policies
Basis 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. 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 policies
The accounting policies adopted are consistent with those of the previous financial year except as follows:
The group has adopted the following new and amended IFRS and IFRIC interpretations during the year. Adoption of these revised standards and interpretations did not have any effect on the financial statements of the group. Some did however give rise to additional disclosures:
IAS 21 Amendment - The Effects of Changes in Foreign Exchange RatesIAS 39 Amendments - Financial Instruments: Recognition and MeasurementIFRIC 4 Determining whether an Arrangement contains a LeaseIFRIC 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation FundsIFRIC 6 Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic EquipmentThe group has also early adopted the following IFRS and IFRIC interpretations.Adoption of these standards and interpretations did not have any effect on thefinancial position of the group. They did however give rise to additionaldisclosures.
IAS 1 Amendment - Presentation of Financial Statements Capital Disclosures IFRIC 8 Scope of IFRS 2
The principal effects of these changes are as follows:
IAS 1 Presentation of Financial Statements Capital Disclosures
The amendment to IAS 1 requires the group to make new disclosures to enable users of the financial statements to evaluate the group's objectives, policies and processes for managing capital.
IAS 21 The Effects of Changes in Foreign Exchange Rates
As of 1 January 2006, the group adopted the amendments to IAS 21 whichclarifies the definition of a net investment in a foreign operation and hencethe exchange differences that are recognised in a separate component of equityin the consolidated financial statements regardless of the currency in whichthe monetary item is denominated. The change has no significant impact as at 31December 2006 or 31 December 2005.
IAS 39 Financial Instruments: Recognition and Measurement
Amendment for financial guarantee contracts (issued August 2005) - amended thescope of IAS 39 to require financial guarantee contracts that are notconsidered to be insurance contracts to be recognised initially at fair valueand to be remeasured at the higher of the amount determined in accordance withIAS 37 Provisions, Contingent Liabilities and Contingent Assets and the amountinitially recognised less, when appropriate, cumulative amortisation recognisedin accordance with IAS 18 Revenue. As the group has no financial guaranteecontracts, this amendment did not have an effect on the financial statements.Amendment for hedges of forecast intragroup transactions (issued April 2005) -amended IAS 39 to permit the foreign currency risk of a highly probableintragroup forecast transaction to qualify as the hedged item in a cash flowhedge, provided that the transaction is denominated in a currency other thanthe functional currency of the entity entering into that transaction and thatthe foreign currency risk will affect the consolidated income statement. As thegroup currently has no such transaction, the amendment did not have an effecton the financial statements.Amendment for the fair value option (issued June 2005) - amended IAS 39 torestrict the use of the option to designate any financial asset or anyfinancial liability to be measured at fair value through the income statement.The group had not previously used this option, hence the amendment did not havean effect on the financial statements.
IFRIC 4 Determining Whether an Arrangement contains a Lease
The group adopted IFRIC Interpretation 4 as of 1 January 2006, which providesguidance in determining whether arrangements contain a lease to which leaseaccounting must be applied. This change in accounting policy did not have aneffect on the financial statements of the group.
IFRIC 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
The group adopted IFRIC Interpretation 5 as of 1 January 2006, whichestablishes the accounting treatment for funds established to help financedecommissioning for a company's assets. As the group does not currently operatein a country where such funds exist, this interpretation has had no impact onthe financial statements.
IFRIC 6 Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment
The group adopted IFRIC Interpretation 6 as of 1 January 2006, whichestablished the recognition date for liabilities arising from the EU Directiverelating to the disposal of Waste Electrical and Electronic Equipment. Thischange in accounting policy did not have an effect on the financial statementsof the group.IFRIC 8 Scope of IFRS 2
The group early adopted IFRIC 8 as of 1 January 2006, which requires IFRS 2 tobe applied to any arrangement where equity instruments are issued forconsideration which appears to be less than fair value. As equity instrumentsare only issued to employees in accordance with the employee share scheme, theinterpretation had no impact on the financial position of the group. 3. Segment informationBusiness segments
At 31 December 2006, the group is organised into six main business segments - News Distribution, CMP Asia, CMP Information, CMP Technology, CMPMedica and Commonwealth Business Media (acquired 19 July 2006). These segments are the basis on which the group reports its primary segment information.
The News Distribution segment operates in the distribution, targeting and evaluation of company information. The main activities of CMP Asia, CMP Information, CMP Technology, CMPMedica and Commonwealth Business Media are the production and provision of magazines, trade press, directories, business information, events and websites.
During 2006, UBM disposed of a number of its UK classified titles within CMPInformation and its US entertainment titles within CMP Technology. The marketresearch business was disposed of on 1 June 2005. The main activities of thissegment were syndicated and custom market research. The motoring titles withinCMP Information were disposed of on 16 September 2005. These titles andactivities are disclosed as discontinued operations (refer to note 16).
3. Segment information (continued)
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 2006and 31 December 2005.
Year ended 31 December 2006
Revenue Revenue Profit/ Share of from from (loss) from results from external other Total operating JVs and Segment customers segments revenue activities associates result ‚£m ‚£m ‚£m ‚£m ‚£m ‚£mContinuing operations Segments News distribution 129.9 - 129.9 41.2 0.6 41.8CMP Asia 66.8 - 66.8 18.2 - 18.2CMP Information 169.8 - 169.8 38.3 - 38.3CMP Technology 186.2 - 186.2 3.7 1.6 5.3CMPMedica 169.5 - 169.5 14.1 - 14.1Commonwealth 16.9 - 16.9 2.2 - 2.2Business Media Corporate - - - (3.0) 1.5 (1.5)operations2 739.1 - 739.1 114.7 3.7 118.4 Exceptional items - - - - - - 4.3corporate operations3 EBIT - - - - - 122.7 Discontinued operations (note 16) CMP Technology 14.7 - 14.7 - - -CMP Information 5.1 - 5.1 0.7 - 0.7 19.8 - 19.8 0.7 - 0.7 Eliminations - - - - - - 758.9 - 758.9 115.4 3.7 123.4Continuing operations Finance income/ (cost) Interest income 14.9Interest cost (6.6)Financing income - 1.4other than interest Financing cost - (21.4)other than interest Financing income - 2.5pension schemes (9.2)Taxation 11.9 Discontinued operations (note 16) Taxation (0.2) Profit from disposal of 20.5
discontinued operations (note
16) Profit for the year from continuing and discontinued 146.4operations 1 Adjusted group operating profit represents group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations and pre tax profits of equityaccounted investments sold in 2005.
2 Corporate operations comprises net central operating costs, together with those equity accounted investments which do not form part of one of the group's operating divisions.
3 Exceptional items include the profit on sale of property and, for 2005, of equity accounted investments.
3. Segment information (continued)
Year ended 31 December 2006 Amortisation Adjusted Share of tax on Exceptional items operating profit from JVs and charged to of Segment profit1 associates operating profit intangibles resultContinuing ‚£m ‚£m ‚£m ‚£m ‚£moperations Segments News 41.9 - - (0.1) 41.8distribution CMP Asia 18.5 - - (0.3) 18.2CMP Information 40.8 - - (2.5) 38.3CMP Technology 22.4 - (14.9) (2.2) 5.3CMPMedica 22.8 - - (8.7) 14.1Commonwealth 3.4 - - (1.2) 2.2Business Media Corporate (0.8) (0.7) - - (1.5)operations2 149.0 (0.7) (14.9) (15.0) 118.4 Exceptional - - - - 4.3items - corporate operations3 EBIT 149.0 (0.7) (14.9) (15.0) 122.7 Discontinued operations (note 16) CMP Technology - - - - -CMP Information 0.7 - - - 0.7 0.7 - - - 0.7 149.7 (0.7) (14.9) (15.0) 123.4 Year ended 31 Interest from December 2006 JVs and Share of results associates Tax from Share of results from JVs from JVs and JVs and and associates (pre associates associates interest and tax) ‚£m ‚£m ‚£m ‚£mContinuing operations Segments News 0.6 - - 0.6distribution CMP Asia - - - -CMP - - - -Information CMP Technology 1.6 - - 1.6CMPMedica - - - -Commonwealth - - - -Business Media Corporate 1.5 - (0.7) 2.2operations2 3.7 - (0.7) 4.4Discontinued operations (note 16) CMP Technology - - - -CMP - - - -Information - - - - 3.7 - (0.7) 4.4 (1) Adjusted group operating profit represents group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations and pre tax profits of equityaccounted investments sold in 2005.(2) Corporate operations comprises net central operating costs, together withthose equity accounted investments which do not form part of one of the group'soperating divisions.(3) Exceptional items include the profit on sale of property and, for 2005, ofequity accounted investments.
3. Segment information (continued)
Year ended 31 Adjusted group December 2006 operating profit1 Adjusted group operating ( before equity Share of results from JVs and profit1 accounted associates (before tax and investments) amortisation) as reported ‚£m ‚£m ‚£mContinuing operations Segments News 41.3 0.6 41.9distribution CMP Asia 18.5 - 18.5CMP Information 40.8 - 40.8CMP Technology 20.8 1.6 22.4CMPMedica 22.8 - 22.8Commonwealth 3.4 - 3.4Business Media Corporate (3.0) 2.2 (0.8)operations2 144.6 4.4 149.0 Discontinued operations (note 16) CMP Technology - - -CMP Information 0.7 - 0.7 0.7 - 0.7 145.3 4.4 149.7 Year ended 31 Segment Investments in Total Segment Total netDecember 2006 assets associates and JVs liabilities assets ‚£m ‚£m ‚£m ‚£m ‚£m Continuing operations Segments News distribution 46.3 1.8 48.1 (44.9) 3.2CMP Asia 45.4 - 45.4 (29.7) 15.7CMP Information 242.0 - 242.0 (71.4) 170.6CMP Technology 237.5 7.6 245.1 (76.9) 168.2CMPMedica 332.3 1.2 333.5 (94.4) 239.1Commonwealth 137.3 - 137.3 (27.7) 109.6Business Media Corporate 293.6 13.3 306.9 (241.0) 65.9operations2 1,334.4 23.9 1,358.3 (586.0) 772.3Discontinued operations (note 16) CMP Technology - - - - -CMP Information - - - - - - - - - - Unallocated - - - (234.6) (234.6)liabilities 1,334.4 23.9 1,358.3 (820.6) 537.7 (1) Adjusted group operating profit represents group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations and pre tax profits of equityaccounted investments sold in 2005.(2) Corporate operations comprises net central operating costs, together withthose equity accounted investments which do not form part of one of the group'soperating divisions.(3) Exceptional items include the profit on sale of property and, for 2005, ofequity accounted investments.
3. Segment information (continued)
Year ended 31 Capital Capital expenditure Depreciation OtherDecember 2006 expenditure (tangible assets and non-cash (acquisition of website development expenses businesses) costs) ‚£m ‚£m ‚£m ‚£mContinuing operations Segments News 12.4 3.5 2.6 0.5distribution CMP Asia - 0.5 0.2 0.4CMP 4.8 3.8 1.5 0.8Information CMP 50.4 2.9 2.2 0.7Technology CMPMedica 4.1 1.4 1.1 0.4Commonwealth 91.3 0.2 0.6 -Business Media Corporate - 0.8 0.4 2.9operations2 163.0 13.1 8.6 5.7 Discontinued operations (note 16) CMP - - - -Technology CMP - - - -Information - - - - 163.0 13.1 8.6 5.7 Capital expenditure of ‚£163.0 million represents gross cash paid of ‚£158.2million, plus accrued expected future deferred consideration payments. The cashoutflow on acquisitions of businesses during the year comprises cash paid netof cash acquired of ‚£152.9 million plus ‚£2.9 million of deferred considerationpayments on prior year acquisitions.
Geographical segments
Year ended 31 December 2006
Segment Segment Capital expenditure Capital expenditure revenue assets (acquisition of (tangible assets and businesses) website development costs) ‚£m ‚£m ‚£m ‚£mSegments Continuing operations United Kingdom 158.9 565.5 14.2 4.4North America 355.3 436.8 139.7 6.6Europe and 124.7 305.6 2.0 1.6Middle East Pacific 100.2 50.4 7.1 0.5 739.1 1,358.3 163.0 13.1 Discontinued operations (note 16) United Kingdom 5.1 - - -North America 14.7 - - -Europe and - - - -Middle East Pacific - - - - 19.8 - - - 758.9 1,358.3 163.0 13.1 (1) Adjusted group operating profit represents group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations and pre tax profits of equityaccounted investments sold in 2005.(2) Corporate operations comprises net central operating costs, together withthose equity accounted investments which do not form part of one of the group'soperating divisions.(3) Exceptional items include the profit on sale of property and, for 2005, ofequity accounted investments.
3. Segment information (continued)
Year ended 31 December 2005
As As As As restated restated restated As restated As restated restated Revenue Revenue Profit/ Share of from from (loss) from results from external other Total operating JVs and Segment customers segments revenue activities associates result ‚£m ‚£m ‚£m ‚£m ‚£m ‚£mContinuing operations Segments News distribution 104.1 - 104.1 14.2 2.4 16.6CMP Asia 61.0 0.3 61.3 17.0 - 17.0CMP Information 157.7 - 157.7 23.7 - 23.7CMP Technology 156.6 - 156.6 7.1 0.9 8.0CMPMedica 154.3 - 154.3 14.1 (0.3) 13.8Commonwealth - - - - - -Business Media Corporate - - (4.9) 9.7 4.8operations2 633.7 0.3 634.0 71.2 12.7 83.9 Exceptional items - - - - - - 150.7corporate operations3 EBIT - - - - - 234.6 Discontinued operations (note 16) CMP Technology 27.0 - 27.0 3.9 - 3.9Market research 76.8 0.1 76.9 4.4 - 4.4CMP Information 36.7 - 36.7 3.0 - 3.0 140.5 0.1 140.6 11.3 - 11.3 Eliminations - (0.4) (0.4) - - - 774.2 - 774.2 82.5 12.7 245.9Continuing operations Finance income/ (cost) Interest income 28.2Interest cost (15.5)Financing income - 8.4other than interest Financing cost - (27.5)other than interest Financing cost - (2.5)pension schemes (8.9)Taxation (23.5) Discontinued operations (note 16) Taxation (2.3)Profit from disposal of 266.3
discontinued operations (note
16) Profit for the year from continuing and discontinued 477.5operations (1) Adjusted group operating profit represents group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations and pre tax profits of equityaccounted investments sold in 2005.(2) Corporate operations comprises net central operating costs, together withthose equity accounted investments which do not form part of one of the group'soperating divisions.(3) Exceptional items include the profit on sale of property and, for 2005, ofequity accounted investments.
3. Segment information (continued)
Year ended 31 As As restated December 2005 restated As restated As restated As restated Exceptional Share of tax on items Amortisation Adjusted profit from charged to operating equity accounted operating of profit1 investments profit intangibles Segment resultContinuing ‚£m ‚£m ‚£m ‚£m ‚£moperations Segments News 29.2 (1.4) (11.2) - 16.6distribution CMP Asia 17.5 - (0.4) (0.1) 17.0CMP Information 40.7 - (14.8) (2.2) 23.7CMP Technology 16.0 - (7.2) (0.8) 8.0CMPMedica 24.1 - (2.0) (8.3) 13.8Commonwealth - - - - -Business Media Corporate 3.1 3.3 (1.6) - 4.8operations2 130.6 1.9 (37.2) (11.4) 83.9 Exceptional - - - - 150.7items - corporate operations3 EBIT 130.6 1.9 (37.2) (11.4) 234.6 Discontinued operations (note 16) CMP Technology 3.9 - - - 3.9Market research 4.4 - - - 4.4CMP Information 3.0 - - - 3.0 11.3 - - - 11.3 141.9 1.9 (37.2) (11.4) 245.9
Year ended 31 December 2005
Share of results from Share of Interest JVs and results from JVs Tax from JVs associates from JVs and and and (pre interest associates associates associates and tax) ‚£m ‚£m ‚£m ‚£m Continuing operations Segments News 2.4 - (1.4) 3.8 distribution CMP Asia - - - - CMP - - - - Information CMP 0.9 - - 0.9 Technology CMPMedica (0.3) - - (0.3) Commonwealth - - - - Business Media Corporate 9.7 (6.9) 3.3 13.3 operations2 12.7 (6.9) 1.9 17.7 Discontinued operations (note 16) CMP - - - - Technology Market - - - - research CMP - - - - Information - - - - 12.7 (6.9) 1.9 17.7 (1) Adjusted group operating profit represents group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations and pre tax profits of equityaccounted investments sold in 2005.(2) Corporate operations comprises net central operating costs, together withthose equity accounted investments which do not form part of one of the group'soperating divisions.(3) Exceptional items include the profit on sale of property and, for 2005, ofequity accounted investments.
3. Segment information (continued)
Year ended 31 December 2005 As restated As restated As restated Share of Adjusted group results from Adjusted operating profit1 equity group before equity investments operating accounted (before tax and profit investments) amortisation) as reported ‚£m ‚£m ‚£m Continuing operations Segments News distribution 25.4 3.8 29.2CMP Asia 17.5 - 17.5CMP Information 40.7 - 40.7CMP Technology 14.6 1.4 16.0CMPMedica 24.4 (0.3) 24.1Commonwealth Business Media - - -Corporate operations2 (3.3) 6.4 3.1 119.3 11.3 130.6
Discontinued operations (note 16)
CMP Technology 3.9 - 3.9Market research 4.4 - 4.4CMP Information 3.0 - 3.0 11.3 - 11.3 130.6 11.3 141.9 Year ended 31 As As restated As As restated As restatedDecember 2005 restated investments restated segment Total net Segment in associates Total liabilities assets assets and joint ventures ‚£m ‚£m ‚£m ‚£m ‚£mContinuing operations Segments News 24.6 5.3 29.9 (50.7) (20.8)distribution CMP Asia 45.6 - 45.6 (31.9) 13.7CMP Information 236.9 - 236.9 (103.5) 133.4CMP Technology 224.0 5.6 229.6 (66.4) 163.2CMPMedica 343.4 1.4 344.8 (59.5) 285.3Commonwealth - - - - -Business Media Corporate 497.1 9.9 507.0 (406.3) 100.7operations2 1,371.6 22.2 1,393.8 (718.3) 675.5Discontinued operations (note 16) CMP Technology 11.5 - 11.5 (2.5) 9.0Market research - - - - -CMP Information 3.3 - 3.3 - 3.3 14.8 - 14.8 (2.5) 12.3 Unallocated - - - (243.4) (243.4)liabilities 1,386.4 22.2 1,408.6 (964.2) 444.4 (1) Adjusted group operating profit represents group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations and pre tax profits of equityaccounted investments sold in 2005.(2) Corporate operations comprises net central operating costs, together withthose equity accounted investments which do not form part of one of the group'soperating divisions.(3) Exceptional items include the profit on sale of property and, for 2005, ofequity accounted investments.
3. Segment information (continued)
Year ended 31 As restated As restated As restated As restatedDecember 2005 Capital Capital Depreciation Other expenditure expenditure non-cash (acquisition of (tangible assets) expenses businesses) ‚£m ‚£m ‚£m ‚£mContinuing operations Segments News distribution - 1.2 2.5 0.7CMP Asia 4.2 0.3 0.2 0.5CMP Information 53.8 2.2 1.9 1.2CMP Technology 31.4 2.7 2.4 1.1CMPMedica 24.3 1.0 1.0 0.2Commonwealth - - - -Business Media Corporate - 0.8 0.5 0.1operations2 113.7 8.2 8.5 3.8 Discontinued operations (note 16) CMP Technology - - - -Market research - 1.5 1.2 0.3CMP Information - - 0.7 - - 1.5 1.9 0.3 113.7 9.7 10.4 4.1 Geographical segmentsYear Ended 31 December 2005 As As As restated restated restated As restated Segment Segment Capital expenditure Capital expenditure revenue assets (acquisition of (tangible assets) businesses) ‚£m ‚£m ‚£m ‚£mSegments Continuing operations United Kingdom 149.2 724.6 40.3 3.1North America 290.5 309.7 44.9 3.8
Europe and Middle 109.2 312.1 24.3 1.0East Pacific 84.8 47.4 4.2 0.3 633.7 1,393.8 113.7 8.2 Discontinued operations (note 16) United Kingdom 53.6 3.3 - 0.9North America 71.4 11.5 - 0.2Europe and Middle 15.2 - - 0.4East Pacific 0.3 - - - 140.5 14.8 - 1.5 774.2 1,408.6 113.7 9.7
The amounts shown for the year ended 31 December 2005 have been restated to reflect the intra-group transfer of 'US Healthcare', a US based medical publishing and continuing medical education business from CMP Technology to CMPMedica; the UK healthcare activities from CMP Information to CMPMedica; and the exhibitions business in the beauty and cruise shipping markets from CMP Technology to CMP Information.
For the year ended 31 December 2005, ‚£37.0m of revenue and ‚£3.5m of operatingprofit1 for 'US Healthcare' was transferred from CMP Technology to CMPMedica, ‚£10.4m of revenue and ‚£1.2m of operating profit1 of the UK healthcare activitieswas transferred from CMP Information to CMPMedica, and ‚£5.3m of revenue and ‚£1.5m of operating profit1 for the beauty and cruise shipping exhibitionsbusiness was transferred from CMP Technology to CMP Information.
As stated in note 2, the group has consolidated CNW Group Limited from 1 January 2006 and equity accounted its interests in PA Group Limited from the same date.
The impact of the consolidation of CNW Group Limited is to increase NewsDistribution revenue by ‚£21.0 million, operating profit by ‚£3.7 million andminority interest share of profits by ‚£2.0 million. The impact of equityaccounting of the group's share of PA Group Limited is to increase the groupoperating profit by ‚£0.4 million.4. Exceptional itemsExceptional items are presented separately as, due to their nature and for theinfrequency of the events giving rise to them, this 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 of
financial performance. As restated 2006 2005 ‚£m ‚£m
(Charged) / credited to operating profit
Vacant property costs (13.7) (8.8)Redundancy (1.2) (8.6)
Re-engineering of business processes -
(10.3)
Restructuring and business reorganisation costs -
(7.8)
Integration of acquired businesses -
(1.7)
Total exceptional reorganisation and restructuring costs (14.9)
(37.2)
Share of results from associates disposed of during the year -
8.5
Total charged to operating profit (14.9)
(28.7)
(Charged)/credited to EBIT Profit on disposal of property, plant and equipment 4.3
-
Profit on disposal of equity accounted investments -
150.7
Total (charged)/credited to EBIT (10.6)
122.0 Charged to profit before tax
Net finance costs - bond buybacks (see note 5) (20.3)
(13.7)
Total (charged)/credited to profit before tax (30.9)
108.3
(Charged)/credited to profit after tax Tax on disposal of equity accounted investments -
(1.2)
Exceptional taxation credit 35.9
-
Total credited to profit after tax 5.0
107.1
Credited to discontinued operations Profit on disposal of discontinued operations (note 16) 20.5
266.3
Profit from discontinued operations (note 16) 0.5
9.0
Profit for the year after discontinued operations 26.0
382.4
Disposals
During the year, the group disposed of a number of titles, including themajority of its remaining UKclassified titles, together with the US based Musicand Entertainment portfolio. The aggregate profits on disposal, which have beenshown as an exceptional item in the group's profit and loss account, amount to‚£20.5 million. The operating results for these disposed businesses have beenincluded within discontinued activities.The group also sold its freehold interest in a property which was no longer inuse within the business giving rise to an exceptional profit on disposal of
‚£4.3 million. Taxation
The group has resolved a number of outstanding items as a consequence of which there is a net exceptional tax credit of ‚£35.9 million.
4. Exceptional items (continued)Restructuring and business reorganisation costsDuring the year, the group commenced a further programme to restructure its CMPTechnology business. This involves the downsizing of the existing operationsbased in Long Island, New York, together with the offshoring of certainfunctions. The costs of ‚£14.9 million recognised as an exceptional item in 2006represent the expected vacant property costs arising, together with certainrelated redundancies already incurred.During 2005, the group recorded an exceptional charge of ‚£37.2 million relatingto a number of restructuring and reorganisation projects, of which ‚£7.2 millionwas spent in 2005. Of the balance, a further ‚£18.5 million has been incurredduring 2006. The majority of the remaining balance represents provisions forvacant property and related costs. As a result of changes to expected timingsfor a specific project which was commenced in 2005, the level of vacantproperty cost to be incurred is less than was originally anticipated; howeveradditional expenditure on redundancy and business restructuring has beenincurred, resulting in a reclassification of ‚£3.2 million between theprovisions held for property and provisions for reorganisation andrestructuring in respect of this project. The overall cost ofthe project remains unchanged.5. Finance income/(cost) Recurring Exceptional Total Recurring Exceptional Total 2006 2006 2006 2005 2005 2005 ‚£m ‚£m ‚£m ‚£m ‚£m ‚£mInterest income Cash and cash equivalents 14.9 - 14.9 28.2 - 28.2 Interest cost Borrowings and loans (5.1) - (5.1) (14.0) - (14.0) Other (1.5) - (1.5) (1.5) - (1.5) (6.6) - (6.6) (15.5) - (15.5)
Financing income - other than
interest Buyback of bonds (c) - 0.4 0.4 - - - Net foreign exchange gain 1.0 - 1.0 8.4 - 8.4(a) 1.0 0.4 1.4 8.4 - 8.4Financing cost - other than interest Fair value loss on embedded - (20.7) (20.7) (9.0) (2.2) (11.2)derivative (b) Buyback of bonds (c) - - - - (11.5) (11.5) Convertible bond (d) (0.7) - (0.7) (4.8) - (4.8) (0.7) (20.7) (21.4) (13.8) (13.7) (27.5) Financing cost - pension 2.5 - 2.5 (2.5) - (2.5)schemes Net finance income/(cost) 11.1 (20.3) (9.2) 4.8 (13.7) (8.9)
(a) Foreign exchange gain on US Dollar denominated balances held
in
UK accounts. The majority of this gain in 2005 arose from the strengthening ofthe US Dollar in the first half of that year.(b) Under IAS 32 and IAS 39, UBM's US Dollar convertible bondcontains an embedded derivative (the option to convert USD denominated debtinto GBP equity), which is measured at fair value with changes in fair valueincluded in the income statement until conversion or repurchase. The fairvalue loss in 2005 of ‚£9.0 million resulted from the increase in UBM's shareprice. The fair value loss of ‚£20.7 million (31 December 2005: ‚£2.2 million)reported as exceptional relates to the portion of the bond that was repurchased/ converted during the year.(c) In 2006 and 2005, UBM repurchased the majority of its US
Dollar
convertible bond, and $179.3 million of the principal of the US dollar fixedrate unsecured notes. This charge reflects the debt settlement gain/(loss),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
equity derivative. This charge reflects the accretion of the debt to the value at maturity.
6. TaxationMajor components of income tax expense for the year ended 31 December 2006 are: As restated 2006 2005 ‚£m ‚£m
Consolidated income statement
Current tax: Current tax charge 27.9 29.0 Deferred tax: Origination and reversal of temporary differences (3.7)
(3.2)
Income tax expense in the consolidated income statement 24.2
25.8
Less: income tax expense for discontinued operations (0.2)
(2.3)Income tax expense for continuing operations 24.0 23.5 Factors affecting tax charge for the yearA reconciliation of income tax expense before exceptional tax credit applicableto accounting profit before tax at the statutory tax rate to tax expense forthe year ended 31 December 2006 is as follows: As restated 2006 2005 ‚£m ‚£m
Profit before tax from continuing operations 113.5
225.7
Profit before tax attributable to discontinued operations (note 16) 21.2
277.6Profit before tax 134.7 503.3
Profit before tax multiplied by standard rate of corporation tax in 40.4
151.0UK of 30% Effect of:
Expenses not deductible for tax purposes 1.4
10.6
Tax effect of items not recognised in consolidated financial 3.6
(21.4)
statements
Origination and reversal of temporary differences not recognised (8.5)
13.3
Different tax rates on overseas earnings (0.4)
5.1
Foreign exchange gains (0.3)
(2.5)
Share of results from associates and joint ventures (after tax) (1.2)
(4.0)
Profit on sale of discontinued operations and equity accounted (6.8)
(124.5)investments Non-taxable income (4.0) (0.5)Other - (1.3) 24.2 25.8
Income tax expense reported in the consolidated income statement 24.0
23.5
Income tax attributable to discontinued operations (note 16) 0.2
2.3
24.2
25.8
The group has resolved a number of outstanding items as a consequence of which there is a net exceptional tax credit of ‚£35.9 million.
Deferred income taxDeferred income tax at 31 December relates to the following: Consolidated balance Consolidated income statement sheet 2006 2005 2006 2005 ‚£m ‚£m ‚£m ‚£mDeferred tax Fair value adjustments on 27.2 22.6 (4.0) (3.3)acquisitions Other temporary differences 1.7 1.4 0.3 0.1 28.9 24.0 (3.7) (3.2) At 31 December 2006, 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 for whicha deferred tax liability has not been recognised amount in aggregate to ‚£1.7billion (2005: ‚£1.8 billion). There are no income tax consequences to the groupattaching to the payment of dividends by the Company to its shareholders.6. Taxation (continued) 2006 2005 ‚£m ‚£m
The movement in the net deferred tax liability was as follows:
Net liability at 1 January 24.0 16.8Transfers (0.1) -Acquisition of subsidiaries (note 15) 9.8 10.7Amounts charged to net profit (3.7) (3.2)Currency translation (1.1) (0.3)Net liability at 31 December 28.9 24.0The group has unrecognised deferred tax assets of ‚£65.6 million relating todeductible temporary differences and ‚£30.3 million (of which ‚£25.9 million willexpire between 2020 and 2027) relating to unused tax losses (2005: ‚£55.2million and ‚£49.6 million respectively). No deferred tax asset has beenrecognised in respect of these amounts due to the unpredictability of futuretaxable profit streams.7. Earnings per share
Basic 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/(adding) interest andthe other income/expenses relating to the convertible bond) by the weightedaverage number of ordinary shares outstanding during the year (adjusted for theeffects of dilutive options and dilutive convertible bond).Adjusted earnings per share is calculated on the net profit for the yearattributable to ordinary equity shareholders, less amortisation of intangibleassets arising on acquisitions, certain exceptional items, deferred tax onamortisation of intangible assets, taxation relating to exceptional items andnet financing cost - other than interest, divided by the weighted averagenumber of ordinary shares outstanding during the year. Certain exceptionalitems, net financing costs - other than interest, taxation related toexceptional items and deferred tax on amortisation of intangible assets areexcluded from this calculation, as due to their nature and the infrequency ofthe events 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 operations basic and diluted earnings per share computations:
2006 2006 2006 2005 2005 2005 Weighted Weighted average Earnings average Earnings no. no. Earnings of per Earnings of per shares share shares share From continuing and ‚£m million pence ‚£m million pence
discontinued operations Adjusted group operating 149.7 141.9 profit Net interest income 8.3 12.7 Financing income/(cost) - 2.5 (2.5) pension schemes Adjusted profit before tax 160.5 152.1 Taxation (28.9) (26.0) Minority interests (4.5) (1.9) B share dividend (0.4) (0.4)
Adjusted earnings per share 126.7 278.7 45.5 123.8 302.5 40.9
Adjustments Amortisation of intangible (15.0) (5.4) (11.4) (3.8) assets arising on acquisitions Deferred tax on amortisation 4.0 1.4 3.3 1.1 of intangible assets Adjustments in respect of 45.8 16.4 379.8 125.6 exceptional items Taxation relating to - - (1.2) (0.4) exceptional items Net financing cost - other (20.0) (7.2) (19.1) (6.3) than interest Basic earnings per share 141.5 278.7 50.7 475.2 302.5 157.1 Dilution Options - 5.2 (0.9) - 3.3 (1.6) Convertible bond - - - 19.1 40.4 (12.7)
Diluted earnings per share 141.5 283.9 49.8 494.3 346.2 142.8 Adjusted earnings per share (as 126.7
45.5 above) 278.7 123.8 302.5 40.9 Options - 5.2 (0.8) - 3.3 (0.4) Convertible bond 0.2 6.0 (0.9) 3.1 40.4 (3.9)Diluted adjusted earnings per share 126.9 289.9 43.8 126.9 346.2 36.6
The convertible bond is earnings enhancing in 2006 and therefore its impact has been excluded from the diluted earnings per share calculation.
7. Earnings per share (continued) As As restated restated 2006 2006 2006 2005 2005 2005 Weighted Weighted average Earnings average Earnings no. no. Earnings of per Earnings of per shares share shares shareFrom continuing operations ‚£m million pence ‚£m million pence
Adjusted group operating profit 149.7 141.9
Operating profit from (0.7) (11.3) discontinued operations Net interest income 8.3 12.7 Financing income/(cost) - 2.5 (2.5) pension schemes Adjusted profit before tax 159.8 140.8 Taxation (28.7) (23.7) Minority interests (4.5) (1.9) B share dividend (0.4) (0.4) Adjusted earnings per share 126.2 278.7 45.3 114.8 302.5 37.9Adjustments Amortisation of intangible (15.0) (5.4) (11.4) (3.8)
assets arising on acquisitions Deferred tax on amortisation 4.0 1.4 3.3
1.1
of intangible assets Adjustments in respect of 25.3 9.1 113.5 37.6exceptional items Taxation relating to - - (1.2) (0.4)exceptional items Net financing cost - other (20.0) (7.2) (19.1) (6.3)than interest Basic earnings per share 120.5 278.7 43.2 199.9 302.5 66.1Dilution Options - 5.2 (0.8) - 3.3 (0.7) Convertible bond - - - 19.1 40.4 (2.1)Diluted earnings per share 120.5 283.9 42.4 219.0 346.2 63.3Adjusted earnings per share(as above) 126.2 278.7 45.3 114.8 302.5 37.9 Options - 5.2 (0.8) - 3.3 (0.4) Convertible bond 0.2 6.0 (0.9) 3.1
40.4 (3.5) Diluted adjusted earnings per share 126.4 289.9 43.6 117.9 346.2 34.0
The convertible bond is earnings enhancing in 2006 and therefore its impact has been excluded from the diluted earnings per share calculation.
The group has two categories of dilutive potential ordinary shares: those shareoptions granted to employees where the exercise price is less than the averagemarket price of the company's ordinary shares during the year, and sharesattributable to convertible debt. The impact of dilutive securities in 2006would be to increase the profit by ‚£21.2 million (2005: ‚£19.1 million) forconvertible debt and to increase weighted average shares by 5.2 million shares(2005: 3.3 million shares) for employee share options and 6.0 million shares(2005: 40.4 million shares) for convertible debt.The weighted average number of shares excludes ordinary shares held by the ESOPand the QUEST. The weighted average number of shares was affected by the shareconsolidation on 20 June 2005, where 17 existing ordinary shares were convertedto 14 new ordinary shares (refer to note 12).8. Dividends 2006 2005 ‚£m ‚£m
Declared and paid during the year Equity dividends on ordinary shares Final dividend for 2005 of 11.00p (2004: 8.37p)
31.9 28.1
Special dividend of nil (2005: 89.00p)
- 298.3
Interim dividend for 2006 of 4.40p (2005: 4.00p) 12.3 11.0Equity dividends - B shares
0.4 0.4 44.6 337.8 Proposed (not recognised as a liability at 31 December) Equity dividends on ordinary shares Special dividend for 2006 of 72.0p (2005: nil)
202.5 -
Final dividend for 2006 of 13.60p (2005: 11.00p)
34.5 31.9
The proposed final and special dividends are subject to approval by shareholders and have not been recognised as a liability in these financial statements.
The B shares have a fixed coupon, and the dividends of ‚£0.4 million owing as at 31 December 2006 have been accrued for accordingly.
9. Assets classified as held for saleAs at 31 December 2006, freehold property with a carrying amount of ‚£3.4million is classified as held for sale. The property was being activelymarketed before 31 December 2006 and a sale is expected to be completed during2007. As at 31 December 2005, there were no non-current assets classified asheld for sale.
10. Cash and cash equivalents
2006 2005 ‚£m ‚£mCash at bank and in hand 56.3 99.0Short term liquid funds 259.9 390.4 316.2 489.4
The effective interest rates on the cash and cash equivalents range between 0%and 6% for 2006 and 2005, 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 cash equivalents comprise the following at December:
2006 2005 ‚£m ‚£mCash at bank and in hand 56.3 99.0Short term liquid funds 259.9 390.4 316.2 489.4Bank overdrafts (note 11) (3.4) (6.8) 312.8 482.6 11. Borrowings 2006 2005 ‚£m ‚£mConvertible bond Current - 93.7
Derivative financial liabilities -
31.5
-
125.2
In 2001 United Business Media (Jersey) Limited, a wholly owned subsidiary ofthe company, issued a 5 year $400 million 2.375% fixed convertible bond with acoupon payable semi-annually. The bonds were convertible into PreferenceShares of United Business Media (Jersey) Limited at any time up to the seventhcalendar day before the date fixed for redemption, 19 December 2006. ThePreference Shares were, in turn, immediately exchangeable for a total of 47.8million Ordinary Shares in the company.In 2006 United Business Media (Jersey) Limited repurchased and cancelled atotal of $80.1 million of the remaining $165.4 million of the $400 million bondfor consideration of $119.2 million (31 December 2005: $234.6 million of theoutstanding $400 million bond for consideration of $285.4 million). A further$85.3 million of bonds were converted and exchanged into 10,196,753 OrdinaryShares in United Business Media Plc in 2006 (31 December 2005: ‚£nil). Following the repurchases and conversions no convertible bond amounts remainoutstanding at 31 December 2006 (31 December 2005: ‚£93.7 million).Other borrowings 2006 2005 ‚£m ‚£mCurrent Unsecured bank overdrafts 3.4 6.8Other loans 184.6 138.8 188.0 145.6Non-current Other loans 2.9 3.3 190.9 148.9The group's debt at the end of 2006 is ‚£190.9 million (2005: ‚£242.6 million)comprising ‚£148.2 million (sterling equivalent of ¢â€š¬206.6 million and 2,100million yen) drawn from the group's multicurrency revolving syndicatedfacility, ‚£2.9 million (sterling equivalent of $5.7 million) of US dollar fixedrate senior unsecured notes and ‚£39.8 million (being ¢â€š¬53.1 million, ‚£2.3million and ‚£1.8 million denominated in various other currencies) of bankborrowings and overdrafts with a maturity of less than one year. The five-yearstand-by ‚£325 million syndicated bank credit facility has a maturity of May2010. All conditions precedent to the committed borrowing facilities were
metat 31 December 2006.12. Share capital 2006 2005 ‚£m ‚£mAuthorised
400,936,636 (2005: 400,936,636) Ordinary shares of 30 and 5/14 pence each 121.7 121.7375,417,690 (2005: 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 paid At 1 January 2005 336,185,328 84.1 5,446,789 0.4 84.5 Issued in respect of share option
schemes and other entitlements 1,996,673 0.5 -
- 0.5
Shares 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 company - - (615,866)
- -
Shares repurchased and cancelled (2,760,000) (0.8) -
- (0.8)
Issued in respect of share option schemes and other entitlements 2,685,178 0.8 - - 0.8At 1 January 2006 278,222,120 84.5 4,830,923
0.4 84.9
Issued in respect of share option
schemes and other entitlements 7,179,010 2.2 -
- 2.2
Shares repurchased and cancelled (14,055,000) (4.3) -
- (4.3)
Issued on conversion of bond 10,196,753 3.1 -
- 3.1
B shares purchased by the company - - (697,153) - -At 31 December 2006 281,542,883 85.5 4,133,770 0.4 85.9Share repurchasesThe group repurchased and cancelled 14,055,000 of its own ordinary sharesduring the year at an average price of 663.3p (2005: 3,010,000 ordinary sharesat an average price of 508.3p). The total amount paid to acquire the ordinaryshares was ‚£93.2 million, and ‚£1.7 million was paid to acquire B shares (2005: ‚£15.3 million for ordinary shares and ‚£1.5 million for B shares). Issue of ordinary sharesDuring 2006, the holders of $85.3 million convertible bonds converted theirbonds into 10,196,753 ordinary shares in the company.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 with a nominal value of 25 pence each to 14 new ordinary shares with anominal value of 30 and 5/14 pence each. The share consolidation converted the337,932,001 existing issued and fully paid ordinary shares into 278,296,942 newissued and fully paid ordinary shares. The weighted average number of sharesused in the calculation of earnings per share reflects the share consolidation(refer to note 7).The 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 shares andreceive a continuing dividend linked to LIBOR. During the year ended 31December 2006, 697,153 B shares were purchased by the company for considerationof ‚£1.7 million. Cumulatively to 31 December 2006, 371,283,920 B shares havebeen purchased by the company for consideration of ‚£909.6 million. At 31December 2006, 4,133,770 B shares remain in issue (31 December 2005: 4,830,923B shares).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. On windingup, the B shareholders are entitled to 245 pence per share and the relevantproportion of the dividends outstanding. B shareholders do not have any votingentitlements except in a resolution relating to a winding up of the company orif the B share dividend has been outstanding for more than six months. 13. Share premium 2006 2005 ‚£m ‚£mIn issue at 1 January 327.7 310.8
Premium on shares issued, net of costs 26.9 16.9
In issue at 31 December 354.6 327.7
The company received ‚£29.1 million (2005: ‚£18.2 million) on the issue of sharesin respect of the exercise of options awarded under various share option plans,of which ‚£29.1 million (2005: ‚£18.2 million) is payable by employees to thegroup for the issue of these shares.14. Other reserves Foreign Capital currency Total Merger redemption translation ESOP Other other
retained Minority
reserve reserve reserve reserve reserve reserves earnings interests Total ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Balance at 31 31.3 42.9 2.1 (11.9) 125.0 189.4 (257.5) 2.6 (65.5) December 2004 Changes in accounting policy relating to first time - - - - - - (41.0) - (41.0) adoption of IAS 32 and 39 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 income and - - (3.9) - - (3.9) 500.6 2.2 498.9 expense for the year Shares repurchased and cancelled by the company - 0.9 - - - 0.9 (16.8) - (15.9) (including costs) Share-based - - - - - - 2.6 - 2.6 payment Special - - - - - - (298.3) - (298.3)dividend Equity - - - - - - (39.5) - (39.5) dividend Minority - - - - - - - (2.1) (2.1) interest dividend Own shares purchased by the company - - - (7.4) - (7.4) - - (7.4) Balance at 31 31.3 43.8 (1.8) (19.3) 125.0 179.0 (149.9) 2.7 31.8 December 2005 Total recognised income and - - (38.8) - - (38.8) 174.4 4.0 139.6 expense for the year Shares repurchased and cancelled by the company - 4.3 - - - 4.3 (95.4) - (91.1) (including costs) Share-based - - - - - - 2.1 - 2.1 payment Equity - - - - - - (44.6) - (44.6) dividend Minority - - - - - - - (4.5) (4.5) interest dividend Consolidation of entity previously - - - - - - - 2.6 2.6 equity accounted Issue of 69.8 - - - - 69.8 - - 69.8 ordinary shares Shares - - - 5.4 - 5.4 - - 5.4 awarded by ESOP Own shares purchased by the company - - - (13.9) - (13.9) - - (13.9) Balance at 31 101.1 48.1 (40.6) (27.8) 125.0 205.8 (113.4) 4.8 97.2 December 2006 Merger reliefThe group has applied the provisions of section 131 of the Companies Act 1985and obtained merger relief on the issue of 10,196,753 ordinary shares whichwere exchanged on conversion by the holders of $85.3 million convertible bondsin place of preference shares in United Business Media (Jersey) Limited, awholly owned subsidiary of the company. As a result the issue of the shareshave been recorded at nominal value and a merger relief reserve created.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differencesarising from the translation of the financial statements of foreignsubsidiaries. It is also used to record the effect of hedging net investmentsof foreign operations.Capital redemption reserve
Entries are made to the capital redemption reserve to ensure there is no reduction in capital when the group repurchases its own shares in accordance with the Companies Act 1985.
ESOP reserve
The ESOP reserve records ordinary shares held by the ESOP to satisfy future share awards. The shares are recorded at cost.
15. Acquisitions and disposals
UBM completed 18 acquisitions during 2006.
On 11 January 2006, UBM acquired MediaLive International, Inc. ('MediaLive')for a cash consideration of US$65.0 million. The transaction adds more than 20IT and telecoms-related events in the US, Japan, and Europe. On 11 January 2006, UBM acquired Shorecliff Communications LLC, a US eventsbusiness, for a cash consideration of US$12.3 million plus contingentconsideration up to US$1.4 million. Shorecliff's four principal events focuson the high growth technology markets of radio frequency identification,broadband services, wireless infrastructure and telecoms television/internetprotocol television.
On 13 March 2006UBM acquired ownership of a set of assets from Mediworld Publications, an Indian medical publisher, for ‚£0.4 million plus contingent consideration of up to ‚£0.3 million.
On 4 April 2006 UBM acquired ownership of the National Venue Show for ‚£1.5 million.
On 1 June 2006, UBM acquired Cable Digital News Inc, an online B2B media business providing news and analysis of the North American cable industry, for a total cash consideration of US$0.3 million.
On 30 June 2006, UBM acquired MeXi Solutions, a secure communication and dataaccess solutions provider to the Belgian healthcare industry, for a total cashconsideration of ¢â€š¬2.6 million.
On 30 June 2006, UBM acquired ownership of the Thames Gateway Forum for ‚£3.0 million plus contingent consideration up to ‚£0.2 million.
On 5 July 2006, UBM acquired Commonwealth Business Media, Inc. ('Commonwealth') for a cash consideration of US$152.0 million. Commonwealth is a leading specialist business intelligence provider to the international trade and transportation industry with comprehensive proprietary data, news and analytical content.
On 2 October 2006, UBM acquired US Newswire, a leading news distribution business focussed on government and public interest sectors, for an initial cash consideration of US$19.0 million plus contingent consideration of up to US$4.0 million.
On 6 October 2006, UBM acquired ownership of The Care Show for ‚£0.4 million plus contingent consideration of ‚£0.3 million.
On 6 October 2006, UBM also acquired ownership of the ATC (Air Traffic Control) Maastricht Conference for a total cash consideration of ‚£0.1 million.
On 9 October 2006, UBM acquired The Austin Game Initiative LLC, a producer ofconferences and events targeting game industry professionals for a total cashconsideration of US$1.1 million. On 5 December 2006, UBM acquired ownership of the Software 2007 conference foran initial cash consideration of US$5.5 million plus contingent considerationof up to US$3.5 million. On 6 December 2006, UBM acquired OAG Holdings Limited ('OAG'), an informationprovider to the global aviation industry, for a total cash consideration of ‚£2.5 million.
On 6 December 2006, UBM's subsidiary, CNW Group Limited, acquired Health Response Communications, a news distribution business focused on the healthcare industry, for cash consideration of CAN$1.5 million.
On 15 December 2006, UBM acquired MediReach Healthcare Communication, aprovider of medical and pharmaceutical marketing consultancy services, for aninitial cash consideration of US$1.1 million plus contingent consideration ofup to US$2.75 million .
On 21 December 2006, UBM acquired Aviation Industry Group Limited, an information provider to the global aviation industry with a portfolio of events, print titles and websites, for initial cash consideration of ‚£6.0 million plus contingent consideration of ‚£1.0 million.
On 21 December 2006, UBM also acquired Customer Contact Center Standard for a total cash consideration of US$0.4 million.
UBM acquired 100% of the voting rights in all cases where acquisitions involved the purchase of companies.
15. Acquisitions and disposals (continued)
The acquisition accounting for US Newswire, Health Response Communications, Aviation Industry Group and Customer Contact Center Standard has been determined on a preliminary basis as the valuation exercise at the date of acquisition is ongoing.
The following table sets out the carrying amounts of the identifiable assetsand liabilities acquired and their fair value in respect of the MediaLive andCommonwealth acquisitions: MediaLive Commonwealth 2006 2006 2006 2006 Fair Acquiree's Fair Acquiree's value carrying value carrying to group amount to group amount ‚£m ‚£m ‚£m ‚£mIntangible assets 9.5 - 23.2 -Property, plant and equipment 0.4 0.4 2.4 3.1Cash and cash equivalents 3.3 3.3 0.3 0.3Inventories - -
- - Trade receivables and other current assets 3.3 3.3 5.0 5.8
16.5 7.0 30.9 9.2Trade payables and other current (8.2) (8.2) (1.8) (1.6)liabilities Deferred tax liability - - (8.1) -Non-current liabilities - - (7.7) (7.7) (8.2) (8.2) (17.6) (9.3)Fair value of net assets 8.3 13.3 Goodwill arising on acquisition 28.6 69.4 36.9 82.7 2006 2006 ‚£m ‚£mConsideration: Cash paid 36.9 82.7Deferred consideration - -Total consideration 36.9 82.7The following table sets out the carrying amounts of the identifiable assetsand liabilities acquired and their fair value in respect of the acquisition
ofother businesses during 2006: 2006 2006 Fair Acquiree's value carrying to group amount ‚£m ‚£mIntangible assets 13.5 2.4Property, plant and equipment 1.6 5.3Cash and cash equivalents 1.7 1.7Inventories 0.1 0.1
Trade receivables and other current assets 5.2
5.2
22.1
14.7
Trade payables and other current liabilities (19.3)
(16.1)Deferred tax liability (1.7) -Non-current liabilities - - (21.0) (16.1)Fair value of net assets 1.1
Goodwill arising on acquisition 45.2
46.3 2006 ‚£mConsideration: Cash paid 38.6Deferred consideration 7.7Total consideration 46.3
The total consideration paid and payable on acquisitions is shown below:
2006 ‚£mConsideration: Cash paid 158.2Deferred consideration 7.7Total consideration 165.9
15. Acquisitions and disposals (continued)
UBM completed 12 acquisitions during 2005.
On 1 February 2005, UBM acquired Tissue World, an events and publication company, from Paperloop.com, Inc. The purchase price was US$4.8 million.
On 7 February 2005, UBM acquired the licensed trade sector publishing and events assets of Quantum Business Media ('Quantum') for ‚£21.0 million.
On 31 March 2005, UBM acquired the medical trade press and other professionalhealthcare business information services in France from MediMedia. The purchaseprice was ¢â€š¬36.0 million in cash.
On 4 April 2005, UBM acquired DotNetJunkies.com and SqlJunkies.com for US$0.2 million.
On 10 May 2005, UBM acquired ABI Building Data Limited for ‚£12.0 million.
On 7 July 2005, UBM acquired Incoming Calls Management Institute ('ICMI') for cash consideration of US$3.75 million.
On 18 August 2005, UBM acquired Light Reading Inc, Informex, and Tech Online for US$27 million, US$24 million, and US$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 cash consideration of US$10 million and US$2.7 million respectively.
UBM acquired 100% of the voting rights in all cases where acquisitions involved the purchase of companies.
The following table sets out the carrying amounts of the identifiable assetsand liabilities acquired and their fair value in respect of the acquisition
ofbusinesses during 2005: 2005 2005 Fair Acquiree's Value Carrying to Group amount ‚£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 3.5Inventories 0.6 0.6
Trade receivables and other current assets 21.9
21.5 69.0 50.1
Trade payables 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 20.2
Goodwill arising on acquisition 93.5
113.7 2005 ‚£mConsideration: Cash paid 109.9Deferred consideration 3.8Total consideration 113.7
15. Acquisitions and disposals (continued)
From the date of acquisition to 31 December 2006, the acquisitions made in 2006have contributed ‚£12.4 million to the operating profit and ‚£49.6 million torevenue of the group. If the acquisitions had taken place at the beginning ofthe year, the acquisitions would have contributed ‚£15.8 million to theoperating profit of the group, and ‚£99.4 million to revenue, which includes aloss from OAG of ‚£4.6 million.The goodwill of ‚£143.2 million (2005: ‚£93.5 million) recognised above relatesto certain intangible assets that cannot be individually separated and reliablymeasured from the acquiree due to their nature. These items include customerloyalty and a skilled workforce.In December 2006, the group acquired OAG for a purchase consideration of ‚£2.5million. The conversion of OAG into a profitable business will involve asignificant level of rationalisation and restructuring, the costs of which willbe incurred in 2007. These costs are estimated to be in the range of ‚£5 millionto ‚£8 million.
The aggregate cash flow effect of acquisitions was as follows:
2006
2005
‚£m ‚£mNet cash acquired with the subsidiaries (5.3)
(3.5)
Cash paid 158.2
109.9
Deferred consideration on 2005 acquisitions 2.9
-
Deferred consideration on 2001 acquisition -
9.2
Net cash outflow on acquisitions 155.8
115.6
The group paid ‚£2.9 million of deferred consideration during 2006 year in relation to the 2005 acquisitions of ICMI, Tech Online and Light Reading Inc. Under terms of the relevant sale and purchase agreements, additional consideration was payable if certain revenue and profit targets were met.
The group also paid ‚£9.2 million of deferred consideration during 2005 in relation to the 2001 acquisition of Allison-Fisher International, Inc. Under the earn out arrangement, if certain profit targets over the period of acquisition until 30 June 2004 were met, additional consideration was payable.
The intangible assets acquired as part of the acquisitions can be analysed asfollows: 2006 2005 ‚£m ‚£mBrands 21.3 20.8Customer contracts and relationships 16.4 16.5Subscription lists 0.6 0.1Databases 7.9 1.4Software - 0.4Trademarks - 2.1Total 46.2 41.3 Disposals
On 10 April 2006, UBM completed the sale of its Culverhouse Cross site for atotal consideration of ‚£18.7 million. A profit of ‚£4.3 million arose on thesale, being the proceeds of disposal less the carrying value of the propertyand costs of disposal.
On 27 April 2005, UBM completed the sale of its associate SDN Limited 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 the disposal of SDN Limited, being the proceeds of disposal less the carrying amount of the associate's net assets and costs of disposal.
On 2 September 2005, UBM announced the sale of its 20% shareholding in Satellite Information Services (Holdings) Ltd to Catalyst Media Group plc for ‚£ 23 million, and the sale of its 35.4% shareholding in Channel 5 Television Group Ltd to the RTL Group for ‚£247.6 million. Profits on sale for these disposals were ‚£11.9 million and ‚£112.3 million respectively.
16. Discontinued operations
On 15 May 2006, UBM announced the sale of a portfolio of UKclassified titleswhich were reported within CMP Information for an aggregate cash considerationof ‚£16.7 million. After accruals for related costs of disposal a profit of ‚£8.0million arose on the sale of these publications.On 14 September 2006, UBM announced the sale of a portfolio of US entertainmenttitles which were reported within CMP Technology for an aggregate cashconsideration of US$51.3 million. After accruals for related costs of disposala profit of ‚£12.5 million arose on the sale of these publications.On 15 April 2005, UBM announced the sale of its market research business, NOPWorld, to GfK Aktiengesellschaft for ‚£383.0 million in cash. The disposal wascompleted on 1 June 2005, on which date control of NOP World passed to theacquirer. A profit of ‚£235.8 million arose on the disposal of NOP World, beingthe proceeds of disposal less the carrying amount of the subsidiary's netassets, attributable goodwill and directly attributable costs.
On 16 September 2005, UBM announced the sale of Exchange & Mart and Auto Exchange to Newsquest Media Group Ltd for ‚£50.3 million in cash. A profit of ‚£ 30.5 million arose on the sale of these titles.
The results of the discontinued operations which have been included in the consolidated income statement were as follows:
UK classified US entertainment titles titles Total 2006 2006 2006 ‚£m ‚£m ‚£mRevenue 5.1 14.7 19.8Operating expenses (4.4) (14.7) (19.1)Profit before tax 0.7 - 0.7Interest income - - -
Profit before tax attributable to
discontinued operations 0.7 - 0.7Attributable taxation (0.2) - (0.2)
Profit after tax attributable to
discontinued operations 0.5 - 0.5
Profit from disposal of discontinued
operations 8.0 12.5 20.5Attributable tax expense - - -
Net profit attributable to discontinued
operations 8.5 12.5 21.0
Earnings per share for discontinued
operations Basic 7.5 pDiluted 7.4 p
Included in operating expenses is employee costs ‚£7.0 million, costs of inventories recognised as an expense ‚£2.3 million, auditors' remuneration ‚£0.1 million and other cost of sales and administration costs of ‚£9.7 million.
UKclassified US entertainment titles titles Total At date of At date of At date of disposal disposal disposal ‚£m ‚£m ‚£mGoodwill 3.3 3.3 6.6Property, plant and equipment - - -Trade and other receivables - 5.2 5.2Inventories - 3.0 3.0Cash and cash equivalents - - - 3.3 11.5 14.8Trade and other payables - (2.5) (2.5)Provisions - - - - (2.5) (2.5)Net assets attributable to 3.3 9.0 12.3discontinued operations
16. Discontinued operations (continued)
UKclassified US entertainment titles titles Total At date of At date of At date of disposal disposal disposal ‚£m ‚£m ‚£m
Net cash flows from operating 0.7 0.5
1.2
activities Net cash flows from investing - -
-
activities Net cash flows from financing - -
-
activities Net cash flows attributable to 0.7 0.5
1.2discontinued operations UK US Exchange & Mart classified entertainment and Auto titles titles NOP Exchange Total 2005 2005 2005 2005 2005 ‚£m ‚£m ‚£m ‚£m ‚£mRevenue 13.7 27.0 76.9 23.0 140.6Operating expenses (11.1) (23.1) (72.5) (22.6) (129.3)Profit before tax 2.6 3.9 4.4 0.4 11.3Interest income - - - - -Profit before tax attributable to discontinued operations 2.6 3.9 4.4 0.4 11.3Attributable taxation (0.5) (0.8) (0.9) (0.1) (2.3)Profit after tax attributable to discontinued operations 2.1 3.1 3.5 0.3 9.0Profit from disposal of discontinued operations - - 235.8 30.5 266.3Attributable tax expense - - - - -Net profit attributable to discontinued operations 2.1 3.1 239.3 30.8 275.3Earnings per share for discontinued operations Basic 91.0 pDiluted 79.5 p Included in operating expenses is employee costs ‚£53.3 million, depreciation ofproperty, plant and equipment ‚£1.9 million, cost of inventories recognised asan expense ‚£39.4 million, operating lease rentals ‚£3.5 million, auditors'remuneration ‚£0.2 million and other cost of sales and administration costs
of ‚£31.0 million. Exchange & Mart and NOP Auto Exchange Total At date of At date of disposal At date of disposal disposal ‚£m ‚£m ‚£mGoodwill 94.9 6.3 101.2
Property, plant and equipment 6.6 1.7
8.3
Trade and other receivables 53.1 -
53.1
Inventories 23.4 -
23.4
Cash and cash equivalents - -
-
178.0 8.0
186.0
Trade and other payables (60.4) -
(60.4)Provisions (0.6) - (0.6) (61.0) - (61.0)
Net assets attributable to 117.0 8.0 125.0discontinued operations 16. Discontinued operations (continued) Exchange & Mart and NOP Auto Exchange Total At date of At date of disposal At date of disposal disposal ‚£m ‚£m ‚£m
Net cash flows from operating (5.0) 0.4
(4.6)
activities Net cash flows from investing - -
-
activities Net cash flows from financing - -
-
activities Net cash flows attributable to (5.0) 0.4
(4.6)discontinued operations 17. Post balance sheet eventsOn 11 January 2007, UBM announced the acquisition of Quest Media Limited forcash consideration of up to ‚£5 million. The transaction adds six award events,three conferences and an associated magazine.On 19 January 2007, UBM announced the acquisition of an additional 2% of thevoting rights of RISI, Inc. ('RISI') for cash consideration of US$1 million.This equity purchase brings UBM's total shareholding in RISI to 52%, giving UBMa controlling interest in the company.
On 2 March 2007, the UBM Board announced that it is seeking approval from shareholders for a share consolidation and the payment of a special dividend of 72.0p.
Before amortisation of intangible assets on acquisitions, exceptional items and share of taxation on profit from joint ventures and associates
Before amortisation of intangible assets on acquisitions, exceptional items,share of taxation on profit from joint ventures and associates, net financingcost - other than interest adjusted to include operating profits fromdiscontinued operations and operating profits of equity accounted investmentssold in 2005. EPS also excludes deferred tax on the amortisation of intangibleassets. Diluted EPS includes the impact of share options and the convertiblebond. APPENDIX 1Segmental analysis
The following table sets out the segmental analysis for revenue and operating profit following the divisional reorganisations and disposals.
Revenue Operating profit1 Margins 2006 2005 2006 2005 2006 2005 ‚£m ‚£m ‚£m ‚£m % %Continuing operations PR Newswire 129.9 104.1 41.9 29.2 32.3 28.0CMP Asia 66.8 61.0 18.5 17.5 27.7 28.7CMP Information 169.8 157.7 40.8 40.7 24.0 25.8CMPMedica 169.5 154.3 22.8 24.1 13.5 15.6CMP Technology 186.2 156.6 22.5 16.0 12.1 10.2Commonwealth 16.9 - 3.4 - 20.1 -Corporate operations - - (0.9) (0.8) - - 739.1 633.7 149.0 126.7 20.3* 20.1* Investments sold in 2005 - 3.9 Discontinued operationsCMP Entertainment 14.7 27.0 - 3.9 CMP Information 5.1 36.7 0.7 3.0 Market Research - 76.8 - 4.4 Total 758.9 774.2 149.7 141.9 * margin excludes corporate operations(1) Before amortisation of intangible assets on acquisitions, exceptional items andshare of taxation on profit from joint ventures and associates
Note that the 2005 profit included ‚£3.9m operating profit from equity investments disposed of in 2005 including five, SIS and SDN which was not technically described as Discontinued under IFRS.
The following table sets out the segmental analysis for revenue and operatingprofit in local currency: Revenue Operating profit1 2006 2005 2006 2005 Continuing operations PR Newswire ($) 239.9 188.5 77.4 51.8 CMP Asia ($) 124.2 110.6 34.5 31.7 CMP Information (‚£) 169.8 157.7 40.8 40.7 CMPMedica (¢â€š¬) 249.2 224.2 33.5 33.6 CMP Technology ($) 342.9 283.1 40.6 30.2 Commonwealth ($) 32.3 - 6.5 -
(1) Before amortisation of intangible assets on acquisitions, exceptional items and share of taxation on profit from joint ventures and associates
Notes to Editors
1. About United Business Media plcUnited Business Media is a leading global business media company. We bringtogether the world's buyers and sellers and the information they need tosucceed. We focus on serving professional, commercial communities, fromconstruction to pharmaceuticals, around the world. Our 5,000 staff in morethan 30 countries are organised into specialist teams that serve thesecommunities, helping them to do business and their markets to work effectivelyand efficiently. For more information, go to www.unitedbusinessmedia.com
UNITED BUSINESS MEDIA PLCRelated Shares:
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