3rd Mar 2008 07:00
Tarsus Group PLC03 March 2008 3 March 2008Tarsus Group plc Preliminary Results for the Year Ended 31 December 2007 Strong Organic Growth & Selective Acquisitions Produce Record Results Tarsus Group plc ("Tarsus" or "the Group"), the international media group withinterests in exhibitions, conferences, publishing and online media is pleasedto announce record preliminary results for 2007. Financial Highlights • Profit before tax up 70 % to £11.9 million (2006: £7.0 million) • Adjusted profit before tax* up by 77% to £13.0 million (2006: £7.3 million) • Basic EPS up 54% to 15.2p (2006: 9.9p) • Adjusted EPS* up 61% to 16.6p (2006: 10.3p) • Adjusted operating cash conversion* of 109% (2006: 110%) • Year end net debt of £29.0 million (2006: £15.8 million) • Proposed full year dividend increased by 25% to 5.0p (2006: 4.0p) Operational Highlights • Strong like-for-like* organic revenue growth at 17% , repeating success of 2006 • Significant investment in organic growth strategy • Further broadening of portfolio with acquisition of the flagship Dubai Airshow • Excellent performance by all major events with high levels of rebooking • Strong first full year contribution from new US medical division (MCII) • Further strong progress in the scaled-up French portfolio • Emerging market business gathering scale and pace • Continued momentum at our online-led business, Caroo Neville Buch, Chairman of Tarsus, commented: "2007 was another year of outstanding progress for Tarsus both in terms offinancial results and strategic development. Having broadened the Group's basein 2006 with the acquisition of the MCII medical portfolio, we have extended itfurther in 2007 with the purchase of The W R Kern Organisation Limited (Kern)whose major event is the biennial Dubai Air Show. As a result, the Group'scommercial base has been further broadened both geographically and in terms ofsectors served. Revenues from emerging markets are expected to reach some 18%over our biennial cycle of events (2008/2009) and the Group now has meaningfulexposure to three of the world's fastest growing regions - the Middle East,China and India. We have continued to invest heavily in our products to ensure they remain marketleaders for our customers. We have also significantly strengthened ouroperational management teams to support the long term growth of the Company. Notwithstanding uncertain macro-economic conditions, especially in the US, ourforward bookings and trading are strong and we are presently seeing no slowdownin levels of interest or activity. Labelexpo Americas, our largest event in2008, is currently 95% contracted. With Labelexpo returning to the US and withan increasing proportion of our business now taking place in fast growingemerging markets, denominated in US dollars, our exposure to the US dollar in2008 will be slightly higher than in 2007. Your Directors remain confident of further strong progress over the 2008 / 2009cycle." Glossary * Adjusted profit before tax:Calculated using profit before tax adjusted for share option charges,amortisation charges, tax on profit from joint ventures and excludesprofit/loss on disposal of intangible assets. Adjusted EPS:Calculated using profit after tax attributable to equity shareholders adjustedfor share option charges, amortisation charges and excludes profit/loss ondisposal of intangible assets. Adjusted operating cash conversion:Cash generated from operations adjusted for working capital acquired/disposed of in the period divided by operating profit adjusted to exclude results from acquisitions and disposals made during the period. Like-for-like revenue and profit before tax: Calculated at constant exchange rates adjusted for biennial events, excludingacquisitions impacting for the first time in 2007, disposals and non-recurringproducts and items. FOR FURTHER INFORMATION, PLEASE CONTACT: Tarsus Group plc:Douglas Emslie, Group Managing Director: 020 8846 2700 Media:Matthew Moth, Madano Partnership: 020 7593 4000 Investors/Analysts:Neville Harris, IRfocus: 020 7593 4215Stephen Scott, Annabel Michie, Scott Harris 020 7653 0030 CHAIRMAN'S AND MANAGING DIRECTOR'S STATEMENT OVERVIEW The Group's oldest brand - Labelexpo - has shown uninterrupted revenue growthover the last thirty years and remains strong, driven by the introduction ofnew technologies and our expansion into emerging markets. Developments such asthis are underpinning the long-term prospects for the exhibitions industryglobally and Tarsus continues to look for opportunities that will deliversimilar returns for shareholders over the long-term. Exhibitions are a vital sales conduit, bringing together buyers and sellers,allowing attendees to view and discuss the latest products and servicesavailable in the market and enabling the establishment of long-term businessrelationships. In emerging markets, a lower degree of infrastructure combinedwith a cultural requirement for personal contact, means that exhibitions arethe mainstay of corporate marketing efforts. As these economies continue toexpand so the demand for exhibitions will continue to increase. In more mature markets we are also seeing a shift in the allocation of marketingspend, in both absolute terms and by market share, towards face-to-faceinitiatives such as the exhibition industry, and online. Tarsus is wellpositioned in both of these media channels. By focusing on growth markets and the implementation of an appropriate strategy,Tarsus has enjoyed rapid growth over the last five years. Since 2002, revenueshave grown from £18.6 million to £46.0 million and adjusted profit before tax has grown from £1.7 million to £13.0 million. Adjusted earnings per share haveincreased from 2.2p to 16.6p and dividends have been increased from 2.2p to5.0p per share. These results have been driven by a carefully targeted new launch programme, anumber of important strategic acquisitions and a concentration on organic growthfrom existing products. RESULTS We are pleased to report that 2007 was another record year for Tarsus with like-for-like organic revenue growth maintained at a high level of 17%. Once again,our established brands performed well, especially Labelexpo Europe and theleading French events. This year we were also aided by a full year'scontribution from our medical division (MCII) which continued to grow rapidly.Revenues from emerging markets increased significantly to £10.2 million from£1.0 million owing to the inclusion for the first time of the biennial DubaiAirshow. Our online-led business, Caroo, achieved revenue growth of 25% to £1.7million (2006: £1.4 million). Group revenue was £46.0 million (2006: £26.3 million), an increase of 75% withunderlying like-for-like organic growth of 17%. Profit before tax was £11.9 million compared with £7.0 million in 2006. Adjustedprofit before tax was up 77% to £13.0 million (2006: £7.3 million). Basic earnings per share were 15.2p (2006: 9.9p) and adjusted earnings per sharerose by 61% to 16.6p (2006: 10.3p). Adjusted operating cash conversion continued to be strong, representing 109% ofadjusted operating profit (110% in 2006). The continued excellent cashconversion rate reflects our strong focus on managing working capital as thebusiness expands. Net debt was £29.0 million (2006: £15.8 million) which waslower than expected at the time of the acquisition of Kern. Your Directors are proposing a final dividend of 3.5p per share, bringing thetotal for the year to 5.0p per share - an increase of 25% over 2006. The finaldividend, which is subject to shareholder approval, is proposed to be paid on30 April 2008 to Shareholders on the Register of Members of the Company on 14March 2008. We will continue to offer a scrip alternative. OPERATING REVIEW Introduction We have continued to invest heavily in our products to ensure they remain market leaders for our customers. To reflect the increased geographical spread and product diversity within theGroup, we have undertaken a number of initiatives throughout 2007 to furtherstrengthen key operational management:- • Our French division has been consolidated into one office (from three) and Bernard Becker has implemented a new management structure, with an experienced entrepreneurial team, to further accelerate our sales capability in this important market now that the expansion of the portfolio is substantially complete. • The management team in the US has been strengthened and our two medical operations have been consolidated into one location, in Florida. • Following the acquisition of the website www.cvbhotrates.com in July, we have appointed a new CEO to drive our online division Caroo's growth in the US. Summary of Results +-------------+-------------+-------------+---------------+| | USA | Europe | Emerging || | | | Markets |+-------------+------+------+------+------+-------+-------+|£ million | 2006 | 2007 | 2006 | 2007 | 2006 | 2007 |+-------------+------+------+------+------+-------+-------+|Revenue | 10.7| 10.1| 14.7| 25.7| 1.0| 10.2|+-------------+------+------+------+------+-------+-------+|Adjusted | 5.9| 4.2| 2.3| 8.4| 0.2| 2.2||profit before| | | | | | ||tax | | | | | | |+-------------+------+------+------+------+-------+-------+ United States Our Off-Price clothing division performed well with the February and Augustshows producing year-on-year revenue growth of 3% and 8% respectively. Thisdivision continues to benefit from the growth of value based retailing andhistorically has been relatively counter-cyclical. The February 2008 show hasrecently completed with like-for-like revenues up by 4%. MCII performed extremely well in 2007. The Orlando show in April saw revenuesrise by 113% year-on-year, the August show in Chicago produced a 51% rise andthe key event in Las Vegas in December saw revenues and attendees rise by 34% and 30% respectively. MCII continued to develop by expanding its educational programme into aestheticsand sports medicine whilst also launching new products - the first Europeanevent is due to take place in Dusseldorf in September 2008 and the first eventin Dubai in November 2008. In addition, we are beginning to add complementary products such as www.worldhealthnet.tv, a new web-based TV channel, which is an online knowledge centre for anti-ageing medicine. Europe Labelexpo returned to Europe in 2007 to great success with record attendance andrevenues 10% higher than in 2005. Encouragingly, visitor feedback was verypositive and rebookings have already reached 90% of the 2007 event for the 2009event. The French exhibition market is the second largest in Europe after Germany and cultural and language differences dictate that it is an important market in itsown right. Tarsus has market leading exhibitions in four sectors - IT,Marketing, Education and Facilities Management. Overall, the French division produced an outstanding result with organic revenuegrowth of 17% year-on-year bolstered by strong showings from the larger events. Despite a reduced lead-in time, the facilities management show, Proseg, grew revenues 10% and later in the year Heavent (12%), Educatec (12%) and IPConvergence (73%) continued the positive trend. During the year we acquired SEPIC whose major assets were the biannual clothing accessories show Mod'Amont and the biannual shoe show Midec, for a netconsideration of €6.5 million. We subsequently disposed of the shoe exhibitionsand 49% of Mod'Amont for a total consideration of €5.5 million. Our strategicjoint venture with Premiere Vision, one of the world's leading textileexhibitions, will allow Mod'Amont to strengthen its operational efficiencywithin Premiere Vision and accelerate its development internationally in themajor fashion markets. The February edition of Mod'Amont recently took placewith revenues up 8% year-on-year. Our online division, Caroo, enjoyed organic revenue growth of 25% year-on-year,with overall revenues reaching £1.7 million. This business continues to benefitfrom the migration of marketing spend to the internet. Labels & Labelling, thedefinitive trade journal for the labels industry worldwide, produced a solid trading performance. Emerging Markets In the first half we held two successful Label Summits in India and Brazil andthe business-to-business Chinese travel show, COTTM, which achieved its targetof reaching profitability in its third year. In September, we acquired the key labelling show in India for Rs 38.9 million(approximately £477,000). This acquisition was well received by the industry andforward sales for the first labelling event under our ownership in December 2008are strong. The third edition of Labelexpo Asia, which was held in Shanghai, was a greatsuccess with visitor numbers up by 54% and revenues by 12%. Rebookings arestrong and currently well ahead of the previous cycle. The major development in emerging markets during the year was the acquisition ofKern in November 2007. Unlike many potential acquisitions that contain only asingle exhibition in one sector, a key attraction of Kern for Tarsus was that itcontained a portfolio of eight different events, across a range of sectors(aviation, packaging and printing, and education), including the flagshipbiennial Dubai Air Show. The Air Show immediately became the Group's largest event and is providing animportant base for expansion into the rapidly growing Dubai economy and market.In 2007 the Air Show itself surpassed expectations with over 45,000business-to-business attendees (up from 35,000) and record orders were taken byour customers. This event will move to a new purpose-built venue in 2009 whichhas resulted in large space upgrades from exhibitors. Not only has this been agood acquisition for Tarsus, but it also provides a platform for additionallaunches into this exciting market. As a result of the Kern acquisition and the acquisition of Hubei Hope ExhibitionCompany Limited (Hope) in China, which we announced this morning, over theGroup's two year cycle (2008/2009) we expect emerging market revenues willcomprise some 18% of Group revenues, surpassing the Group's strategicmedium-term target of 15%. In addition, Tarsus now has meaningful exposure tothree of the world's fastest growing regions - the Middle East, China and India. Outlook Notwithstanding uncertain macro-economic conditions, especially in the US, our forward bookings and trading are strong and we are presently seeing no slowdownin levels of interest or activity. Labelexpo Americas, our largest event in 2008, is currently 95% contracted. With Labelexpo returning to the US and withan increasing proportion of our business now taking place in fast growingemerging markets, denominated in US dollars, our exposure to the US dollar in2008 will be slightly higher than in 2007. Your Directors remain confident of further strong progress over the 2008 / 2009cycle. Neville Buch, Douglas Emslie, Chairman Group Managing Director3 March 2008 3 March 2008 FINANCIAL REVIEW REVENUE AND PROFIT A detailed analysis of the Group's revenues and profits is set out in theChairman's and Managing Director's statement. EARNINGS PER SHARE Basic earnings per share improved to 15.2p from 9.9p in 2006. The Group achievedadjusted earnings per share of 16.6p compared with 10.3p in 2006. Adjustedearnings per share is based on profit after tax attributable to equityshareholders, adjusted for share option charges, amortisation charges, andexcluding profit/loss on disposal of intangible assets. On a fully dilutedbasis earnings per share improved to 14.9p compared with 9.5p in 2006. ACQUISITIONS & DISPOSALS The Group made five acquisitions during the year, the largest being The W R KernOrganisation Ltd. The acquisition was completed in November 2007 at a total costincluding contingent consideration of up to $35 million. The other significantacquisition during the year was the purchase of Sepic SAS, which was completedin September 2007 for a net cost of €6.5 million. On 7 November 2007, Tarsussold a 49% interest in the Mod'Amont event to Premiere Vision for aconsideration of €3.5 million. A profit of £0.1million arose on this disposal,being the proceeds less the carrying value of the event's net assets and thecost of disposal. In September, the Group added to its portfolio of international Labelling eventswith the purchase of Label Expositions Private Limited which owns the rights tothe biennial India Label show, the next event of which will take place inDecember 2008 in New Delhi. The Group also continued its expansion of its online-led division Caroo, withtwo smaller acquisitions. In May, the Group purchased the websitewww.exhibitions.co.uk, to compliment its set of UK focused on-line eventsproducts and in July it purchased DMS Group which operates a website forconvention bureaus in the USA www.cvbhotrates.com. Acquisitions have contributed £1.9 million to Group profit before taxationduring the year. On 19 December 2007 the Group disposed of Midec SAS, a subsidiary of Sepic SAS,for a cash consideration of €2.0 million, €0.7 million of which was paid oncompletion, with the remaining €1.3 million payable over the next 4 years. Thedisposal resulted in no profit or loss. Midec SAS held the rights to the Midecevent , a French B2B shoe exhibition. TAX CHARGE The tax charge of £2.4 million (2006: £1.4 million) represents 20% of profitbefore tax (2006: 20%). The Group anticipates that, in the medium term, the taxcharge will remain approximately at this level, as it continues to benefit fromexisting tax assets and taxation structures. CASH & CASH CONVERSION During the year Tarsus generated £8.2 million of cash from operations (2006:£5.9 million). Adjusting for the effect of acquisitions and disposals madeduring the year, the Group generated £12.0 million (2006: £6.9 million) of cashfrom underlying operations, which represented a 109% conversion of underlyingoperating profit to cash (2006: 110%). The major cash movements during the year were: • Acquisition of subsidiaries (net of cash acquired) £15.8 million• Acquisition of other intangible assets £4.2 million• Dividends paid £2.2 million• Net cash from additional borrowings £14.4 million BALANCE SHEET As at 31 December 2007 the Group had net assets of £35.1 million (2006: £27.3million), an increase of £7.8 million in the year. The principal changes wereintangible assets (an increase of £27.0 million), overdrafts, loans & borrowings(an increase of £15.3 million), and deferred & contingent consideration (anincrease of £5.7 million) all principally resulting from the acquisitions asdetailed above. FACILITIES At 31 December 2007, the Group had net debt of £29.0 million (2006: £15.8million) which was principally denominated in US dollars (2007: US$ 28.1million; 2006: US$24.3 million) and euros (2007: €18.2 million; 2006: €5.8million). As at 31 December 2007, the Group's total facilities were £40.5million (2006: £24.6 million). FOREIGN CURRENCY RISK The Group is exposed to movements in foreign exchange rates against sterling fortrading transactions and the translation of net assets and the income statementsof overseas operations. The principal exposure is to the US dollar and euroexchange rates which form the basis of pricing for our customers. Tarsus has anelement of natural hedge within its costs and revenues and its policy is not toenter into any external hedging arrangements for its foreign currency tradingexposures. LIQUIDITY RISK Our policy is to ensure continuity of funding for operational needs through cashdeposits and debt facilities as appropriate. The key requirement for thebusiness is to maintain flexibility to allow it to take advantage ofopportunities that could arise over the short term. The needs of the businessare determined on a rolling cash flow forecast basis, covering short, mediumand long term requirements. Neil JonesGroup Finance Director3 March 2008 CONSOLIDATED INCOME STATEMENT Notes Year to Year to 31 December 31 December 2007 2006 £000 £000 Group revenue 2 45,991 26,347 Operating costs (32,852) (19,050) Group operating profit 13,139 7,297 Share of profit from joint ventures 121 132(post tax) Interest receivable 20 12 Interest payable and other financial (1,334) (427)expenses Profit before taxation 11,946 7,014 Taxation expense 5 (2,411) (1,433) Profit for the financial year 9,535 5,581 Profit for the financial yearattributable to equity shareholders ofthe parent company 8 9,203 5,375 Profit for the financial yearattributable to minority interests 8 332 206 9,535 5,581 Notes Year to Year to 31 December 31 December 2007 2006Earnings per share (pence) 7 - basic 15.2 9.9- diluted 14.9 9.5 Dividends 6 £000 £000Equity - ordinaryFinal dividend paid (2.75p/2.25p per share) 1,623 1,204Interim dividend paid (1.5p/1.25p per share) 912 670 2,535 1,874 CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Year to Year to 31 December 31 December 2007 2006 £000 £000 Net foreign exchange deficit recognised (548) (961)directly in equity Revaluation of trade investment 39 - Movement in deferred tax relating to share (1,087) 482options Profit for the financial year 9,535 5,581 Total recognised income and expense for the 7,939 5,102year Attributable to: Equity holders of the parent 7,607 4,896Minority interest 332 206 Total recognised income and expense for the 7,939 5,102year CONSOLIDATED BALANCE SHEET Notes 31 December 31 December 2007 2006 £000 £000 NON-CURRENT ASSETS Property, plant and equipment 627 556Intangible assets 84,102 57,124Investments in joint ventures 418 437Other investments 760 65Deferred tax assets 3,469 2,525 89,376 60,707 CURRENT ASSETS Trade and other receivables 15,998 10,271Cash and cash equivalents 2,981 907 18,979 11,178 CURRENT LIABILITIES Trade and other payables (15,402) (9,501)Deferred income (11,738) (9,370)Provisions - (43)Bank overdrafts (141) (402)Other interest bearing loans and borrowings (7,431) (2,858)Liabilities for current tax (2,124) (2,656) (36,836) (24,830) NET CURRENT LIABILITIES (17,857) (13,652) TOTAL ASSETS LESS CURRENT LIABILITIES 71,519 47,055 NON-CURRENT LIABILITIES Other payables (6,122) (2,980)Deferred tax liability (5,902) (3,327)Interest bearing loans and borrowings (24,428) (13,457) (36,452) (19,764) NET ASSETS 35,067 27,291 EQUITY Share capital 8 3,042 2,945Share premium account 8 45,312 44,348Other reserves 8 (2,840) (2,331)Retained earnings 8 (11,005) (17,897) Issued capital and reservesattributable to equity holders of theparent 34,509 27,065 MINORITY INTEREST 8 558 226 TOTAL EQUITY 8 35,067 27,291 CONSOLIDATED CASH FLOW STATEMENT Year to Year to 31 December 31 December 2007 2006 £000 £000 Cash flows from operating activities Profit for the year 9,535 5,581 Adjustments for:Depreciation 259 163Amortisation 669 192Profit on disposal of intangible assets 14 (242)Share option charge 271 310Share of operating profit in joint venture (196) (179)Taxation charge - joint ventures 74 47Taxation charge - other 2,411 1,433Net interest 1,314 415 Operating profit before changes in 14,351 7,720working capital and provisions Increase in trade and other receivables (4,563) (1,627)Decrease in current trade and other payables (1,587) (71)Decrease in provisions (43) (88) Cash generated from operations 8,158 5,934 Interest paid (999) (291)Income taxes paid (1,276) (552)Net cash from operating activities 5,883 5,091 Cash flows from investing activitiesInterest received 20 12Proceeds from sale of property, plant 2,502 -and equipmentProceeds from sale of intangible fixed 2,137 651assetsAcquisition of property, plant and (161) (370)equipmentAcquisition of subsidiaries, net of (15,768) (21,197)cash acquiredAcquisition of intangible fixed assets (4,150) (275)Acquisition of other investments (650) (65)Deferred and contingent consideration paid (510) (744) Net cash outflow from investing activities (16,580) (21,988) Cash flows from financing activitiesNet drawdown of borrowings 14,426 11,088Proceeds from the issue of share 757 11,102capitalCost of share issue (26) (362)Dividends paid (2,204) (1,690) Net cash inflow from financing 12,953 20,138activities Net increase in cash and cash 2,256 3,241equivalentsOpening cash and cash equivalents 505 (2,347)Effect of exchange rate fluctuations on 79 (389)cash held Closing cash and cash equivalents 2,840 505 1. BASIS OF PREPARATION The preliminary results for the year ended 31 December 2007 have been preparedin accordance with International Financial Reporting Standards (IFRS) as adoptedby the EU and are in line with the Group's accounting policies, as stated in theGroup's 2006 Annual Report and Accounts. The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2007 or 2006 but is derivedfrom those accounts. Statutory accounts for 2006 have been delivered to theRegistrar of Companies. Those for the year ended 31 December 2007 will bedelivered following the Company's Annual General Meeting. The auditors havereported on those accounts; their reports were unqualified and did not containstatements under section 237 (2) or (3) of the Companies Act 1985. 2. SEGMENTAL ANALYSIS Primary segment As at 31 December 2007, the Group was organised into three main geographicalsegments - Europe, US and Emerging markets. These segments are the basis onwhich the Group reports its primary segment information. The main activities of all segments are the production of exhibitions supportedby other media activities related to those exhibitions. The following table sets out the revenue and profit information and certainasset and liability information for the Group's business segments: 31 December 2007 Emerging Central Europe US markets costs Group £000 £000 £000 £000 £000 Group revenue 25,692 10,104 10,195 - 45,991 Profit/(loss) from operating 7,978 3,860 2,167 (866) 13,139activities Net financing costs (1,314) (1,314) Share of profit from joint 121 - - - 121ventures (post tax) Profit/(loss) before taxation 8,099 3,860 2,167 (2,180) 11,946 Loss on disposal of intangible - - - 14 14assets Amortisation of intangible 238 391 40 - 669assets Cost of share options - - - 271 271 Tax on share of joint venture 70 - - - 70profit Adjusted profit/(loss) before 8,407 4,251 2,207 (1,895) 12,970tax* Segment assets 44,068 33,786 26,081 - 103,935 Share of joint venture assets 418 - - - 418 Unallocated assets - - - 533 533 Total assets 44,486 33,786 26,081 533 104,886 Deferred tax assets 3,469 Total assets 108,355 Segment liabilities (30,817) (22,320) (10,715) - (63,852) Unallocated liabilities - - - (1,410) (1,410) Total liabilities (30,817) (22,320) (10,715) (1,410) (65,262) Liabilities for current tax (2,124) Deferred tax liabilities (5,902) Total liabilities (73,288) Capital expenditure 120 41 - - 161 Depreciation charge (215) (26) (18) - (259) Amortisation charge (238) (391) (40) - (669) Total significant non-cash (453) (417) (58) - (928)expenses * Adjusted profit before tax excludes share option charges, amortisation charges, tax on profit from joint ventures and profit/loss on disposal of intangible assets. 2. SEGMENTAL ANALYSIS (CONTINUED) 31 December 2006 Emerging Central Europe US markets costs Group £000 £000 £000 £000 £000 Group revenue 14,686 10,674 987 - 26,347 Profit/(loss) from operating 2,161 5,847 159 (870) 7,297activities Net financing costs - - - (415) (415) Share of profit from jointventures (post tax) 132 - - - 132 Profit/(loss) before taxation 2,293 5,847 159 (1,285) 7,014 Profit on disposal of (242) - - - (242)intangible asset Amortisation of intangible 166 26 - - 192assets Cost of share options - - - 310 310 Tax on share of joint venture 47 - - - 47profit Adjusted profit/(loss) before 2,264 5,873 159 (975) 7,321tax* Segment assets 28,855 38,481 1,442 - 68,778 Share of joint venture assets 437 - - - 437 Unallocated assets - - - 145 145 Total assets 29,292 38,481 1,442 145 69,360 Deferred tax assets 2,525 Total assets 71,885 Segment liabilities (17,031) (20,090) (495) - (37,616) Unallocated liabilities - - - (995) (995) Total liabilities (17,031) (20,090) (495) (995) (38,611) Liabilities for current tax (2,656) Deferred tax liabilities (3,327) Total liabilities (44,594) Capital expenditure 355 15 - - 370 Depreciation charge (152) (11) - - (163) Amortisation charge (166) (26) - - (192) Total significant non-cash (318) (37) - - (355)expenses * Adjusted profit before tax excludes share option charges, amortisation charges, tax on profit from joint ventures and profit/loss on disposal of intangible assets. 3. PROFIT AND LOSS ANALYSIS The following analysis illustrates the performance of Tarsus's activities andreconciles the Group's statutory profit to adjusted profits. Adjusted resultsare presented to provide a better indication of overall financial performanceand to reflect how the business is managed and measured on a day-to-day basis.The adjusted profit before tax excludes share option charges, amortisationcharges, minority interests' share of losses, tax on profit from joint venturesand profit on disposal of intangible assets. 2007 2006 £000 £000 Group revenue 45,991 26,347 Cost of sales (21,087) (11,101) Gross profit 24,904 15,246 Administrative expenses (11,765) (7,949) Group operating profit 13,139 7,297 Share of profit from joint ventures (post tax) 121 132Net interest (1,314) (415) Profit before taxation 11,946 7,014 Add back: Share option charge 271 310 Amortisation charge 669 192 Tax on share of profit from joint ventures 70 47 Loss/(profit) on disposal of intangible assets 14 (242) Adjusted profit before tax 12,970 7,321 Impact of acquisitions (1,917) (1,014) Underlying adjusted profit 11,053 6,307 Cash generated from underlying operations 12,007 6,925 Adjusted operating cash conversion 109% 110% 4. ACQUISITIONS AND DISPOSALS (i) ACQUISITIONS The Group completed five acquisitions during 2007. These are as follows: Effective Name Type of business Percentagedate acquired11 May The rights to run the Internet based event 100% website listings and exhibitions www.exhibitions.co.uk news resource12 July DMS Group LLC Internet based convention 100% centre & hotel bookings resource5 September Sepic SAS Clothing and footwear events 100% in France21 September Label Expositions Private Label event in India 100% Ltd12 November The WR Kern Organisation Dubai Airshow and other 100% Ltd Dubai based events The following table sets out the book values of the identifiable assets andliabilities acquired, and their fair value to the Group, in respect of thesubsidiary acquisitions made during 2007: KERN SEPIC Other Total Carrying Fair Carrying Fair Carrying Fair Carrying Fair value value value value value value value value £000's £000's £000's £000's £000's £000's £000's £000's Property, plant and 441 441 1,127 2,416 - - 1,568 2,857equipmentOther intangibles on - 5,552 - 1,588 - 333 - 7,473acquisitionDeferred taxation - (1,665) - (476) - (100) - (2,241)Trade and other 4,419 4,419 2,183 2,183 32 32 6,634 6,634debtorsCash and cash 3,151 3,151 3,189 3,189 4 4 6,344 6,344equivalentsTrade and other (9,228) (9,228) (3,411) (3,411) (36) (36) (12,675) (12,675)payablesNet identifiable (1,217) 2,670 3,088 5,489 - 233 1,871 8,392assetsGoodwill on 14,620 4,181 1,201 20,002acquisition 17,290 9,670 1,434 28,394Consideration paid andcosts incurred:Satisfied in cash 11,610 9,634 868 22,112Contingent 3,755 - 493 4,248considerationDeferred consideration 1,925 - 73 1,998Current (assets)/ 36 - 36liabilitiesTotal consideration 17,290 9,670 1,434 28,394and costs incurredConsideration paid in 11,610 9,634 868 22,112cashCash acquired (3,151) (3,189) (4) (6,344)Total net cash outflow 8,459 6,445 864 15,768Less: Property, plant (2,416)and equipmentTotal cashflow after 4,029disposal of fixedassets (i) ACQUISITIONS (CONTINUED) Deferred consideration relates to agreed payments to vendors that are payableafter completion. Contingent consideration relates to payments to vendors, payable aftercompletion, that are dependent on the outcome of future events. The contingentconsideration within the Group is dependent on the future financial performancesof various exhibitions, conferences and publications acquired during 2007. From the date of acquisition to 31 December 2007, acquisitions have contributed£1.9 million to the Group profit before taxation and £11.9 million to revenue.If the acquisitions had taken place at the beginning of the year, they wouldhave contributed £0.9 million to the Group profit before taxation and £17.0million to revenue. Goodwill of £20.0 million, recognised on these acquisitions, relates to certainassets that cannot be separated and reliably measured. These items includesector knowledge, customer loyalty and the anticipated future profitability thatthe Group can bring to the businesses acquired. (ii) DISPOSALS On 7 November 2007, the Group entered into an agreement with Premiere Vision forthe disposal of 49% of Sepic SAS, for a consideration of €3.5 million. A profitof £0.1 million arose on this disposal, being the proceeds less the carryingvalue of the event's net assets and the cost of disposal. On 19 December 2007, the Group disposed of Midec SAS, a subsidiary of Sepic SAS,for a consideration of €2.0 million, €0.7 million of which has been paid, withthe remaining €1.3 million payable over the next 4 years. The disposal resultedin no profit or loss. Midec SAS held the rights to the Midec event, a French B2Bshoe exhibition. On 30 September 2007, the Group disposed of its trade investment in EventsReview Limited. The disposal resulted in a loss of £0.1 million. 5. INCOME TAX EXPENSE 2007 2006 £000 £000Corporation tax:UK tax on profits for the period 2,178 688Overseas tax on profits for the period 706 1,029Adjustments to UK corporation tax in respectof previous periods (521) 37Tax on joint ventures - (47)Adjustments to overseas corporation tax inrespect of previous periods (554) (454)Current tax charge for the period 1,809 1,253 Deferred tax:Origination and reversal of temporary 741 319differencesAdjustment in respect of previous periods (taxlosses recognised) (144) (184)Adjustments in respect of previous periods(temporary difference recognised) 5 45 Total deferred tax 602 180 Tax charge for the year 2,411 1,433 The tax charge for the year is lower than the standard rate of corporation taxin the UK. The differences are explained below: 2007 2006 £000 £000 Profit before taxation 11,946 7,014 Tax at the standard rate of corporation tax in 3,584 2,104UK of 30%Effects of:Expenses not deductible 381 281Income not chargeable to tax - (87)Overseas current period losses unrecognised 417 -Utilisation of unrecognised losses (144) (49)Effect of tax rates in overseas jurisdictions 247 179Over provision in respect of prior periods (1,075) (556)Current period credit for historic exposures (438) (233)Other temporary differences (566) (173)Impact of change in tax rates 5 -Impact of tax on joint ventures - (33)Tax on profit on ordinary activities 2,411 1,433 6. DIVIDENDS 2007 2006 £000 £000 Dividend paid 2006/2005 final dividend (2.75p/2.25p pershare) 1,623 1,204 2007/2006 interim dividend (1.5p/1.25p pershare) 912 670 2,535 1,874 Dividend proposed Dividend proposed in the period (3.5p/2.75pper share) 2,130 1,325 The directors announced the proposed final dividend for 2007, of 3.5p per share,on 3 March 2008. Subject to approval at the Annual General Meeting on 17 April2008 the proposed date of payment is 30 April 2008 to Shareholders on theRegister of Members on 14 March 2008. Dividends are recognised as a liability in the period in which they areappropriately authorised and are no longer at the discretion of the entity. 7. EARNINGS PER SHARE 2007 2006 Pence penceBasic earnings per share 15.2 9.9Diluted earnings per share 14.9 9.5Adjusted earnings per share 16.6 10.3Adjusted diluted earnings per share 16.2 9.8 Basic earnings per share Basic earnings per share has been calculated on profits after tax attributableto ordinary shareholders for the year of £9,202,718 (2006: £5,375,945) and60,380,541 (2006: 54,159,937) ordinary shares, being the weighted average numberof shares in issue during the year. Diluted earnings per share Diluted earnings per share has been calculated on profits after tax attributableto ordinary shareholders for the year of £9,202,718 (2006: £5,375,945) and61,882,770 (2006: 56,761,446) ordinary shares, being the weighted average numberof shares in issue during the year calculated as follows: Weighted average number of ordinary shares (diluted): 2007 2006Weighted average number of ordinary shares 60,380,541 54,159,937Effect of share options 1,502,229 2,601,509Weighted average number of ordinary shares 61,882,770 56,761,446(diluted) Dilutive and anti-dilutive share options were determined using the averageclosing price for the period. The average share price used was 200 pence. Adjusted earnings per shareAdjusted earnings per share is calculated using profit after tax attributable to equity shareholders, adjusted for share option charges, amortisation charges, and excludes loss/profit on disposal of intangible assets, of £10,021,819 (2006: £5,581,118) and 60,380,541 (2006: 54,159,937) ordinary shares, being the weighted average number of shares in issue during the year. Adjusted diluted earnings per shareAdjusted diluted earnings per share is calculated using profit after taxattributable to equity shareholders, adjusted for share option charges,amortisation charges, and excludes loss/profit on disposal of intangible assets,of £10,021,819 (2006: £5,581,118) and 61,882,770 (2006: 56,761,446) ordinaryshares, being the weighted average number of shares in issue during the year. 8. RECONCILIATION OF MOVEMENT IN EQUITY Other reserves Share Share Capital Fair Foreign Retained Minority Total capital premium redemption value exchange earnings interest account reserve reserve £000 £000 £000 £000 £000 £000 £000 £000As at 31 December 2007:Recognised foreign - - - (548) - - (548)exchange losses for theperiod -Movement in deferred tax - - - - (1,087) - (1,087)relating to share options -Revaluation of trade - - - 39 - - - 39investmentTotal income and expense - - - (548) (1,087) - (1,596)recognized directly inequity 39Profit attributable to - - - - - 9,203 - 9,203shareholdersTotal recognized income - - - 39 (548) 8,116 - 7,607and expenseScrip dividend 7 323 - - - - - 330New share capital 90 667 - - - - - 757subscribedCost of shares issued - (26) - - - - - (26)Share option charge - - - - - 271 - 271Movement in reserves - - - - 1,040 - 1,040relating to share options -Dividend paid - - - - - (2,535) - (2,535)Minority interest profit - - - - - - 332 332for the periodNet change in 97 964 - 39 (548) 6,892 332 7,776shareholders' fundsOpening equity 2,945 44,348 (443) - (1,888) (17,897) 226 27,291shareholders' fundsClosing equity 3,042 45,312 (443) 39 (2,436) (11,005) 558 35,067shareholders' funds As at 31 December 2006:Recognised foreign - - - (961) - - (961)exchange losses for theperiod -Movement in deferred tax - - - - - 482 - 482Total income and expense - - - (961) 482 - (479)recognized directly inequity -Profit attributable to - - - - - 5,375 - 5,375shareholdersTotal recognized income - - - - (961) 5,857 - 4,896and expenseScrip dividend 5 178 - - - - - 183New share capital 277 10,825 - - - - - 11,102subscribedCost of shares issued - (362) - - - - - (362)Share option charge - - - - - 310 - 310Dividend paid - - - - - (1,874) - (1,874)Disposal of minority's - - - - - 278 278share of subsidiary -Minority interests on - - - - - - 20 20acquisitionsMinority interest profit - - - - - - 206 206for the periodNet change in 282 10,641 - - (961) 4,293 504 14,759shareholders' fundsOpening equity 2,663 33,707 (443) - (927) (22,190) (278) 12,532shareholders' fundsClosing equity 2,945 44,348 (443) - (1,888) (17,897) 226 27,291shareholders' funds 9. POST BALANCE SHEET EVENT On 3rd March 2008, Tarsus acquired 50% of the share capital of Hubei HopeExhibition Company Limited ("Hope") for a maximum total consideration of RMB 20million (approximately £1.4 million). The acquisition is conditional on theapproval of the Chinese government which is expected in April 2008. Hope is wholly owned by Hubei OIN-Hope Exhibition Service Ltd. Co., which iswholly owned by the management of Hope. Founded in 2000, Hope is one of theleading exhibition organisers in Central and Western China and owns andorganises a portfolio of 27 exhibitions annually in three sectors: medicalequipment, industrial equipment and leisure. The portfolio covers approximately50,000 net square metres and the business employs approximately 150 people inseven offices and is headquartered in Wuhan. Tarsus will pay an initial consideration of RMB 12 million (approximately£850,000) with a further RMB 3 million (approximately £200,000) payable whencertain financial targets are achieved. In addition, both Tarsus and the vendorshave committed to invest a further RMB 5 million (approximately £350,000) eachto further expand the business both by acquisition and organically over the next12 months. The Annual General Meeting will be held at Fourth Floor, Metro Building, 1Butterwick, London W6 8DL on 17 April, 2008 at 10.00 am. A copy of this report will also be available on the Group's website atwww.tarsus-group.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Tarsus