27th Feb 2008 07:02
Informa PLC27 February 2008 27 February 2008 Informa plc Preliminary Results for Year End 31 December 2007 Strong Growth and Quality of Earnings Financial Highlights • Revenue £1.13 billion - 9% pro forma growth• Adjusted operating profit £261.0m - 19% pro forma growth• Adjusted operating margin rises above 23%• Strong trading across all three divisions (Academic & Scientific, Professional and Commercial) and all three business streams (Publishing, Performance Improvement and Events)• Datamonitor delivers 22% pro forma revenue growth for the full year• Adjusted cash conversion 110% of adjusted operating profit• Total dividend increases 39%• Confident of 2008 outlook 2007 2006 Increase Pro forma(1) £m £m % % Revenue 1,129.1 1,039.1 9% 9%Operating profit 154.0 128.3 20%Adjusted(2) operating profit 261.0 219.1 19% 19%Profit before tax 124.4 86.5Adjusted(3) profit before tax 202.6 178.1Profit for period 100.1 67.8Adjusted(4) profit for period 151.9 132.2Basic earnings per share (p) 23.4 16.0Diluted earnings per share (p) 23.3 15.9Adjusted(4) diluted earnings per share (p) 35.5 31.1Dividend per share (p) 16.9 12.2Adjusted cash conversion(5) 110% 103% (1) Adjusted for material acquisitions and effects of changes in foreigncurrency exchange rates. This also adjusts for the reduction in revenue of £18min 2007 from the new 3GSM contract and the impact of the quadrennial IPEXexhibition which contributed £21m to 2006 revenues. The related adjustedoperating profit impact for 3GSM was £nil and for IPEX was £7.7m. (2) Excludes restructuring and reorganisation costs of £7.7m (2006:£7.2m), andintangible asset amortisation of £99.3m (2006: £83.1m). (3) Excludes restructuring and reorganisation costs of £7.7m (2006:£7.2m), nonrecurring finance costs of £4.6m (2006:£nil), intangible asset amortisation of£99.3m (2006: £83.1m) and profit on disposal of available for sale investmentsof £33.4m (2006: loss £0.8m). (4) Excludes restructuring and reorganisation costs of £7.7m (2006:£7.2m), nonrecurring finance costs of £4.6m (2006:£nil), intangible asset amortisation of£99.3m (2006: £83.1m), profit on disposal of available for sale investments of£33.4m (2006: loss £0.8m) and related tax of £26.4m (2006:£27.3m). (5) Adjusted cash generated by operations (note 10) divided by adjusted operating profit. Business Highlights • Academic and Scientific division grows adjusted operating profit by 25% to achieve a 29% margin - Strong yield increases and drop through from electronic delivery• Professional division benefits from Performance Improvement extending global reach - Non-US revenues increase by 29%• Commercial division growth fuelled by extension of Large Scale Events portfolio and 38% increase in Dubai revenues Chairman's and Chief Executive's Statement Informa had another year of significant achievement in 2007. We achieved 9% pro forma revenue growth, 19% pro forma adjusted operating profitgrowth and a 23% adjusted operating profit margin. All three of our business streams, publishing, events and performanceimprovement, traded strongly. All geographies and market sectors performed well.As we connect more of our brands, to more of our media formats to more of ourgeographies, we are growing a dynamic network of business units that enables usto benefit from our size, while keeping the passion and speed of ourentrepreneurial roots. We have transformed Informa in recent years. We have built a business based onrecurring revenue streams which provides strong defensive qualities, but not atthe expense of continuing good growth. We are of course aware of the current uncertainty in the financial markets, butat this point the board sees no signs in our trading to alter its expectationsthat Informa will deliver another strong performance in 2008. Our confidence inthe future of the business is reflected by a 39% increase in the dividend over2006. Peter Rigby and David Gilbertson Chairman and Chief Executive's Report Our 2007 performance successfully builds upon the excellent results achieved in2006. We have built a pool of information assets in Informa which cover many differentvertical markets as well as geographic territories, and which deliver content ina broad range of media formats. This is designed to enable us to capture thedifferent requirements of individual users within industries and meet global andlocal needs with equal proficiency. We believe that our business now has thecharacteristics not only to demonstrate superior growth in expanding economiesbut also to protect profitability. Our major acquisition of 2007 contributes significantly to both thesecapabilities. Datamonitor, for which we paid £510m in July, is an electronicinformation business serving six global sectors predominantly throughsubscription. Its subscriptions renew annually at 90%, constituting a powerfulrecurring revenue stream. But Datamonitor has high growth too. It achieved a 22%pro forma revenue increase and a pro forma adjusted operating profit rise of 59%for the full year on the same period a year earlier. Datamonitor'sinternet-delivered knowledge centres of international data in the healthcare,telecoms, finance, automotive, energy and retail sectors are all now fully XMLcoded, enabling users to interrogate its information intuitively to obtain theirown uniquely customised solutions. As we enter 2008 Datamonitor's products will be increasingly co-marketed to ourconference, publishing and performance improvement customers and audiences. Theinter-relationship between the different parts of Informa is one of the keycontributors to the superior growth we have seen over the last few years. Manylarge media businesses structure themselves in silos and find it difficult tosell different product types to the same customer bases. At Informa we work hardat making sure we offer as much relevant content as we can, whatever the mode ofdelivery, to customers likely to find value in it. In so doing we grow anddevelop brands which our customers trust and return to. The marketing requirements of our conference business, with more than 12,500events produced in 2007, are such that we have many opportunities to putrelevant related products in front of potential customers. Informa benefits herefrom a unique advantage: our database of 20m names of individual customers,clients and prospects in more than 150 countries across the world. It enables us to market our products quickly and cost effectively. It means wecan cross market and cross sell seamlessly. And it ensures that we can respondappropriately to the dynamics of individual markets: some may be experiencingstrong growth with fast rising information demand; others may be seeing aslowdown in the pace of development. The strength of the Informa database allowsus to direct our output appropriately to changing levels of customer need. Our international conference business grew pro forma adjusted operating profitby 27% in 2007 with our burgeoning Dubai business again leading the way with 38%year on year revenue growth. As Middle East event market leaders we produced 20leading exhibitions including the developing world's largest property investmentshow, Cityscape, which attracted more than 50,000 visitors to the Dubai show.Similar numbers attended Arab Health, the region's premier healthcare eventwhose 2,000 stands attracted visitors from over 65 countries. Our Dubaioperation also produced over 500 conferences and training courses reflecting thefast expanding diversity of the local economy. The Dubai business also rolled out several of its winning events within theMiddle East region and beyond. Cityscape ran satellite shows in Abu Dhabi,Brazil, Singapore, Shanghai and Mumbai in 2007 and further internationalroll-outs are planned. This geo-cloning of successful event formulas also saw usextending our major European based finance events under the market-leading ICBIbrand into Asia and the Americas. The world's largest private equity event SuperReturn was staged in Asia and our leading hedge fund event GAIM ran in theCayman Islands and Dubai as well as in Europe. Extending leading brands acrossgeographies is providing a further strong engine for growth. Informa's top 200 event brands contributed some 40% of event revenue andapproximately 70% of adjusted operating profit but the smaller events too playtheir important part. While less spectacular in size, the workshop or seminar orsmall conference makes a financial contribution and also keeps us at theforefront of new developments. A new early stage piece of scientific ortechnological research, a legislative change or a commercial development may beof relatively narrow interest today but could become tomorrow's blockbuster. In2007 we ran the 10th World Ethanol Forum in Amsterdam with more than 700attendees. The first event in 1997 attracted just 40. Researching topics beforethey become headline news, as biofuels has now become, enables Informa to buildfuture growth as well as deliver current contribution. In biofuels, as in otherfields, we surround leading branded events with news, information products anddatabases. Informa's publishing businesses continued to benefit from the shift toelectronic distribution in the year. Most of our customers whether academic,professional or commercial, now want to receive their information from us inelectronic forms. This has enabled us increasingly to sell enterprise-wideinformation packages, moving away from more traditional personal subscriptionbased models. The higher prices this wider dissemination carries, coupled withgrowing income from electronic archive sales helped our Academic & Scientificbusiness to grow its revenues by 15% and its adjusted operating profit by 25% inthe year. Trialtrove, the world's largest database of clinical trials data, which is fastbecoming an essential resource for the world's pharmaceutical industry grew itssales by over 40% in the year to contribute to that result. In the legal marketour law portal i-law.com saw a 200+% increase in revenue. The migration of ourtelecoms information from newsletters to on-line Intelligence Centres, similarin construct to Datamonitor's Knowledge Centres further fuelled our growth. The Performance Improvement (PI) group of companies also achieved double digitpro forma adjusted operating profit growth in the year. Some 40% of thesecompanies' revenues now come from over 16 different US federal governmentdepartments. This highly resilient government revenue stream, led by ourprogramme management company Robbins-Gioia, enjoyed good growth in the yearwhile overseas revenues for the PI businesses climbed to almost 20% of theirtotal sales, up from 15% in 2006. Publishing Publishing contributed 44% of revenue, £495.0m, in 2007. This 21% increasereflects the growing importance of this resilient revenue stream. The proportionof total Informa revenues publishing constitutes has increased from 39% in 2006and is expected to increase still further in 2008 to approximately 50% of totalrevenues and 60% of total adjusted operating profit when a full year ofDatamonitor is delivered. Subscription sales, which now represent over 60% of publishing revenues, grew by8% on a pro forma basis and 26% on a reported basis. Subscriptions will increaseto approximately 65% of publishing revenue and 80% of publishing adjustedoperating profit with a full year of Datamonitor. Books, largely in the academicsector, will account for another approximately 30% of publishing revenue. Advertising revenues, historically minimal in Informa, remain so at just 3% oftotal Informa revenue. Publishing margins continue to improve through a good combination of the yieldimprovements from electronic revenues and cost reductions from print on demandin our book production. Technological advances in printing mean that Informa is able to print highquality books on demand at comparable costs to bulk printing. This print ondemand capability continued to reduce cost, increase revenue and help theenvironment in 2007. The number of books being printed on demand increased in2007 by over 50%. The average print run is being economically reduced by asimilar percentage. In addition, some third of our total books catalogue is now availableelectronically as e-books. Holding 'virtual stock' rejuvenated back lists bykeeping out of print books on sale and also reduced Informa's carbon footprint. In each of Informa's divisions, the successful migration from print totechnology based publishing has driven sales growth. Revenue growth in puredigitally designed products is outstripping all other delivery media. In Informa's Academic and Scientific markets, on-line book sales, with theirability to drive back lists, now represent 30% of total sales. Informa's ownpurely electronic reference and e-books produced turnover well in excess of £5mand growth in 2007 of 48%. The successful launch in 2006 of four electronic subject based archives, basedon authoritative journals content, has continued well through 2007. Informa nowhas rich archives in: • Education• Business, Management and Economics• Chemistry• Physics• Mathematics & Statistics• Geography, Planning, Urban and Environment• Behavioural Science• Engineering, Computing & Technology• Health Sciences• Politics, International Relations and Area Studies• Strategic, Defence and Security Studies. With still more in production, journal archive sales have more than tripled in2007 and now include nationwide agreements in Germany and Greece. Sales to the commercial, professional and pharmaceutical markets produced over60% of subscription revenues in 2007. In the Professional division, growth in subscription revenues for InformaProfessional was largely driven by the take-up of on-line products. Expandingfrom a small base of early adopters, i-law, which brings together the core lawreport archives and in-depth analysis for the niche markets of shipping,insurance, arbitration, construction and intellectual property law, has grownsignificantly in 2007. Sales to existing clients migrating to the on-linerepository are typically 57% higher. Market feedback has been excellentconfirming that i-law's content depth and functionality is turning it from aresearch tool into a daily work aid. Datamonitor also delivers its business intelligence via electronicsubscriptions. It was fully integrated into Informa in 2007, contributing £51.1mrevenue and £17.6m to adjusted operating profit from the date of acquisition of13 July 2007. For the year ended 31 December 2007 it achieved a 22% pro formarevenue increase and a pro forma adjusted operating profit rise of 59% on thesame period a year earlier. For the second half of 2007 Datamonitor achieved a strong adjusted operatingprofit margin of 33% compared to 22% in the first half of the year. The strongsecond half is the result of a combination of impressive drop through and costsavings from the Informa integration. Datamonitor continues to execute on its strategy to achieve the dual objectiveof increasing the total number of subscribers whilst at the same time driving upthe number of subscribers spending in the top quadrant of customer yields. At the end of 2007, Datamonitor had 3,458 subscribers compared with 2,861 at thedate of its purchase. In addition Datamonitor had another 3,000+ report buyers.Datamonitor's sales model is to move these single buyers up the value chain tobecome subscribers. Subscribers spending over £20,000 grew by 20% in 2007 on afull year pro forma basis. Overall renewals were 90%, while clients spendingover £20,000 had a 100% retention rate. Products in all Informa publishing and market facing units are now designed tobe media neutral. The flag ship maritime title Lloyd's List is a prime exampleof this. In June this year, to wide spread acclaim, it unveiled a new design asa full-colour compact broadsheet format with increased content. Maintaining thequality ethic underpinning it since 1734, the redesign was merely the front endof a significant investment in a world-leading media neutral publishing system.All transport magazines and newspapers are now migrating into the system,creating a large database of highly structured XML content to combine withMaritime's data driven products and enabling the business to re-purpose contentacross all titles spurring on-line revenue growth and producing significant costefficiencies. Performance ImprovementPerformance Improvement (PI) at £225.3m accounted for 20% of Informa's revenuein 2007. Revenues grew on a pro forma basis by 8% reflecting good demand bymulti-nationals looking to achieve efficiencies and consistency of best practiceperformance globally. The PI businesses experienced strong demand across all industry sectors as wellas from the US Federal Government which constitutes approximately 40% of totalPI revenues and 85% of Robbins-Gioia's, the Program Management specialists,revenues who represent almost 30% of total PI revenues. The other two of the three largest PI businesses, AchieveGlobal and ESI,experienced good growth not just in the Government sector but among Fortune 1000companies with particular increases in financial services, retail, manufacturingand healthcare where organisations looked to them to help drive better results,particularly in these more turbulent times. By using the PI businesses' tailoredintellectual property and learning based programmes to change the way employeesbehave, clients were able to execute strategy and drive measurable resultsconsistently and confidently through their organisations. A good example of this comes from Forum, the mid size PI company specialising inLeadership and transformational growth, which has been working with AmericanExpress to improve the effectiveness of senior leaders moving into new roles.Using Forum's First 90 Days programme as part of their leadership developmentapproach, time to effectiveness in the new role has reduced by 25%.Consequently, Amex is expanding the programme to more leaders and more levels inits organisation. Informa's decision to buy back some of the small PI Asian franchises deliveredgood growth in 2007. ESI's 2006 acquisition and subsequent integration of itsAsian distributor and successful launch in India in 2007 has produced good topline growth in Asia significantly ahead of last year. Similarly Forum and Omega both saw double digit revenue growth in Asia andAsiaPac regions in 2007, significantly ahead of 2006. AchieveGlobal's purchase of its Taiwan and Greater Chinese franchise operationalso produced good results both ahead of budget and 2006. AchieveGlobal is nowco-located with ESI and the IIR events business in new offices in Beijing,enabling strong cross promotion and savings in general office and infrastructurecosts. Street sales(6) of AchieveGlobal solutions in 2007 moved to 40% non-USoriginated and are tracking towards 50% by the end of 2008. Some ofAchieveGlobal's largest wins in 2007 such as that of a large internationalmultinational confectionery producer, started overseas and then expanded backinto the US. From a client perspective 44% of all Achieve engagements are nowglobal, creating a significant competitive advantage as there is no other PIcompany with Informa's global reach. ESI is also benefiting from this global footprint. This in conjunction withinvestment in the EMEA(7) sales force and closer partnering with events sistercompanies in Dubai, South Africa and Spain, contributed to excellent full yeartop line growth in EMEA. Total ESI non US revenues now make up almost 30% of thebrand's revenues. In 2007 non-US PI revenues accounted for almost 20% of total PI revenuescompared to 10% of revenues produced under the ownership of IIR prior to itsacquisition in July 2005. (6) Street sales equal sales of wholly owned operations and all sales offranchise businesses (7) EMEA = Europe, Middle East and Africa Events Events at £408.8m contributed 36% of Informa's revenue in 2007, a 13% pro formarevenue increase. This is the largest growth of any of the Informa revenuestreams. It is driven by a continuing focus on "must attend" Large Scale Events(LSE); geo-cloning of these established brands and the ability to seize marketopportunities quickly in new geographies, sectors and topic areas. LSEs create high barriers to entry, good pricing power, substantial levels ofrepeat business and the opportunity for replications elsewhere in the world,known as 'geo-cloning'. All of these factors have contributed to strong tradingin 2007 and position the business well for 2008. The top event brands represent40% of event revenue and approximately 70% of adjusted operating profit. In 2007 Informa grew its LSE portfolio by over 20%. Informa continues to benefitfrom the increased requirement of corporate marketing departments to measureReturn-On-Investment in their marketing spend. Sponsorship and Exhibition (SpEx)revenues now represent 28% of total Informa event revenues and over 50% ofrevenue in the top 200 event brands. Much of this growth was driven by geo-cloning, taking flagship events with theirleading multi-national sponsors and exhibitors, and rolling them out to newterritories. Of the top 200 events in 2006, twelve of them were geo-cloned in2007. Average revenue for each of the cloned events was over £650,000. The Dubai events business was particularly successful in its geo-cloning,helping to deliver another excellent set of results. It cloned both itsCityscape and Arab Health brands. In October Cityscape Dubai, the world'slargest property event, attracted more than 50,000 participants from 120countries. Over 1,000 exhibitors showcased their projects and services on 75,000square metres of exhibition space. Record show revenues were 35% ahead of 2006.In November the first Cityscape India was held, beating expectations on bothexhibitor and delegate figures and providing a strong platform for furthergrowth in India. The event was also successfully held in Singapore, China,Brazil and Abu Dhabi. In 2008 it will also take place in Russia. The Arab HealthAbu Dhabi clone was also similarly successful, beating budgeted expectations anddelivering significant operating profit in its launch year. In the Professional division, the geo-cloning strategy is also producing goodresults. ICBI, the market leading international financial events specialists,has continued to perform strongly all year. In December the business held itslargest ever inaugural geo-cloned event with the extension of its LSE,SuperReturn, the world's largest private equity conference, to the Middle East.This followed the earlier success of Funds Asia in the first half of the year,when ICBI took its flagship mutual funds events, in its 17th year, andattracting over 1,400 participants, to Hong Kong. Seizing opportunities in emerging markets, in 2007 Informa increased the numberof conferences held in China, Czech Republic, Dubai, Singapore, South Africa,Russia and the Ukraine with considerable success. Academic & Scientific Academic & ProScientific 2007 2006 Increase forma £'m £'mRevenueSTM 201.0 178.7 12% 6%HSS 138.5 116.5 19% 13% ------- ------- -------- 339.5 295.2 15% 9% ------- ------- -------- Adjusted Operating ProfitSTM 62.9 50.6 24% 19%HSS 34.0 27.0 26% 28% ------- ------- -------- 96.9 77.6 25% 22% ------- ------- -------- Adjusted Operating Margin 28.5% 26.3% ------- ------- -------- ------- Revenue increased by 15% to £339.5m in 2007, driven by a strong pro forma growthrate of 9% and contributions from acquisitions, of which Datamonitor contributed£13.9m. Adjusted operating profit increased by 25% to £96.9m in 2007. The adjustedoperating profit margin improved by more than two percentage points from 26.3%to 28.5%, demonstrating good drop through in all of our A&S revenue streams. Almost 3,000 new books and a continuing e-led invigoration of the back list ledto copy sales for the division increasing on a reported basis by 7% and by 5% ona pro forma basis. Taylor & Francis, the academic publisher which merged withInforma in 2004 and constitutes the largest business within this division,continues to gain library market book share. Subscription revenue from journals and electronic archives in Academic &Scientific grew 24% on a reported basis. We achieved pro forma revenue increasesof 11% reflecting content growth and frequency increases in a number ofjournals, particularly in the Humanities and Social Sciences (HSS) area; as wellgrowth in the total number of subscribers year on year. Over 90% of subscriptions to our 1,500+ academic journals are now digitallydelivered. Informa added over 300 new journals in 2007, a more than four foldincrease in new titles, positioning the business well for further growth in2008. The Scientific, Technical & Medical (STM) business grew reported revenues by 12%and pro forma revenue by 6%, a two percentage point increase on 2006. Within it,Informa Healthcare, which targets the medical, bioscience and pharmaceuticalsectors with a full mix of delivery formats including books, journals, magazinesand awards had another strong year achieving for the second year running revenuegrowth of 12% and adjusted operating profit growth of 16%. The Informa Healthcare (IHC) team's ability to leverage brands and provide highquality content across multiple delivery formats was proven again as it rolledout both its Agrow (the flagship information source providing opinions andanalysis for the plant services industry) and GCPj (Good Clinical PracticeJournal, the market leader in clinical trial news, regulatory updates andpeer-reviewed features) brands with two new awards ceremonies. IHC customers' demand for more market intelligence on key medical technologysectors led to the highly successful launch of two niche information services,Clinica Diagnostics and Clinica Cardiology, as brand extensions of the marketleading Clinica Medical Technology News product. Building on the strongnews content of Clinica, these new services also feature detailed market sectoranalysis and data as well as in-depth company profiles to providea comprehensive source of news and intelligence on the medical diagnostics andcardio-vascular equipment markets. In HSS, the purchase of Lawrence Erlbaum towards the end of 2006, with animpressive portfolio of 100 titles particularly in behavioural sciences andeducation, helped drive strong top line growth of 19% to £138.5m. Pro formarevenue growth for the year was 13% reflecting continuing strong growth in bothcopy and journal sales. Pro forma adjusted operating profit grew by a strong 28% to £34.0m to produce anadjusted operating profit margin of 25%, compared to 23% in 2006. The 2007 reorganisation of the HSS books business to a global structure hasreduced costs, increased efficiency and improved margins. Informa's marketleadership in newer areas of academia, such as media studies, built environmentsand gender studies, as well as deep relationships with the newer universities,has ensured that we are first to market with newer delivery formats so that, forexample, we now have over 100 companion websites to our text books, givingprofessors extended teaching materials and students more learning tools. This isin turn drives higher adoptions of new books and increases revenue. The events businesses, which represent 10% of the division's revenue, saw goodpro forma adjusted operating profit growth of 12% driven primarily by strongperformances of their LSEs such as Clinical Trials Congress, Partnering withCentral Labs, Medicaid Drug Rebate Program and BioProcess International which isnow widely recognised as the meeting place for the Bioprocess manufacturingindustry. Annual and LSEs now represent almost 45% of the number of conferences held inthis division, reflecting a successful migration from more niche, opportunisticevents to the more resilient and higher yielding conferences with dual revenuestreams (both delegate and SpEx revenue). This duality combined with higherdelegate yield, means that almost 70% of event revenue in this division nowderives from these larger events. Professional ProProfessional 2007 2006 Increase forma £'m £'mRevenuePerformance Improvement 225.3 225.8 -% 8%Financial Data Analysis 72.4 63.6 14% -3%Finance Insurance Law and Tax 95.6 83.3 15% 13% ------- ------- -------- 393.3 372.7 6% 7% ------- ------- -------- Adjusted Operating ProfitPerformance Improvement 35.3 34.7 2% 10%Financial Data Analysis 21.9 19.1 15% -2%Finance Insurance Law and Tax 26.7 22.0 21% 17% ------- ------- -------- 83.9 75.8 11% 9% ------- ------- -------- Adjusted Operating Margin 21.3% 20.3% ------- ------- -------- ------- Revenue increased by 7% on a pro forma basis to £393.3m representing 35% ofInforma's total revenue. Reported revenue growth at a slightly lower 6% wasprimarily due to the impact of the weaker US dollar. The strong reported revenueincrease in Financial Data Analysis (FDA) is due to the Datamonitor andInvestment Scorecard acquisitions which have contributed £14.2m. Adjusted operating profit grew on a reported basis by 11% to £83.9m and on a proforma basis by 9%. Performance Improvement (PI), which represented 57% of the division's revenue in2007 and 20% of Informa's as a whole, was flat on reported revenues due to theimpact of the dollar, but increased revenues on a pro forma basis by 8%. Secondhalf trading was slightly ahead of the first half with 52% of full year proforma revenue coming from the second half and 56% of pro forma adjustedoperating profit. Client revenue renewal rates of over 90% combined with over 100% retained valuefor another consecutive year contributed to good trading in 2007 and stands thebusiness in good stead for 2008. Robbins-Gioia (R-G), the programme management specialists who contribute circa30% of PI revenue, had a strong year. The 2006 $4m investment programme,reported in last year's Annual Report, produced a good return. On a pro formabasis R-G revenue increased by 9% with double digit adjusted operating profitgrowth Omega, the retail financial services specialists and market leaders in creditand commercial lending, who as the second smallest PI business contribute just4.5% to total PI revenues, experienced a weaker second half year after a strongstart to the year, 16% up on 2006, reported in the interim results. As we enter2008, the credit slow down primarily in the US, as clients took stock of currentmarket conditions, appears to be being replaced by significant new activity astheir clients look for proven solutions to their current difficulties. Financial Data Analysis (FDA) which represented 18% of the division's revenue in2007 and 6% of the Group's revenue grew revenues and adjusted operating profitby 14% and 15% respectively benefiting from the Datamonitor financial andprofessional services client base. On a pro forma basis FDA experienced a slight decline in revenue, partly off-setby cost savings. Informa Global Markets (IGM), the bond and foreign exchange informationprovider, which in 2006 experienced a slight decline in pro forma revenue dueprimarily to consolidation in the banking community, continued to see someattrition in the first half of 2007 which was off-set by growth in the secondhalf, particularly in the EMEA markets, to finish the year slightly ahead of2006. Despite the challenging markets, IGM achieved year on year margin growth.Given current equity market turmoil, attention to information and analysis ofsafe harbour alternatives is likely to increase. International Insider, our Eurobond analysis business, experienced both revenueand profit growth for the year. Informa Global Markets and International Insidercombined resources in 2007 and launched a consolidated product suite of capitalmarkets analytical tools, which will continue to be rolled out in 2008. Informa Research Services (IRS), providing competitive intelligence, marketresearch and mystery shopping services to the financial industry, had adisappointing start to the year. While the core bank rate and fee informationbusiness performed well, the market research business experienced sufficientweakness that in the second half of the year we completely restructured it,leaving IRS in a much healthier position for 2008. Informa Investment Solutions (IIS) with its strong wealth management solutionset, finished the year strongly. Having successfully integrated InvestmentScorecard, acquired in the first half of the year, IIS drove cross-sellingsynergies between the legacy clients and those acquired with InvestmentScorecard to increase revenues substantially. Post acquisition adjustedoperating profit growth for Investment Scorecard compared to the same period inthe prior year was over 50%. iMoneyNet, the publishers of the subscription driven Money Fund Report R, alsosaw year on year revenue and adjusted operating profit growth primarily drivenby the conversion of traditional data delivery to on-line browser based workflowanalysis tools which provide greater yield and extend client engagements. The strongest growth within the division came from the Finance, Insurance, Lawand Tax (FILT) unit which includes Informa Professional, a market facing unit,and legacy IIR specialist finance events businesses in both the UK and the US.With revenues at £95.6m and adjusted operating profit at £26.7m representing 32%of the division's adjusted operating profit, FILT had pro forma revenue andadjusted operating profit growth of 13% and 17% respectively. The stronger UK Professional performance was led by its move to on-line dataservices in both the legal and insurance markets. Here, the increased utilityand timeliness of web based solutions continues to drive higher client yield,robust revenue renewal and new business acquisition. Financial events, which includes the market leader in Large Scale FinancialEvents, ICBI, traded strongly. Revenue increased by double digits year on yearwhilst still delivering a 30%+ margin. As well as contribution from a smallacquisition, growth came from the execution of a number of recurring Informastrategies. Average delegates and yield increased in our LSEs. In turn, this expansionincreased the high margin SpEx revenues as suppliers were eager to have accessto senior audiences, with proven, considerable purchasing power. The Adam Smith brand, specialising in Russia and other emerging central andeastern European markets, saw good productivity and delegate growth as itexpanded into other countries such as the Ukraine, taking advantage of the scaleand reach of Informa to ensure first mover advantage. Both ICBI and US Finance successfully geo-cloned a number of their leadingevents including SuperReturn (private equity), GAIM (hedge funds) and Funds inAsia and the Middle East, taking sponsors and exhibitors to new markets andattracting new local delegates while reducing the reliance on more developedmarkets. The weakest part of the division was the small Dutch publishing unit which hadflat year on year growth after it reduced its product portfolio, divesting lessprofitable products following a poor 2006. This unit accounts for 7% of thedivision's revenue. Commercial ProCommercial 2007 2006 Increase forma £'m £'mRevenueRegional Events 250.7 241.1 4% 12%Telecoms & Media 74.0 64.7 14% 17%Maritime & Commodities 71.6 65.4 9% 8% ------- ------- -------- 396.3 371.2 7% 12% ------- ------- -------- Adjusted Operating ProfitRegional Events 46.5 42.3 10% 27%Telecoms & Media 23.2 16.1 44% 23%Maritime & Commodities 10.4 7.3 42% 38% ------- ------- -------- 80.1 65.7 22% 28% ------- ------- -------- Adjusted Operating Margin 20.2% 17.7% ------- ------- -------- ------- The Commercial division, which represents 35% of Informa's revenue, increasedrevenue by 7% on a reported basis to £396.3m and by 12% on a pro forma basis.Growth on reported numbers was lower than pro forma due to the £39m aggregateimpact from the absence of the quadrennial IPEX print show exhibition which washeld in 2006 and the changed relationship for the 3GSM World Congress underwhich profits rather than revenues are now shared with the trade association.This arrangement lasts until end of 2009. The impact of this change is to reduceturnover by £18m and has a small impact on adjusted operating profit. The IPEXevent in 2006 contributed £21m of turnover and £7.7m of operating profit. The3GSM and IPEX reductions are offset by £30.3m of Datamonitor revenue and £9.1mof adjusted operating profit. Adjusted operating profit for the division rose by 22% on a reported basis andby 28%+ on a pro forma basis to £80.1m. A pleasingly 2.5 percentage point marginincrease to 20% reflects the good gearing of this division. With the acquisition of Datamonitor, the successful launch of the InformaTelecoms and Media Intelligence Centre and the growth of Maritime & Commoditieshighly successful Maritime Intelligence Unit, the mix of revenues in thisdivision has shifted. In 2007 the very resilient subscription revenues grew by78% to £53.6m. Regional Events which represented 63% of the division's revenue in 2007 achieved12% pro forma revenue growth and 27% pro forma adjusted operating profit growth.Reported revenue growth of 4% was lower due to the impact of the weaker USdollar. Adjusted operating profit growth at 10% despite this dollar weaknessagain demonstrates the ability of Informa's events business to scale the costswithin the business and increase margin. The adjusted operating profit margin in2007 increased to 18.5%. The powerhouse within the Regional Events unit in 2007 was again the Dubaievents business, contributing 21% of revenues and over 35% of adjusted operatingprofits and growing revenues by 38% year on year. This growth was primarily driven by successfully leveraging brand strength.Existing shows increased square metres with a 60% profit drop through. Thisenabled equally profitable growth in sponsorship revenue and yields. Geo-cloning event brands created a safe new launch vehicle, taking sponsors andexhibitors to new markets. Dubai's most successful 2007 launch was thegeo-cloned Cityscape Abu Dhabi which contributed a multi-million dollar grossprofit at an above average margin. The German and Dutch conference businesses which between them represent around athird of both revenue and adjusted operating profit of the Regional Event'sportfolio built on their strong start to the year to finish well with doubledigit pro forma adjusted operating profit growth. The remaining smaller regional events businesses which include for exampleAustralia, Brazil, Czech Republic, Denmark, Hungary, India, Italy, Mexico,Poland, Portugal, Singapore, Spain and Sweden, saw a focus on best practiceprogramme development, marketing KPIs, cost control and productivity pay off.The developing markets of South Africa and Singapore had particularly strongyear on year conference growth. Denmark, which had a weak start to the year,executed an exceptional turnaround programme and finished the year substantiallyahead of 2006. Launch investments in 2007 in Mexico and India are expected tocontribute to further good growth in 2008. Informa Telecoms & Media (ITM) as a market facing unit combines publishing andevents revenues. Following the Datamonitor acquisition it now includes theDatamonitor Ovum branded Knowledge Centre. In 2007 ITM contributed 19% ofrevenue and 29% of adjusted operating profit of the division, and 6.6% and 8.9%respectively of Informa's total revenue and adjusted operating profit. In 2007ITM grew reported revenue by 14% and adjusted operating profit by 44% with theloss of revenue from the change in the relationship with the telecoms tradeassociation over the 3GSM World Congress offset by both a rigorous focus on costcontrol and the benefit of the Datamonitor acquisition. ITM grew pro forma revenue by 17% and pro forma adjusted operating profit by 23%increasing an already strong adjusted operating margin by over six percentagepoints to a subscription quality of earnings level of 31%. ITM's wholly owned GSM world series, branded as the Com series of events isgrowing strongly and the training business continues to roll out its successfulMiniMBA series as well as to make strong inroads into the corporate trainingmarket. In Asia, ITM's focus on growing its largest events, has also producedgood adjusted operating profit growth. Maritime and Commodities which contributes 18% of the Commercial division's and6.3% of Informa's revenue, saw 9% reported and 8% pro forma revenue increasestranslate well into 42% and 38% respectively adjusted operating profitincreases. A strong focus on driving subscription revenues in this market facingunit which includes events, advertising, copy sales and subscriptions, hasincreased the latter to 42% of the unit's revenue. Adjusted operating profitmargins have consequently risen by 3 percentage points. Within Maritime, Lloyd's Maritime Intelligence Unit which created a dedicatedportal in mid 2006 bringing together various data streams and websites relatingto vessel and ownership information, continues to capture strong market appetitefor this workflow tool. Reporting on over 28 million vessel positions on a dailybasis as well as providing detailed characteristics of over 120,000 vessels andcomprehensive information on 163,000 shipping companies, site traffic and clientyields continues to grow monthly. Commodities also finished the year well as, a market facing unit, it continuedto repurpose its content and leverage its brands across multiple media. In aperfect example of marrying market expertise with Informa's best practicebusiness stream methodology, it applied Informa's Large Scale Event blueprint tothe 10th Anniversary of its World Ethanol event in 2007 to increase operatingprofit by 35%. Current Trading All three of Informa's divisions and revenue streams have started the year welland are trading in line with our expectations. Publishing is positioned well for 2008. Renewal rates of over 95% and theaddition of 300 new academic journals in the current year combined with contentdriven price increases underpins both revenue and profit growth in the Academicand Scientific division. In addition, an already robust pipeline of books isfurther bolstered by the publication of the 5th edition of Molecular Biology ofthe Cell, our leading book title. Electronic workflow solutions in the Academic & Scientific, Professional andCommercial divisions are all seeing strong client retention and new businesswins. Datamonitor in particular has begun the year well; new sales recorded inJanuary were 24% ahead of the same month last year. As a result of the Datamonitor acquisition, we expect almost 60% of Informa's2008 profits to come from publishing. 80% of these profits are derived from oursubscription products. Almost half of these revenues are already banked.Publishing revenue overall (recognised and deferred) at the end of Januaryaccounted for almost a third of expected full year revenue. The Performance Improvement (PI) businesses have had a solid start to the year,underpinned by 2007 revenue retention of over 90% and good international salesgrowth. Non US revenue in January is over 20% higher than a year ago. In December Omega, the financial service specialists who had a weaker secondhalf of 2007, signed two large contracts with US banks both of whom had beensignificantly impacted by the sub prime turmoil, looking to rebound quickly withreinvigorated market presence. Omega's pipeline is currently over 20% ahead ofthe same point last year. Total value of opportunities across all PI pipelinessupports our growth expectations for this year. The events businesses have also started the year well. Three of our largest andmost established events were held in the first weeks of the year each in adifferent sector and each achieving the most successful results in theirhistory. SuperReturn, the world's largest Private Equity event now in its 11thyear, has had record delegate attendance and sponsorship and exhibition (SpEx)revenues. Arab Health, the premier Middle East healthcare show, occupied theentire Dubai International Convention & Exhibition Centre, covering more than60,000sqm of gross space. Energie, the German national energy event, attractedmore delegates then ever before and increased SpEx revenue by 11%. Newer events,such as Ukraine Investment, were also highly successful. Event revenues (recognised and deferred) are currently significantly ahead ofthis same point last year. Over 20% of 2008 expected delegate revenues arealready booked. At our 2007 events we secured on-site renewals of some 75% ofour SpEx clients for this year's events. This strong revenue renewal, coupledwith good early new sales with deferred revenues running at double digit growthon prior year, means that we now have firm bookings on a substantial portion ofour budgeted 2008 SpEx revenues. We are of course aware of the current uncertainty in the financial markets, butat this point the board sees no reason to alter its expectations that Informawill deliver another strong performance in 2008. Financial Review Informa reported 2007 revenues of £1,129.1m, 9% higher than in 2006 and adjustedoperating profit increased by 19% to £261.0m. Adjusted operating profit marginsincreased from 21% to 23%. These results reflect the increased scale of the Group and the growth rates andopportunities that have arisen from the combination of the Informa, T&F and IIRbusinesses and most recently the Datamonitor acquisition. The increase in marginreflects the benefit of operational gearing and a continued focus on costefficiency across the Group. Recent acquisitions have traded strongly. In particular, Datamonitor hasperformed ahead of our acquisition model, reporting post-acquisition revenues of£51.1m and adjusted operating profit of £17.6m. Revenue In the year to 31 December 2007, we reported revenues of £1,129.1m, up 9% fromthe £1,039.1m reported in the same period last year. Datamonitor which wasacquired on 13 July 2007 contributed £51.1m to revenue and a further £23m wascontributed by other acquisitions. The weakness in the US dollar throughout 2007 reduced reported pounds sterlingrevenues by £41m relative to 2006. Also affecting reported 2007 revenues werethe change to the relationship with the trade association for the 3GSM WorldCongress which reduced our revenue from this event by £18m compared to 2006, andthe quadrennial IPEX exhibition which contributed £21m to 2006 reportedrevenues. Operating Profit Operating profit increased by 20% to £154.0m from £128.3m in 2006. Whileoperating costs benefited from the impact of a weaker US dollar, the absoluteincrease in operating costs of 7% includes increases in intangible assetamortisation of 21% and staff costs of 7%. Included in other expenses and employee benefit expenses are in aggregate £7.7mof restructuring costs which include the costs of integrating acquisitions andrestructuring costs associated with a Group wide initiative to rationalise ourback office teams within Europe and the UK. Finance Costs Net finance costs, which consist principally of interest costs net of interestreceivable increased by £22.0m from £41.0m to £63.0m, principally as result ofthe increase in debt in July 2007 to finance the acquisition of Datamonitor. Acquisitions and Disposals The Group has spent £599.0m during 2007 on acquisitions. As well as matching theGroup's business criteria and strategy, the Group continues to apply itsrigorous financial investment criteria which are that acquisitions should payback their initial investment within seven years, be earnings enhancing in theirfirst full year of ownership and associated cash flows must produce a positivenet present value within 10 years when discounted at the Group's weightedaverage cost of capital plus a suitable premium for risk. The integration of Datamonitor is progressing to plan and the Group expects torealise annualised cost savings of £3m in line with the acquisition model andexpects that the post-tax return on invested capital will exceed Informa's costof capital in the second full year of ownership. In February 2007 the Group disposed of its interest in Blackwell PublishingLimited. The proceeds on this disposal were £38.9m and the gain on disposal isincluded within the £33.4m profit on disposal of available for sale investmentwhich is shown on the face of the consolidated income statement. Taxation Across the Group tax has been provided at an adjusted tax rate of 25.05% (2006:26%). This adjusted tax rate benefits from profit generated in low taxjurisdictions including Dubai and Monaco. The effective Group tax charge was19.5% (2006: 21.6%). EPS Basic and diluted EPS are both 46% ahead of 2006. Adjusted Results Adjusted operating profit, which is shown in note 4 to these results, iscalculated after removing certain items not related to the underlying tradingoperations of the Group. Adjusted operating profit increased by 19% from £219.1mto £261.0m. Adjusted operating profit before tax increased 14% to £202.6m from £178.1m andadjusted profit for the period increased by 15% from £132.1m to £151.9m. Adjusted diluted EPS of 35.5 pence is 14% ahead of 2006. The Board believes these adjusted operational figures provide additionalinformation to explain the underlying performance and trends across the Groupand further details are provided in note 4. Dividend As was reported in the interim report for the six months ended 30 June 2007, theBoard has reviewed the Group's dividend policy and given the excellent cash flowcharacteristics of the business and the resilience of its revenue and profitstreams decided to set dividend payouts at a range of 2.0 to 2.5 times adjustedearnings per share. In line with this policy and in recognition of the continued good tradingprospects, the Board has recommended a final dividend of 11.3 pence (2006: 8.9pence) which together with the interim dividend of 5.6 pence represents a totaldividend of 16.9 pence (2006: 12.2 pence). This represents an increase of 39% onthe 2006 equivalent. The final dividend which is subject to shareholder approvalwill be payable on 21 May 2008 to ordinary shareholders registered at the closeof business on 18 April 2008. Balance Sheet Goodwill increased from £1,124.5m to £1,554.3m, including additions fromacquisitions of £415.2m and favourable currency movements. Other intangible assets increased from £921.2m to £1,154.5m, with £317.3m of theincrease being attributable to acquisitions, offset by amortisation and currencymovements. Also included within this category is £28m in respect of theinvestment in a series of developments in our group wide operating systemsincluding finance, sales order processing, contact management and marketing. Property and fixed assets increased to £24.6m from £23.1m, reflecting additionsof £8.3m (2006:£9.7m) and additions from acquisitions of £2.3m offset bydepreciation. The reduction in available for sale investments previously shown under currentand non current assets includes a reduction of £38.9m following the sale of theshares held in Blackwell Publishing Limited. Trade and other receivables rose by £54.7m principally due to acquisitions andgrowth in trade receivables in line with increased trading. Share capital has been substantially restructured on 19 December 2007. Theauthorised share capital was reduced by cancelling 9.90 pence of each 10.00pence share in issue resulting in a reduction of share capital (£42.0m), areduction in share premium (£505.1m) and the creation of a distributable capitalreserve of £547.1m. The increase in the hedging and translation reserve of £23.6m relates to the netcurrency impact from retranslating assets and goodwill offset by the conversionof liabilities (principally loans) also held in those same currencies.Additionally there was a net decrease in the fair value of derivatives held of£11.9m. The decrease in the revaluation reserve of £26.2m reflects the disposal of theGroup's investment in Blackwell Publishing Limited. Net debt increased by £506.5m from £738.4m to £1,244.9m reflecting inter alia anincrease in operating cash flows of £59.8m to £279.2m and disposal of availablefor sale investments of £38.9m offset by investment in acquisitions of £598.9m(of which £497.1m was in respect of Datamonitor), and higher cash out-flows inrespect of net interest, capital expenditure and dividend payments. The level ofnet debt at 31 December 2007 is also impacted by currency movements of £12.9mand by interest being paid as incurred in the second half of the year ratherthan being accrued as had been the case in the prior year. The Group continues to generate excellent cash flows and this is reflected in acash conversion rate (expressed as adjusted cash generated by operations as apercentage of adjusted operating profit, note 10 of the results) of 110% (2005:103%). In 2007, before taking into account spend on acquisitions or proceedsfrom the sale of assets, the Group generated free cash flow of £77m. As was outlined in the interim 2007 financial statements, in support of theDatamonitor acquisition, the Group has put in place a new £1.45bn multicurrency5 year unsecured credit facility. The syndication of the facility wassuccessfully completed in the second half of the year. The facility isstructured as a £500m revolving credit facility and a £950m term loan (includingforeign currency sub-tranches). The £500m revolving credit facility is repayableat the end of 5 years and the £950m term loan amortises over 5 years, with 5%payable at the end of 2008, 10% at the end of each of 2009 and 2010, 15% at theend of 2011 and the balance on the final May 2012 maturity date. The principalfinancial covenant ratios under the facility are maximum net debt to EBITDA andminimum EBITDA interest cover, tested semi-annually. At 31 December 2007 bothfinancial covenants were comfortably achieved. The ratio of net debt to EBITDAat 31 December 2007 was 4.3 times and given the strong cash flow of the Groupthis is expected to drop below 3.75 times by the end of December 2008. The Group has also entered into interest rate hedging agreements to the extentthat approximately 70% of the projected interest cost is effectively covered atfixed rates through 2009, with the percentage hedged gradually decreasingthereafter in line with expected decreases in gearing levels. Based on currentmarket interest rates the Group is currently paying a blended interest rate onits debt of approximately 6.25%. Provisions shown under current and non current liabilities have increased from£13.3m to £36.6m. The increase in is relation to the Datamonitor acquisition andis split between £22.0m of contingent consideration and £3.0m of propertyrelated provisions. This has been partly offset by utilisation of the openingprovisions during the year. Trade and other payables shown under current and non current liabilities of£195.2m have increased by £25.8m from £169.4m. Acquisitions account for themajority of the increase (£21.5m). The Group's defined pension liabilities disclosed under "retirement benefitobligations" have reduced by £2.8m compared with 31 December 2006 principallydue to additional contributions by the Group of £1.2m and actuarial gains of£1.4m. Deferred revenue which represents income received in advance was up £56.0m (31%)on the same period in 2006 to £237.4m. Adjusted for the impact of acquisitions,deferred income at 31 December 2007 was 9% ahead of the same date last year. Consolidated Income StatementFor the Year Ended 31 December 2007 Year ended Year ended 2007 2006 Notes £'000 £'000 Continuing operationsRevenue 1,129,098 1,039,142Change in inventories of finished goods andwork in progress 2,009 2,513Raw materials and consumables used (378,880) (349,930)Employee benefit expense (318,586) (297,248)Depreciation expense (9,066) (9,113)Amortisation of intangible fixed assets (104,957) (86,656)Impairment of goodwill - (515)Impairment of available for sale investments (755) -Other expenses (164,893) (169,897) ----- -------- --------Operating profit 153,970 128,296Profit/(loss) on disposal of available forsale investment 33,365 (812)Finance costs 5 (67,763) (45,654)Investment income 5 4,793 4,670 ----- -------- --------Profit before tax 124,365 86,500Tax charge 6 (24,279) (18,653) ----- -------- --------Profit for the year 100,086 67,847 ----- -------- --------Attributable to:- Equity holders of the parent 99,192 67,368- Minority interests 894 479 ----- -------- --------Earnings per share 8- Basic (p) 23.40 15.98- Diluted (p) 23.32 15.91 ----- -------- -------- Consolidated Statement of Recognised Income and ExpenseFor the Year Ended 31 December 2007 Year ended Year ended 2007 2006 Notes £'000 £'000 (Loss)/gain on cash flow hedges 9 (16,577) 4,800Loss on translation of foreign operations 9 (9,781) (62,590)Actuarial gains on defined benefit pensionschemes 9 1,375 6,817Tax on items taken directly to equity 6 11,457 (8,871)Revaluation of available for sale investment - 33,390 ----- ------- ---------Net loss recognised directly in equity (13,526) (26,454)Transferred to profit or loss on cash flow 9 (1,904) (2,572)hedgesProfit for the year 100,086 67,847 ----- ------- ---------Total recognised income and expense for the 84,656 38,821year ----- ------- ---------Attributable to: - Equity holders of the parent 83,762 38,342- Minority interests 894 479 ----- ------- --------- Consolidated Balance SheetAt 31 December 2007 2007 2006 Note £'000 £'000ASSETSNon-current assetsGoodwill 1,554,351 1,124,529Other intangible assets 1,154,534 921,229Property and equipment 24,603 23,143Available for sale investments 257 1,012Deferred tax assets 31,835 19,900Derivative financial instruments 1,990 6,339 -------- ---------- ---------- 2,767,570 2,096,152 -------- ---------- ----------Current assetsInventory 31,523 33,601Available for sale investments - 38,943Trade and other receivables 247,647 192,987Cash and cash equivalents 23,973 19,478Derivative financial instruments 790 1,357 -------- ---------- ---------- 303,933 286,366 -------- ---------- ----------Non-current assets classified as held for sale 2,247 2,247 -------- ---------- ----------Total assets 3,073,750 2,384,765 -------- ---------- ---------- EQUITY AND LIABILITIESCapital and reservesCalled up share capital 9 425 42,327Share premium account 9 - 501,310Reserve for shares to be issued 9 5,394 2,803Merger reserve 9 496,400 496,400Other reserve 9 37,398 37,398ESOP trust shares 9 (1,955) (3,332)Revaluation reserve 9 - 26,190Hedging and translation reserve 9 (83,574) (59,954)Capital reserve 9 547,075 -Retained losses 9 (73,312) (111,742) -------- ---------- ----------Equity attributable to equity holders of parent 927,851 931,400Minority interests 612 589 -------- ---------- ----------Total equity 928,463 931,989 -------- ---------- ----------Non-current liabilitiesLong-term borrowings 1,205,427 654,847Deferred tax liabilities 293,151 244,320Retirement benefit obligation 8,437 11,219Provisions 28,027 11,769Trade and other payables 5,725 3,287Derivative financial instruments 13,142 - -------- ---------- ---------- 1,553,909 925,442 -------- ---------- ----------Current liabilitiesShort-term borrowings 63,396 103,041 Current tax liabilities 92,483 75,227 Provisions 8,616 1,558 Trade and other payables 189,523 166,136 Deferred income 237,360 181,372 -------- ---------- ---------- 591,378 527,334 -------- ---------- ----------Total liabilities 2,145,287 1,452,776 -------- ---------- ----------Total equity and liabilities 3,073,750 2,384,765 -------- ---------- ---------- Consolidated Cash Flow StatementFor the Year Ended 31 December 2007 Year ended 2007 Year ended 2006 Note £'000 £'000 Operating activitiesCash generated by operations 10 279,160 219,358Income taxes paid (30,970) (32,466)Interest paid (84,340) (42,845) ---- -------- --------Net cash from operating activities 163,850 144,047 ---- -------- --------Investing activitiesInvestment income 4,459 4,670Proceeds on disposal of property,equipment and non-current assetsclassified as held for sale 105 2,996Purchases of intangible software assets (25,666) (13,936)Purchases of property and equipment (8,332) (9,705)Disposal of available for saleinvestments 38,893 -Acquisition of subsidiaries andbusinesses (598,984) (136,207) ---- -------- --------Net cash used in investing activities (589,525) (152,182) ---- -------- --------Financing activitiesDividends paid (61,520) (39,160)Repayments of borrowings 10 (1,073,971) (352,185)New bank loans raised 10 1,555,467 397,514Repayments of obligations underfinance leases 10 (8) (28)Proceeds from the issue of sharecapital 3,863 4,659 ---- -------- --------Net cash from financing activities 423,831 10,800 ---- -------- -------- Net (decrease)/increase in cash andcash equivalents (1,844) 2,665 Cash and cash equivalents at beginningof year net of overdrafts 18,750 16,085 ---- -------- --------Cash and cash equivalents at end ofyear net of overdrafts 16,906 18,750 ---- -------- -------- Notes to the Preliminary AnnouncementFor the Year Ended 31 December 2007 1 Basis of Preparation The financial information set out in the preliminary announcement does notconstitute statutory accounts within the meaning of Section 240 of the CompaniesAct 1985, but is derived from those accounts. While the financial information inthis preliminary announcement has been prepared in accordance with InternationalFinancial Reporting (IFRS), this announcement does not itself contain sufficientinformation to comply with IFRS. The IFRS accounting policies applied in respectof the current and prior years have previously been disclosed, the only changefrom the prior year is the adoption of IFRS 7. Statutory accounts for the yearended 31 December 2006 have been delivered to the Registrar of Companies andthose for the year ended 31 December 2007 will be delivered following theCompany's Annual General Meeting. The statutory accounts for the year ended 31December 2007 will be despatched to shareholders by 2 April 2008 for approval atthe Annual General Meeting on 15 May 2008. The auditors have reported on thoseaccounts - their reports were unqualified and did not contain statements underSection 237(2) or (3) of the Companies Act 1985. 2 Business and Geographical Segments Analysis by market sector Revenue Operating profit 2007 2006 2007 2006 £'000 £'000 £'000 £'000Academic & Scientific DivisionScientific, 200,948 178,738 36,293 31,922Technical & MedicalHumanities & Social 138,513 116,511 23,161 15,906Sciences -------- -------- -------- -------- 339,461 295,249 59,454 47,828Professional DivisionPerformance 225,260 225,794 17,899 17,709ImprovementFinancial Data 72,422 63,641 16,893 15,823AnalysisFinance, Insurance, 95,648 83,287 17,155 12,615Law & Tax -------- -------- -------- -------- 393,330 372,722 51,947 46,147Commercial DivisionRegional Events 250,701 241,045 14,860 12,525Telecoms & Media 73,990 64,736 17,744 14,542Maritime & 71,616 65,390 9,965 7,254Commodities -------- -------- -------- -------- 396,307 371,171 42,569 34,321 -------- -------- -------- --------Total from continuing 1,129,098 1,039,142 153,970 128,296operations -------- --------- -------- -------- Adjusted operating profit 2007 2006 Note £'000 £'000 Academic & Scientific DivisionScientific, 62,896 50,618Technical & MedicalHumanities & Social 34,034 26,936Sciences -------- -------- -------- 96,930 77,554Professional DivisionPerformance 35,292 34,726ImprovementFinancial Data 21,964 19,064AnalysisFinance, Insurance, 26,667 22,012Law & Tax -------- -------- -------- 83,923 75,802Commercial DivisionRegional Events 46,519 42,280Telecoms & Media 23,225 16,151Maritime & 10,396 7,304Commodities -------- -------- -------- 80,140 65,735 -------- -------- --------Adjusted operating 4 260,993 219,091profit -------- -------- -------- Geographical segments The following table provides an analysis of the Group's revenue by geographicalmarket, irrespective of the origin of the goods/services: Revenue by geographical market 2007 2006 £'000 £'000 United Kingdom 166,443 161,837North America 426,028 409,780Continental Europe 322,756 293,385Rest of World 213,871 174,140 ----------- ----------- 1,129,098 1,039,142 ----------- ----------- 3 Restructuring Costs 2007 2006 £'000 £'000 Board level changes 472 -Acquisition integration costs 1,774 3,643Business restructuring 5,426 3,560 -------- ------- 7,672 7,203 -------- ------- In the year ended 31 December 2007, acquisition integration and businessrestructuring costs comprise reorganisation costs of £2,354,000 (2006:£3,672,000), redundancy costs of £4,846,000 (2006: £2,467,000) and vacantproperty provisions of £nil (2006: £1,064,000). These items are included in theother expenses line on the Income Statement except for redundancies which areincluded in employee benefit expense. 4 Adjusted Figures - Continuing Operations 2007 2006 Note £'000 £'000 Reconciliation of operating profit to adjustedoperating profit:Operating profit 153,970 128,296 Adjusting operating profit items -------- --------Restructuring and re-organisation costs 3 7,672 7,203Intangible asset amortisation(1) 99,351 83,077Impairment of goodwill - 515 -------- --------Adjusting operating profit items 107,023 90,795 ------ -------- --------Adjusted operating profit 260,993 219,091 ------ -------- --------Reconciliation of statutory profit before tax toadjusted profit before tax:Profit before tax 124,365 86,500 ------ -------- --------Adjusting operating profit items 107,023 90,795(Profit)/loss on disposal of available for saleinvestment (33,365) 812 Finance costs -------- --------Excess interest on early repayment of privateplacement loan notes 915 -Bank loan facility fees written off on refinancing 3,666 - -------- -------- 4,581 - ------ -------- --------Adjusting profit before tax items 78,239 91,607 ------ -------- --------Adjusted profit before tax 202,604 178,107 ------ -------- --------Reconciliation of profit for the year to adjustedprofit for the year:Profit for the year 100,086 67,847 ------ -------- --------Adjusted profit before tax items 78,239 91,607 Attributable tax expense on adjusting items (26,465) (27,301) ------ -------- --------Adjusting profit for the year items 51,774 64,306 ------ -------- --------Adjusted profit for the year 151,860 132,153 ------ -------- -------- (1)Excludes software amortisation 5 Finance Costs and Investment Income 2007 2006 £'000 £'000Interest expense on financial liabilities measured atamortised cost 60,114 43,118Excess interest on early repayment of private placement loannotes 915 -Bank loan facility fees written off on refinancing 3,666 -Fair value gain on interest rate swap previously recognisedin equity - (842)Interest on pension scheme liabilities 3,403 3,185 ------- --------Total Interest Expense 68,098 45,461 Hedge ineffectiveness on cash flow hedges (616) 224Fair value gains transferred from equity on interest rateswaps designated as cash flow hedges of floating rate debt 281 (31) ------- --------Finance costs 67,763 45,654 ------- -------- 2007 2006 £'000 £'000Loans and receivables:Interest IncomeBank deposits 958 348Interest on unwinding of discounted loan 80 58Translation gain on foreign currency loan(1) - 1,284Profit on disposal of non-current assets classified as heldfor sale - 160Expected return on pension scheme assets 3,755 2,820 ------- --------Investment income 4,793 4,670 ------- -------- (1) The Group no longer has borrowings in Japanese Yen. 6 Tax The tax charge comprises: 2007 2006 £'000 £'000Current tax:UK corporation tax 20,617 20,555Foreign tax 24,107 22,925 ------- ------- 44,724 43,480 ------- ------- Deferred tax:Current year (20,445) (24,827) ------- -------Total tax charge on profit on ordinary activities 24,279 18,653 ------- ------- UK corporation tax is calculated at 30% (2006: 30%) of the estimated assessableprofit for the year. Taxation for other jurisdictions is calculated at the ratesprevailing in the relevant jurisdictions. A reduction in the UK tax rate from 30% to 28% will apply from 1 April 2008.This will impact the current tax charge for the year to 31 December 2008 and hasbeen applied to the deferred tax attributable to the UK. The total charge for the year can be reconciled to the accounting profit asfollows: 2007 2006 £'000 % £'000 % Profit before taxation 124,365 86,500 Tax at the UK corporation tax rate of 30%(2006: 30%) 37,309 30 25,950 30 Tax effect of expenses that are notdeductible in determining taxable profit 2,434 2 18,589 21Effect of different tax rates ofsubsidiaries operating in otherjurisdictions (15,283) (12) (10,747) (12)Deferred tax not previously recognised (181) - (15,139) (17) -------- ------ ------- ------Tax expense and effective rate for theyear 24,279 20 18,653 22 -------- ------ ------- ------ In addition to the income tax expense charged to the Income Statement, a taxdebit of £11,457,000 all of which relates to deferred tax (2006: tax credit of£8,871,000 all of which related to deferred tax), has been recognised in equityduring the year. 7 Dividends 2007 2006 £'000 £'000Amounts recognised as distributions to equity holders in theyear:Final dividend for the year ended 31 December 2005 of 6.00pper share - 25,275Interim dividend for the year ended 31 December 2006 of3.30p per share - 13,885Final dividend for the year ended 31 December 2006 of 8.90pper share 37,759 -Interim dividend for the year ended 31 December 2007 of5.60p per share 23,761 - -------- -------- 61,520 39,160 -------- -------- Proposed final dividend for the year ended 31 December 2007of 11.30p per share (2006: 8.90p per share) 48,013 37,612 -------- -------- Holders of 300,391 ordinary shares of 0.10p (2006: 725,213 ordinary shares of10.00p) each have waived their rights to receive dividends. The proposed final dividend is subject to approval by shareholders at the AnnualGeneral Meeting and has not been included as a liability in the preliminaryannouncement. 8 Earnings per Share Basic The basic earnings per share calculation is based on a profit attributable toequity shareholders of the parent of £99,192,000 (2006: £67,368,000). Thisprofit on ordinary activities after taxation is divided by the weighted averagenumber of shares in issue (less those non-vested shares held by employee shareownership trusts) which is 423,972,990 (2006: 421,619,174). Diluted The diluted earnings per share calculation is based on the basic earnings pershare calculation above except that the weighted average number of sharesincludes all potentially dilutive options granted by the Balance Sheet date asif those options had been exercised on the first day of the accounting period orthe date of the grant, if later, giving a weighted average of 425,437,510 (2006:423,346,817). The table below sets out the adjustment in respect of diluted potential ordinaryshares: 2007 2006Weighted average number of shares used in basicearnings per share calculation 423,972,990 421,619,174Effect of dilutive share options 1,464,520 1,727,643 ------------ ------------Weighted average number of shares used in dilutedearnings per share calculation 425,437,510 423,346,817 ------------ ------------ Adjusted earnings per share The basic and diluted adjusted earnings per share calculations have been made toallow shareholders to gain a further understanding of the trading performance ofthe Group. They are based on the basic and diluted earnings per sharecalculations above except that profits are based on continuing operationsattributable to equity shareholders and are adjusted for items that are notperceived by management to be part of the underlying trends in the business andthe tax effect of those adjusting items as follows: 2007 2006 Note £'000 £'000 Profit for the financial year 100,086 67,847Minority interests (894) (479)Adjusting items net of attributable taxation 4 51,774 64,306 -------- -------- --------Adjusted profit for the year attributable to equityshareholders 150,966 131,674 -------- -------- -------- Earnings per share:- Adjusted basic (p) 35.61 31.23- Adjusted diluted (p) 35.48 31.10 -------- -------- -------- 9 Capital and Reserves Reserve for Hedging Share Shares ESOP and Capital Share Premium to be Merger Other Trust Revaluation Translation Reduction Retained Capital Account Issued Reserve Reserve Shares Reserve Reserve Reserve Losses £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000At 1 January2006 42,152 496,826 1,124 496,400 37,398 (3,334) - 408 - (145,096) Profit forthe periodattributableto equityholders of - - - - - - - - - 67,368the parent Actuarialgain on defined benefit - - - - - - - - - 6,817pension scheme Tax on itemstaken directly - - - - - - (7,200) - - (1,671)to equity Exchangedifferences ontranslation of - - - - - - - (62,590) - -foreignoperations Increase infair value of - - - - - - - 4,800 - -derivatives Transfer toincome - - - - - - - (2,572) - -Dividends toshareholders - - - - - - - - - (39,160) Share awardexpense - - 1,681 - - - - - - - Optionsexercised 175 - (2) - - 2 - - - - Premiumarising onoptionsexercisedduring year - 4,484 - - - - - - - - Revaluationof availablefor sale - - - - - - 33,390 - - -investment ----------------------------------------------------------------------------------------------------------- At 1 January2007 42,327 501,310 2,803 496,400 37,398 (3,332) 26,190 (59,954) - (111,742) Profit forthe periodattributableto equityholders of - - - - - - - - - 99,192the parent Actuarial gainon definedbenefit - - - - - - - - - 1,375pension scheme Tax on itemstaken directly - - - - - - 7,200 4,642 - (385)to equity Exchangedifferenceson translationof foreign - - - - - - - (9,781) - -operations Decrease infair value of - - - - - - (16,577) - -derivatives Transfer toincome - - - - - - - (1,904) - - Dividends toshareholders - - - - - - - - - (61,520) Share awardexpense - - 2,591 - - - - - - - Optionsexercised 136 - - - - 1,377 - - - (232) Premiumarising onoptionsexercisedduring year - 3,727 - - - - - - - - CapitalReduction (42,038) (505,037) - - - - - - 547,075 - Sale ofavailablefor sale - - - - - - (33,390) - - -investment ----------------------------------------------------------------------------------------------------------- At 31December 425 - 5,394 496,400 37,398 (1,955) - (83,574) 547,075 (73,312)2007 ----------------------------------------------------------------------------------------------------------- As at 31 December 2007 the Informa Employee Share Trust held 297,616 (2006:618,718) ordinary shares in the Company at a cost of £1,955,000 (2006:£3,332,000) and a market value of £1,374,000 (2006: £3,694,000). Informa QuestLtd held 2,775 (2006: 106,495) ordinary shares at a book cost of £15,000 (2006:£106,000) and a market value of £13,000 (2006: £636,000). These shares have notyet been allocated to individuals and accordingly, dividends on these shareshave been waived. At 31 December 2007 the Group held 0.1% (2006: 0.2%) of its own called up sharecapital. The Capital Reserve will become distributable upon satisfaction of certain legalrequirements for the protection of creditors of the Company, which will becompleted prior to the declaration of the final dividend at the Annual GeneralMeeting. 10 Notes to the Cash Flow Statement 2007 2006 £'000 £'000 Operating profit 153,970 128,296 Adjustments for:Depreciation of property and equipment 9,066 9,113Amortisation of intangible assets 104,957 86,656Impairment of goodwill - 515Impairment of available for sale investments 755 -Loss on disposal of property and equipment 228 23 -------- --------Operating cash flows before movements in working capital 268,976 224,603 Decrease in inventories 2,694 211(Increase)/decrease in receivables (11,985) 9,866Increase/(decrease) in payables 17,449 (15,185)Movement in other operating items 2,026 (137) -------- --------Cash generated by operations 279,160 219,358 -------- -------- Cash and cash equivalents (which are presented as a single class of assets onthe face of the Balance Sheet) comprise cash at bank and other short-term highlyliquid investments with a maturity of three months or less. Adjusted cash generated by operations 2007 2006 Notes £'000 £'000 Cash generated by operations 279,160 219,358Restructuring costs 3 7,672 7,203 ----------- -------- --------Adjusting items on a cash flow basis 286,832 226,561Accrued in prior year 5,725 4,426Accrued at year end (5,450) (5,725) ----------- -------- --------Adjusted cash generated by operations 287,107 225,262 ----------- -------- -------- ----------- -------- --------Adjusted operating profit 4 260,993 219,091 ----------- -------- -------- 2007 2006 % % ----------- -------- --------Percentage of adjusted operating profitconverted to 110 103adjusted cash generated by operations ----------- -------- -------- Analysis of Net Debt At 1 January Non-cash Cash Exchange At 31 2007 items flow movement December 2007 £'000 £'000 £'000 £'000 £'000Cash at bank andin hand 19,478 - 4,495 - 23,973Overdrafts (728) - (6,339) - (7,067) ---------- --------- ---------- --------- -----------Net cash 18,750 - (1,844) - 16,906Bank loans due inless than one year (102,055) - 46,303 (23) (55,775)Loan notes due inless than one year (250) (551) 250 - (551)Bank loans due inmore than one year (654,841) (5,097) (528,049) (12,874) (1,200,861)Loan notes due inmore than one year - (4,563) - - (4,563)Finance leases duein less than oneyear (8) - 5 - (3)Finance leases duein more than oneyear (6) - 3 - (3) ---------- --------- ---------- --------- ----------- (738,410) (10,211) (483,332) (12,897) (1,244,850) ---------- --------- ---------- --------- ----------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Informa