27th Jul 2005 06:00
For immediate release 27th July 2005 Interim Results For the Six Months ended 30 June 2005 POSITIONING for GROWTH STRONG FIRST HALF PERFORMANCE Financial Highlights for Six Months Ended 30 June 2005Headline ResultsRevenue Up 19.7 per cent to ‚£336.6m (‚£281.1m)Operating profit* Up 23.3 per cent to ‚£76.1m (‚£61.7m)Profit before tax* Up 30.1 per cent to ‚£81.3m (‚£62.5m)EPS** Up 50.4 per cent to 21.2p (14.1p)Dividend Up 10.2 per cent to 4.00p (3.63p)Note: the net impact of IFRS accounting standards over UK GAAP has been toincrease these key 2005 indicators as follows: operating profit ‚£0.3m, profitbefore tax ‚£1.1m, EPS 1.7p.- Acquisitions performing ahead of plan- ‚£67m invested in acquisitions in 2005- 38 organic new product initiatives, 20 underperforming products closed- ‚£418m proceeds from disposals, ‚£267m profit on disposals- ‚£311.6m of capital distributed to investors via special dividendand buyback- Net debt of ‚£(0.2)m at period end* Before amortisation of intangible assets, non-recurring items and including discontinued operations** Before amortisation of intangible assets, non-recurring items,other financial income other than interest and including discontinuedoperationsStatutory ResultsRevenue Up 19.7 per cent to ‚£336.6m (‚£281.1m)Operating profit Up 33.0 per cent to ‚£66.5m (‚£50.0m)Profit before tax Up 613.8 per cent to ‚£362.6m (‚£50.8m)EPS Up 653.2 per cent to 106.2p (14.1p)Dividend Up 10.2 per cent to 4.00 (3.63p)David Levin, Chief Executive of United Business Media, said"UBM delivered a strong overall performance in the first half of 2005,including the first time impact of the mid 2004 acquisition of CMPMedica.CMP Asia and PR Newswire both performed well - at both the revenue andoperating profit levels. CMPi (excluding UAP) delivered a solid revenue growthperformance and investment in new product development was stepped up. UAP sawsome impact from the slowdown in the UK markets but achieved positive momentumin online. Integration of these CMPi and UAP businesses is progressing wellwith good prospects across the UAP titles being brought into CMPi. CMPMedica'sperformance was split by geography, with strength in its important Frenchmarket but softness in Asia-Pacific trade press. CMP Media saw little changein its recent performance trends.In order to focus the business and to crystallise value created for investors,UBM has either sold, or agreed to sell, three major assets in 2005 - and weare working on the sale of our UK auto titles. This makes UBM an increasinglyfocused business. UBM is now a leading global provider of news distributionand specialist information services for the professional and enthusiastmarkets, actively bringing buyers and sellers together across targeted mediachannels - publications, events and online. Following the disposals UBM hasreturned over ‚£310m of capital to shareholders - via a special dividend andalso an open market buyback programme.In 2005 UBM has invested ‚£67m in seven acquisitions, building the business bysignificantly strengthening positions in attractive end markets. Integrationof the acquisitions is progressing well and they are performing according toplan. Internally 38 new organic product development initiatives are underwayand 20 underperforming products have been closed down. The business has beenfurther reshaped by changes in the management reporting structure designed toalign the structure of UBM's management and UBM's cost base with thegeographical needs of customers and their marketplaces.UBM is a great business with many strong market positions in specificverticals. We are steadily working at making those positions even stronger. Inmy first four months I have been directly engaging with many of our majorcustomers. I have been encouraged both by the strength of the existingrelationships and also by the evident potential UBM has to add more value.OutlookThe overall operating profit performance outlook for the second half isbroadly in line with the first half - subject to the first half weighting ofCMPMedica. Solid booking levels and new investment are encouraging us toexpect higher levels of underlying revenue growth. This will be offset at theoperating profit level by measured increases in development spend - around theupper end of the ‚£5m to ‚£10m previously announced for 2005.While print remains challenged, the events businesses in particular havestrong forward bookings and are looking healthy, and CME bookings haveimproved in the US. Online revenue is set to continue to increase."SUMMARY GROUP INCOME STATEMENTThe income statement set out below re-presents the group's full incomestatement (which accompanies this summary) in order to show more clearly theresults from operations. Six Months Ended 30 June 2005 2004 ‚£m ‚£m % Revenue 336.6 281.1 19.7 Adjusted group operating profit* 76.1 61.7 23.3 Net interest income 6.5 3.2 103.1Other financing costs - pension (1.3) (2.4)schemes (45.8) Adjusted profit before tax** 81.3 62.5 30.1Net financing income other than 23.5 -interest - Profit before non recurring items 104.8 62.5and tax* 67.7 Amortisation of intangible assets (4.6) - -Non-recurring items 262.2 - -Share of taxation of JV's and 4.9 (0.7)associates -Operating profit on discontinued (4.7) (11.0)operations - Profit/(loss) before tax 362.6 50.8 614.8Taxation (12.7) (11.4) (11.4)Taxation relating to (1.2) -non-recurring items - Profit after tax - Continuing 348.7 39.4activitiesDiscontinued operations 3.8 8.7 Profit after tax 352.5 48.1 633.9Minority interest (0.9) (0.9) -Retained profit for the period 351.6 47.2 646.0 Dividends paid in period 326.6 19.5 EPS ** (pence) 21.2 14.1 50.4 Basic EPS (pence) 106.2 14.1 * Before amortisation of intangible assets, non-recurring items and including discontinued operations** Before amortisation of intangible assets, non-recurring items,other financial income other than interest and including discontinuedoperationsCONTENTS1. Summary of interim financial results for 20052. Divisional commentary3. Dividend4. Balance sheets and cash conversion5. Pensions6. Tax7. Interest8. Non-recurring items9. IFRS1. SUMMARY OF INTERIM FINANCIAL RESULTS FOR 2005Reflecting new management structure - continuing businesses only Revenue Adjusted Group Operating Profit* Six months to 30 June Six months to 30 June (‚£m) (‚£m) 2005 2004 Change Underlying 2005 2004 Change Underlying (%) #(%) (%) #(%)CMP Media 103.9 110.6 (6.1) (3.4) 12.9 14.3 (9.8) (8.2)CMPMedica 54.7 - - - 13.5 - - -CMP Asia 22.0 20.1 9.5 10.1 6.3 5.7 10.5 7.5CMPi 104.7 102.7 1.9 0.7 21.0 24.2 (13.2) (13.0)PR Newswire 51.3 47.7 7.5 9.6 14.3 12.4 15.3 21.5Corporate+ - - - - 3.4 (5.9) - -Total 336.6 281.1 19.7 1.2 71.4 50.7 40.8 16.5 # Underlying: adjusted for the estimated effects of acquisitions, foreign exchange and biennial events* before amortisation of intangible assets, non-recurring items and including discontinued operations+ Corporate operations comprises net central operating costs, together with those equity accounted investments which do not form part of one of the group's operating divisions.Underlying revenue was up 1.2 per cent - after adjusting for theeffects of acquisitions, foreign exchange and biennials. Group revenue in 2005was increased by ‚£61.1m of revenue from acquisitions in 2004 and 2005. Theweakness of the US dollar has a direct translation impact - with approximatelytwo thirds of UBM revenue reported locally in US dollars, group revenue wasreduced by ‚£3.7m as a result of foreign exchange.The average rate of $:‚£ exchange in the first six months of 2005was 1.87 (1.82), together with the effects of other currency movements thisreduced operating profit in the first half of 2005 by ‚£0.7m. A 1 cent movementin the US dollar against sterling is approximately equivalent to a move inprofit of around ‚£200,000 to ‚£300,000 over the full year.2. DIVISIONAL COMMENTARYNote: As previously notified the amounts shown against CMP Media, CMP Asia andCMP Information in the table above have been restated to reflect theintra-group transfer of United Entertainment Media in the US from CMPInformation to CMP Media, the transfer of CMP Princeton from CMP Asia to CMPMedia, and the transfer of United Advertising Publications to CMP Information.The amounts transferred are stated in detail in the business segments sectionof the accompanying financial statements.PR NEWSWIREPR Newswire delivered another strong performance in all main areas ofoperation. Underlying revenue was up 9.6 per cent, underlying operating profitwas up 21.5 per cent, with an overall operating margin up from 26.0 per centto 27.9 per cent. The core US messaging business achieved a strong yieldincrease on steady volume levels. Revenue from new and recent developments inthe media intelligence product range was up over 22 per cent. Businesses inEurope and Asia achieved 17.8 per cent revenue growth with the Europeanoperating margin up to 20.8 per cent and a total Rest of the World operatingprofit of ‚£1.1m (‚£0.3m loss in the same period in 2004).CMP INFORMATIONThe UAP and CMPi businesses were combined during the first half of 2005. TheUK Auto businesses have been put up for sale with the remaining UAP businessesbeing fully integrated into CMPi. Underlying revenue of the combined entitywas up 0.7 per cent reflecting some softness in the UK markets but also stronggrowth in online revenues. Overall underlying operating profit was down 13.0per cent, also reflecting increased investment in new product development(this increased spend is not backed out in the underlying calculation). The"old" CMPi again grew underlying revenue - by a solid 3.8 per cent.The 2005 acquisitions of ABI and the Publican titles are performing in linewith business case.CMP MEDIAIn dollar terms technology revenues were down 1.6 per cent reflecting thecontinuation of recent trends across the different media platforms - withprint declining and with events and online both strong.Although the healthcare business was weak, with dollar revenuesdown 13.0 per cent, the medical education businesses customers have nowrestructured themselves to address US regulatory concerns.The US based entertainment businesses - formerly part of CMPi -have now been integrated into CMP Media and have delivered steady revenuelevels compared to the same period in 2004.The 8.2 per cent decline in underlying operating profits across CMP Medialargely reflected the previously announced increased level of investment innew product development - in particular in online. Overall new cost savings ofover $7m were achieved in controllable areas such as staffing but these wereoffset to some extent by incremental increases in postage and paper costs.CMPMEDICACMPMedica was acquired on 30 July 2004 with the acquisition of additionalMediMedia assets completed on 31 March 2005. The 2004 acquisition has beentrading broadly in line with its acquisition case. Its performance againreflects a strong seasonal weighting towards the first half of the year. Thedrug information products have performed well but there was some softness inthe Asia-Pacific trade press markets.The 2005 acquisition is proceeding according to plan - with the integration ofthe French medical education and communication business - including tradepress titles - Quotidien Du Medecin and Le Generaliste -well underway.CMP ASIAThe first half of 2005 saw CMP Asia deliver another strong performance fromthis exhibitions based business. Underlying revenue was up 10.1 per cent, withunderlying operating profits up 7.5 per cent. Operating margins were againhigh at 28.6 per cent (28.4 per cent) and the steady programme of new productlaunches continued - including more geographic extensions into mainland China.The acquisition of Tissue World is performing in line with its business case.These numbers exclude the Princeton based businesses (the Cruise Shipping andthe Health & Beauty exhibitions) which are now part of CMP Media.CORPORATEAs noted above "Corporate" operations comprises net central operating costs,together with those equity accounted investments which do not form part of oneof the group's operating divisions - these included five, SIS, ITN and SDN.A major factor during this period was the strong improvement in the operatingperformance of five. Total revenue at five was up 16.2 per cent to ‚£155.3m(‚£133.6m) with operating profit up from ‚£6.2m to ‚£17.9m.3. DIVIDENDAn interim dividend of 4.00 pence (3.63) pence per share will bepaid - an increase of 10.2 per cent.The interim dividend on the ordinary shares will be paid on 20October to shareholders on the register on 12 of August.4. BALANCE SHEET AND CASH CONVERSIONNet debt at the end of the period was ‚£(0.2)m, after operating cashconversion of 85.0 per cent of operating profit, expenditure of ‚£67m onacquisitions during the year, receipts of ‚£418m from disposals, a return ofapproximately ‚£300m of capital to investors by means of a special dividend.Our target rate for the full year is again to achieve cashconversion of over 90 per cent.5. PENSIONSDuring the period the pension deficit was reduced from ‚£96.0 m to ‚£90.4m,reflecting the effects of additional contributions.6. TAXThe effective tax rate in the first half of 2005 was 20.0 per cent (21.8 percent).Neither the disposals of NOP World nor (post balance sheet) of thestake in five are expected to generate any tax liability for UBM.7. INTERESTNet interest income for the year was ‚£6.5m (‚£3.2m). Interest income of ‚£16.0mincluded ‚£4.1m in relation to loans to five, with interest expense being‚£(9.5)m.8. NON-RECURRING ITEMSNon-recurring items of ‚£262.2m represents the net of the profits on thedisposal of NOP World and SDN of ‚£267.4m, less redundancy and restructuringcosts of ‚£5.2m. The disposals are both subject to completion adjustments. SDNhas an associated tax charge of ‚£1.2m.9. INTERNATIONAL FINANCIAL REPORTING STANDARDS "IFRS"UK GAAP TO IFRS RECONCILIATION OF 2005 INTERIM RESULTSThe following table reconciles the adjusted group operating profit,PBT and EPS between the reported IFRS results and the `UK GAAP' numbersconsistent with UBM's historical reporting: Adjusted Adjusted Adjusted operating profit PBT EPS ‚£m ‚£m pence`UK GAAP' 75.8 80.2 19.5Charge for share based payments (1.2) (1.2) (0.3)Movement in holiday pay accrual (1.1) (1.1) (0.3)Accounting for equity investments pre tax 3.3 3.3 1.0Share of tax of JV's and equity - - 1.3investmentsAdjustment to WIP overhead capitalisation (0.7) (0.7) -IAS 32 & 39 adjustments - 0.8 -IFRS 76.1 81.3 21.2In addition to these items, the statutory results also include‚£23.5m of net financing income - other than interest. This includes ‚£10.2m netforeign exchange gain, a ‚£(2.5)m charge reflecting the accretion of theconvertible bond debt to maturity value and a ‚£15.9m gain on the fair value ofthe embedded derivative in the US Dollar convertible bond. The accounting forthis embedded derivative follows currently worded accounting standards howeverit is possible that the accounting standard will change. The ‚£23.5m of netfinancing income - other than interest has been excluded from the headline PBTand EPS numbersFor further information please contact:Michael Waring United Business Media 020 7921 5031Colin Browne The Maitland Consultancy 020 7379 5151Notes to Editors:UNITED BUSINESS MEDIABackgroundUnited Business Media plc (http://www.unitedbusinessmedia.com)UBM is a market leading global provider of specialist business informationservices to the technology, healthcare, media & entertainment , property andfinancial services industries. Geographically revenues are generated in Europe(39%), the US (51%) and in Asia (10%).CustomersUBM's market leading - typically ranked number one or two - products serve topblue chip clients in all their end markets including:-Microsoft, Hewlett Packard, IBM, Astra Zeneca, Forest Laboratories,Pfizer/Pharmacia, Merck & Co, GlaxoSmithKline, Novartis, Cisco, Toyo Shinaku,India Trade Promotions Organisation, China Chamber of Commerce, Sinopharm,Incase, Edelman Worldwide, Porter Novelli, Fleishman Hillard, NASA.Product CategoriesPublications- Over 160 magazines, 110 countries, 4m readers, 4,500 advertisersEvents- Over 300 events, 1.3m visitors, 2,500 exhibitors, from 120 countriesDirectories- Over 50 directories, over 750 thousand recipients, in over 40 countriesOnline- Over 200 websites, 22 million page impressions, revenue up over 35%News Distribution- Over 180,000 messages, in 135 countries, in more than 150 languages- Over 460,000 journalists, monitoring message boards with over 25m usersProduct BrandsCMP Mediawww.cmpmedia.comInformation Week, CRN, EE Times, Network Computing, VARBusiness, TechWeb,Consultant Magazine, Game Developer Conference, Embedded Systems Conference,Xchange Conferences, Guitar Player, Health & Beauty America, Seatrade CruiseShipping Convention,CMP Informationwww.cmpinformation.comCPHI, Building, Furniture Show, Property Week, Farmer's Guardian, FIE, Ifsec,Health & Safety, Pulse, Daltons Weekly, Trade It, Trader, Opportunities,Private Villas, This Caring Business, ECMCMPMedicaVidal, Quotidien du Medecin, Le Generaliste, Medec, HopitalExpo, Le Journal duMedicin, Medex, MedServe, Gelbeliste, Kassenartzt, Pharmindex, Vademecum,MIMS, Medical Observer, Medical TribuneCMP Asiawww.cmpasia.comAsia Pacific Leather Fair, Cosmoprof Asia, Hong Kong Jewellery and Watch Fair,Health Industry News, Jewellery News Asia, Tokyo Intnl Health Industry Show.PR Newswirewww.prnnewswire.comMultiVu, MediaAtlas, eWatch, Profnet, US1This press release includes statements which are not historical facts and areconsidered "forward-looking" within the meaning of Section 27 of theSecurities Act of 1933, as amended. These forward-looking statements reflectUBM's current views about future events, business and growth strategy andfinancial performance. These forward-looking statements are identified bytheir use of terms and phrases such as "believe," "expect," "plan,""anticipate," "on target" and similar expressions identifying forward-lookingstatements. Investors should not rely on forward-looking statements becausethey are subject to a variety of risks, uncertainties and other factors thatcould cause actual results to differ materially from UBM's expectations. UBMexpressly does not undertake any duty to update forward-looking statements.Management does not attempt to update forecasts unless conditions materiallychange.Consolidated income statementfor the six months ended 30 June 2005 As restated As restated Six Months ended Six months Year ended 30 June 2005 ended 31 December 30 June 2004 2004 Notes ‚£m ‚£m ‚£mContinuing operationsRevenue 3 336.6 281.1 586.7Operating expenses (276.1) (233.9) (490.0)Non-recurring restructuring costs 4 (5.2) - -Share of profit in joint ventures and 3 10.7 0.3 4.9associates (after tax)Income from investments 0.5 2.5 5.2 Group operating profit 66.5 50.0 106.8 Non-recurring itemsProfit on disposal of businesses 4 267.4 - -Additional profit on prior year 4 -disposals - 18.9Amounts written off investments 4 - - (11.7) 267.4 - 7.2 Earnings before interest and taxes 3 333.9 50.0 114.0("EBIT") Net interest income 5 6.5 3.2 12.4Net financing income - other than 5 23.5 - -interestNet financing costs - pension schemes 5 (1.3) (2.4) (3.4)Profit before tax 362.6 50.8 123.0 Taxation (12.7) (11.4) (24.3)Taxation relating to non-recurring 4 (1.2) - -itemsNon-recurring taxation credit - - 121.0 Profit for the period from continuing 348.7 39.4 219.7operations Discontinued operationsProfit for the period from 10 3.8 8.7 17.6discontinued operations (after tax) Profit for the period 352.5 48.1 237.3 Attributable to:Equity shareholders - ordinary 351.4 47.0 235.4Equity shareholders - B shares 0.2 0.2 0.4Minority interests 0.9 0.9 1.5 352.5 48.1 237.3 Earnings per share- basic 6 106.2 p 14.1 p 70.4 p- diluted 6 92.0 p 12.6 p 61.8 p Adjusted group operating profit* 3 76.1 61.7 132.6Amortisation of intangible assets (4.6) - (3.1)Share of taxation on profit in joint 4.9 (0.7) (0.8)ventures and associatesNon-recurring items (net) 4 262.2 - 7.2Operating profit from discontinued (4.7) (11.0) (21.9)operations (before tax)Earnings before interest and taxes 3 333.9 50.0 114.0("EBIT") *Adjusted group operating profit represents group operating profit excludingamortisation of intangible assets, and non-recurring items, and includingoperating profit from discontinued operations.Consolidated balance sheetat 30 June 2005 As restated As restated 30 June 30 June 31 December Notes 2005 2004 2004 ‚£m ‚£m ‚£mAssetsNon-current assetsGoodwill 554.2 431.5 583.4Intangible assets 65.1 - 50.4Property, plant and equipment 39.2 51.4 45.0Investments accounted for using the 62.0 53.4 55.1equity methodOther investments 5.9 118.2 47.9 726.4 654.5 781.8Current assetsInventories 7.7 14.2 14.9Trade and other receivables 265.7 276.3 304.7Derivative financial assets 1.0 - -Cash and cash equivalents 455.2 474.0 336.8 729.6 764.5 656.4 Non-current assets classified as held 10.3 - 5.1for sale Total assets 1,466.3 1,419.0 1,443.3 LiabilitiesCurrent liabilitiesBorrowings 139.1 202.1 142.8Convertible bond - 217.8 -Trade and other payables 528.2 592.0 500.3 667.3 1,011.9 643.1Non-current liabilitiesBorrowings 102.7 101.4 96.1Convertible bond 213.6 - 208.7Derivative financial liabilities 34.5 - -Retirement benefit obligation 90.4 72.0 96.0Trade and other payables 4.6 6.4 4.6Provisions 41.1 56.3 48.6Deferred tax liabilities 21.7 - 16.8 508.6 236.1 470.8 Total liabilities 1,175.9 1,248.0 1,113.9 Shareholders' equityShare capital 8 69.9 72.6 72.6Share premium 317.6 310.1 310.8Other reserves 180.1 196.1 201.3Retained earnings (279.4) (409.5) (257.5)Total shareholders' equity 288.2 169.3 327.2Minority interests 2.2 1.7 2.2Total equity 290.4 171.0 329.4 Total equity and liabilities 1,466.3 1,419.0 1,443.3Consolidated cash flow statementfor the six months ended 30 June 2005 Six months As restated As restated ended 30 June Six months Year ended 2005 ended 30 31 December Notes June 2004 2004 ‚£m ‚£m ‚£m Cash flows from operating activitiesCash generated from operations 11 50.6 27.0 107.1Interest received 14.6 6.6 27.4Interest paid (11.3) (7.5) (19.6)Taxation paid (7.4) (4.9) (10.0)Dividend received from joint ventures 2.8 2.8 4.8and associatesDividend paid to non equity - (0.4) (0.4)shareholdersIncome from fixed asset investments 0.5 2.6 4.8 Net cash flows from operating 26.2 114.1activities 49.8 Cash flows from investing activitiesAcquisition of interests in (69.3) - (190.2)subsidiaries, net of cash acquiredSale of subsidiary undertakings and 432.9 - -businessesPurchase of property and equipment (4.7) (2.9) (8.5)Proceeds from the sale of property - - 1.9and equipmentAcquisition of interests in - -associated companies and jointventures (1.7)Proceeds from sale of investments 42.8 18.8 67.1Purchase of investments - (4.6) -Investment in own shares - ESOP (2.4) - (4.1) Net cash flows from investing 399.3 11.3 (135.5)activities Cash flows from financing activitiesProceeds from the issuance of 7.3 0.7 1.5ordinary share capitalReturn of capital to shareholders (6.6) - (1.9)(including costs)Dividend paid to shareholders (326.8) (19.1) (31.2)Dividend paid to minority interests (0.9) (0.2) -Decrease in borrowings - (44.0) (98.9) Net cash flows from financing (327.0) (62.6) (130.5)activities Net increase/(decrease) in cash and 122.1 (25.1) (151.9)cash equivalentsNet foreign exchange difference (6.1) 5.1 (8.0)Cash and cash equivalents at 334.0 493.9 493.9beginning of period Cash and cash equivalents at end of 450.0 473.9 334.0period Cash at bank and in hand 408.5 364.6 144.6Short-term liquid funds 46.7 109.4 192.2Bank overdraft (5.2) (0.1) (2.8)Cash and cash equivalents at end of period 450.0 473.9 334.0Consolidated statement of changes in equityfor the six months ended 30 June 2005 Share ESOP Share Other Retained Total Minority Total capital shares premium reserves earnings interests equity Balance at 1 January 84.5 (7.8) 309.4 199.2 (461.6) 123.7 1.0 124.72004Changes in - -accounting policyrelating tofirst-time adoptionof IFRS - - 15.2 15.2 - 15.2Restated balance at 84.5 (7.8) 1 January 2004 309.4 199.2 (446.4) 138.9 1.0 139.9Currency translation - - - (3.1) - (3.1) - (3.1)differencesNet profit - - - - 47.2 47.2 0.9 48.1Own shares purchased - (4.1)by the company - - - (4.1) - (4.1)Premium on shares - - 0.7 - - 0.7 - 0.7issuedShare-based payment - - - - 0.5 0.5 - 0.5Actuarial gains on - - - - 8.6 8.6 - 8.6pensionsEquity dividends - - - - (19.4) (19.4) (0.2) (19.6)Restated balance at 84.5 (11.9) 310.1 196.1 (409.5) 169.3 1.7 171.0 30 June 2004Currency translation - - - 5.2 - 5.2 - 5.2differencesNet profit - - - - 188.6 188.6 0.6 189.2B shares purchased - -by the company - - (1.8) (1.8) - (1.8)Premium on shares - - 0.7 - - 0.7 - 0.7issuedShare-based payment - - - - 1.0 1.0 - 1.0Actuarial losses on - - - - (23.5) (23.5) - (23.5)pensionsEquity dividends - - - - (12.3) (12.3) (0.1) (12.4)Restated balance at 84.5 (11.9) 31 December 2004 310.8 201.3 (257.5) 327.2 2.2 329.4Currency translation - - - (21.2) - (21.2) - (21.2)differencesNet profit - - - - 351.6 351.6 0.9 352.5Changes in - -accounting policyrelating tofirst-time adoptionof IAS 32 and 39 - - (41.0) (41.0) - (41.0)Own shares purchased - (2.4)by the company - - - (2.4) - (2.4)Shares repurchased (0.8) -and cancelled by thecompany - - (12.5) (13.3) - (13.3)Shares issued 0.5 - 6.8 - - 7.3 - 7.3Share-based payment - - - - 1.2 1.2 - 1.2Actuarial gain on - - - - 5.4 5.4 - 5.4pensionsSpecial dividends - - - - (298.3) (298.3) - (298.3)Equity dividends - - - - (28.3) (28.3) (0.9) (29.2)Balance at 30 June 84.2 (14.3) 317.6 180.1 (279.4) 288.2 2.2 290.42005 Notes to the interim financial reportfor the six months ended 30 June 20051. General informationThe information for the year ended 31 December 2004 does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. A copy of the statutory accounts for that year has been filed with theRegistrar of Companies. The auditors' opinion on those accounts wasunqualified and did not contain a statement under section 237 of the CompaniesAct 1985.The interim financial information was approved by a duly appointedand authorised committee of the board of directors on 27 July 2005. It isunaudited but has been reviewed by the auditors as set out in their report onpage 22.2. Accounting policiesThe interim financial report has been prepared in accordance withthe group's IFRS accounting policies. These are the first IFRS financialstatements of the company and details of the impact of transition are set outin note 17.Changes in accounting policiesThe same accounting policies and methods of computation arefollowed in the interim financial report as published by the company on 30June 2005, which are available on the company's website,www.unitedbusinessmedia.com. For the recognition and measurement of financialinstruments, the group applied the exemption in IFRS 1 `First-time Adoption ofInternational Financial Reporting Standards' to adopt IAS 32 `FinancialInstruments: Disclosure and Presentation' and IAS 39 `Financial Instruments:Recognition and Measurement' from 1 January 2005 and comparative informationpresented does not need to comply with these standards in the first year oftransition.The principal changes with the adoption of these standards arediscussed below.IAS 32 Financial Instruments: Disclosure and Presentation' and IAS39 `Financial Instruments: Recognition and Measurement'IAS 39 `Financial Instruments: Recognition and Measurement'requires that assets and liabilities are all classified into one of fivecategories, which dictates the accounting treatment. Items are measured eitherat fair value, or at amortised cost using the effective interest rate method.The main impact of IAS 32 and IAS 39 on the Group is to record themovement in fair values through the income statement for all derivatives. Theembedded derivatives within the credit link notes and the convertible bond areboth required to be at fair value on transition.IAS 39 specifies three types of hedging relationships: fair valuehedges, cash flow hedges, and hedges of a net investment in a foreignoperation. IAS 39 requires all hedges to be formally documented on transition,explaining the hedging relationship and the objectives and strategy forundertaking the hedge. The hedge must be expected to be highly effective, andeffectiveness must be able to be reliably measured. The Group is applyinghedge accounting for its hedges that qualify under IAS 39 on transition. Forqualifying cash flow hedges and hedges of a net investment, the change in thefair value of the hedging instrument is deferred in equity to the extent thehedge is effective. Accumulated fair value changes from qualifying hedges arereleased from equity to the profit and loss account in the period when thehedged cash flow effects the profit and loss account (for cash flow hedges) oron disposal of the foreign operation (for hedges of net investments). Forqualifying fair value hedges, all gains or losses on the hedging instrumentare recognised immediately in the profit and loss account.IAS 32 `Financial Instruments: Disclosure and Presentation'requires convertible bonds denominated in a foreign currency to be split intothe debt component and the component representing the embedded derivatives inthe bond. IAS 39 requires the debt component to be measured at amortised cost,and the embedded derivatives to be measured at fair value through profit orloss. The Group's convertible bond is denominated in US Dollars, so must besplit into its relevant debt and derivative components and measuredaccordingly.The revised accounting policies for derivative financialinstruments and other investments are as follows:Derivative Financial InstrumentsThe policy for financial instruments represents that which will beapplied from 2005 onwards. Derivative financial instruments are initiallyrecorded at cost and then remeasured to fair value at subsequent balance sheetdates for reporting purposes.The fair value of forward exchange contracts is calculated byreference to current forward exchange rates for contracts with similarmaturity profiles. The fair value of interest rate swap contracts isdetermined by reference to market rates of interest.For the purpose of hedge accounting, hedges are classified aseither fair value hedges when they hedge the exposure to changes in the fairvalue of a recognised asset or liability; or as cash flow hedges where theyhedge exposure to variability in cash flows that is either attributable to aparticular risk associated with a recognised asset or liability or a forecasttransaction.Changes in the fair value of derivative financial instruments thatare designated and effective as cash flow hedges of forecast transactions arerecognised directly in equity. Amounts deferred in this way are recognised inthe income statement in the same period in which the hedged firm commitmentsor forecast transactions are recognised in the income statement.In relation to fair value hedges which meet the conditions forhedge accounting, any gain or loss from remeasuring the hedging instrument atfair value is recognised in the income statement. Any gain or loss on thehedged item attributable to the hedged risk is adjusted against the carryingamount of the hedged item and recognised in the income statement.2. Accounting policies (continued)Changes in the fair value of the derivative financial instrumentsthat do not qualify for hedge accounting are recognised in the incomestatement as they arise.Hedge accounting is discontinued when the hedging instrumentexpires or is sold, terminated or exercised, or no longer qualifies for hedgeaccounting. At that point in time, any cumulative gains or losses on thehedging instrument recognised in equity are retained until the forecasttransaction occurs. If a hedged transaction is no longer expected to occur,the net cumulative gain or loss recognised in equity is transferred to theincome statement for the period.Other InvestmentsThe Group classifies its investments in the following categories:available-for-sale financial assets and loans and receivables. Theclassification depends on the purpose for which the investments were acquired.Management determines the classification of its investments at initialrecognition and re-evaluates this designation at every reporting date.All investments are initially recognised as cost, being the fairvalue of the consideration given and including acquisition charges associatedwith the investments. After initial recognition, investments that areclassified as available-for-sale are measured at fair value and loans andreceivables are carried at amortised cost using the effective interest method.The Group assesses at each balance sheet date whether there is objectiveevidence that a financial asset or a group of financial assets is impaired.(a) Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivatives that areeither designated in this category or not classified in any of the othercategories. They are included in non-current assets unless management intendsto dispose of the investment within 12 months of the balance sheet date.Listed and unlisted investments are stated at market value, except where thereis no market value in an active market and where the fair value cannot bereliably measured, in which case they are measured at cost.(b) Loans and receivablesLoans and receivables are non-derivative financial assets withfixed or determinable payments that are not quoted in an active market. Theyarise when the Group provides money, goods or services directly to a debtorwith no intention of trading the receivable. They are included in currentassets, except for maturities greater than 12 months after the balance sheetdate. These are classified as non-current assets.Convertible BondsThe convertible bond is split into two components: a debt componentand a component representing the embedded derivatives in the bond. The debtcomponent represents the group's liability for future interest coupon paymentsand the redemption amount. The embedded derivatives represent the value of theoption that bondholders have to convert into ordinary shares of the company.The debt component of the convertible bond is measured at amortisedcost and therefore increases as the present value of the interest couponpayments and redemption amount increases, with a corresponding charge tointerest payable. The debt component decreases by the cash interest couponpayments made. The embedded derivatives are measured at fair value at eachbalance sheet date, and the change in the fair value is recognised in theincome statement.The impact of accounting for the convertible bond in this way, inaccordance with current IFRS interpretation, from 1 January 2005 compared toUK GAAP is to:- increase interest payable in the income statement;- reduce the debt component of the bonds; and- introduce volatility to the income statement through the changein fair value of the embedded derivatives.BorrowingsAll loans and borrowings are initially recognised at cost, beingthe fair value of the consideration received net of issue costs associatedwith the borrowings. After initial recognition, loans and borrowings aresubsequently measured at amortised cost, and any difference between theproceeds and the redemption value is recognised in the income statement overthe period of the borrowings using the effective interest method. Amortisedcost is calculated by taking into account any issue costs, and any discount orpremium on settlement.3. Business segmentsAt 30 June 2005, the Group is organised into five main businesssegments - CMP Media, CMPMedica, CMP Asia, CMP Information, and NewsDistribution. These segments are the basis on which the group reports itsprimary segment information.CMP Media's, CMPMedica's, CMP Asia's and CMP Information's mainactivities are the production of magazines, trade press, directories, events,and websites. The News Distribution segment operates in the distribution,targeting and evaluation of company information.The market research business is included in discontinued operationsas it was disposed of on 1 June 2005. The main activities of this segment weresyndicated and custom market research.The following tables set out the revenue and profit information andcertain asset and liability information for the Group's business segments.Six months ended 30 June 2005 Share of profit/(loss) Profit from from equity operating accounted Revenue activities investments EBIT ‚£m ‚£m ‚£m ‚£mSegmentsContinuing operationsCMP Media 103.9 12.2 0.7 12.9CMPMedica 54.7 9.5 (0.1) 9.4CMP Asia 22.0 5.9 0.3 6.2CMP Information 104.7 20.5 - 20.5News distribution 51.3 12.5 1.3 13.8Corporate operations ** - 0.4 8.5 8.9 336.6 61.0 10.7 71.7 Non-recurring items - - - 262.2 - - - 333.9Discontinued operationsMarket research 76.9 4.4 - 4.4Corporate operations ** - - 0.3 0.3 76.9 4.4 0.3 4.7 ` 413.5 65.4 11.0 338.6 Share of tax *Adjusted on profit group from equity Amortisation operating accounted Impairment of profit investments of goodwill intangibles EBIT ‚£m ‚£m ‚£m ‚£m ‚£mSegmentsContinuing operationsCMP Media 12.9 - - - 12.9CMPMedica 13.5 - - (4.1) 9.4CMP Asia 6.3 - - - 6.3CMP Information 21.0 - - (0.5) 20.5News distribution 14.3 (0.5) - - 13.8Corporate operations** 3.4 5.4 - - 8.8 71.4 4.9 - (4.6) 71.7 Non-recurring items - - - - 262.2 - - - - 333.9Discontinued operationsMarket research 4.4 - - - 4.4Corporate operations ** 0.3 - - - 0.3 4.7 - - - 4.7 76.1 4.9 - (4.6) 338.6*Adjusted group operating profit represents group operating profitexcluding amortisation of intangible assets, and non-recurring items, andincluding operating profit from discontinued operations.** Corporate operations comprises net central operating costs,together with those equity accounted investments which do not form part of oneof the group's operating divisions.3. Business segments (continued)Six months ended 30 June 2004 Share of Profit/(loss) profit/(loss) from from equity operating accounted Revenue activities investments EBIT ‚£m ‚£m ‚£m ‚£mSegmentsContinuing operationsCMP Media 110.6 13.7 0.6 14.3CMPMedica - - - -CMP Asia 20.1 5.6 0.1 5.7CMP Information 102.7 24.2 - 24.2News distribution 47.7 10.7 1.2 11.9Corporate operations ** - (4.5) (1.6) (6.1) 281.1 49.7 0.3 50.0Discontinued operationsMarket research 102.8 10.4 - 10.4Corporate operations ** - - 0.6 0.6 102.8 10.4 0.6 11.0 383.9 60.1 0.9 61.0 Six months ended 30 June 2004 Share of tax on *Adjusted profit from group equity Impairment Amortisation operating accounted of of profit investments goodwill intangibles EBIT ‚£m ‚£m ‚£m ‚£m ‚£mSegmentsContinuing operationsCMP Media 14.3 - - - 14.3CMPMedica - - - - -CMP Asia 5.7 - - - 5.7CMP Information 24.2 - - - 24.2News distribution 12.4 (0.5) - - 11.9Corporate operations ** (5.9) (0.2) - - (6.1) 50.7 (0.7) - - 50.0Discontinued operationsMarket research 10.4 - - - 10.4Corporate operations ** 0.6 - - - 0.6 11.0 - - - 11.0 - 61.7 (0.7) - - 61.0 *Adjusted group operating profit represents group operating profitexcluding amortisation of intangible assets, and non-recurring items, andincluding operating profit from discontinued operations.** Corporate operations comprises net central operating costs,together with those equity accounted investments which do not form part of oneof the group's operating divisions.3. Business segments (continued)For the year ended 31 December 2004 Share of Profit/(loss) profit from from equity operating accounted Revenue activities investments EBIT ‚£m ‚£m ‚£m ‚£mSegmentsContinuing operationsCMP Media 220.3 25.9 1.2 27.1CMPMedica 29.8 0.3 - 0.3CMP Asia 45.0 13.2 0.5 13.7CMP Information 196.8 43.4 - 43.4News distribution 94.8 20.4 2.3 22.7Corporate operations ** - (1.3) 0.9 (0.4) 586.7 101.9 4.9 106.8 Additional profit on prior year - 18.9disposals - -Amounts written off investments - - - (11.7) 586.7 101.9 4.9 114.0Discontinued operationsMarket research 222.4 20.3 - 20.3Corporate operations ** - - 1.6 1.6 222.4 20.3 1.6 21.9 809.1 122.2 6.5 135.9 Share of tax on *Adjusted profit from group equity Impairment Amortisation operating accounted of of profit investments goodwill intangibles EBIT ‚£m ‚£m ‚£m ‚£m ‚£mSegmentsContinued operationsCMP Media 27.1 - - - 27.1CMPMedica 3.4 - - (3.1) 0.3CMP Asia 13.7 - - - 13.7CMP Information 43.4 - - - 43.4News distribution 23.9 (1.2) - - 22.7Corporate operations ** (0.8) 0.4 - - (0.4) 110.7 (0.8) - (3.1) 106.8 Additional profit on - - - - 18.9prior year disposalsAmounts written off - - - - (11.7)investments - - - (3.1) 114.0Discontinued operationsMarket research 20.3 - - - 20.3Corporate operations ** 1.6 - - - 1.6 21.9 - - - 21.9 132.6 (0.8) - (3.1) 135.9*Adjusted group operating profit represents group operating profitexcluding amortisation of intangible assets, and non-recurring items, andincluding operating profit from discontinued operations.** Corporate operations comprises net central operating costs,together with those equity accounted investments which do not form part of oneof the group's operating divisions.3. Business segments (continued)The amounts shown against CMP Media, CMP Asia and CMP Informationfor 30 June 2004 and 31 December 2004 in the tables above have been restatedto reflect the intra-group transfer of United Entertainment Media in the USfrom CMP Information to CMP Media, the transfer of CMP Princeton from CMP Asiato CMP Media, and the transfer of United Advertising Publications to CMPInformation.For the six months ended 30 June 2004, ‚£9.8 million of revenue and‚£0.7 million of operating profit for United Entertainment Media wastransferred from CMP Information to CMP Media, ‚£2.5 million of revenue and‚£1.0 million of operating profit for CMP Princeton was transferred from CMPAsia to CMP Media, and ‚£29.9 million of revenue and ‚£7.2 million of operatingprofit for United Advertising Publications was included in CMP Information.For the year ended 31 December 2004, ‚£21.0 million of revenue and‚£3.4 million of operating profit for United Entertainment Media wastransferred from CMP Information to CMP Media, ‚£5.5 million of revenue and‚£1.2 million of operating profit for CMP Princeton was transferred from CMPAsia to CMP Media, and ‚£58.5 million of revenue and ‚£13.2 million of operatingprofit for United Advertising Publications was included in CMP Information.4. Non-recurring items Six months Six months ended 30 ended 30 Year ended June June 31 December 2005 2004 2004 ‚£m ‚£m ‚£mCharged to group operating profit:Restructuring costs (a) (5.2) - - Credited to EBIT:Profit on disposal of businesses (b) 267.4 - -Additional profit on prior year disposals (c) - - 18.9Amounts written off investments (d) - - (11.7) 262.2 - 7.2Taxation relating to non-recurring items (e) (1.2) - -Non-recurring tax credit (f) - - 121.0 (1.2) - 121.0(a) Redundancy, restructuring, business integration costs and othercosts relating to the reorganisation of the group recognised in the period.(b) Profit on disposal of businesses includes the profit ondisposal of the market research business, ‚£242.4 million, and the profit onthe disposal of SDN, ‚£25.0 million. These profits represent the considerationreceived after deduction of net assets, attributable goodwill and directlyattributable costs. Both disposals are subject to completion adjustments whichwill be reflected as at 31 December 2005.(c) In December 2004, UBM agreed a settlement of ‚£32.0 million fromGranada in respect of outstanding items relating to the disposals in 2000. Theadditional profit on disposal represents this receipt, after deduction ofinterest, costs, and the offset of recorded receivables.(d) In 2004, the group wrote the carrying value of certain fixedasset investments to reflect their expected realisable value. It is thegroup's intention to exit these investments.(e) Taxation relating to the disposal of SDN.(f) In 2004, the group resolved a number of outstanding items, as aconsequence of which there was a net exceptional tax credit of ‚£121.0 million.5. Net interest and financing income Six months Six months ended 30 ended 30 Year ended June June 31 December 2005 2004 2004 ‚£m ‚£m ‚£m Net interest incomeInterest income 16.0 13.6 26.6Interest costs (9.5) (10.4) (14.2) 6.5 3.2 12.4 Net financing income - other than interestNet foreign exchange gain (a) 10.2 - -Convertible bond (b) (2.5) - -Fair value gain on derivative embedded in 15.9 - -convertible bond (c)Other fair value adjustments (0.1) - - 23.5 - - Net financing costs - pension schemes (1.3) (2.4) (3.4) 28.7 0.8 9.0(a) Foreign exchange gain on US Dollar denominated balances held inUK accounts. This gain arose from the strengthening of the US Dollar in thefirst half of 2005.(b) The convertible bond is separated into fixed rate debt and anequity derivative. This charge reflects the accretion of the debt to the valueat maturity.(c) As currently drafted, accounting standards determine that UBM'sUS Dollar convertible bond contains an embedded derivative, and this optionneeds to be fair valued through the income statement. This credit is a resultof the movement in UBM's share price and strengthening of the US Dollar.6. Earnings per shareBasic earnings per share amounts are calculated by dividing netprofit for the year attributable to ordinary equity holders of the parent bythe weighted average number of ordinary shares outstanding during the year.Diluted earnings per share amounts are calculated by dividing thenet profit attributable to ordinary shareholders (after deducting interest onthe convertible bond) by the weighted average number of ordinary sharesoutstanding during the year (adjusted for the effects of dilutive options anddilutive convertible bond).The following reflects the income and share data used in the totaloperations basic and diluted earnings per share computations: Six months ended Six months ended Year ended 30 June 2005 30 June 2004 31 December 2004 Earnings Earnings Earnings Earnings per share Earnings per share Earnings per share ‚£m pence ‚£m pence ‚£m penceAdjusted earnings per share 70.1 21.2 47.0 14.1 109.4 32.7AdjustmentsAmortisation of intangible - - (3.1) (0.9)assets (4.6) (1.4)Deferred tax on amortisation of - - 0.9 0.3intangible assets 1.4 0.4Non-recurring items 262.2 79.3 - - 128.2 38.3Taxation relating to - - - -non-recurring items (1.2) (0.4)Net financing income - other - - - -than interest 23.5 7.1Basic earnings per share 351.4 106.2 47.0 14.1 235.4 70.4DilutionOptions - (1.6) - (0.2) - (1.0)Convertible bond 1.9 (12.6) 1.8 (1.3) 3.5 (7.6)Diluted earnings per share 353.3 92.0 48.8 12.6 238.9 61.8The weighted average shares for the period were 330,990,030 (30 June 2004: 334,297,844; 31 December 2004: 334,436,606).Adjusted earnings per share is presented as the directors considerthat this is a meaningful measure of the performance of the group. For dilutedearnings per share, the weighted average number of shares in issue is adjustedto assume conversion of all dilutive potential ordinary shares. The group hastwo categories of dilutive potential ordinary shares: those share optionsgranted to employees where the exerciseRelated Shares:
UBM