29th Feb 2008 07:00
Excellent results for 2007: on track for 2008 Preliminary Results for the Year Ended 31 December 2007 Headline resultsContinuing revenue Up 8.5% to ‚£801.6m (‚£739.1m) Adjusted continuing operating profit* Up 11.5% to ‚£166.1m
(‚£149.0m)
Fully diluted EPS (adjusted)** Up 19.4% to 52.3p (43.8p) Constant currency fully diluted EPS (adjusted)** Up 25.1%
Dividend per share Up 20.0% to 21.6p (18.0p) Cash Conversion 100%
.Events, news distribution and data products - over 80% of operating profits - excellent results
.Acquisitions performing well above cost of capital threshold
- ‚£94m invested in 17 acquisitions in 2007, over ‚£385m on 52 acquisitions since 2005
- 13.1% average return on acquisitions 2005-2007
- Targeting total investment of ‚£300m-‚£500m in acquisitions in 2008 and 2009
- 5 acquisitions completed so far in 2008 for total of approximately ‚£25m
.‚£200m-‚£300m capital return by end of 2009 planned
.Underlying revenue*** up 5.0% (2006: 4.3%)
.Operating margin up to 20.7% (2006: 20.3%)
.‚£276m of capital returned in 2007, ‚£438.3m since February 2006
.Net debt of ‚£157.5m at year end
.On track for 2008
- 2008 revenue bookings for top 20 events over 10% ahead of prior year
- 2008 revenues for directories and subscription products substantially booked
- Further expansion into Brazil, India and China
* Adjusted continuing group operating profit is group operating profit before amortisation of intangible assets on acquisitions, exceptional items and share of taxation on profit in joint ventures and associates (see notes). ** Adjusted EPS is before amortisation of intangible assets arising on acquisitions, exceptional items, deferred tax on intangible assets and net financing costs - other than interest (see notes). *** Underlying: adjusted for the effects of acquisitions, discontinued businesses and products, foreign exchange and biennial events.
Statutory resultsRevenue ‚£801.6m (‚£739.1m)
Group operating profit ‚£126.1m (‚£118.4m)
Profit before tax ‚£129.5m (‚£113.5m) EPS 42.7p (50.7p) EPS (diluted) 41.8p (49.8p)
David Levin, Chief Executive Officer of United Business Media plc said:
2007 was a strong year for UBM. We launched new businesses in India, Braziland China, made 17 acquisitions worldwide, enhanced our ability to deliverintegrated media and consistently executed our successful strategy to deliverprofitable growth. We achieved our 2007 target of 5% underlying revenuegrowth, our fully diluted earnings per share (adjusted) were up by 19.4%,dividend per share was up by 20%, our cash conversion was over 100% - and wereturned ‚£276m of capital to shareholders.
Outlook
Overall we have made a good start to the year. UBM's events portfolio - whichis our largest profit contributor - is showing strong momentum. Revenuebookings for our top twenty shows, which generated close to ‚£100m in revenue in2007, are running more than 10% ahead of 2007. Our recent launches - Web 2.0Expo, the Macau Jewellery and Watch Show and P-MEC India - are performingstrongly.
We continue to invest in acquisitions and in the organic development of our businesses to position them for continued profitable growth, particularly in the fast-growing emerging economies.
The substantial restructuring and development of UBM over the last three yearshas provided us with much greater predictability and visibility of revenues andprofitability. We monitor the progress of each of our businesses extremelycarefully and we have demonstrated our willingness and ability to take rapidand decisive action in response to changing circumstances or performance. UBM's businesses are distributed across more than 30 countries worldwide (lessthan 15% of UBM's profits are generated in the UK) and are active in a widerange of markets and sectors, each experiencing different economic conditions. We anticipate we will generate more than 80% of our 2008 profits from events,news distribution and intellectual property- or data-based embedded workflowinformation products.As announced in November 2007, we aim to invest ‚£150m to ‚£250m per year inacquisitions in both 2008 and 2009. So far in 2008 we have completed fiveacquisitions for a total of approximately ‚£25m (including estimated earnouts). We remain committed to maintaining our financial discipline in makingacquisitions. We have seen early indicators that sellers' pricing expectationsare becoming better aligned with the realities of the current economic climate.During 2007 we returned capital totalling ‚£276m to shareholders by means of a ‚£200m special dividend and through buying back 10.7m shares. In November weannounced that, subject to trading conditions, we expect to return ‚£200m-‚£300mto shareholders by the end of 2009. Since that announcement we have returned‚£30.8m through the purchase of 4.6m shares. We ended the year with net debt of‚£157.5m.UBM is well placed to deliver another strong performance for our shareholdersin 2008.David Levin29 February 2008 ContactsMedia Peter Bancroft Director of Communications E-mail [email protected] Direct telephone +44 20 7921 5961 Chris Barrie Citigate Dewe Rogerson E-mail [email protected] Direct telephone +44 20 7282 2943 Mobile +44 796 872 72 89 Analysts / Investors E-mail [email protected] Direct telephone +44 20 7921 5095 Nigel Wilson +44 20 7921 5019 Andrew Crow +44 20 7921 5940
A webcast of the results presentation will be made available from UBM's website from 8.30am, 29 February 2008. To access the webcast please go to www.unitedbusinessmedia.com.
A video recording of the webcast will also be accessible from UBM's website. The presentation will also be available from UBM's website.
Contents1. Chief Executive's Review2. Summary of group income statement3. Summary of preliminary financial results for 20074. Divisional commentary5. Acquisitions6. Return of capital7. Dividend8. Cash and cash conversion9. Investments10. Pensions11. Tax 12. Interest and financing13. Exceptional items Financial report 1. Chief Executive's Review 1.1. Results OverviewIn 2007 UBM successfully continued its operational and strategic progress.Revenues from continuing operations grew by 8.5% to ‚£801.6m (2006 - ‚£739.1m)and adjusted operating profit(1) from continuing operations rose by 11.5% to ‚£166.1m (2006 - ‚£149.0m).Adjusted profit before tax(2) was ‚£170.0m excluding profits on disposals (2006- ‚£160.5m), and ‚£176m (2006 - ‚£185.3m) including disposal profits. In 2007continuing operating margins were 20.7% (2006 - 20.3%).
Fully diluted earnings per share(2) (adjusted) rose by 19.4% to 52.3p from 43.8p and by 17.4% to 53.4p from 45.5p on a headline basis. On a constant currency basis, the increase was 25.1%.
We ended the year with ‚£157.5m of net debt (2006: net cash ‚£130.9m).
The Board is proposing a final dividend of 16.76p, taking the total dividend for 2007 to 21.6p, an increase of 20.0% from 18.0p in 2006.
1.2. 2007 Performance
2007 was a strong year for UBM. We launched new businesses in India, Braziland China, made 17 acquisitions worldwide, further improved our media mix andhave stuck to our successful strategy to deliver profitable growth. Ourunderlying revenue(3) growth achieved our 2007 target of 5%, our fully dilutedearnings per share (adjusted)(2) are up by 19.4%, dividend per share by 20%,our cash conversion was over 100% - and we returned ‚£276m of capital toshareholders. Not only did we deliver a great set of results but we alsocontinued to drive the strategic transformation of UBM, investing inface-to-face media and IP-based products and services, pushing our businessestowards markets that offer higher growth, more predictable revenue streams
andmore reliable profitability. 1 Adjusted continuing group operating profit is group operating profit beforeamortisation of intangible assets on acquisitions, exceptional items and shareof taxation on profit from joint ventures and associates.2 Adjusted profit before tax and earnings per share is before amortisation ofintangible assets arising on acquisitions, exceptional items, share of taxationon profit from joint ventures and associates, deferred tax on intangibleassets and net financing cost - other than interest. EPS also excludesdeferred tax on the amortisation of intangible assets. Diluted EPS includesthe impact of share options and the convertible bond (see notes). 3 Underlying: adjusted for the effects of acquisitions, discontinuedbusinesses and products, foreign exchange and biennial events.
Profitable growth from events
Our strategy to invest in exhibition and tradeshow events has continued to besuccessful. In 2007 our events portfolio was our largest contributor,generating over 40% of operating profit. Tradeshow events - in contrast withconferences - have lengthy planning timescales, ensuring customers makecontracted bookings, usually a year in advance. Again in contrast withconferences, the history of our event franchises shows their resilience in theface of economic downturns. Events such as the Game Developer Conference,IFSEC, CPhI and the Hong Kong Jewellery and Watch Fair have records ofuninterrupted growth over at least the past eight years. Forward bookings forour top twenty events - which generated close to ‚£100m of revenue in 2007 - arecurrently over 10% ahead of the previous year. In 2007 we continued to buildour events in emerging economies, notably by transplanting successful eventbrands into new territories. For example, the first Macau Jewellery and WatchShow, launched in January 2008, became the twelfth show in the Jewellery andWatch event franchise and was CMP Asia's most successful launch event ever.
Another strong performance from PR Newswire
PR Newswire had a successful 2007, contributing almost a third of UBM's overallprofits. PR Newswire's financial performance improved through 2007 with strongdemand for its premium US1 distribution service and a growing contribution fromits businesses outside North America, as well as from multimedia products likeMultiVu. The substantial investment in PR Newswire's new customer servicecentres contributed to improved margins in the year, albeit with some servicedisruption. PR Newswire is well positioned to continue its growth inmultimedia, in its international products and in its adjacent markets. Thebusiness's four 'bolt-on' acquisitions made in 2006 and 2007 are performingabove expectations. International expansion is accelerating with PR NewswireEurope delivering good results, revenues generated in China in 2007 doubledthose of 2006 and PR Newswire's growing presence in South America wasreinforced with the acquisition of Notilog. New offices opened in Dubai andSweden in 2007, in Mumbai in February 2008, with offices due to open in Norwaylater this year. PR Newswire's strategic ambition is to take advantage of itsnews distribution expertise and new, stronger infrastructure to help businessesreach and interact with their customers directly by providing services such asonline audience targeting, marketing effectiveness analysis and support forinteractive media such as video-sharing.
Using acquisitions to redevelop UBM's business
Making the right acquisitions has been key to our ability to reshape UBM'sbusinesses and to position them for profitable growth. In 2007 we invested ‚£93.7m in 17 acquisitions, bringing the total invested in the past three yearsto ‚£361.6m in 47 acquisitions. We have maintained strict financial disciplinein doing so and so have made effective use of our shareholders' capital: theacquisitions made by UBM in the last three years have made an average return oncapital of 13.1%. We are targeting an investment in acquisitions of ‚£150m to ‚£250m per year in 2008 and 2009, subject to our financial criteria. So far in2008 we have completed five acquisitions for a total investment ofapproximately ‚£25m (including estimated earnouts).
Positioned for growth in emerging economies
We have made it a strategic priority to invest in the clear opportunities tobuild our business in fast-growing emerging economies, taking advantage of ourglobal infrastructure and local expertise to do so. We are already well placedin Asia with CMP Asia in the vanguard of our efforts in India and China. OurAsia Pacific revenues rose to ‚£120.1m. CMP Asia is the largest privateorganiser of tradeshow events in mainland China. CMP Asia also manages UBM'sactivities in India, including six major shows, four of which are jointventures with other UBM companies. The 2007 CPhI India and P-MEC India shows(joint ventures with CMPi) together achieved revenue growth in excess of 50%. In 2007 the IFSEC (CMPi, security) and Embedded Systems (CMP Technology,electronics) shows were successfully launched. In addition to Macau, Indiaand mainland China, CMP Asia is developing its operations in Japan, Korea,Malaysia, Taiwan and Singapore. UBM is expanding further in Latin America. PR Newswire has intereststhroughout the region and acquired Notilog, a media monitoring service. CMPilaunched the Food Ingredients event in Brazil and acquired the Intermodal SouthAmerica trade show in July.
Innovating in the digital environment
The evolution of digital online media creates new opportunities and challengesacross UBM's markets as companies redirect their marketing and advertising toalign with new patterns of media usage and content consumption. However theonline environment also creates huge opportunities for us to develop innovativeproducts and services that facilitate increasingly sophisticated interactionsbetween buyers and sellers. We are investing to grow our digital sophistication as technology changes howbusinesses access and use online media. Our strategic focus is on new mediatechnologies and business models that are based on intellectual property(rather than display advertising) and on products which complement and extendour existing products. For example, our How Machines Work business designs anddevelops bespoke 'immersive' online environments (e.g. games) for use as acomponent within a marketing campaign that also uses other, complementary UBMproperties. We are exploring how to harness interactive media to extend theface to face interactions of professional communities at our events into theonline environment, hosting their professional interactions throughout theyear, for example, the myGDC social networking site for the Game DeveloperConference.In response to our customers' growing sophistication in accessing, manipulatingand analysing ever more commercial information as part of their normal businesspractice, we have a strategic priority to extend our existing businesses intointellectual property or data-based subscription products that are embedded inthe working lives of the professional communities we serve. For example, weinvested in the in-house development of Heavy Reading, a research andconsulting business focusing on the telecoms sector spun out of the LightReading business acquired in 2005. In 2007, Heavy Reading grew 21%. Semiconductor Insights (www.semiconductor.com), a market leader in providingresearch on the intellectual property used in electronic components, andPortelligent (www.teardown.com), a leader in analysis of the componentry ofconsumer electronic products, are both examples of business extension by meansof acquisition. 1.3. Outlook - On TrackOverall we have made a good start to the year. UBM's events portfolio - whichis our largest profit contributor - is showing strong momentum. Revenuebookings for our top twenty shows, which generated close to ‚£100m in revenue in2007, are running more than 10% ahead of 2007. Our recent launches - Web 2.0Expo, the Macau Jewellery and Watch Show and P-MEC India - are performingstrongly.
We continue to invest in acquisitions and in the organic development of our businesses to position them for continued profitable growth, particularly in the fast-growing emerging economies.
The substantial restructuring and development of UBM over the last three yearshas provided us with much greater predictability and visibility of revenues andprofitability. We monitor the progress of each of our businesses extremelycarefully and we have demonstrated our willingness and ability to take rapidand decisive action in response to changing circumstances or performance. Inaddition, UBM's businesses are distributed across more than 30 countriesworldwide (less than 15% of UBM's profits are generated in the UK) and areactive in a wide range of markets and sectors, each experiencing differenteconomic conditions. We anticipate we will generate more than 80% of our 2008profits from events, news distribution and intellectual property- or data-basedembedded workflow information products.As announced in November 2007, we aim to invest ‚£150m to ‚£250m per year inacquisitions in both 2008 and 2009. So far in 2008 we have completed fiveacquisitions for a total of approximately ‚£25m (including estimated earnouts). We remain committed to maintaining our financial discipline in makingacquisitions. We have seen early indicators that sellers' pricing expectationsare becoming better aligned with the realities of the current economic climate.During 2007 we returned capital totalling ‚£276m to shareholders by means of a ‚£200m special dividend and through buying back 10.7m shares. In November weannounced that, subject to trading conditions, we expect to return ‚£200m-‚£300mto shareholders by the end of 2009. Since that announcement we have returned‚£30.8m through the purchase of 4.6m shares. We ended the year with net debt of‚£157.5m.
UBM is well placed to deliver another strong performance for our shareholders in 2008.
1.4. Strategy SummaryUBM is a news distribution and professional B2B media and service business. Weconnect buyers and sellers, across an integrated mix of complementary media -events, data, online, print and news distribution - helping them to do businessand their markets to operate effectively and efficiently.UBM's strategy to achieve profitable growth explicitly recognises the macrochanges taking place in the media business environment, especially those drivenby the digital revolution. In particular, UBM seeks to take advantage of thefragmentation of broad media markets into many more smaller, narrower,specialist communities of interest.Each of UBM's businesses aims to position itself at the heart of fast-growing,business-to-business, professional communities of interest, offering aportfolio of complementary premium media products that serves the needs of eachcommunity's buyers and sellers.UBM aims to own the 'must attend' event, the 'must read' website orpublication, the 'must have' market analysis or information resource for eachcommunity of buyers and sellers that we serve. These media products command apremium for advertising space, information and analysis, and for makingface-to-face introductions at events.
2. Summary of group income statement
The income statement set out below re-presents the group's full income statement (which accompanies this summary) in order to provide a better understanding of the results from operations.
2007 2006 ‚£m ‚£m % Revenue 801.6 739.1 8
Adjusted continuing operating profit* 166.1 149.0 11
Adjusted discontinued operating profit* - 0.7
Net interest (costs)/income (0.6) 8.3
Other financing income - pension schemes 4.5 2.5
Adjusted profit before tax** 170.0 160.5 6
Net financing cost - other than interest (0.5) (20.0)
Amortisation of intangible assets (20.0) (15.0)
Other exceptional items (13.6) 9.9 Profit before tax 135.9 135.4 Taxation (23.7) (24.9) Exceptional taxation credit 1.8 35.9 Profit after tax 114.0 146.4 Minority interest (5.2) (4.5) Retained profit for the year 108.8 141.9 Dividend (pence) 21.6 18.0 20.0 Adjusted EPS** (pence) 53.4 45.5 17.4
Adjusted fully diluted EPS** (pence) 52.3 43.8 19.4
* Adjusted continuing group operating profit before amortisation of intangibleassets on acquisitions, exceptional items and share of taxation on profit injoint ventures and associates.** Adjusted profit before tax and earnings per share is before amortisation ofintangible assets arising on acquisitions, exceptional items, deferred tax
onintangible assets and net financing cost - other than interest (see notes).
3. Summary of preliminary financial results for the year ended 31 December 2007
Note: As previously notified the amounts shown against CMP Technology and CMPAsia in the table below have been restated to reflect the intra-group transferof Medialive Japan from CMP Technology to CMP Asia. The amounts transferred arestated in detail in the business segments section of the financial statements. Revenue Adjusted Operating Profit1 As As restated restated 2007 2006 Change Underlying2 2007 2006 Change Underlying2 ‚£m ‚£m (%) (%) ‚£m ‚£m
(%) (%) PR Newswire 141.1 129.9 8.6 6.9 49.1 41.9 17.2 15.4 CMP Asia 76.6 73.8 3.8 10.7 21.0 19.7 6.6 11.4 CMP 192.2 169.8 13.2 9.4 47.6 40.8 16.7 2.5 Information CMP 160.5 179.2 (10.4) 2.4 25.2 21.3 18.9 54.9 Technology CMPMedica 161.8 169.5 (4.5) (1.7) 18.5 22.8 (18.9) (16.6) Commonwealth 57.1 16.9 237.9 6.7 7.2 3.4 111.8 6.9 789.3 739.1 6.8 5.0 168.6 149.9 12.5 10.5 Corporate3 12.3 - - (2.5) (0.9) - - Continuing 801.6 739.1 8.5 166.1 149.0 11.5 10.5 businesses Discontinued operations CMP - 14.7 - - - - - Technology CMP - 5.1 - - 0.7 - - Information 801.6 758.9 5.6 166.1 149.7 10.9 10.5 1 Adjusted continuing group operating profit before amortisation of intangibleassets on acquisitions, exceptional items and share of taxation on profit injoint ventures and associates2 Underlying: adjusted for the effects of acquisitions, discontinuedbusinesses and products, foreign exchange and biennial events.3 Corporate operations comprises net central operating costs, together withthose equity accounted investments which do not form part of one of the group'soperating divisions. 4. Divisional Commentary
The divisional commentary that follows is based on the numbers presented in the table above.
4.1. PR NewswirePR Newswire delivered another excellent performance, generating profits closeto $100m. Underlying revenue and operating profit rose 6.9% and 15.4%respectively, with the business's overall operating margin continuing toimprove, rising from 32.3% to 34.8%. PR Newswire's strong performance wasdriven primarily by continued growth in demand from US customers for itspremium news distribution service, US1. This growth was augmented by a growingcontribution from non-regulatory, non-wire, added value services such asMultiVu, MEDIAtlas and ProfNet and by an expanding international business inEurope, China and Latin America.Continuing cost management efforts also helped to ensure that margins improvedin each of business's operational geographies over the course of 2007. PRNewswire undertook a project to consolidate its US editorial bureaux from 11offices to three facilities in Cleveland, Albuquerque and Washington DC. Theproject was almost completed during the year, with the final stages of theAlbuquerque move due to be completed by March 2008. The project successfullyreduced overall costs and, in time, will enable PR Newswire to improve both itsservice levels and its ability to win business. However, as previouslydisclosed, the disruption of the consolidation and the demands of training ofnew staff caused PR Newswire to experience some service lapses.During 2007 PR Newswire made three acquisitions for a total of ‚£33.7m(including estimated earnouts); the acquisitions are performing ahead of plan. The acquisition of Vintage Filings expands PR Newswire's services in the EDGARfilings market. As part of its continuing expansion in Latin America, Notilog,a media monitoring market leader in Mexico with strong market positions in theArgentinean and Brazilian markets, was acquired in June. At the end of theyear 2007, PR Newswire acquired Hispanic PR Wire to support development of itsservices in the U.S. and internationally.
4.2. CMP Information
In 2007 CMP Information achieved strong revenue growth, 13.2% representing aconsiderable improvement on 2006 (2006 - 7.7%). Underlying revenue was up9.4%. The strength of the performance of CMPi's live media (trade shows,conferences) was notable, particularly its international shows which grew 12%. CMPi's key print titles such as Property Week also performed strongly duringthe year, although some smaller titles declined. CMPi expanded its levels ofinvestment in new product development in events (notably Think 07), online anddata products through 2007; operating profit performance reflected thisincreased investment.During the year CMPi made five acquisitions for a total investment of ‚£24.7m. As part of the continuing strategy to rebalance and refocus CMPi's productportfolio, each acquisition was made as a complementary addition to an existingportfolio of products servicing a specific market. All four of theacquisitions made in 2006 are performing in line with, or exceeding, their
acquisition business case. 4.3. CMP AsiaCMP Asia delivered another strong performance in 2007 with underlying revenueup 10.7% and underlying operating profits up 11.4%. CMP Asia's establishedevents had another successful year. The key Hong Kong shows - the Hong KongJewellery Show, Asia-Pacific Leather Fair - all performed to plan or better. CMP Asia's events in mainland China were particularly strong with revenue upmore than 30%. CMP Asia continued to invest in new events, for example inJanuary 2008 it launched its first event in Macau. The Macau Jewellery Showwas CMP Asia's most successful launch event ever, generating revenues of$3.7m. CMP Asia is also responsible for UBM's presence in Indiaand now runssix events, four of which are joint ventures with other UBM businesses.To provide its customers with an all year round online presence to complementits shows, CMP Asia has developed a portfolio of highly specialised portalwebsites to provide market news, a trading network and a marketing and sourcingplatform for global materials and components suppliers. Investment in thisplatform will continue in 2008.
4.4. CMP Technology
In 2007 CMP Technology achieved a significant improvement in its performancewhile continuing to reshape its business. 2007 profits were 30.0% above 2006 at$50.1m (2006 - $38.3m) and underlying revenues increased by 2.4%, the firstsuch increase since 2001. As a result of the print portfolio consolidationannounced in June, headline revenues were 10.1% below 2006 at $320.6m. CMPTechnology's underlying margin was 15.4%, compared with 10.2% in 2006. Thisrepresents CMP Technology's best margin performance for five years. During theyear, CMP Technology made four acquisitions for a total investment of $47.4m;these acquisitions are performing ahead of plan. Businesses acquired by CMP Technology in the last three years also contributed significantly to the year's results, witheach acquisition expected to exceed the UBM cost of capital threshold in thefirst full year of ownership. During 2007 CMP Technology undertook a significantrestructuring of its print portfolio, incurring an exceptional charge of $12.5mwhich was taken in the first half. Today UBM has announced the creation of four new, market-focused businessesfrom CMP Technology. As agile, independent companies, each new business willbe well positioned to accelerate its profitable growth as it meets the changingneeds of the professional communities and technology markets it serves. Thenew businesses will share a key account management function as well as a smallIT and support services (HR, legal, M & A) capability. This is a further stepin the redevelopment of CMP Technology from a single traditional print mediabusiness to a set of next generation, integrated media businesses that are ableto offer their varied customers a portfolio of event, online, print anddata-based workflow products and services. Since 2005, UBM has supported CMPTechnology with an investment of more than $200m investment in 18 acquisitions,particularly of events, online and business information products, as well aswith investment in CMP Technology's in-house product development andgeographical expansion. The four new businesses and their respective ChiefExecutive Officer are listed below; each CEO will report to UBM ChiefExecutive, David Levin:
TechWeb- the global leader in business technology media, focused on serving the needs of technology decision-makers and marketers worldwide.
CEO - Tony Uphoff
Key products - Interop, Web 2.0, Black Hat and VoiceCon; online resources: TheTechWeb Network, Light Reading, Intelligent Enterprise, InformationWeek.com,bMighty.com and The Financial Technology Network; and the market leading,award-winning print versions of InformationWeek, TechNet and MSDN Magazines.TechWeb also provides end-to-end services ranging from next-generationperformance marketing, custom media, research and analyst services.
2007 proforma revenues - $148m
Website - www.TechWeb.com
Everything Channel- the one stop shop for the indirect IT sales channel. High-tech suppliers and solution providers turn to Everything Channel to manage and accelerate their business.
CEO - Robert Faletra
Key products - ChannelWeb online network, magazines (CRN and VARBusiness), events (XChange and Vision), workflow tools (MTC and eXalt), tele-recruiting, sales support, marketing services, research and education (IPED).
2007 proforma revenues - $73mWebsite - www.channelweb.com
TechInsights- the source of essential business and technical information for the electronics industry's decision makers.
CEO - Paul Miller
Key products - EE Times, Semiconductor Insights, TechOnline, Embedded Systems Conferences and Portelligent.
2007 proforma revenues - $83m
Website - www.techinsights.com
Think Services- connects specialized communities via interactive media, educational events, consulting, training and certification.
CEO - Philip Chapnick
Key products - Game Developers Conference, the Webby Award-winning Gamasutra.com, the International Customer Management Institute, the Help Desk Institute and Dr. Dobb's Journal.
2007 proforma revenues - $61m
Website - www.think-services.com
Each business will have the freedom to develop business models, audiencedevelopment and international programs that best fit its specific marketplacebut will also be able to take advantage of UBM's global footprint to supportits international expansion.
4.5. CMPMedica
As highlighted in our interim results statement and in our December trading statement, CMPMedica's overall performance in 2007 was disappointing with underlying revenue falling by 1.7% and underlying profit by 16.6%. Revenue growth in the French business (which accounts for more than 50% of the business's profits) and in the Iberian and Pacific businesses were offset by declines in other national businesses in Benelux, Germany, the UK and most notably in the US.
UBM announced in February 2007 that an 18 to 24 month restructuring programmewould enable CMPMedica to achieve sustainable profitable growth. CMPMedica'sUS operations are being substantially reorganised, including the relocation ofthe Continuing Medical Education business closer to its customers on the EastCoast. A number of senior management changes have also made, including theappointment of a new CEO for the US business, as well as improvements to thebusiness's operational support functions. Senior management changes have alsobeen made in other parts of the business with a reorganisation ofresponsibilities for Beneluxand Iberia, the appointment of a Chief FinancialOfficer for CMPMedica, and new heads appointed to the Pacific, Asian, Belgianand Polish businesses. Restructuring costs of ‚£5.7m have been taken as anexceptional charge in 2007.
During the year CMPMedica made two bolt-on acquisitions for a total investment of ‚£9.4m.
CMPMedica's restructuring programme is well advanced and the business'sperformance is improving. However the substantial investment in new productdevelopment that contributed to the business's depressed profits and marginswill continue into 2008. 4.6. CommonwealthCommonwealth Business Media has performed to expectations in its transitionalyear following its acquisition by UBM in July 2006. Commonwealth's underlyingrevenues and profits grew modestly by 6.7% and 6.9% respectively. PIERS andBACK, the online workflow information businesses that contribute more than 50%of Commonwealth's revenue showed good organic growth, growing by 7.7% on 2006.At the very end of 2006 Commonwealth acquired OAG Worldwide and AviationIndustry Group, both complementary 'bolt-ons' acquisitions for the BACKAviation Solutions business. In 2007 the businesses performed to theirrespective business case and their integration is progressing in line withplan. As anticipated before its acquisition OAG required a significantrestructuring process which is now largely complete. An exceptional charge of‚£7.7m was taken during 2007 against the restructuring costs. OAG, which is wasloss-making before its acquisition, is now trading profitably in 2007 andfurther improvements are expected in 2008.
4.7. Corporate operations
Corporate operations includes the results of operations and equity investmentswhich do not fall under the other divisions, together with central expenses netof central profits. Revenue of ‚£12.3m for 2007 represents the revenue of RISI,a paper and pulp data business in which we took a controlling interest inJanuary 2007. 5. Acquisitions
In 2007, we invested ‚£93.7m in 17 acquisitions. In 2007 pre-tax return on acquisitions made over the period 2005 to 2007 was 13.1% (2006 - 11.3%), well ahead of our cost of capital.
In November 2007, the Board announced that it is seeking to invest ‚£150m - ‚£250m per year in 2008 and 2009, whilst maintaining UBM's strict financialcriteria for acquisitions. In 2008, we have already invested approximately ‚£25m (including estimated earnouts) in the acquisition of Mass Events Labs,Think Service Inc., Exposure Events UK Limited, Vision Events and AeroStrategy. 6. Return of capitalIn 2006, the Board announced its intention to return more than ‚£300m of capitalto shareholders by the end of 2007, subject to trading conditions. This targethas been significantly exceeded with a total of ‚£438.3m returned by way ofshare buybacks and a special dividend since February 2006. In November 2007,the Board announced its intentions with respect to acquisitions, capitalstructure and dividend policy over the next two years. Subject to tradingconditions, UBM expects to return ‚£200m - ‚£300m to shareholders by the end of2009. A further 4.6 million shares have been repurchased since theannouncement in November at a cost of ‚£30.8m (an average price of ‚£6.69 pershare). 7. Dividend
The Board is recommending a final dividend of 16.76 pence per share (2006 -13.6 pence), bringing the total for the year to 21.6 pence, an increase of20.0% on the prior year. This increase reflects the improved earningsvisibility and predictability arising form the changed composition of UBM'sbusinesses. In November 2007, the Board announced its intention to move to anongoing level of dividend cover of approximately two times for the period tothe end of 2009. The dividend cover is 2.47 times for 2007 and we are on trackto achieve this target.
Subject to shareholder approval, the final dividend on the ordinary shares willbe paid on 22 May 2008 to shareholders on the register on 14 March 2008. Thedividend on the B shares will be 10 pence per share and will be paid on 24April 2008 to shareholders on the register on 25 March 2008. 8. Cash and cash conversion
Our balance sheet remains strong. UBM had net debt as at 31 December 2007 of ‚£ 157.5m.
Continuing operating cash conversion remains strong at 100.2% of operating profits (2006 - 95.5%).
9. Investments
During 2007, we continued to hold investments in ITN (20%) and the Press Association (17.01%), which continue to perform well.
10. Pensions
At 31 December 2007the aggregate surplus under IAS 19 was ‚£36.2m, an improvement of ‚£40.0m compared to the deficit of ‚£3.8m at the previous year end, reflecting strong asset returns and an increase in the discount rate.
The IAS 19 interest credit was ‚£4.5m, being the excess of expected assets growth during 2007 over the scheme liabilities.
11. Tax
The effective tax rate in 2007 was 17.0% (2006:18.0%).
UBM's tax creditor was ‚£227.6m (2006: ‚£205.7m).
As previously disclosed, UBM is in dispute with HMRC with regards to atechnical matter arising in relation to the sale of our Regional Newspapersbusiness in 1998. The tax in dispute is estimated at ‚£80m. UBM's appeal washeard at the High Court on 22 February 2007. The decision of the High Courtwent against UBM and UBM lodged an appeal with the Court of Appeal. The appealwas heard on 26 February 2008 and we are awaiting the outcome. Whilst it islikely that the matter will not be resolved until 2009 it is possible that thematter could be resolved during the current year.
Excluding potential payments in respect of the Regional Newspapers dispute discussed above, we do not expect the tax cash outflow in respect of this creditor in 2008 to exceed ‚£10m.
12. Interest and financing
Net interest paid was ‚£0.6m, compared to ‚£8.3m net interest received in 2006 asa result of UBM moving from a net cash to a net debt position during the yearas a result of acquisitions and capital returns. Net interest paid representsinterest payments on UBM's notes and facilities, reduced by receipts due on ourcash holdings. Other financing income relating to the pension schemes of ‚£4.5m (2006 - ‚£2.5m) represents the financing credit on the pension assetscalculated in accordance with IAS 19.
13. Exceptional items
As noted above, an exceptional charge relating to the reorganisation of CMP Technology, CMPMedica and OAG has been recognised. The total charge is ‚£19.6m, offset by an exceptional tax credit of ‚£1.8m. Of this total charge ‚£3.9m relates to vacant property costs, ‚£12.1m to redundancy costs and ‚£3.6m to restructuring and reorganisation costs.
‚£6.0m of additional profit from discontinued operations (after tax) has beenrecognised as an exceptional credit in 2007. This represents additionalconsideration receivable from GfK following the settlement of certainoutstanding items relating to the sale of NOP World in 2005, together with therelease of amounts previously held for potential warranty and other claimswhich are now no longer required. After taxation, the aggregate of exceptionalitems for the year is a net charge of ‚£11.8m.
Consolidated income statementfor the year ended 31 December 2007 Before Before exceptional Exceptional exceptional Exceptional items items Total items items Total 2007 2007 2007 2006 2006 2006Notes ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Continuing operations 3 Revenue 801.6 - 801.6 739.1 - 739.1 Other 11.4 - 11.4 12.5 - 12.5 operating income Operating (649.5) - (649.5) (607.0) - (607.0) expenses Amortisation (20.0) - (20.0) (15.0) - (15.0) of intangible assets arising on acquisitions 4 Exceptional - (19.6) (19.6) - (14.9) (14.9) reorganisation and restructuring costs Share of results from 2.2 - 2.2 3.7 - 3.7 joint ventures and associates (after tax) Group 145.7 (19.6) 126.1 133.3 (14.9) 118.4 operating profit Exceptional items 4 Profit on - - - - 4.3 4.3 disposal of property, plant and equipment - - - - 4.3 4.3 Earnings 145.7 (19.6) 126.1 133.3 (10.6) 122.7 before interest and taxes ("EBIT") Financing income/(costs) 5 Interest 6.7 - 6.7 14.9 - 14.9 income 5 Interest cost (7.3) - (7.3) (6.6) - (6.6) 5 Financing - - - 1.0 0.4 1.4 income - other than interest 5 Financing cost (0.5) - (0.5) (0.7) (20.7) (21.4) - other than interest 5 Financing 4.5 - 4.5 2.5 - 2.5 income - pension schemes Profit before 149.1 (19.6) 129.5 144.4 (30.9) 113.5 tax 4,6 Taxation (23.3) 1.8 (21.5) (24.0) 35.9 11.9 Profit for the 125.8 (17.8) 108.0 120.4 5.0 125.4 year from continuing operations Discontinued operations 4,16 Profit for the year from - 6.0 6.0 - 21.0 21.0 discontinued operations (after tax) Profit for the 125.8 (11.8) 114.0 120.4 26.0 146.4 year Attributable to: Equity 108.5 141.5 shareholders - ordinary Equity 0.3 0.4 shareholders - B shares Minority 5.2 4.5 interests 114.0 146.4 Earnings per share - from continuing operations (pence) 7 - basic 40.3p 43.2p 7 - diluted 39.5p 42.4p Earnings per share - continuing and discontinued operations (pence) 7 - basic 42.7p 50.7p 7 - diluted 41.8p 49.8p ‚£m ‚£m Adjusted Group 166.1 149.7 operating profit1 Amortisation of intangible (20.0) (15.0) assets arising on acquisitions Exceptional (19.6) (14.9) reorganisation and restructuring costs Share of taxation on (0.4) (0.7)
profit in joint ventures and associates Operating profit from -
(0.7)
discontinued operations (before tax) Group operating profit 126.1
118.4
from continuing operations Dividends 8 - Interim 12.0 12.3 dividend of 4.84p (4.40p) 8 - Special 200.3 - dividend of 72.00p (nil) 8 - Proposed - 200.3 special dividend of nil (72.00p) 8 - Proposed 40.4 34.1 year end dividend of 16.76p (13.60p) 1 Adjusted Group operating profit represents Group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations. Consolidated balance sheetat 31 December 2007 As restated 31 December 31 December 2007 2006Notes ‚£m ‚£m Assets Non-current assets Goodwill 783.2 690.8 Intangible assets 120.4 109.1 Property, plant and equipment 29.1
30.2
Investments in joint ventures and associates 24.6
23.9
Retirement benefit surplus 40.3 - Other investments 1.6 2.7 999.2 856.7 Current assets Inventories 7.1 6.7 Trade and other receivables 176.6
171.9
Derivative financial assets 4.6
5.8
10 Cash and cash equivalents 95.0
316.2 283.3 500.6 9 Assets classified as held for sale - 3.4 Total assets 1,282.5 1,360.7 Liabilities Current liabilities 11 Borrowings 39.3 188.0 Trade and other payables 298.8
332.2
Derivative financial liabilities 0.2 0.2 Provisions 27.3 24.8 Current tax liabilities 227.6 205.7 593.2 750.9 Non-current liabilities 11 Borrowings 213.2 2.9 Retirement benefit obligation 4.1
3.8
Trade and other payables 18.8 4.0 Provisions 42.2 28.1 6 Deferred tax liabilities 44.5 30.2 322.8 69.0 Total liabilities 916.0 819.9 Shareholders' equity 12 Share capital 82.7 85.9 13 Share premium 361.3 354.6 14 Other reserves 217.7 205.8 14 Retained earnings (300.9) (110.3) Total shareholders' equity 360.8
536.0
14 Minority interest in equity 5.7
4.8 Total equity 366.5 540.8 Total equity and liabilities 1,282.5 1,360.7
These financial statements were approved by a duly appointed and authorised committee of the Board of Directors on 29 February 2008 and were signed on its behalf by:
David Levin DirectorNigel Wilson Director Consolidated cash flow statementfor the year ended 31 December 2007 2007 2006Notes ‚£m ‚£m Cash flows from operating activities Reconciliation of profit to operating cash flows Profit for the period 114.0 146.4 Add back: Taxation 21.9 (11.0) Depreciation 9.8 8.6 Amortisation of website development costs
0.4 -
Amortisation of intangibles arising on acquisitions 20.0 15.0 Interest income (6.7) (14.9) Interest expense 7.3 6.6 Net financing income - pension schemes
(4.5) (2.5)
Net financing costs - other than interest
0.5 20.0
Other non-cash items
7.5 5.7
Share in profits from associates and joint venture
(2.6) (4.4)
Additional profit on prior year disposal (6.0) - Profit on disposal - (24.8) Exceptional reorganisation and restructuring costs
19.6 14.9 181.2 159.6 Payments against provisions
(32.2) (27.9)
Additional pension contributions
(1.7) (7.3)
Decrease/(increase) in inventories
0.1 (0.7)
Decrease in trade and other receivables
15.0 0.9
Decrease in trade and other payables
(23.7) (32.0)
Cash generated from operations 138.7 92.6 Interest received 7.5 15.1 Interest paid (6.3) (4.9) Taxation paid (5.3) (6.2) Dividends received from joint ventures and associates 0.8 5.1 Net cash flows from operating activities 135.4 101.7 Cash flows from investing activities
Acquisition of interests in subsidiaries, net of cash acquired (82.4) (155.8)
Sale of discontinued operations - 44.4 Purchase of property, plant and equipment and intangibles
(12.6) (13.1)
Proceeds of sale of property and equipment
7.7 16.9
Purchase of interest in joint ventures and associates
(2.7) (4.1)
Purchase of other investments - (0.6) Proceeds from sale of investments
1.1 0.3
Net cash flows from investing activities (88.9) (112.0) Cash flows from financing activities Proceeds from issuance of ordinary share capital 7.2 29.1 Return of capital to shareholders (including costs)
(76.7) (95.4)
Dividend paid to shareholders
(246.7) (44.6)
Dividend paid to minority interests
(3.9) (4.5)
Investment in own shares - ESOP (0.2) (13.9) Increase in borrowings 55.2 45.8 Repurchase of bonds - (68.1) Net cash flows from financing activities (265.1) (151.6) Net decrease in cash and cash equivalents
(218.6) (161.9)
Net foreign exchange difference
0.5 (7.9)
10 Cash and cash equivalents at 1 January
312.8 482.6
10 Cash and cash equivalents at 31 December
94.7 312.8
Consolidated statement of recognised income and expense for the year ended 31 December 2007
As restated 2007 2006 ‚£m ‚£m Profit for the financial year 114.0 146.4
Currency translation differences on foreign operations:
Group 1.0 (38.6)
Associates and joint ventures (0.1)
(0.7)
Gains on cash flow hedges taken to equity 4.1
-
Actuarial gain recognised in the pension schemes 34.8
30.1
Deferred tax recognised on the pension surplus (13.7)
- 26.1 (9.2) Total recognised income 140.1 137.2 Attributable to: Equity shareholders 134.3 133.2 Minority interests 5.8 4.0 140.1 137.2
Effects of changes in accounting policy
Effect of adopting IFRIC 14 - (2.4) Equity shareholders - (2.4) Minority interests - - - (2.4) Notes to the consolidated financial statementsat 31 December 2007 1. General informationThe figures and financial information for the year ended 31 December 2007 donot constitute the statutory financial statements for that year. Thosefinancial statements have not yet been delivered to the Registrar, but includethe auditors' report which was unqualified and did not contain a statementunder Section (2) or (3) of the Companies Act 1985. The figures and financialinformation for the year ended 31 December 2006 included in the preliminaryannouncement do not constitute the statutory financial statements for thatyear. Those financial statements have been delivered to the Registrar andincluded the auditors' report which was unqualified and did not contain astatement under Section (2) or (3) of the Companies Act 1985.
This preliminary announcement was approved by a duly appointed and authorised committee of the Board of Directors on 29 February 2008.
The comparative information for the year ended 31 December 2006 has been restated as follows:
- Following the transfer of certain operations between segments, the segmental results have been restated. The impact is disclosed in note 3.
- Acquisition accounting adjustments have been finalised in relation to certainacquisitions which were made in 2006. The comparative information has beenrestated in accordance with IFRS 3 'Business Combinations'. The impact of thisrestatement is to increase intangible assets, provisions, other payables anddeferred tax liabilities by ‚£3.3m, ‚£0.7m, ‚£0.4m and ‚£1.3m respectively with acorresponding reduction to trade and other receivables of ‚£0.2m and goodwill of‚£0.7m.- Following the adoption of IFRIC 14, a surplus of ‚£3.1m on one of the Group'spension's schemes, which previously had been treated as irrecoverable, has beenrecognised. The impact of this restatement is to reduce the retirement benefitobligation by ‚£3.1m with a corresponding increase to shareholders' equity.
Changes to composition of Group
Following the acquisition of an additional 2% of the voting rights of RISI,Inc. ('RISI'), the Group has consolidated its 52% controlling interest in RISI.Previously the Group equity accounted its 50% share of the results and netassets of RISI. RISI continues to be reported in the Corporate operationssegment. The impact of the consolidation of RISI is to increase Corporateoperations revenue by ‚£12.3m, operating expenses by ‚£11.1m, minority interestin the income statement by ‚£0.6m, total assets by ‚£8.3m, total liabilities by ‚£8.1m and total equity and reserves by ‚£0.2m.
The Group has made a number of acquisitions in the year as disclosed in note 15.
2. Significant accounting policies
Basis of preparation
The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as adopted in the European Union and asapplied in accordance with the provisions of the Companies Act 1985.The consolidated financial statements have been prepared on a historical costbasis, except for derivative financial instruments that have been measured atfair value.
Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except as follows.
The Group has adopted the following new and amended IFRS, IAS and IFRIC interpretations during the year. Adoption of these revised standards and interpretations, with the exception of IFRIC 14, did not have any effect on the financial statements of the Group. Some did however give rise to additional disclosures:
- IFRS 7 Financial instruments: Disclosures
- IFRIC 7 Applying the Restatement Approach under IAS Financial Reporting in Hyperinflationary Economies
- IFRIC 9 Re-assessment of embedded derivatives
- IFRIC 10 Interim Financial Reporting and Impairment
- IFRIC 11 IFRS 2 - Group and Treasury Share Transactions
- IFRIC 12* Service Concession Arrangements
- IFRIC 13* Customer Loyalty Programmes
- IFRIC 14* The limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
* These interpretations are yet to be adopted by the European Union, howeverthe Group has early adopted them because they provide guidance on theapplication of existing standards which have been endorsed for use in the EUvia the EU Endorsement mechanism.
The principal effects of these changes are as follows:
IFRS 7 Financial instruments: Disclosures
The Group adopted this standard on 1 January 2007. This requires the Group tomake disclosures to enable users of the financial statements to evaluate thesignificance of the Group's financial instruments and the nature and extent ofrisks arising from those financial instruments. These new disclosures areincluded throughout the financial statements. 2. Significant accounting policies (continued)
IFRIC 7 Applying the Restatement Approach under IAS Financial Reporting in Hyperinflationary Economies
As of 1 January 2007, the Group adopted this interpretation which requires theapplication of IAS 29 in the reporting period in which an entity firstidentifies the existence of hyperinflation in the economy of its functionalcurrency as if the economy had always been hyperinflationary. Since the Groupdoes not have operations in any country with hyperinflationary conditions, thechange has no impact as at 31 December 2007 or 31 December 2006.
IFRIC 9 Re-assessment of embedded derivatives
The Group adopted IFRIC Interpretation 9 as of 1 January 2007, whichestablishes that the existence of an embedded derivative should be determinedat the date an entity first becomes party to the contract, with reassessmentonly if there is a change to the contract that significantly modifies the cashflows. This change in accounting policy did not have an effect on the financialstatements of the Group.
IFRIC 10 Interim Financial Reporting and Impairment
The Group adopted IFRIC Interpretation 10 as of 1 January 2007, which requiresthat an entity must not reverse an impairment loss recognised in a previousinterim period in respect of goodwill or an investment in either an equityinstrument or financial asset carried at cost. As the Group had no impairmentlosses recognised at the interim in either 2007 or 2006, the interpretation hadno effect on the financial statements of the Group.
IFRIC 11 - IFRS 2 - Group and Treasury Share Transactions
The Group adopted IFRIC Interpretation 11 as of 1 January 2007, insofar as itapplies to consolidated financial statements. This interpretation requiresarrangements whereby an employee is granted rights to an entity's equityinstruments to be accounted for as an equity-settled scheme, even if the entitybuys the instruments from another party, or the shareholders provide the equityinstruments needed. This change in accounting policy did not have an effect onthe financial statements of the Group.
IFRIC 12 Service Concession Arrangements
The Group adopted IFRIC Interpretation 12 as of 1 January 2007, which outlines an approach to account for contractual arrangements arising from entities providing public services. This change in accounting policy did not have an effect on the financial statements of the Group because the Group does not enter into such arrangements.
IFRIC 13 Customer Loyalty Programmes
The Group early adopted IFRIC Interpretation 13 as of 1 January 2007, whichrequires that entities which grant loyalty award credits to customers shouldallocate some of the proceeds of the initial sale as a liability, being itsobligation to provide the awards. The amount allocated to the award credits ismeasured at fair value, that is, the amount for which the award credits couldhave been sold separately. The deferred portion of the proceeds shall berecognised as revenue only when the entity has fulfilled its obligations bysupplying the awards. This change in accounting policy did not have a materialimpact on the financial statements of the Group.
IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
The Group early adopted IFRIC Interpretation 14 as of 1 January 2007, whichsets out when refunds or reductions in future contributions should be regardedas available in accordance with IAS 19 'Employee Benefits', how a minimumfunding requirement might affect the availability of reductions in futurecontributions and when a minimum funding requirement might give rise to aliability. This change in accounting policy has led to the Group recognising asurplus of ‚£3.1m on one of its defined benefit pension schemes that hadpreviously been treated as irrecoverable. This adjustment has been treated
as aprior period adjustment.3. Segment informationBusiness segments
At 31 December 2007, the Group is organised into six main business segments -News Distribution, CMP Asia, CMP Information, CMP Technology, CMPMedica andCommonwealth Business Media. These segments are the basis on which the Groupreports its primary segment information.
The News Distribution segment operates in the distribution, targeting and evaluation of company information. The main activities of CMP Asia, CMP Information, CMP Technology, CMPMedica and Commonwealth Business Media are the production and provision of magazines, trade press, directories, business information, events and websites.
During 2006, the Group disposed of a number of its UK classified titles within CMP Information and its US entertainment titles within CMP Technology. The operating profit attributable to these titles are disclosed as discontinued operations (refer to note 16).
3. Segment information (continued)
The following tables present the revenue and profit information and certain asset and liability information for the Group's business segments for the year ended 31 December 2007 and 31 December 2006.
Year ended 31 December 2007 Share of Segment Revenue Revenue results result from from from including external other Total Segment JVs and JVs and customers segments revenue result associates associates ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Continuing operations Segments News distribution 141.1 - 141.1 47.5 0.7 48.2 CMP Asia 76.6 1.4 78.0 20.4 0.1 20.5 CMP Information 192.2 - 192.2 44.5 - 44.5 CMP Technology 160.5 - 160.5 14.9 1.2 16.1 CMPMedica 161.8 - 161.8 3.3 - 3.3 Commonwealth Business Media 57.1 - 57.1 (3.6) - (3.6) Corporate operations 2 12.3 - 12.3 (3.1) 0.2 (2.9) 801.6 1.4 803.0 123.9 2.2 126.1 Eliminations - (1.4) (1.4) - - - 801.6 - 801.6 123.9 2.2 126.1 Continuing operations Finance income/(cost) Interest income 6.7 Interest cost (7.3) Financing cost - other than (0.5)interest Financing income - pension 4.5 schemes 129.5 Taxation (21.5)
Discontinued operations (note 16)
Taxation -
Profit from disposal of discontinued
6.0 operations (note 16)
Profit for the year from continuing and
114.0 discontinued operations 1 Adjusted Group operating profit represents Group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations.2 Corporate operations comprises net central operating costs, together withRISI Inc and those equity accounted investments which do not form part of oneof the Group's operating divisions.
3. Segments information (continued)
Year ended 31 December 2007 Share of tax Segment on profit result Adjusted from Amortisation including operating JVs and Exceptional of JVs and profit1 associates items intangibles associates ‚£m ‚£m ‚£m ‚£m ‚£m Continuing operations Segments News distribution 49.1 - - (0.9) 48.2 CMP Asia 21.0 - - (0.5) 20.5 CMP Information 47.6 - - (3.1) 44.5 CMP Technology 25.2 - (6.2) (2.9) 16.1 CMPMedica 18.5 - (5.7) (9.5) 3.3 Commonwealth Business 7.2 - (7.7) (3.1) (3.6)Media Corporate operations2 (2.5) (0.4) - - (2.9) 166.1 (0.4) (19.6) (20.0) 126.1 Year ended 31 December 2007 Share of results from Share of JVs and results associates Interest from from (pre interest JVs and Tax from JVs JVs and and tax) associates and associates associates ‚£m ‚£m ‚£m ‚£m Continuing operations Segments News distribution 0.7 - - 0.7 CMP Asia 0.1 - - 0.1 CMP Information - - - - CMP Technology 1.1 0.1 - 1.2 CMPMedica - - - - Commonwealth Business - - - - Media Corporate operations2 0.6 - (0.4) 0.2 2.5 0.1 (0.4) 2.2 1 Adjusted Group operating profit represents Group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations.2 Corporate operations comprises net central operating costs, together withRISI Inc and those equity accounted investments which do not form part of oneof the Group's operating divisions.
3. Segment information (continued)
Year ended 31 December 2007 Adjusted Share of Group results from operating JVs and Adjusted profit1 associates Group (before equity (before tax operating accounted and profit1 investments) amortisation) as reported ‚£m ‚£m ‚£m Continuing operations Segments News distribution 48.4 0.7 49.1 CMP Asia 20.9 0.1 21.0 CMP Information 47.6 - 47.6 CMP Technology 24.0 1.2 25.2 CMPMedica 18.5 - 18.5 Commonwealth Business Media 7.2 - 7.2 Corporate operations2 (3.1) 0.6 (2.5) 163.5 2.6 166.1 Year ended 31 December 2007 Investments Segment in JVs and Segment Total net assets associates Total liabilities assets ‚£m ‚£m ‚£m ‚£m ‚£m Continuing operations Segments News distribution 77.9 2.0 79.9 (41.2) 38.7 CMP Asia 52.5 1.7 54.2 (37.6) 16.6 CMP Information 268.7 - 268.7 (76.7) 192.0 CMP Technology 251.8 9.6 261.4 (86.7) 174.7 CMPMedica 353.9 1.4 355.3 (112.4) 242.9 Commonwealth Business Media 123.0 - 123.0 (26.7) 96.3 Corporate operations2 130.1 9.9 140.0 (262.6) (122.6) 1,257.9 24.6 1,282.5 (643.9) 638.6 Unallocated liabilities - - - (272.1) (272.1) 1,257.9 24.6 1,282.5 (916.0) 366.5
Unallocated liabilities comprise the current tax liability of ‚£227.6m anddeferred tax liabilities of ‚£44.5m.1 Adjusted Group operating profit represents Group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations.2 Corporate operations comprises net central operating costs, together withRISI Inc and those equity accounted investments which do not form part of oneof the Group's operating divisions.
3. Segment information (continued)
Year ended 31 December 2007 Capital Depreciation expenditure Capital (including Capital (property, expenditure amortisation expenditure plant (website of website Other (acquisition of and development
development non-cash businesses) equipment) costs) costs) expenses ‚£m ‚£m ‚£m ‚£m ‚£m Continuing operations Segments News distributions 34.3 3.4 - 2.6 1.0 CMP Asia 1.8 0.2 - 0.3 0.4 CMP Information 27.1 0.6 2.0 1.7 0.9 CMP Technology 24.1 1.2 - 2.2 0.9 CMPMedica 9.6 0.8 - 1.2 0.6 Commonwealth Business 1.3 3.6 - 1.6 0.2 Media Corporate operations2 0.8 0.8 - 0.6 3.5 99.0 10.6 2.0 10.2 7.5 Capital expenditure relating to the acquisition of businesses of ‚£99.0mrepresents gross cash paid of ‚£80.7m, plus accrued expected future deferredconsideration payments. The cash outflow on acquisitions of businesses duringthe year comprises cash paid net of cash acquired of ‚£76.9m plus ‚£8.2m ofdeferred consideration payments on prior year acquisitionsGeographical segmentsYear ended 31 December 2007 Capital Capital expenditure Capital expenditure expenditure (property, (website Segment Segment (acquisition plant and development revenue assets of businesses) equipment) costs) ‚£m ‚£m ‚£m ‚£m ‚£m Continuing operations Segments United Kingdom 187.4 403.1 24.5 3.7 2.0 North America 365.5 485.2 71.9 5.8 -
Europe and Middle East 128.6 316.4 0.3 0.3
- Pacific 120.1 53.2 2.3 0.8 - 801.6 1,257.9 99.0 10.6 2.0 1 Adjusted Group operating profit represents Group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations.2 Corporate operations comprises net central operating costs, together withRISI Inc and those equity accounted investments which do not form part of oneof the Group's operating divisions.
3. Segment information (continued)
Year ended 31 December 2006
As As As As As As restated restated restated restated restated restated Share of Segment Revenue Revenue results result from from from JVs including external other Total Segment and JVs and customers segments revenue result associates associates ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Continuing operations Segments News distribution 129.9 - 129.9 41.2 0.6 41.8 CMP Asia 73.8 - 73.8 19.2 - 19.2 CMP Information 169.8 - 169.8 38.3 - 38.3 CMP Technology 179.2 - 179.2 2.7 1.6 4.3 CMPMedica 169.5 - 169.5 14.1 - 14.1 Commonwealth 16.9 - 16.9 2.2 - 2.2 Business Media Corporate - - - (3.0) 1.5 (1.5)operations2 739.1 - 739.1 114.7 3.7 118.4 Exceptional items - - - - - - 4.3 corporate operations3 EBIT - - - - - 122.7 Discontinued operations (note 16) CMP Technology 14.7 - 14.7 - - - CMP Information 5.1 - 5.1 0.7 - 0.7 19.8 - 19.8 0.7 - 0.7 Eliminations - - - - - - 758.9 - 758.9 115.4 3.7 123.4 Continuing operations Finance income/ (cost) Interest income 14.9 Interest cost (6.6) Financing income - 1.4 other than interest Financing cost - (21.4)other than interest Financing cost - 2.5 pension schemes 114.2 Taxation 11.9 Discontinued operations (note 16) Taxation (0.2) Profit from disposal of 20.5 discontinued operations (note 16) Profit for the year from continuing and 146.4 discontinued operations 1 Adjusted Group operating profit represents Group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations.2 Corporate operations comprises net central operating costs, together withthose operations and equity accounted investments which do not form part of oneof the Group's operating divisions.3 Exceptional items include the profit on sale of property for 2006.
3. Segment information (continued)
Year ended 31 December 2006 As As restated As restated As restated Share of As restated restated tax Segment on profit result Adjusted from equity Amortisation including operating accounted Exceptional of JVs and profit1 investments items intangibles associatesContinuing operations ‚£m ‚£m ‚£m ‚£m ‚£m Segments News distribution 41.9 - - (0.1) 41.8 CMP Asia 19.7 - - (0.5) 19.2 CMP Information 40.8 - - (2.5) 38.3 CMP Technology 21.2 - (14.9) (2.0) 4.3 CMPMedica 22.8 - - (8.7) 14.1 Commonwealth Business 3.4 - - (1.2) 2.2 Media Corporate operations2 (0.8) (0.7) - - (1.5) 149.0 (0.7) (14.9) (15.0) 118.4 Exceptional items - - - 4.3 - 4.3 corporate operations3 EBIT 149.0 (0.7) (10.6) (15.0) 122.7 Discontinued operations (note 16) CMP Technology - - - - - CMP Information 0.7 - - - 0.7 0.7 - - - 0.7 149.7 (0.7) (10.6) (15.0) 123.4 Share of results from JVs and Share of associates Interest results (pre from JVs Tax from JVs from interest and and JVs and and tax) associates associates associates ‚£m ‚£m ‚£m ‚£m Continuing operations Segments News distribution 0.6 - - 0.6 CMP Asia - - - - CMP Information - - - - CMP Technology 1.6 - - 1.6 CMPMedica - - - - Commonwealth - - - - Business Media Corporate 2.2 - (0.7) 1.5 operations2 4.4 - (0.7) 3.7 Discontinued operations (note 16) CMP Technology - - - - CMP Information - - - - - - - - 4.4 - (0.7) 3.7 1 Adjusted Group operating profit represents Group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations.2 Corporate operations comprises net central operating costs, together withthose operations and equity accounted investments which do not form part of oneof the Group's operating divisions.3 Exceptional items include the profit on sale of property for 2006. 3. Segment information (continued)Year ended 31 December 2006 As restated As restated Adjusted Group Share of As restated operating results from Adjusted profit1 equity Group (before equity investments operating accounted (before tax and profit1 investments) amortisation) as reported ‚£m ‚£m ‚£m Continuing operations Segments News distribution 41.3 0.6 41.9 CMP Asia 19.7 - 19.7 CMP Information 40.8 - 40.8 CMP Technology 19.6 1.6 21.2 CMPMedica 22.8 - 22.8 Commonwealth Business Media 3.4 - 3.4 Corporate operations2 (3.0) 2.2 (0.8) 144.6 4.4 149.0
Discontinued operations (note 16)
CMP Technology - - - CMP Information 0.7 - 0.7 0.7 - 0.7 145.3 4.4 149.7 As As As restated As restated restated As restated restated Investments Segment in JVs and Segment Total net assets associates Total liabilities assets ‚£m ‚£m ‚£m ‚£m ‚£m Continuing operations Segments News distribution 45.7 1.8 47.5 (44.9) 2.6 CMP Asia 46.8 - 46.8 (29.7) 17.1 CMP Information 242.6 - 242.6 (71.4) 171.2 CMP Technology 236.1 7.6 243.7 (76.9) 166.8 CMPMedica 332.3 1.2 333.5 (94.4) 239.1 Commonwealth Business 139.7 - 139.7 (28.8) 110.9 Media Corporate operations2 293.6 13.3 306.9 (237.9) 69.0 1,336.8 23.9 1,360.7 (584.0) 776.7 Discontinued operations (note 16) CMP Technology - - - - - CMP Information - - - - - - - - - - Unallocated liabilities - - - (235.9) (235.9) 1,336.8 23.9 1,360.7 (819.9) 540.8
Unallocated liabilities comprise the current tax liability of ‚£205.7m anddeferred tax liabilities of ‚£30.2m.1 Adjusted Group operating profit represents Group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations.2 Corporate operations comprises net central operating costs, together withthose operations and equity accounted investments which do not form part of oneof the Group's operating divisions.
3. Segment information (continued)
Year ended 31 As restated AsDecember 2006 As restated As restated As restated restated Depreciation Capital Capital Capital (including expenditure expenditure expenditure amortisation (acquisition (property, (website of website Other of plant and development development non-cash businesses) equipment) costs) costs) expenses ‚£m ‚£m ‚£m ‚£m ‚£m Continuing operations Segments News distribution 12.4 3.5 - 2.6 0.5 CMP Asia 5.6 0.5 - 0.2 0.4 CMP Information 4.8 3.1 0.7 1.5 0.8 CMP Technology 44.8 2.9 - 2.2 0.7 CMPMedica 4.1 1.4 - 1.1 0.4 Commonwealth 91.3 0.2 - 0.6 - Business Media Corporate - 0.8 - 0.4 2.9 operations2 163.0 12.4 0.7 8.6 5.7 Discontinued operations (note 16) CMP Technology - - - - - CMP Information - - - - - - - - - - 163.0 12.4 0.7 8.6 5.7 Capital expenditure relating to the acquisition of businesses of ‚£163.0mrepresents gross cash paid of ‚£158.2m, plus accrued expected future deferredconsideration payments. The cash outflow on acquisitions of businesses duringthe year comprises cash paid net of cash acquired of ‚£152.9m plus ‚£2.9m ofdeferred consideration payments on prior year acquisitionsGeographical segmentsYear Ended 31 As As As restated As restated December 2006 restated restated Capital As restated Capital expenditure Capital expenditure (property, expenditure (acquisition plant and (website Segment Segment of equipment) development revenue assets businesses) ‚£m costs) ‚£m ‚£m ‚£m ‚£m
Continuing operations
Segments United Kingdom 158.9 554.7 14.2 3.7 0.7 North America 348.3 431.3 134.1 6.6 - Europe and Middle 124.7 300.6 2.0 1.6 - East Pacific 107.2 50.2 12.7 0.5 - 739.1 1,336.8 163.0 12.4 0.7 Discontinued operations United Kingdom 5.1 - - - - North America 14.7 - - - - 19.8 - - - - 758.9 1,336.8 163.0 12.4 0.7
The amounts shown for the year ended 31 December 2006 have been restated toreflect the intragroup transfer of MediaLive Japan from CMP Technology to CMPAsia. As a result, for the year ended 31 December 2006, ‚£7.0m of revenue, ‚£1.2mof operating profit, ‚£0.2m of amortisation of acquired intangibles, ‚£5.6m ofcapital expenditure on acquisition of subsidiaries and ‚£1.4m of assets havebeen transferred from CMP Technology to CMP Asia.As stated in note 1, the Group has consolidated its 52% controlling interest inRISI Inc ('RISI') from 1 January 2007 following the acquisition of anadditional 2% of the voting rights. Previously the Group equity accounted its50% share in the results and net assets of RISI. RISI continues to be reportedin the Corporate operations segment.
The impact of the consolidation of RISI is to increase Corporate operations revenue by ‚£12.3m, operating expenses by ‚£11.1m, minority interest in the income statement by ‚£0.6m, total assets by ‚£8.3m, total liabilities by ‚£8.1m and total equity and reserves by ‚£0.2m.
1 Adjusted Group operating profit represents Group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional items,share of taxation on profit in joint ventures and associates, and adjusted foroperating profit from discontinued operations.2 Corporate operations comprises net central operating costs, together withthose operations and equity accounted investments which do not form part of oneof the Group's operating divisions.3 Exceptional items include the profit on sale of property for 2006.
4. Exceptional items
Exceptional items are presented separately as, due to their nature and for theinfrequency of the events giving rise to them, this allows shareholders tounderstand better the elements of financial performance for the year, so as tofacilitate comparison with prior periods and to assess better the trends of
financial performance. 2007 2006 ‚£m ‚£m Charged to operating profit Vacant property costs (3.9) (13.7) Redundancy (12.1) (1.2) Restructuring and business reorganisation costs
(3.6) -
Total charged to operating profit (19.6) (14.9) Credited to EBIT
Profit on disposal of property, plant and equipment
- 4.3
Total (charged)/credited to EBIT (19.6) (10.6) Charged to profit before tax
Net finance costs - bond buybacks (see note 5)
- (20.3)
Total (charged)/credited to profit before tax (19.6) (30.9) Credited to profit after tax Taxation relating to exceptional items 1.8 - Exceptional taxation credit - 35.9 Total (charged)/credited to profit after tax (17.8) 5.0
Credited to discontinued operations Profit on disposal of discontinued operations (note 16)
- 20.5
Additional profit on prior years disposal (note 16)
6.0 -
Profit form discontinued operations (note 16)
- 0.5
(Loss)/profit for the year after discontinued operations (11.8) 26.0 Charged to operating profitDuring the year, CMP Technology announced a restructuring to align its productportfolio and organisational structure to the changing needs of its customers,and to better position the business to take advantage of growth opportunitiesin events, online and data. This involved the closure and merging of someprint titles and a headcount reduction of over 200 people. The exceptionalcharge of ‚£6.2m includes ‚£3.3m relating to redundancy, ‚£2.2m relating to vacantproperty and ‚£0.7m to restructuring and business reorganisation costs. Theredundancy and restructuring and business reorganisation costs have beensubstantially incurred at the year end and the amount relating to vacantproperty will be incurred over the remainder of the lease terms.In 2006, CMP Technology downsized its existing operations based in Long Island,New York, together with the off shoring of certain functions. The costs of ‚£14.9m represent the expected vacant property costs arising, together withcertain related redundancies already incurred.
Following the acquisition of the Official Airlines Guide (OAG) in December 2006, the Group announced a restructuring plan to integrate OAG into the Commonwealth business and to enable it to serve its global customers more effectively. The exceptional charge of ‚£7.7m includes ‚£6.0m relating to the redundancy of 120 people, ‚£0.5m relating to vacant property and ‚£1.2m of restructuring costs. The redundancy and restructuring costs have been substantially incurred at the year end and the amount relating to vacant property will be incurred over the remainder of the lease term.
During the year, CMPMedica commenced a restructuring programme to rebalance thebusiness to enable them to better meet the changing customer requirements, toposition them in growth markets and to improve profitability. The exceptionalcharge of ‚£5.7m includes ‚£2.8m relating to the redundancy of 60 people, ‚£1.2mof vacant property costs and ‚£1.7m of other reorganisation costs. Of theamount charged, ‚£1.3m has been spent in 2007 and the balance is expected to beincurred in 2008.Credited to EBIT
During 2006, the Group also sold its freehold interest in a property which wasno longer in use within the business giving rise to an exceptional profit ondisposal of ‚£4.3m.Credited to profit after tax
There is a ‚£1.8m tax credit in relation to the ‚£6.0m redundancy provisionassociated with the restructuring of OAG.In 2006, the Group resolved a number of outstanding items as a consequence ofwhich there is was a net exceptional tax credit of ‚£35.9m.
Credited to discontinued operations
The additional profit on prior year disposals represents additionalconsideration receivable from GfK following the settlement of certainoutstanding items relating to the sale of NOP World in 2005, together with arelease of amounts held for certain potential warranty and other claims whichare now no longer required.During 2006, the Group disposed of a number of titles, including the majorityof its remaining UK classified titles, together with the US based Music andEntertainment portfolio. The aggregate profits on disposal, which have beenshown as an exceptional item in the Group's profit and loss account, amount to‚£20.5m. The operating results for these disposed businesses have been includedwithin discontinued activities.
5. Finance income/(cost)
Recurring Exceptional Total Recurring Exceptional Total 2007 2007 2007 2006 2006 2006 ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Interest income Cash and cash 6.7 - 6.7 14.9 - 14.9 equivalents Interest cost Borrowings and loans (5.6) - (5.6) (5.1) - (5.1) Other (1.7) - (1.7) (1.5) - (1.5) (7.3) - (7.3) (6.6) - (6.6) Financing income - other than interest Buyback of bonds (c) - - - - 0.4 0.4 Net foreign exchange - - - 1.0 - 1.0 gain (a) - - - 1.0 0.4 1.4 Financing cost - other than interest Fair value loss on - - - - (20.7) (20.7)embedded derivative (b) Net foreign exchange (0.2) - (0.2) - - - loss Other fair value (0.3) - (0.3) - - - adjustments Convertible bond (d) - - - (0.7) - (0.7) (0.5) - (0.5) (0.7) (20.7) (21.4) Financing income - 4.5 - 4.5 2.5 - 2.5 pension schemes Net finance income/ 3.4 - 3.4 11.1 (20.3) (9.2)(cost) (a) Foreign exchange gain in 2006 related to US dollar denominated balancesheld in UK accounts.(b) Under IAS 32 and IAS 39, UBM's US Dollar convertible bond contains anembedded derivative (the option to convert USD denominated debt into GBPequity), which is measured at fair value with changes in fair value included inthe income statement until conversion or repurchase. The fair value loss in2006 of ‚£20.7m reported as exceptional relates to the portion of the bond thatwas repurchased / converted during the year.(c) In 2006, UBM repurchased the majority of its US Dollar convertible bond.This credit reflects the debt settlement gain.(d) The convertible bond is separated into fixed rate debt and an equityderivative. This charge reflects the accretion of the debt to the value at
maturity. 6. TaxationMajor components of income tax expense for the year ended 31 December 2007 are: 2007 2006 ‚£m ‚£m Consolidated income statement Current tax: Current tax charge 27.2 27.9 Deferred tax:
Origination and reversal of temporary differences (5.7) (3.7)
Income tax expense in the consolidated income statement 21.5 24.2
Less: income tax expense for discontinued operations - (0.2)
Income tax expense for continuing operations 21.5 24.0
Factors affecting tax charge for the year
A reconciliation of income tax expense before exceptional tax credit applicableto accounting profit before tax at the statutory tax rate to tax expense forthe year ended 31 December 2007 is as follows: 2007 2006 ‚£m ‚£m Profit before tax from continuing operations 129.5
113.5
Profit before tax attributable to discontinued operations (note 6.0 21.2 16) Profit before tax 135.5 134.7 Profit before tax multiplied by standard rate of corporation tax 40.7 40.4 in UK of 30% (2006: 30%) Effect of:
Expenses not deductible for tax purposes 7.7
1.4
Tax effect of items not recognised in consolidated financial (11.7) 3.6 statements
Origination and reversal of temporary differences not recognised (7.8) (8.5)
Different tax rates on overseas earnings (0.4) (0.4) Foreign exchange gains - (0.3)
Share of results from associates and joint ventures (after tax) (0.7) (1.2)
Profit on sale of discontinued operations and equity accounted (1.8) (6.8)investments Non-taxable income (4.5) (4.0) 21.5 24.2
Income tax expense reported in the consolidated income statement 21.5 24.0
Income tax attributable to discontinued operations (note 16) - 0.2 21.5 24.2
In 2006, the Group resolved a number of outstanding items as a consequence of which there is a net exceptional tax credit of ‚£35.9m.
Deferred income tax
Deferred income tax at 31 December relates to the following:
Consolidated balance sheet Consolidated income statement 2007 2006 2007 2006 ‚£m ‚£m ‚£m ‚£m Deferred tax Fair value adjustments 29.6 28.5 (5.2) (4.0)on acquisitions Defined benefit pension 13.7 - - - surplus Other temporary 1.2 1.7 (0.5) 0.3 differences 44.5 30.2 (5.7) (3.7)
At 31 December 2007, there was no recognised deferred tax liability for taxes that would be payable on the unremitted earnings of certain of the Group's subsidiaries as the Group has determined that undistributed profits of its subsidiaries will not be distributed in the foreseeable future.
The temporary differences associated with investments in subsidiaries for whicha deferred tax liability has not been recognised amount in aggregate to ‚£3.1 bn(2006: ‚£1.7 bn). There are no income tax consequences to the Group attaching tothe payment of dividends by the Company to its shareholders.6. Taxation (continued) As 2007 restated 2006 ‚£m ‚£m
The movement in the net deferred tax liability was as follows:
Net liability at 1 January 30.2 24.0 Transfers - (0.1) Acquisition of subsidiaries (note 15) 5.4
11.1
Amounts credited to net profit (5.7)
(3.7)
Amounts charged to consolidated statement of recognised income 13.7
- and expense Currency translation 0.9 (1.1) Net liability at 31 December 44.5 30.2 The Group has unrecognised deferred tax assets of ‚£63.4m relating to deductibletemporary differences and ‚£49.2m (of which ‚£35.2m will expire between 2018 and2027) relating to unused tax losses (2006: ‚£65.6m and ‚£30.3m of which ‚£25.9mwill expire within 2020 and 2027 respectively). No deferred tax asset has beenrecognised in respect of these amounts due to the unpredictability of futuretaxable profit streams. The amounts shown for the year ended 31 December 2006have been restated to reflect the finalisation of acquisition accountingadjustments relating to certain acquisitions made in 2006 (see note 1).
7. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for theyear attributable to ordinary equity shareholders by the weighted averagenumber of ordinary shares outstanding during the year (reflecting the movementsset out in note 12).Diluted earnings per share amounts are calculated by dividing the net profitattributable to ordinary shareholders (after deducting/(adding) interest andthe other income/expenses relating to the convertible bond) by the weightedaverage number of ordinary shares outstanding during the year (adjusted for theeffects of dilutive options and dilutive convertible bond).Adjusted earnings per share is calculated on the net profit for the yearattributable to ordinary equity shareholders, less amortisation of intangibleassets arising on acquisitions, certain exceptional items, deferred tax onamortisation of intangible assets, taxation relating to exceptional items andnet financing cost - other than interest, divided by the weighted averagenumber of ordinary shares outstanding during the year. Certain exceptionalitems, net financing costs - other than interest, taxation related toexceptional items and deferred tax on amortisation of intangible assets areexcluded from this calculation, as due to their nature and the infrequency ofthe events giving rise to them, separate presentation allows shareholders tounderstand better the elements of financial performance for the year, so as tofacilitate comparison with prior periods and to assess better the trends offinancial performance.
The following reflects the income and share data used in the total operations basic and diluted earnings per share computations:
2007 2006 2007 2007 2006 2006 Weighted Weighted average Earnings average Earnings no. of per no. of per From continuing and Earnings shares share Earnings shares share discontinued operations ‚£m million pence ‚£m million pence Adjusted Group 166.1 149.7 operating profit Net interest (expense)/ (0.6) 8.3 income Financing income - 4.5 2.5 pension schemes Adjusted profit before 170.0 160.5 tax Taxation (28.9) (28.9) Minority interests (5.2) (4.5) B share dividend (0.3) (0.4) Adjusted earnings per 135.6 254.0 53.4 126.7 278.7 45.5 share Adjustments Amortisation of (20.0) (7.9) (15.0) (5.4) intangible assets arising on acquisitions Deferred tax on 5.2 2.0 4.0 1.4 amortisation of intangible assets Adjustments in (13.6) (5.3) 45.8 16.4 respect of exceptional items Taxation relating to 1.8 0.7 - - exceptional items Net financing cost - (0.5) (0.2) (20.0) (7.2) other than interest Basic earnings per 108.5 254.0 42.7 141.5 278.7 50.7 share Dilution Options - 5.5 (0.9) - 5.2 (0.9) Convertible bond - - - - - - Diluted earnings per 108.5 259.5 41.8 141.5 283.9 49.8 share Adjusted earnings per 135.6 53.4 share (as above) 254.0 126.7 278.7 45.5 Options - 5.5 (1.1) - 5.2 (0.8) Convertible bond - - - 0.2 6.0 (0.9) Diluted adjusted earnings per share 135.6 259.5 52.3 126.9 289.9 43.8
The convertible bond is earnings enhancing in 2006 and therefore its impact has been excluded from the diluted earnings per share calculation.
7. Earnings per share (continued) 2007 2007 2006 2006 2007 Weighted 2006 Weighted average average no. Earnings no. Earnings of per of perFrom continuing Earnings shares share Earnings shares shareoperations ‚£m million pence ‚£m million pence
Adjusted Group operating 166.1 149.7
profit Operating profit from - (0.7) discontinued operations
Net interest (expense)/ (0.6) 8.3
income Financing income - 4.5 2.5 pension schemes
Adjusted profit before 170.0 159.8
tax Taxation (28.9) (28.7) Minority interests (5.2) (4.5) B share dividend (0.3) (0.4) Adjusted earnings per 135.6 254.0 53.4 126.2 278.7 45.3 share Adjustments Amortisation of (20.0) (7.9) (15.0) (5.4)intangible assets arising on acquisitions Deferred tax on 5.2 2.0 4.0 1.4 amortisation of intangible assets
Adjustments in respect (19.6) (7.7) 25.3
9.1 of exceptional items Taxation relating to 1.8 0.7 - - exceptional items Net financing cost - (0.5) (0.2) (20.0) (7.2)other than interest Basic earnings per share 102.5 254.0 40.3 120.5 278.7 43.2 Dilution Options - 5.5 (0.8) - 5.2 (0.8) Convertible bond - - - - - - Diluted earnings per 102.5 259.5 39.5 120.5 283.9 42.4 share Adjusted earnings per share (as above) 135.6 254.0 53.4 126.2 278.7 45.3 Options - 5.5 (1.1) - 5.2 (0.8) Convertible bond - - - 0.2 6.0 (0.9)
Diluted adjusted earnings per share 135.6 259.5 52.3 126.4 289.9 43.6
The convertible bond is earnings enhancing in 2006 and therefore its impact has been excluded from the diluted earnings per share calculation.
The Group has two categories of dilutive potential ordinary shares: those shareoptions granted to employees where the exercise price is less than the averagemarket price of the Company's ordinary shares during the year, and sharesattributable to convertible debt. The impact of dilutive securities in 2007would be to increase the profit by ‚£nil (2006: ‚£21.2m) for convertible debt andto increase weighted average shares by 5.5 million shares (2006: 5.2 millionshares) for employee share options and nil million shares (2006: 6.0 millionshares) for convertible debt.The weighted average number of shares excludes ordinary shares held by the ESOPand the QUEST. The weighted average number of shares was affected by the shareconsolidation which accompanied the special dividend paid on 27 March 2007,where 49 existing ordinary shares were converted to 44 new ordinary shares
(refer to note 12).8. Dividends 2007 2006 ‚£m ‚£m Declared and paid during the year Equity dividends on ordinary shares Final dividend for 2006 of 13.60p (2005: 11.00p) 34.1 31.9 Special dividend of 72.00p (2006: nil) 200.3 - Interim dividend for 2007 of 4.84p (2006: 4.40p) 12.0 12.3 Equity dividends - B shares 0.3 0.4 246.7 44.6 Proposed (not recognised as a liability at 31 December) Equity dividends on ordinary shares Special dividend for 2007 of nil (2006: 72.00p) - 200.3 Final dividend for 2007 of 16.76p (2006: 13.60p) 40.4 34.1
The proposed final dividend is subject to approval and has not been recognised as a liability in these financial statements.
The B shares have a fixed coupon, and the dividends of ‚£0.3m owing as at 31 December 2007 have been accrued for accordingly.
9. Assets classified as held for sale
As at 31 December 2007, there were no non-current assets classified as held forsale. As at 31 December 2006, freehold property with a carrying amount of ‚£3.4mwas classified as held for sale. The property was being actively marketedbefore 31 December 2006 and a sale was completed during 2007.
10. Cash and cash equivalents
2007 2006 ‚£m ‚£m Cash at bank and in hand 35.5 56.3 Short term liquid funds 59.5 259.9 95.0 316.2
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying periods of between one day and three months and earn interest at the respective short-term deposit rates.
The fair value of cash and cash equivalents at 31 December 2007 is ‚£95.0m(2006: ‚£316.2m). The Group only deposits surplus cash with major banks of highquality credit standing with which it has a lending relationship. The Groupclassifies all its cash and short term deposits as loans and receivables.
For the purposes of the consolidated cash flow statement, cash and cash equivalents comprise the following at December:
2007 2006 ‚£m ‚£m Cash at bank and in hand 35.5 56.3 Short term liquid funds 59.5 259.9 95.0 316.2 Bank overdrafts (note 11) (0.3) (3.4) 94.7 312.8 11. BorrowingsOther borrowings 2007 2006 ‚£m ‚£m Current Bank overdrafts 0.3 3.4 Current instalments due on bank loans 39.0 184.6 39.3 188.0 Non-current
Non current instalments due on bank loans 210.3 -
7.75% US bonds 2.9 2.9 213.2 2.9
The Group classifies all its derivative financial instruments as fair value through profit and loss and its bank overdrafts, bank loans and 7.75% US bonds as financial liabilities at amortised cost.
2007 2006Bank loans ‚£m ‚£m ¢â€š¬53.1m variable rates loan 2008
39.0 35.8
CAD26.0m variable rates loan 2010 13.2
-
‚£325m variable rate multi option facility due 2010 -
148.2
CAD6.0m variable rate multi option facility due 2010 0.8
-
‚£325m variable rate multi option facility due 2012 195.8
- Other 0.5 0.6 249.3 184.6 31 December 2007
¢â€š¬53.1m variable rates loan 2008 This unsecured loan is repayable on 16 December 2008 and bears interest at LIBOR plus 0.325%.
CAD26.0m variable rates loan 2010 This unsecured loan is repayable on 27 May 2010 and bears interest at LIBOR plus 0.3%
CAD6.0m variable rate multi option facility due 2010 This unsecured revolving facility is repayable on 27 May 2010 and bears interest at LIBOR plus 0.3%. At 31 December 2007, CAD1.7m of this loan was drawn leaving CAD 4.3m undrawn.
‚£325m variable rate multi option facility due 2012 This ‚£325m multicurrency unsecured revolving facility is repayable on 27 July 2012 and bears interest at LIBOR plus 0.325%. The undrawn portion of this facility is ‚£129.2m.
11. Borrowings (continued)31 December 2006
¢â€š¬53.1m variable rates loan 2007 This unsecured loan is repayable on 19 December 2007 and bears interest at LIBOR plus 0.325%.
‚£325m variable rate multi option facility due 2010This unsecured revolving facility is repayable on 27 May 2010 and bearsinterest at LIBOR plus 0.325%. The undrawn portion of this facility is ‚£182.6m.12. Share capital 2007 2006 ‚£m ‚£m Authorised
360,024,734 Ordinary shares of 33 and 71/88 pence each (2006: 400,936,636 Ordinary shares of 30 and 121.7 121.7 5/14 pence each) 375,417,690 (2006: 375,417,690) B shares of 8 and 23/44 pence 32.0 32.0 each 153.7 153.7 Ordinary Ordinary B B shares Shares Shares Shares Total Number ‚£m Number ‚£m ‚£m Issued and fully paid At 1 January 2006 278,222,120 84.5 4,830,923 0.4 84.9 Issued in respect of share 7,179,010 2.2 - 2.2 option schemes and other entitlements Shares repurchased and (14,055,000) (4.3) - - (4.3)cancelled Issued on conversion of bond 10,196,753 3.1 - - 3.1 B shares purchased by the - - (697,153) - - company At 1 January 2007 281,542,883 85.5 4,133,770 0.4 85.9 Issued in respect of share 308,994 0.1 - - 0.1 option schemes and other entitlements Shares repurchased and (260,000) (0.1) - - (0.1)cancelled At 27 March 2007 (pre share 281,591,877 85.5 4,133,770 0.4 85.9 consolidation) Share consolidation (28,733,865) - - - - Issued in respect of share 1,152,290 0.4 - - 0.4 option schemes and other entitlements Shares repurchased and (10,467,793) (3.5) - - (3.5)cancelled B shares purchased by the - - (323,838) (0.1) (0.1)company At 31 December 2007 243,542,509 82.4 3,809,932 0.3 82.7 Share repurchasesThe Group repurchased and cancelled 10,727,793 of its own ordinary sharesduring the year at an average price of 705.8p (2006: 14,055,000 ordinary sharesat an average price of 663.3p). The total amount paid to acquire the ordinaryshares was ‚£75.9m, and ‚£0.8m was paid to acquire B shares (2006: ‚£93.2m forordinary shares and ‚£1.7m for B shares).
Issue of ordinary shares
During 2006, the holders of $85.3m convertible bonds converted their bonds into 10,196,753 ordinary shares in the company.
On 19 March 2007, in conjunction with the special dividend of 72.0 pence pershare, a share consolidation was carried out to convert 49 existing ordinaryshares with a nominal value of 30 and 5/14 pence each to 44 new ordinary shareswith a nominal value of 33 and 71/88 pence each. The share consolidationconverted the 281,591,877 existing issued and fully paid ordinary shares into252,858,012 new issued and fully paid ordinary shares. The weighted averagenumber of shares used in the calculation of earnings per share reflects theshare consolidation (refer to note 7).The return of capital to shareholders undertaken in 2001 took the form of asubdivision and consolidation of the existing Company ordinary shares. On 23April 2001, each of the existing 507,901,885 ordinary shares of 25 pence thenin issue were sub-divided into one share of 8 23/44 pence (B Shares) and oneshare of 16 21/44 pence and immediately following such sub-division everyissued share of 16 21/44 pence was sub-divided into 29 shares of 25/44 pence. Every 44 shares of 25/44 pence each resulting from such sub-division were thenconsolidated into one ordinary share of 25 pence. The subdivision created aclass of B shares with a total value of approximately ‚£1.25bn. UK shareholdershad the option to sell these shares back to the Company for 245 pence pershare, to receive a single dividend of 245 pence per share, or to retain the Bshares and receive a continuing dividend linked to LIBOR. During the yearended 31 December 2007, 323,838 B shares were purchased by the company forconsideration of ‚£0.8m. Cumulatively to 31 December 2007, 371,607,758 B shareshave been purchased by the company for consideration of ‚£910.4m. At 31 December2007, 3,809,932 B shares remain in issue (31 December 2006: 4,133,770 Bshares).
The B shares are irredeemable. However, the Company has the authority to convert into ordinary shares, at its option, all remaining B shares in issue after 23 April 2011, if the number is less than 125m. The conversion into ordinary shares will be based on the market price of ordinary shares at the time of the conversion.
12. Share capital (continued)
B Shares
B shareholders are entitled to a non-cumulative preference dividend. On windingup, the B shareholders are entitled to 245 pence per share and the relevantproportion of the dividends outstanding. B shareholders do not have any votingentitlements except in a resolution relating to a winding up of the company orif the B share dividend has been outstanding for more than six months.13. Share premium 2007 2006 ‚£m ‚£m In issue at 1 January 354.6 327.7
Premium on shares issued, net of costs 6.7 26.9
In issue at 31 December 361.3 354.6
The Company received ‚£7.2m (2006: ‚£29.1m) on the issue of shares in respect of the exercise of options awarded under various share option plans.
14. Other reserves Foreign Capital currency Total Merger redemption translation ESOP Other other
Retained Minority
reserve reserve reserve reserve reserve reserves earnings interests Total ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m Balance at 1 January 2006 31.3 43.8 (1.8) (19.3) 125.0 179.0 (149.9) 2.7 31.8 as previously stated Change in accounting - - - - - - 5.5 - 5.5 policy relating to adoption of IFRIC 14 Restated balance at 1 31.3 43.8 (1.8) (19.3) 125.0 179.0 (144.4) 2.7 37.3 January 2006 Total recognised - - (38.8) - - (38.8) 172.0 4.0 137.2 income and expense for the year Shares repurchased and cancelled - 4.3 - - - 4.3 (95.4) - (91.1)by the company (including costs) Share-based - - - - - - 2.1 - 2.1 payment Equity - - - - - - (44.6) - (44.6)dividend Minority - - - - - - - (4.5) (4.5)interest dividend Consolidation of entity - - - - - - - 2.6 2.6 previously equity accounted Issue of 69.8 - - - - 69.8 - - 69.8 ordinary shares Shares - - - 5.4 - 5.4 - - 5.4 awarded by ESOP Own shares purchased by - - - (13.9) - (13.9) - - (13.9)the company Restated balance at 31 101.1 48.1 (40.6) (27.8) 125.0 205.8 (110.3) 4.8 100.3 December 2006 Total recognised - - 0.3 - 4.1 4.4 129.9 5.8 140.1 income and expense for the year Shares repurchased and cancelled - 3.7 - - - 3.7 (76.7) - (73.0)by the company (including costs) Share-based - - - - - - 2.9 - 2.9 payment Equity - - - - - - (246.7) - (246.7)dividend Minority - - - - - - - (3.9) (3.9)interest dividend Consolidation of entity - - - - - - - (1.0) (1.0)previously equity accounted Shares - - - 4.0 - 4.0 - - 4.0 awarded by ESOP Own shares purchased by - - - (0.2) - (0.2) - - (0.2)the company Balance at 31 101.1 51.8 (40.3) (24.0) 129.1 217.7 (300.9) 5.7 (77.5)December 2007 Merger reliefIn 2006, the Group applied the provisions of section 131 of the Companies Act1985 and obtained merger relief on the issue of 10,196,753 ordinary shareswhich were exchanged on conversion by the holders of $85.3m convertible bondsin place of preference shares in United Business Media (Jersey) Limited, awholly owned subsidiary of the company. As a result the issue of the shareshave been recorded at nominal value and a merger relief reserve created.
14. Other reserves (continued)
Capital redemption reserve
Entries are made to the capital redemption reserve to ensure there is no reduction in capital when the Group repurchases its own shares in accordance with the Companies Act 1985.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differencesarising from the translation of the financial statements of foreignsubsidiaries. It is also used to record the effect of hedging net investmentsof foreign operations.Other reserve
This reserve includes the unrealised gains and losses reserve which records theportion of the gain or loss on a hedging instrument in a cash flow hedge thatis determined to be an effective hedge.
ESOP reserve
The ESOP reserve records ordinary shares held by the ESOP to satisfy future share awards. The shares are recorded at cost.
15. Acquisitions and disposals
The Group completed 17 acquisitions during 2007.
On 4 January 2007, the Group acquired Quest Media Limited for cash consideration of ‚£5.0m. The transaction adds six award events, three conferences and an associated magazine.
On 17 January 2007, the Group acquired an additional 2% of the voting rights of RISI, Inc. ('RISI') for cash consideration of $1.0m. This equity purchase brings UBM's total shareholding in RISI to 52%, giving UBM a controlling interest in the company.
On 1 March 2007, the Group's majority-owned subsidiary, RISI, acquired EU Consulting for cash consideration of ¢â€š¬0.4m.
On 7 March 2007, the Group acquired a 25% equity holding in eXalt Solutions Inc('eXalt'), a leading provider of on-demand web-based services for IT solutionsales, for cash consideration of $2.0m. The Group also has an option topurchase an additional 15% equity holding in eXalt. The Group accounts foreXalt Solutions Inc as an associate.On 17 April 2007, the Group acquired Vintage Filings, LLC, a leading US Edgarfiling business, for initial cash consideration of $38.0m. A furtherperformance-dependent consideration of up to $15.0m will be payable over thenext four years.
On 26 April 2007, the Group acquired Physicians Practice, LLC for cash consideration of $17.5m, with a further performance-dependent consideration of $0.5m.
On 25 May 2007, the Group along with its joint venture partner, BolognaFiere,completed the acquisition of a 55% interest in the Guangzhou Beauty Fair. TheGroup's share of the purchase consideration was $3.0m and UBM has a 27.5%effective holding in the fair, which it accounts for as a joint venture.On 2 July 2007, the Group acquired How Machines Work Corporation for an initialcash consideration of $1.2m and a further performance-dependent considerationpayable of up to $0.6m.
On 26 July 2007, the Group completed the following acquisitions:
- Semiconductor Insights Inc for an initial cash consideration of $26.0m. A further performance-dependent consideration of up to $8.0 million will be payable over the next three years;
- Notilog, a leading Latin American news monitoring service, for an initialcash consideration of $4.0m. A further performance-dependent consideration ofup to $5.0m will be payable over the next two years;
- Australia Prescription Products Guide for a total cash consideration of A$1.0m.
On 13 September 2007, the Group acquired Ithaca Holdings, a UK events business, for a total cash consideration of ‚£14.3m.
On 21 September 2007, the Group acquired the Decorex tradeshow for total cash consideration of ‚£2.2m.
On 9 October 2007, the Group acquired the Energy Solutions Expo for total cash consideration of ‚£1.0m.
On 9 November 2007, the Group acquired Portelligent, Inc. for an initial cashconsideration of $8.0m. A further performance-dependent consideration of up to$4.0m will be payable over the next three years.
On 21 December 2007, the Group completed the acquisition of the Intermodal South America trade show for a total cash consideration of ‚£3.4m.
On 31 December 2007, the Group completed the acquisition of HispaniMark, LLCfor an initial cash consideration of $5.5m, with a further performance-relatedconsideration of up to $3.0m payable over the next three years.
15. Acquisitions and disposals (continued)
The Group acquired 100% of the voting rights in all cases where acquisitions involved the purchase of companies unless where otherwise stated.
The acquisition accounting for Portelligent, Inc, Intermodal South America trade show and HispaniMark, LLC has been determined on a preliminary basis as the valuation exercise at the date of the acquisition is ongoing.
The following table sets out the carrying amounts of the identifiable assetsand liabilities acquired and their fair value in respect of the acquisition
ofVintage Filings, LLC: Vintage Filings 2007 2007 Fair Acquiree's value carrying to Group amount ‚£m ‚£m Intangible assets 5.2 - Property, plant and equipment 0.1 0.2
Trade receivables and other current assets 1.3 1.7 6.6 1.9 Trade payables and other current liabilities (1.2) (0.6) Fair value of net assets 5.4 Goodwill arising on acquisition 21.0
26.4 2007 ‚£m Consideration: Cash paid 18.9 Deferred consideration 7.5 Total consideration 26.4 The following table sets out the carrying amounts of the identifiable assetsand liabilities acquired and their fair value in respect of the acquisition
ofother businesses during 2007: 2007 2007 Fair Acquiree's value carrying to Group amount ‚£m ‚£m Intangible assets 21.5 0.7 Property, plant and equipment 1.9 2.3 Cash and cash equivalents 2.2 2.2 Trade receivables and other current assets 9.2 6.4 Associates and joint ventures 2.7 - 37.5 11.6
Trade payables and other current liabilities (11.2) (6.6)
Deferred tax liability (5.4) - Non-current liabilities (0.2) (0.2) (16.8) (6.8) Fair value of net assets 20.7 Goodwill arising on acquisition 55.0 75.7 2007 ‚£m Consideration: Cash paid 61.8 Deferred consideration 13.9 Total consideration 75.7
The total consideration paid and payable on acquisitions is shown below:
2007 ‚£m Consideration: Cash paid 80.7 Deferred consideration 21.4 Total consideration 102.1
15. Acquisitions and disposals (continued)
The Group completed 18 acquisitions during 2006.
On 11 January 2006, the Group acquired MediaLive International, Inc. ('MediaLive') for a cash consideration of US$65.0m. The transaction adds more than 20 IT and telecoms-related events in the US, Japan, and Europe.
On 11 January 2006, the Group acquired Shorecliff Communications LLC, a USevents business, for a cash consideration of US$12.3m plus performance-relatedconsideration of up to US$1.4m. Shorecliff's four principal events focus onthe high growth technology markets of radio frequency identification, broadbandservices, wireless infrastructure and telecoms television/internet protocoltelevision.On 13 March 2006 the Group acquired ownership of a set of assets from MediworldPublications, an Indian medical publisher, for ‚£0.4m plus performance-relatedconsideration of up to ‚£0.3m.
On 4 April 2006 the Group acquired ownership of the National Venue Show for ‚£ 1.5m.
On 1 June 2006, the Group acquired Cable Digital News Inc, an online B2B mediabusiness providing news and analysis of the North American cable industry, fora total cash consideration of US$0.3m.On 30 June 2006, the Group acquired MeXi Solutions, a secure communication anddata access solutions provider to the Belgian healthcare industry, for a totalcash consideration of ¢â€š¬2.6m.
On 30 June 2006, the Group acquired ownership of the Thames Gateway Forum for ‚£ 3.0m plus performance-related consideration of up to ‚£0.2m.
On 19 July 2006, the Group acquired Commonwealth Business Media, Inc. ('Commonwealth') for a cash consideration of US$152.0m. Commonwealth is a leading specialist business intelligence provider to the international trade and transportation industry with comprehensive proprietary data, news and analytical content.
On 2 October 2006, the Group acquired US Newswire, a leading news distributionbusiness focussed on government and public interest sectors, for an initialcash consideration of US$19.0m plus performance-related consideration of up toUS$4.0m.
On 6 October 2006, the Group acquired ownership of The Care Show for ‚£0.4m plus performance-related consideration of ‚£0.3m.
On 6 October 2006, the Group also acquired ownership of the ATC (Air Traffic Control) Maastricht Conference for a total cash consideration of ‚£0.1m.
On 9 October 2006, the Group acquired The Austin Game Initiative LLC, a producer of conferences and events targeting game industry professionals for a total cash consideration of US$1.1m.
On 5 December 2006, the Group acquired ownership of the Software 2007 conference for an initial cash consideration of US$5.5m plus performance-related consideration of up to US$3.5m.
On 6 December 2006, the Group acquired OAG Holdings Limited ('OAG'), an information provider to the global aviation industry, for a total cash consideration of ‚£2.5m.
On 6 December 2006, the UBM's subsidiary, CNW Group Limited, acquired HealthResponse Communications, a news distribution business focused on the healthcareindustry, for cash consideration of CAD1.5m.On 15 December 2006, the Group acquired MediReach Healthcare Communication, aprovider of medical and pharmaceutical marketing consultancy services, for aninitial cash consideration of US$1.1m plus performance-related consideration ofup to US$2.75m.
On 21 December 2006, the Group acquired Aviation Industry Group Limited, an information provider to the global aviation industry with a portfolio of events, print titles and websites, for initial cash consideration of ‚£6.0m plus performance-related consideration of ‚£1.0m.
On 21 December 2006, the Group also acquired Customer Contact Center Standard for a total cash consideration of US$0.4m.
The Group acquired 100% of the voting rights in all cases where acquisitions involved the purchase of companies.
15. Acquisitions and disposals (continued)
The following table sets out the carrying amounts of the identifiable assetsand liabilities acquired and their fair value in respect of the MediaLive andCommonwealth acquisitions: Commonwealth MediaLive As restated 2006 2006 2006 2006 Fair Acquiree's Fair Acquiree's value carrying value carrying to Group amount to Group amount ‚£m ‚£m ‚£m ‚£m Intangible assets 9.5 - 23.2 - Property, plant and equipment 0.4 0.4 2.4 3.1 Cash and cash equivalents 3.3 3.3 0.3 0.3 Trade receivables and other 3.3 3.3 4.8 5.8 current assets 16.5 7.0 30.7 9.2 Trade payables and other current (8.2) (8.2) (2.2) (1.6)liabilities Deferred tax liability - - (8.1) - Non-current liabilities - - (7.7) (7.7) (8.2) (8.2) (18.0) (9.3) Fair value of net assets 8.3 12.7
Goodwill arising on acquisition 28.6 70.0
36.9 82.7 2006 2006 ‚£m ‚£m Consideration: Cash paid 36.9 82.7 Deferred consideration - - Total consideration 36.9 82.7 The following table sets out the carrying amounts of the identifiable assetsand liabilities acquired and their fair value in respect of the acquisition
ofother businesses during 2006: As restated 2006 2006 Fair Acquiree's Value Carrying to Group amount ‚£m ‚£m Intangible assets 16.8 2.4 Property, plant and equipment 1.6 5.3 Cash and cash equivalents 1.7 1.7 Inventories 0.1 0.1 Trade receivables and other current assets 5.2 5.2 25.4 14.7
Trade payables and other current liabilities (20.0) (16.1)
Deferred tax liability (3.0) - (23.0) (16.1) Fair value of net assets 2.4 Goodwill arising on acquisition 43.9 46.3 2006 ‚£m Consideration: Cash paid 38.6 Deferred consideration 7.7 Total consideration 46.3
The total consideration paid and payable on acquisitions is shown below:
2006 ‚£m Consideration: Cash paid 158.2 Deferred consideration 7.7 Total consideration 165.9 15. Acquisitions and disposals (continued)
As disclosed in note 1, the acquisition accounting adjustments have been finalised in relation to certain acquisitions which were made in 2006. The amounts disclosed above have been restated in accordance with IFRS 3 'Business Combinations'.
From the date of acquisition to 31 December 2007, the acquisitions made in 2007have contributed ‚£6.8m to the operating profit and ‚£38.9m to revenue of theGroup. If the acquisitions had taken place at the beginning of the year, theacquisitions would have contributed ‚£11.1m to the operating profit of theGroup, and ‚£61.9m to revenue.The goodwill of ‚£76.0m (2006: ‚£142.5m) recognised above relates to certainintangible assets that cannot be individually separated and reliably measuredfrom the acquiree due to their nature. These items include customer loyaltyand a skilled workforce.
The aggregate cash flow effect of acquisitions was as follows:
2007 2006 ‚£m ‚£m Net cash acquired with the subsidiaries (2.2)
(5.3)
Net cash in entity previously equity accounted (1.6)
-
Cash paid to acquire subsidiaries 78.0
158.2
Cash paid to acquire interests in associates and joint 2.7
- ventures
Deferred consideration on 2005 acquisitions 5.4
2.9
Deferred consideration on 2006 acquisitions 2.8
-
Net cash outflow on acquisitions 85.1 155.8
The Group paid ‚£8.2m of deferred consideration during 2007 in relation to the2005 acquisitions of ICMI, Tech Online, Light Reading Inc. and Black Hat andthe 2006 acquisitions of US Newswire, Shorecliff Communications LLC and the2007 Software conference. Under terms of the relevant sale and purchaseagreements, additional consideration was payable if certain revenue and profittargets were met.The Group paid ‚£2.9m of deferred consideration during 2006 in relation to the2005 acquisitions of ICMI, Tech Online and Light Reading Inc. Under terms ofthe relevant sale and purchase agreements, additional consideration was payableif certain revenue and profit targets were met.The intangible assets acquired as part of the acquisitions can be analysed asfollows: As restated 2007 2006 ‚£m ‚£m Brands 13.3 22.2
Customer contracts and relationships 9.9 15.2
Subscription lists - 0.6 Databases 1.4 11.5 Software 2.1 - Total 26.7 49.5 DisposalsOn 10 April 2006, the Group completed the sale of its Culverhouse Cross sitefor a total consideration of ‚£15.8m. A profit of ‚£4.3m arose on the sale, beingthe proceeds of disposal less the carrying value of the property and costs
ofdisposal.
16. Discontinued operations
The ‚£6.0m additional profit on prior year disposals represents additionalconsideration receivable from GfK following the settlement of certainoutstanding items relating to the sale of NOP World in 2005, together with arelease of amounts held for certain potential warranty and other claims whichare now no longer required. Weighted average no. of shares Earnings perEarnings per share for Earnings million sharediscontinued operations ‚£m pence Basic 6.0 254.0 2.4p Diluted 6.0 259.5 2.3p On 15 May 2006, the Group announced the sale of a portfolio of UK classifiedtitles which were reported within CMP Information for an aggregate cashconsideration of ‚£16.7m. After accruals for related costs of disposal a profitof ‚£8.0m arose on the sale of these publications.On 14 September 2006, the Group announced the sale of a portfolio of USentertainment titles which were reported within CMP Technology for an aggregatecash consideration of US$51.3m. After accruals for related costs of disposal aprofit of ‚£12.5m arose on the sale of these publications.
The results of the discontinued operations which have been included in the consolidated income statement were as follows:
UK US Classified Entertainment titles titles Total 2006 2006 2006 ‚£m ‚£m ‚£m Revenue 5.1 14.7 19.8 Operating expenses (4.4) (14.7) (19.1)
Profit before tax attributable to 0.7 -
0.7 discontinued operations Attributable taxation (0.2) - (0.2)
Profit after tax attributable to 0.5 - 0.5 discontinued operations Profit from disposal of 8.0 12.5 20.5 discontinued operations Attributable tax expense - - - Net profit attributable to 8.5 12.5 21.0 discontinued operations Weighted average no. of shares Earnings Earnings million per shareEarnings per share for ‚£m pencediscontinued operations Basic 21.0 278.7 7.5p Diluted 21.0 283.9 7.4p Included in operating expenses is employee costs ‚£7.0m, cost of inventoriesrecognised as an expense ‚£2.3m, auditors' remuneration ‚£0.1m and other cost ofsales and administration costs of ‚£9.7m. UK US classified Entertainment Total titles titles At date At date of At date of of disposal disposal disposal ‚£m ‚£m ‚£m Goodwill 3.3 3.3 6.6 Trade and other receivables - 5.2 5.2 Inventories - 3.0 3.0 3.3 11.5 14.8 Trade and other payables - (2.5) (2.5) - (2.5) (2.5) Net assets attributable to discontinued 3.3 9.0 12.3 operations 16. Discontinued operations (continued) UK US classified entertainment Total titles titles At date At date of At date of of disposal disposal disposal ‚£m ‚£m ‚£m
Net cash flows from operating activities 0.7 0.5
1.2
Net cash flows from investing activities - -
-
Net cash flows from financing activities - -
-
Net cash flows attributable to discontinued 0.7 0.5
1.2 operations
17. Post balance sheet events
On 3 January 2008, the Group announced the acquisition of Mass Event Labs for an initial cash consideration of $1.2m, with a further performance-related consideration of up to $3.8m payable over the next four years.
On 23 January 2008, the Group announced the acquisition of Think Service, Incfor an initial cash consideration of $24.5m, with a further performance-relatedconsideration of up to $5.0m payable over the next year.
On 8 February 2008, the Group announced the acquisition of Exposure Events UK Limited, for an initial cash consideration of ‚£0.6m, with a further performance-related consideration of up to ‚£1.9m payable over the next two years.
On 21 February 2008, the Group announced the acquisition of Vision Events for a total cash consideration of $11.4m.
On 26 February 2008, the Group announced the acquisition of AeroStrategy's aviation data business for an initial cash consideration of $0.9m, with a further performance-related consideration of up to $1.2m payable over the next three years.
UNITED BUSINESS MEDIA PLCRelated Shares:
UBM