1st Sep 2005 07:00
Tarsus Group PLC01 September 2005 1 September 2005 Tarsus Group plc Interim results for the six months to 30 June 2005 STRONG FIRST HALF PERFORMANCE Tarsus Group plc, the international business-to-business media group withinterests in exhibitions, conferences and related publishing is pleased toannounce record interim results for the six months to 30 June 2005. The figures are being presented in accordance with IFRS for the first time andcomparatives for 2004 have been restated where applicable. Further commentsrelating to the impact of IFRS are included in the notes to the financialstatements. Financial Highlights • Organic growth* in revenue of 32% • Profit before tax of £0.5 million (2004: loss £0.3 million) • Adjusted profits before tax* up £1.0 million to £0.8 million (2004: loss £0.2 million) • Basic EPS of 1.1p (2004: loss of 0.4p) • Adjusted EPS 1.3p* (2004: loss of 0.3p) • Continuing strong operating cash flow of £2.6 million (2004: £0.2 million) • Maiden interim dividend of 1.0 pence Glossary * Organic growth = excluding the impact of acquisitions made in the second half of 2004 and first half of 2005. Adjusted = adjusted to add back share option charges, amortisation andprofit before minority interests' share of losses.tax Adjusted EPS = calculated using profit after tax adjusted to add back share option charges, amortisation and minority interests' share of losses. Operational Highlights • Major US shows performed strongly and rebooking levels are high. • Continued improvement in French performance, aided by acquisitions. • Exhibition bookings for the year to date at 95% of our forecast. Neville Buch, Chairman of Tarsus said: "Our performance in the first half has been excellent and I am delighted that wehave moved the company into profit at the interim stage for the first time. Ourestablished products continue to grow well and their brand strength is enablingus to extend our reach into both closely related trade areas as well as newgeographic markets. This will provide a strong platform for growth in comingyears. The Group's main events take place in the second half of the year and withexhibition bookings for the year to date now standing at 95% of our forecast,revenue visibility is high. In Europe, I am especially pleased both by thecontinued progress in France and the very promising outlook for our major showof the year- Labelexpo Europe - in September. I remain confident that 2005 willbe a highly satisfactory year for Tarsus." For further information please contact: Tarsus Group plc: Douglas EmslieGroup Managing Director: Tel. 020 8846 2700 Media: Matthew MothMadano Partnership Tel. 020 7378 7033 Investor Relations Neville HarrisIRFocus Tel. 020 7378 7057 CHAIRMAN AND MANAGING DIRECTOR'S STATEMENT INTRODUCTION The first half of 2005 has witnessed another strong performance from Tarsus.Overall, our shows have performed well and we have continued to lay thefoundations for further profitable growth in the years ahead. Most pleasingly,for the first time in Tarsus' history, we have posted profits at the interimstage through a combination of underlying organic growth, new launches and afirst time contribution from the acquisitions we made in France in July 2004. RESULTS Group revenue, excluding our share of joint ventures, was £7.9 million (2004:£4.5 million) an increase of 76% with underlying organic growth of 32%. Profit before tax was £0.5 million (2004: loss of £0.3 million). Adjusted profitbefore tax was £0.8 million (2004: loss of £0.2 million) of which £0.4 millioncame from acquisitions. Basic earnings per share were 1.1p (2004: loss of 0.4p). Adjusted earnings pershare were 1.3p (2004: loss of 0.3p). Operating cash flow continued to be strong with £2.6 million generated in theperiod (2004: £0.2 million). Given the strong first half performance and our confidence in the medium-termoutlook for the Group, your directors are proposing an interim dividend for thefirst time in the Group's history, amounting to 1.0p per share. The interimdividend will be paid on 28 October 2005 to Shareholders on the Register ofMembers of the Company on 9 September 2005. As indicated at the time of our 2004full-year results, we expect the split between the interim and final dividendsto be approximately one third and two thirds respectively and we will continueto offer a scrip alternative. OPERATING REVIEW USA The US operations have again performed well with revenues up 20% at £2.4 millionand adjusted profit 44% ahead at £0.8 million. The February Off-Price showproduced revenues 10% higher than 2004 and since the period-end, the August showhas turned in another record performance with revenues 4% ahead of last year. A significant development for the Group saw the staging of two new exhibitionsin the packaging market - one we know well as it is closely allied to labelling.Our Packaging Services Expo in May in Chicago was a great success. Unusually fora brand new exhibition in a new sector, it was profitable at the operatinglevel. On the back of this success, we have launched a Packaging Containers andMaterials Expo which will run alongside the second Packaging Services Expo inthe US in May 2006 and be supported by no less than nine major tradeassociations. Consistent with our replication strategy, we will be holding aEuropean Packaging Services event in Amsterdam in June 2006. The second launchin this period, a smart labels event covering Radio Frequency Identificationtook place in Baltimore in late June and was also profitable on its firstedition. Europe Overall revenue rose by 70% to £5.6 million (2004: £3.3 million) and adjustedprofit (including joint ventures) was £0.2 million compared to a loss of £0.6million in 2004. Our French business continued the good progress seen in the second half of lastyear. We have made two sets of acquisitions in France since July 2004 and we areconfident that the increased scale of the business will be of great benefit inthe future. In July 2004 we acquired Solutions Linux and the 65% interest we did not alreadyown in SeCA. The French division's revenues increased from £2.2 million to £3.9million. Adjusted profit increased from £0.1 million to £0.8 million, of which£0.6 million was attributable to the Linux and SeCA acquisitions. The acquisitions of Heavent and Mobile Office were completed in June 2005.Mobile Office takes place in December and the second of Heavent's annual eventsis in November - both are in Paris. Bookings for both exhibitions are in linewith our expectations and as we commented at the time of acquisition, weanticipate that both will be earnings enhancing in 2005. Revenue from our United Kingdom based operations significantly improved from£1.0 million to £1.6 million with adjusted losses reduced by 23% to £0.4million. Healthy growth was seen in both our Labels and Labeling magazine andnew media products. Emerging markets Revenue grew from £0.2 million to £0.5 million with an adjusted loss of £0.2million (2004: adjusted profit of £0.1 million) reflecting the investment in thelaunch of the Beijing International Travel and Tourism Market (BITTM). Twoevents took place in the first half. The first was BITTM, the first exclusivelybusiness-to-business outbound travel show in China which was held in Beijing inApril. A significantly larger exhibition is expected in 2006 and we anticipatethe event will become profitable in 2007. The second, a Latin America LabelSummit, took place in Sao Paulo, Brazil and was profitable at its first edition. We are encouraged by the medium-term prospects in China and to underline Tarsus'commitment, we have recently opened an office there in Shanghai to help usextend our marketing to potential Chinese customers. In the second half, our largest show in these markets takes place, LabelexpoAsia in Shanghai, and it is on track to more than double the size of itsprevious edition. OUTLOOK A summary table of our major events is shown below : Date of next event Next event Prior eventMajor Events m2 sold m2 sold at date as at 1 Sept 05 of event Labelexpo Europe Sept 05 26,643 23,664Labelexpo Americas Sept 06 16,350 16,410Labelexpo Asia (China) Dec 05 5,426 2,892Off-Price Clothing Feb 06* Nil 9,365Off-Price Clothing Aug 05 10,022 9,734Educatec Nov 05 3,482 4,206Heavent Nov 05 5,764 5,612 * sales start in mid-September Our portfolio of major events is growing in both a logical and controlledfashion. We are expanding our unrivalled Labelexpo franchise into new andgrowing geographic areas. We are exporting our labels expertise into the closelyrelated packaging market where industrial innovation is driving demand for newproducts and information exchange. The Off-Price discount division continues togrow its core exhibition revenues while offering new opportunities in small,fast-growing related markets. Finally, we are providing critical mass to ourFrench business through attractively priced acquisitions in its core areas ofexpertise, which will provide a stronger platform for growth. Our businesses are performing well and remain extremely cash-generative. Ourconfidence for the future is underlined by the payment of a maiden interimdividend and we continue to expect 2005 to show substantial growth over 2004. Neville Buch Douglas Emslie Executive Chairman Group Managing Director CONSOLIDATED INCOME STATEMENT Notes Six months Six Year to months to 30 June to 30 31 June December 2005 2004 2004 £000's £000's £000's Revenue (including share of joint ventures) 3 8,404 5,474 15,655Less: share of revenue of joint ventures (478) (959) (1,007) Revenue (excluding joint ventures) 7,926 4,515 14,648 Operating costs (7,363) (4,859) (11,764) Group operating profit/(loss) 563 (344) 2,884 Share of profit of joint venture 116 308 256Interest receivable and other financial 1 2 5incomeInterest payable and other financial expenses (159) (252) (439) Profit/(loss) before taxation 521 (286) 2,706 Taxation (charge)/credit 8 (147) 40 (657) Profit/(loss) for the financial period 374 (246) 2,049 Profit/(loss) for the financial period 520 (196) 2,201attributable to equity shareholders of theparent company Loss for the financial period attributable to (146) (50) (152)minority interests 374 (246) 2,049 Notes Six months Six months Year to to 30 June to 30 June 31 December 2005 2004 2004 Earnings/(loss) per share (pence) 7 - basic 1.1 (0.4) 4.7- diluted 1.0 (0.4) 4.6 STATEMENT OF RECOGNISED INCOME AND EXPENSE Six months Six Year to months to 30 June to 30 31 June December 2005 2004 2004 £000's £000's £000's Profit/(loss) for the financial period 374 (246) 2,049Foreign exchange (losses)/gains on retranslation of (685) (248) 176overseas subsidiaries, including net gain/(loss) onhedge of net investment in foreign subsidiary Total recognised income and expense for the period (311) (494) 2,225 Attributable to:Equity holders of the parent 457 544 2,377Minority interest (146) (50) (152) Total recognised income and expense for the period (311) (494) 2,225 CONSOLIDATED BALANCE SHEET Notes 30 June 30 June 31 December 2005 2004 2004 £000's £000's £000's NON-CURRENT ASSETSIntangible assets 6 26,049 14,283 18,733Tangible assets 301 183 150Interests in joint venture 318 2,031 214Deferred tax assets 1,082 1,137 1,001 27,750 17,634 20,098 CURRENT ASSETSTrade and other receivables 8,304 5,427 5,672Assets for current tax - 120 -Cash and cash equivalents 890 585 932 9,194 6,132 6,604 CURRENT LIABILITIESTrade and other payables (18,738) (12,504) (12,352)Provisions (431) (621) (505)Financial liabilities (3,578) (4,961) (1,614)Liabilities for current tax (406) - (260) (23,153) (18,086) (14,731) NET CURRENT LIABILITIES (13,959) (11,954) (8,127) TOTAL ASSETS LESS CURRENT LIABILITIES 13,791 5,680 11,971 NON-CURRENT LIABILITIESOther payables (639) - (675)Financial liabilities (5,768) (7,979) (7,156) (6,407) (7,979) (7,831) NET ASSETS/(LIABILITIES) 7,384 (2,299) 4,140 EQUITYShare capital 9 2,656 2,248 2,473Share premium account 9 33,517 25,847 29,404Reserves 9 (28,609) (30,344) (27,388) Issued capital and reserves attributable to 7,564 (2,249) 4,489equity holders of the parent MINORITY INTEREST 9 (180) (50) (349) TOTAL EQUITY 7,384 (2,299) 4,140 CONSOLIDATED CASH FLOW STATEMENT Six months Six Year to months to 30 June to 30 31 June December 2005 2004 2004 £000's £000's £000's Cash flows from operating activitiesProfit/(loss) for the period 374 (246) 2,049Adjustments for:Depreciation 78 72 150Amortisation 17 - 8Loss on disposal of fixed assets 1 7 -Share option charge 99 56 136Share of operating profit in joint venture (116) (308) (256)Taxation charge/(credit) 147 (40) 657Net interest 158 250 434 Operating profit/(loss) before changes in working 758 (209) 3,178capital and provisions (Increase)/decrease in trade and other receivables (817) 490 594Increase/(decrease) in current trade and other 2,700 166 (840)payablesDecrease in provisions (83) (277) (393) Cash generated from operations 2,558 170 2,539 Interest paid (159) (188) (408)Income taxes received/(paid) 345 (30) (126) Net cash from operating activities 2,744 (48) 2,005 Cash flows from investing activitiesInterest received 1 2 5Proceeds from sale of tangible fixed assets 11 - -Acquisition of tangible fixed assets (177) (34) (64)Acquisition of subsidiary, net of cash acquired (2,331) (125) (934)Acquisition of intangible fixed assets - - (890)Dividends received 177 - -Deferred consideration paid (20) (141) (192) Net cash outflow from investing activities (2,339) (298) (2,075) Cash flows from financing activitiesRepayment of borrowings (1,927) (1,741) (4,594)Proceeds from the issue of share capital 45 - 3,912Cost of share issue (6) (5) (134)Dividends paid (862) (727) (727) Net cash outflow from financing activities (2,750) (2,473) (1,543) Net decrease in cash and cash equivalents (2,345) (2,819) (1,613)Opening cash and cash equivalents 932 2,545 2,545 Closing cash and cash equivalents (1,413) (274) 932 NOTES TO THE INTERIM FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES The comparative figures for the financial year ended 31 December 2004 are notthe Company's statutory accounts for that financial year. Those accounts, whichwere prepared under UK GAAP, have been reported on by the company's auditors anddelivered to the Registrar of Companies. The report of the auditors wasunqualified and did not include a statement under Section 237(2) or 237(3) ofthe Companies Act 1985. Copies of this document have been sent to Shareholders and are available forpublic inspection at the Company's registered office during normal businesshours. Tarsus Group plc (the "Company") is a company domiciled in the United Kingdom.The consolidated financial statements of the Company for the period ended 30June 2005 comprise the Company and its subsidiaries (together referred to as the"Group") and the Group's interest in jointly controlled entities. The financial statements were authorised for issue by the directors on 1September 2005. a) Statement of compliance EU law (IAS Regulation EC 1606/2002) requires that the next annual consolidatedfinancial statements of the company, for the year ending 31 December 2005, beprepared in accordance with International Financial Reporting Standards (IFRSs)adopted for use in the EU ("adopted IFRSs"). This interim financial information has been prepared on the basis of therecognition and measurement requirements of adopted IFRSs as at 30 June 2005that are effective (or available for early adoption) at 31 December 2005, theGroup's first annual reporting date at which it is required to use adopted IFRSs. Based on these adopted IFRSs, the directors have applied the accountingpolicies, as set out below, which they expect to apply when the first annualIFRS financial statements are prepared for the year ending 31 December 2005. However, the adopted IFRSs that will be effective (or available for earlyadoption) in the annual financial statements for the year ending 31 December2005 are still subject to change and to additional interpretations and thereforecannot be determined with certainty. Accordingly, the accounting policies forthat annual period will be determined finally only when the annual financialstatements are prepared for the year ending 31 December 2005. An explanation of how the transition to IFRS has affected the reported financialposition, financial performance and cash flows of the Group is provided in note10. b) Basis of preparation These financial statements are presented in sterling, rounded to the nearestthousand. They are prepared on the historical cost basis. The preparation of financial statements in conformity with IFRSs requiresmanagement to make judgements, estimates and assumptions that affect theapplication of policies and reported amounts of assets and liabilities, incomeand expenses. The estimates and associated assumptions are based on historicalexperience and various other factors that are believed to be reasonable underthe circumstances, the results of which form the basis of making the judgementsabout carrying values of assets and liabilities that are not readily apparentfrom other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in the period in which theestimate is revised if the revision affects only that period, or in the periodof the revision and future periods if the revision affects both current andfuture periods. The accounting policies set out below have been applied consistently in allperiods presented in these consolidated financial statements and in preparing anopening IFRS balance sheet at 1 January 2004 for the purposes of the transitionto IFRS. c) Basis of consolidation i) Subsidiaries Subsidiaries are those entities controlled by the Company. Control exists whenthe Company has the power, directly or indirectly, to govern the financial andoperating policies of an entity so as to obtain benefits from its activities. Inassessing control, potential voting rights that presently are exercisable orconvertible are taken into account. The financial statements of subsidiaries areincluded in the consolidated financial statements from the date controlcommences until the date that control ceases. ii) Joint ventures Joint ventures are those entities over whose activities the Group has jointcontrol, established by contractual agreement. The consolidated financialstatements include the investment in joint ventures, stated at cost, plus theGroup's share of retained post acquisition profits and other changes in netassets. Joint ventures are equity accounted from the date that joint controlcommences until the date that the joint control ceases. iii) Transactions eliminated on consolidation Intragroup balances and any unrealised gains and losses or income andexpenditure arising from intragroup transactions are eliminated in preparing theconsolidated financial statements. Unrealised gains arising from transactionswith jointly controlled entities are eliminated to the extent of the Group'sinterest in the entity. d) Foreign currency i) Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rateruling at the date of the transaction. Monetary assets and liabilitiesdenominated in foreign currencies at the balance sheet date are translated intosterling at the foreign exchange rate ruling at that date. Foreign exchangedifferences arising on translation are recognised in the income statement.Non-monetary assets and liabilities that are measured in terms of historicalcost in a foreign currency are translated using the exchange rate at the date ofthe transaction. Non-monetary assets and liabilities denominated in foreigncurrencies that are stated at fair value are translated to sterling at foreignexchange rates ruling at the dates the fair value was determined. ii) Financial statements of foreign operations The assets and liabilities of foreign operations, including goodwill and fairvalue adjustments arising on consolidation, are translated to sterling atforeign exchange rates ruling at the balance sheet date. The revenues andexpenses of foreign operations are translated into sterling at the weightedaverage rate for the year. Foreign exchange differences arising on retranslationare recognised directly in a separate component of equity. e) Derivative financial instruments The Group does not enter into derivative financial instruments and has nofinancial liabilities other than creditors and loans. Financial assets andliabilities are recognised and cease to be recognised, on the basis of when therelated legal titles or obligations pass to or from the Group. Financial assetsare shown at the lower of cost or fair value. Fair value is determined byreference to the market value of the asset or liability. f) Hedging Hedge of net investment in foreign operation The portion of the gain or loss on an instrument used to hedge a net investmentin a foreign operation that is determined to be an effective hedge is taken tothe translation reserve. The ineffective portion is recognised immediately inprofit or loss. Any exchange differences arising from the translation of the netinvestment which were previously taken to reserves are released into the incomestatement upon disposal of the investment. g) Property, plant and equipment i) Owned assets Items of property, plant and equipment are stated at cost or deemed cost lessaccumulated depreciation (see below) and impairment losses (see accountingpolicy j). ii) Depreciation Depreciation is charged to the income statement on a straight-line basis overthe estimated useful lives of items of property, plant and equipment. Theestimated useful lives are as follows: Computer equipment 3 years Fixtures and fittings 4-5 years h) Intangible assets i) Goodwill All business combinations are accounted for by applying the purchase method.Goodwill represents amounts arising on acquisition of subsidiaries and jointventures. In respect of business acquisitions that have occurred since 1 January2004, goodwill represents the difference between the cost of acquisition and thefair value of the net identifiable assets acquired. In respect of acquisitions prior to this date, goodwill is included on the basisof its deemed cost, which represents the amount recorded under previous GAAP.The classification and accounting treatment of business combinations thatoccurred prior to 1 January 2004 has not been reconsidered in preparing theGroup's opening IFRS balance sheet as at 1 January 2004 (see note 10). Goodwill is stated at cost less any accumulated impairment losses. Goodwill isallocated to cash-generating units and is no longer amortised but is testedannually for impairment (see accounting policy j). ii) Other intangible assets Other intangible assets that are acquired by the Group are stated at cost lessaccumulated amortisation (see below) and impairment losses (see accountingpolicy j). Expenditure on internally generated goodwill and brands is recognisedin the income statement as an expense incurred. iii) Subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only whenit increases the future economic benefits embodied in the specific asset towhich it relates. All other expenditure is expensed as incurred. iv) Amortisation Amortisation is charged to the income statement on a straight line basis overthe estimated useful lives of intangible assets unless such lives areindefinite. Goodwill and intangible assets with an indefinite useful life aresystematically tested for impairment at each balance sheet date. Otherintangible assets are amortised from the date they are available for use. Theestimated useful lives are determined separately for each acquisition but do notexceed 20 years. j) Impairment The carrying amounts of the Group's assets, other than deferred tax assets (seeaccounting policy w), are reviewed at each interim date (30 June) to determinewhether there is any indication of impairment. If any such indication exists,the asset's recoverable amount is estimated. An impairment loss is recognisedwhenever the carrying amount of an asset or its cash-generating unit exceeds itsrecoverable amount. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocatedfirst to reduce the carrying amount of any goodwill allocated to cash-generatingunits (groups of units) and then, to reduce the carrying amount of the otherassets in the unit (group of units) on a pro-rata basis. Goodwill was tested for impairment at 1 January 2004, the date of transition toIFRS, even though no indication of impairment existed. i) Calculation of recoverable amount The recoverable amount is the greater of the selling price and value in use. Inassessing value in use, the estimated future cash flows are discounted to theirpresent value using a pre-tax discount rate that reflects current marketassessments of the time value of money and the risks specific to the asset. Foran asset that does not generate largely independent cash inflows, therecoverable amount is determined for the cash-generating unit to which the assetbelongs. ii) Reversals of impairment An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is reversed if there has been achange in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carryingamount does not exceed the carrying amount that would have been determined, netof depreciation or amortisation, if no impairment loss had been recognised. k) Investments Investments in subsidiary undertakings included in the Company's balance sheetare stated at cost less any impairment in the value of these subsidiaryundertakings. l) Trade and other receivables Trade and other receivables are stated at their cost less impairment losses (seeaccounting policy j). m) Cash and cash equivalents Cash and cash equivalents comprises cash balances and call deposits. Bankoverdrafts that are repayable on demand and form an integral part of the Group'scash management are included as a component of cash and cash equivalents for thepurpose of the statement of cash flows. n) Share capital Dividends Dividends are recognised as a liability in the period in which they becomelegally payable. o) Interest-bearing borrowings Interest-bearing borrowings are recognised initially at cost, less attributabletransaction costs. Subsequent to initial recognition, interest-bearingborrowings are stated at amortised cost with any difference between cost andredemption value being recognised in the income statement over the period of theborrowings on an effective interest basis. p) Employee benefits Share based payment transactions The share option programme allows Group employees to acquire shares of theCompany. The fair value of options granted is recognised as an employee expensewithin the income statement with an equal credit to the profit and loss reserve.The fair value is measured at grant date and spread over the period during whichthe employees become unconditionally entitled to the options. The fair value ofthe options granted is measured using the Binomial Option Pricing Model, takinginto account the terms and conditions upon which the options were granted. Theamount recognised as an expense is adjusted to reflect the actual number ofshare options that vest except where forfeiture is only due to share prices notachieving the threshold for vesting. q) Provisions A provision is recognised in the balance sheet when the Group has a presentlegal or constructive obligation as a result of a past event, and it is probablethat an outflow of economic benefits will be required to settle the obligation.If the effect is material, provisions are determined by discounting the expectedfuture cash flows at a pre-tax rate that reflects current market assessments ofthe time value of money and, where appropriate, the risks specific to theliability. i) Restructuring A provision for restructuring is recognised when the Group has approved adetailed and formal restructuring plan, and the restructuring has eithercommenced or has been announced publicly. Future operating costs are notprovided for. ii) Onerous contracts A provision for onerous contracts is recognised when the expected benefits to bederived by the Group from a contract are lower than the unavoidable cost ofmeeting its obligations under the contract. r) Trade and other payables Trade and other payables are stated at cost. s) Deferred consideration Where a portion of consideration for an acquisition is deferred to a date morethan one year after the end of the current financial year, that portion ofdeferred consideration is discounted to its present value. The amount, by whichthat portion of deferred consideration is discounted, is charged to interestpayable. The deferred consideration is based on the directors' current estimateof the final consideration payable. t) Revenue Revenue represents amounts invoiced in respect of completed exhibitions andconferences, together with related publishing revenue and new media revenues,exclusive of value added tax. u) Revenue and cost recognition on events: i) Traditional media Profit is recognised when an event is completed. As such, billings and cashreceived in advance and directly related costs arising in the year relating touncompleted and future events are deferred until the events are completed. Theamounts so deferred are included in the balance sheet as deferred income orprepaid event costs. Losses are recognised in the profit and loss account in theperiod the loss is first anticipated. ii) New media The revenue streams that relate to a period of time have an ongoing obligationand, therefore, are recognised over the period to which they relate. Thoserevenue streams that have no ongoing obligation are recognised at the invoicedate. v) Expenses i) Operating lease payments Payments made under operating leases are recognised in the income statement on astraight-line basis over the term of the lease. Lease incentives received arerecognised in the income statement as an integral part of the total leaseexpense. ii) Net financing costs Net financing costs comprise interest payable on borrowings calculated using theeffective interest rate method, interest receivable on funds invested, dividendincome, foreign exchange gains and losses, and gains and losses on hedginginstruments that are recognised in the income statement (see accounting policyf). Interest income is recognised in the income statement as it accrues, taking intoaccount the effective yield on the asset. Dividend income is recognised in theincome statement on the date that the dividend is declared. w) Income tax Income tax on the profit or loss for the year comprises current and deferredtax. Income tax is recognised in the income statement except to the extent thatit relates to items recognised directly to equity, in which case it isrecognised in equity. Current tax is the expected tax payable on the taxable income for the year,using tax rates enacted or substantially enacted at the balance sheet date, andany tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing fortemporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts for taxation purposes. Thefollowing temporary differences are not provided for: goodwill not deductiblefor tax purposes, the initial recognition of assets or liabilities that affectneither accounting nor taxable profit and the differences relating toinvestments in subsidiaries to the extent that they will probably not reverse inthe foreseeable future. The amount of deferred tax provided is based on theexpected manner of realisation or settlement of the carrying amount of assetsand liabilities, using tax enacted or substantively enacted at the balance sheetdate. A deferred tax asset is recognised only to the extent that it is probable thatfuture taxable profits will be available against which the asset can beutilised. Deferred tax assets are reduced to the extent that it is no longerprobable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends arerecognised at the same time as the liability to pay the related dividend. x) Segment reporting A segment is a distinguishable component of the Group that is engaged either inproviding products or services (business segment), or in providing products orservices within a particular economic environment (geographical segment), whichis subject to risks and rewards that are different from those of other segments. 2. PROFIT AND LOSS ANALYSIS Six months Six months Year to to 30 June to 30 June 31 December 2004 2005 2004 £'000 £'000 £'000 Profit/(loss) for the financial period after 374 ( 246) 2,049taxationAdd back:Taxation charge/(credit) 147 ( 40) 657 521 (286) 2,706Add back:Minority's share of losses 146 50 152Charge for share options 99 56 136Amortisation charge 17 - 8 Adjusted profit/(loss) before tax 783 ( 180) 3,002 3. SEGMENTAL ANALYSIS Primary segment As at 30 June 2005, the Group is organised into three main business segments -Europe, USA and Emerging Markets. These segments are the basis on which theGroup reports its primary segment information. The main activities of all segments are the production of exhibitions, websites,directories & magazines. The following table sets out the revenue and profit information and certainassets and liability information for the Group's geographical segments: Six months ended 30 June 2005 Europe USA Emerging Financing Group £'000 £'000 Markets costs £'000 £'000 £'000 Revenue 5,577 2,358 469 - 8,404 (Loss)/profit from operating (4) 737 (170) - 563activitiesNet financing costs - - - (158) (158)Share of profit from joint venture 116 - - - 116Add back minority interest 76 70 - - 146 Profit/(loss) before tax after 188 807 (170) (158) 667minority interest Amortisation of intangible assets 17Cost of share options 99 Adjusted profit before tax* 783 Six months ended 30 June 2004 Europe USA Emerging Financing Group £'000 £'000 Markets costs £'000 £'000 £'000 Revenue 3,289 1,963 223 - 5,475 (Loss)/profit from operating (951) 512 95 - (344)activitiesNet financing costs - - - (250) (250)Share of profit from joint venture 308 - - - 308Add back minority interest - 50 - - 50 (Loss)/profit before tax after (643) 562 95 (250) (236)minority interest Cost of share options 56 Adjusted loss before tax* (180) Year ended 31 December 2004 Europe USA Emerging Financing Group £'000 £'000 Markets costs £'000 £'000 £'000 Revenue 8,302 6,975 378 - 15,655 (Loss)/profit from operating (707) 3,497 94 - 2,884activitiesNet financing costs - - - (434) (434)Share of profit from joint venture 256 - - - 256Add back minority interest 49 103 - - 152 (Loss)/profit before tax after (402) 3,600 94 (434) 2,858minority interest Amortisation of intangible assets 8 Cost of share options 136 Adjusted profit before tax* 3,002 * Adjusted profit/(loss) before tax represents Group profit before tax includingfinancing costs, share of profit from joint venture and excluding amortisationof intangible assets, cost of share options and minority share of losses. Thisis the same measure as given in note 2. 4. REVENUE AND COST RECOGNITION Revenue and cost on events are recognised when an event is completed. Most ofthe Group's major 2005 exhibitions take place in the second half of the year.Revenue for all future events of £9,729,000 is included in current liabilities,£8,965,000 of which relates to events to occur in 2005 and the balance to eventsin 2006. 5. DIVIDENDS Six months Six months Year to to 30 June to 30 June 31 December 2005 2004 2004 £000's £000's £000's Dividend paid in the period 1,236 982 982 Dividend proposed in the period 531 - 1,236 6. INTANGIBLE FIXED ASSETS Total £000 Cost:At 1 January 2005 18,741Additions 7,713Foreign exchange adjustments (329)Adjustments for deferred consideration (51) At 30 June 2005 26,074 Amortisation:At 1 January 2005 8Amortisation charge 17 At 30 June 2005 25 Net book value at 30 June 2005 26,049 Net book value at 31 December 2004 18,733 7. EARNINGS/(LOSS) PER SHARE Six months Six months Year to to 30 June to 30 June 31 December 2005 2004 2004 Adjusted earnings/(loss) per share (pence) 1.3 (0.3) 5.0 The adjusted earnings per share is based on profits after tax, including jointventures, before amortisation of intangibles and charge for share options, of£635,705 (June 2004: £139,658 loss; December 2004: £2,344,512 profit) and49,649,062 (June 2004: 44,787,536; December 2004: 46,887,267) ordinary sharesbeing the weighted average number of shares in issue during the period. Basic earnings per share The basic earnings per share has been calculated on profits after taxattributable to ordinary shareholders for the six months of £520,303 (June 2004:£195,650 loss; December 2004: £2,201,000 profit) and 49,649,062 (June 2004:44,787,536; December 2004: 46,887,267) ordinary shares being the weightedaverage number of shares in issue during the period calculated as follows: Weighted average number of ordinary shares (diluted): Six months Six months Year to to 30 June to 30 June 31 December 2005 2004 2004 Opening weighted average number of ordinary shares 49,649,062 44,787,536 46,887,267Effect of share options 2,072,852 942,632 1,110,857 Closing weighted average number of ordinary shares (diluted) 51,721,914 45,730,168 47,998,124 Actual shares in issue at 1 September 2005: 53,114,784 8. TAXATION The taxation charge for the six months ended 30 June 2005 is based on theestimated effective tax rate of 22% for the year ending 31 December 2005. 9. RECONCILIATION OF MOVEMENTS IN EQUITY Share Share Minority Capital Profit and Foreign Total capital premium interest redemption loss exchange account reserve account reserves £000's £000's £000's £000's £000's £000's £000'sAs at 30 June 2005:Profit attributable to shareholders - - - - 520 - 520Scrip dividend 13 356 - - - - 369New share capital subscribed 170 3,757 - - - - 3,927Recognised foreign exchange lossesfor the period - - - - - (685) (685)Share option charge - - - - 99 - 99Movement in deferred tax - - - - 81 - 81Dividend declared - - - - (1,236) - (1,236)Acquisition of minority's share of subsidiary - - 315 - - - 315Minority interest loss for the period - - (146) - - - (146) Net change in shareholders funds 183 4,113 169 - (536) (685) 3,244 Opening equity shareholders funds 2,473 29,404 (349) (443) (26,601) (344) 4,140 Closing equity shareholders funds 2,656 33,517 (180) (443) (27,137) (1,029) 7,384 As at 31 December 2004:Profit attributable to shareholders - - - - 2,201 - 2,201Scrip dividend 13 237 - - - - 250New share capital subscribed 225 3,557 - - - - 3,782Recognised foreign exchange gainsfor the period - - - - - 176 176Share option charge - - - - 136 - 136Movement in deferred tax - - - - 105 - 105Dividend declared - - - - (982) - (982)Minority's share of losses on acquisition of subsidiary - - (197) - - - (197)Minority interest loss for the period - - (152) - - - (152) Net change in shareholders (deficit)/funds 238 3,794 (349) - 1,460 176 5,319 Opening equity shareholders deficit 2,235 25,610 - (443) (28,061) (520) (1,179) Closing equity shareholders funds 2,473 29,404 (349) (443) (26,601) (344) 4,140 As at 30 June 2004:Loss attributable to shareholders - - - - (196) - (196)Scrip dividend 13 237 - - - - 250Recognised foreign exchange lossesfor the period - - - - - (248) (248)Share option charge - - - - 56 - 56Movement in deferred tax - - - - 50 - 50Dividend declared - - - - (982) - (982)Minority interest loss for the period - - (50) - - - (50) Net change in shareholders deficit 13 237 (50) - (1,072) (248) (1,120) Opening equity shareholders deficit 2,235 25,610 - (443) (28,061) (520) (1,179)Closing equity shareholders deficit 2,248 25,847 (50) (443) (29,133) (768) (2,299) 10. EXPLANATION OF TRANSITION TO IFRS In the current year, the Group has adopted International Financial Reporting Standards "IFRS", for the first time. The Group has applied IFRS 1 First Time Adoption of IFRS to provide a startingpoint for reporting under IFRS. The date of transition to IFRS, was selected as1 January 2004 and all comparative information in these financial statements hasbeen restated to reflect the Group's adoption of IFRS. As required under IFRS the Group sets out below a reconciliation of equity andprofit and loss for the 6 months to 30 June 2004, the year to 31 December 2004and an opening equity reconciliation as at 1 January 2004, along with an explanation of why those changes arise. Opening equity reconciliation £ 000's Opening equity under UK GAAP at 1 January 2004 (2,626)IAS 12 adjustment for deferred tax on share options 289IAS 12 adjustment for deferred tax resulting from timing differences 176Reverse 2003 final dividend accrual 982 Restated equity under IFRS at 1 January 2004 (1,179) Reconciliation of loss for the six months ended 30 June 2004: Notes As reported Effects of Reported under transition under UK GAAP To IFRS IFRS £000's £000's £000's Revenue (including share of joint 2 5,299 175 5,474ventures)Less: share of revenue of joint ventures (959) - (959) Revenue (excluding joint ventures) 4,340 175 4,515 Operating costs 1,2,5 (5,100) 241 (4,859) Group operating loss (760) 416 (344) Share of profit of joint ventures 1,4 269 39 308Interest receivable and other financial 2 - 2incomeInterest payable and other financial (252) - (252)expenses Loss before taxation (741) 455 (286) Taxation credit 40 - 40 Loss for the financial period (701) 455 (246) Loss for the financial period attributable (701) 505 (196)to equity shareholders of the parentcompany Loss for the financial period attributable 2 - (50) (50)to minority interests (701) 455 (246) Dividend paid in the period 7 - (982) (982) Reconciliation of equity as at 30 June 2004: Notes As reported Effects of Reported under transition under UK GAAP To IFRS IFRS £000's £000's £000's NON-CURRENT ASSETSIntangible assets 1,2,3 13,761 522 14,283Tangible assets 183 - 183Interests in joint venture 1 1,992 39 2,031Deferred tax assets 6 622 515 1,137 16,558 1,076 17,634 CURRENT ASSETSTrade and other receivables 2 5,476 (49) 5,427Assets for current tax 120 - 120Cash and cash equivalents 585 - 585 6,181 (49) 6,132 CURRENT LIABILITIESTrade and other payables (11,592) (912) (12,504)Provisions (621) - (621)Financial liabilities (4,961) - (4,961) 2 (17,174) (912) (18,086) NET CURRENT LIABILITIES (10,993) (961) (11,954) TOTAL ASSETS LESS CURRENT LIABILITIES 5,565 115 5,680 NON-CURRENT LIABILITIESOther payables (911) 911 -Financial liabilities (7,979) - (7,979) (8,890) 911 (7,979) NET LIABILITIES (3,325) 1,026 (2,299) EQUITY Share capital 2,248 - 2,248Share premium account 25,847 - 25,847Reserves (31,420) 1,076 (30,344) Issued capital and reserves attributable (3,325) 1,076 (2,249)to equity holders of the parent MINORITY INTEREST 2 - (50) (50) TOTAL EQUITY (3,325) 1,026 (2,299) Reconciliation of profit for the year ended 31 December 2004 Notes As reported Effects of Reported under transition under UK GAAP To IFRS IFRS £000's £000's £000's Revenue (including share of joint 2 15,491 164 15,655ventures)Less: share of revenue of joint ventures (1,007) - (1,007) Revenue (excluding joint ventures) 14,484 164 14,648 Operating costs 1,2,5 (12,462) 698 (11,764) Group operating profit 2,022 862 2,884 Share of profit of joint venture 1,4 247 9 256Interest receivable and other financial 5 - 5incomeInterest payable and other financial (439) - (439)expenses Profit before taxation 1,835 871 2,706 Taxation charge (657) - (657) Profit for the financial period 1,178 871 2,049 Profit for the financial period 1,178 1,023 2,201attributable to equity shareholders of theparent company Loss for the financial period attributable 2 - (152) (152)to minority interests 1,178 871 2,049 Dividend paid in the period 7 (1,236) 254 (982) Reconciliation of equity as at 31 December 2004: Notes As reported Effects of Reported under Transition under UK GAAP To IFRS IFRS £000's £000's £000's NON-CURRENT ASSETSIntangible assets 1,2,3 17,516 1,217 18,733Tangible assets 147 3 150Investments 2 491 (491) -Related Shares:
Tarsus