Interim Results

22nd Sep 2005 07:03

Informa PLC22 September 2005 22 September 2005 Informa plcSTRONG OPERATING PERFORMANCE CONFIRMS MERGER BENEFITS.INTEGRATION OF IIR ON TARGET First Half 2005 Highlights H1 2005 H1 2004 £'m £'mResults under IFRS Turnover 259.7 191.7 Operating (loss)/profit*1 (50.3) 32.9 (Loss)/profit before tax*1 (58.9) 23.6 Profit for the period from continuing operations*2 48.8 15.1 Diluted earnings per share 16.21p 7.73p *1 Including a one-off goodwill write off of £86.6m *2 Including a one-off deferred tax credit of £116.6m in connection with areorganisation of the Group's UK businesses Constant H1 2005 H1 2004 Reported Currency*6 £'m £'m Growth GrowthComparable results under Former UK GAAP*3 Turnover 258.6 246.3 5% 6% Adjusted operating profit*4 50.7 46.6 9% 16% Adjusted profit before tax*5 42.5 38.0 12% 20% • Benefits of Taylor & Francis / Informa merger coming through - new events and publications well received • Professional and Commercial divisions built on positive market trading conditions - adjusted operating profit*4 under Former UK GAAP*3 up 8% and 30% respectively (constant currency*6) • Solid subscription renewal rates underpin Academic & Scientific division - adjusted operating profit*4 under Former UK GAAP*3 up 11% (constant currency*6) • Good, resilient performances from both key product areas - events and subscriptions • IIR integration on target • Interim dividend up 8% to 2.7p per ordinary share • Strong, well balanced platform for further profitable growth *3 Former UK GAAP refers to UK GAAP as at 31 December 2004 which was adopted inthe Group's 2004 financial statements. See Note 19 to the Interim Report *4 Excluding exceptional costs of £5.1m (2004: £2.0m) and goodwill amortisationand impairment of £17.0m (2004: £17.6m) *5 Excluding merger and other exceptional costs of £5.1m (2004: £20.1m) andgoodwill amortisation and impairment of £17.0m (2004: £17.6m) *6 Based on 2004 exchange rates Commenting on the results and the Group's progress, Peter Rigby, ChiefExecutive, said: "We had a strong first half with a good underlying operating performance. Themerger of Informa and Taylor & Francis last year is now producing clear benefitsand we are well into a programme of new product launches and revenue initiativesderived from the merger. "The more recent acquisition of IIR is being integrated well and in line withour targets. A great deal of work has already been completed and I am pleasedwith the standards and quality of the business we have acquired. "Our focus is on the integration of IIR and exploiting the ongoing opportunitiesfrom the Taylor & Francis/Informa merger, with the emphasis on developing newrevenue streams. The performance of the Group is in line with our expectations.We are confident of a satisfactory outcome for 2005 and the Group's prospectsare exciting." Operating and Financial Review Introduction Informa had a strong first half of 2005. Using Former UK GAAP accounting and at2004 exchange rates the Group achieved turnover growth of 6% to £258.6m,compared to the first half of 2004. Under Former UK GAAP adjusted operatingprofit grew by 16% to £50.7m and profit before tax increased by 20% to £42.5m. Under International Financial Reporting Standards (IFRS) accounting thecomparative 2004 first half results only include two months' contribution fromthe Taylor & Francis Group, making comparison between the first half 2005 and2004 difficult. Under IFRS first half 2005 turnover was £259.7m. The reportedresults include a one-off goodwill write off of £86.6m required under IFRS,resulting in an operating loss of £50.3m and a loss before tax of £58.9m. Thereported IFRS (post-tax) profit from continuing operations of £48.8m reflect adeferred tax credit of £116.6m.**1 During the first half of 2005 trading conditions in the markets served by ourProfessional and Commercial divisions remained buoyant. In the Professionaldivision, the Finance, Insurance, Law and Tax businesses all had a good sixmonths as their markets stabilised. In the Commercial division, the Telecomsand Media business continued to perform strongly as third generation mobileservices began to reach end users. The Maritime, Trade and Transport businessbenefited as the industry continued to enjoy greater prosperity. TheInternational Conferences business, which operates across a wide range ofmarkets and sectors, also capitalised on improving trends. In our Academic & Scientific division the journals subscription businessremained very durable and benefited fully from the integration of the Dekkerbusiness acquired in January 2004. However the book publishing businessexperienced tougher market conditions. Our events and publishing activities inthe life sciences area were also adversely affected by reduced levels ofinvestment in early stage drug discovery, a field which had yielded strongresults in previous years. The pharmaceutical information portfolio continuesto perform well. **1 Under IFRS the Group was required to provide a deferred tax liability of£101.9m to reflect the potential tax payable on any future sale of the assetsbrought into the Group with the merger of Taylor & Francis in May 2004. Thisliability was matched by a corresponding goodwill asset of £101.9m. Following a reorganisation of the UK businesses within the Group in January 2005the deferred tax liability for the UK portion of the total Taylor & Francisbusiness was extinguished, meaning £86.6m of the £101.9m goodwill asset was nolonger required and was written off as a charge to the Income Statement. Thereorganisation of these operations also had the effect of creating a deferredtax asset of £116.6m which was also required to be taken to the Income Statementas a tax credit in this period. Across the Group the events businesses have traded strongly, reflecting thegenerally more positive conditions in the international professional andcommercial markets as well as the successful introduction of new conferences,seminars and courses for the academic marketplace, following the merger withTaylor & Francis in May 2004. During the first half of 2005 the Group ran morethan 1,400 events, attracting approximately 63,000 delegates, compared to 1,200events in the same period in 2004 with 55,000 delegates. The Group's subscription businesses, which include academic and scientificjournals, electronic data and information services as well as a range ofprofessional and commercial periodicals, have generally performed well withrenewal rates remaining high. Subscription revenues continued to demonstratetheir traditional resilience and we have developed a number of new marketinginitiatives and product enhancements, particularly electronically, to ensurethat we continue to add new subscribers, especially in some of our smaller nichesubject areas. Merger Update The merger of Informa with Taylor & Francis (T&F) was completed on 10 May 2004.The new product development resulting from the merger is proceeding to plan andwe are on course to achieve £9m of incremental revenue through a combination ofnew products and the increased sale of existing products through improvedmarketing access. Through two dedicated units, one in the US and one based in the UK for Europe,we have launched a range of conferences, courses and e-learning products for theacademic market. Typical lead times for these academic events, at six to twelvemonths, are longer than in the commercial market place and we now have a strongsecond half 2005 programme of events and a good pipeline for 2006. While theseevents typically attract lower delegate fees, their associated costs are alsolower as the events are usually held at academic institutions and are marketedpredominately through email. Successful events have been held in fields asdiverse as Breast Cancer, Childhood Obesity, Religious Terrorism, RitualisticCrime, Coral Reef Restoration, Workplace Stress, Self-Harm, Natural Products andDistributed Sensor Networks. Subject matter experts drawn from our bookauthors, journal editors and editorial advisory board members have madeimportant contributions to our research and event programme development and asevent speakers. Additionally, we have launched a series of instructor-led courses in multiple UScities featuring many prominent authors of T&F's books. We are also working inpartnership with a number of academic societies, including developing a majorcommercial conference to sit alongside the American Association of Geographersannual event; coinciding a conference with a new journal launch in DigitalForensics and advancing a significant new book publishing programme in mobiletelecoms technology. Among a range of other merger-related revenue-drivinginitiatives, we expect this year to double advertising revenue in the T&Fjournals from 2004 levels. The cost savings resulting from the merger are £9m per year. IIR On 6 July 2005 the Group completed the acquisition of IIR Holdings Limited(IIR). The addition of IIR significantly extends the Group's events businessand gives it a substantial and immediate position in the growing PerformanceImprovement market. The IIR events business clearly complements our existingevents business, both geographically and by sector. IIR's PerformanceImprovement business, with its highly respected brands, strong market positionsand high cash generation presents a unique opportunity for the Group to enter anattractive market which we see as offering strong recurring revenue streams andgood growth prospects. We have put in place a detailed 90 day integration plan for the IIR businesses.A number of integration teams from both groups have been formed, coveringevents, publications, marketing, sales, branding, back office operations andPerformance Improvement. The response has been very positive and we are well onthe way to achieving the targets set out in the integration plan. Since it wasacquired, Informa senior management have met almost all the IIR staff and we arevery pleased with the high standards of IIR's management, systems and products,which are as good as, or in many cases better than, we expected. Severalmembers of IIR's management team have been appointed to senior positions withinthe combined Group. In connection with the acquisition of IIR the Board carefully reviewed theenlarged Group's brand strategy and decided to change the corporate identity toInforma plc. The name change became effective on 18 August, followingshareholder approval. At the operational level, the Group will retain its manystrong and established brands and imprints including Taylor & Francis and IIR. Board Appointment We recently announced the appointment of John Davis, who will join the Board asa Non-Executive Director with effect from 1 October 2005. John's financial andmedia experience will be of value to the Board as we continue to build ourbusiness both organically and through selective acquisitions. Outlook The Group's strategy of combining organic growth with selective acquisitions hasled to considerable growth over the last 18 months initially through the mergerof Taylor & Francis and Informa and now through the acquisition of IIR. We arecurrently focusing on the integration of IIR and exploiting the ongoingopportunities arising from the Taylor & Francis / Informa merger - both of whichenable us to develop new product revenue streams and explore new geographicareas. The combined Group is performing in line with our expectations and the Board isconfident of a satisfactory outcome for 2005. The prospects for the enlargedbusiness are exciting. Divisional Performance To facilitate comparison with 2004, the following divisional commentary is basedon the results stated under UK GAAP applicable as at 31 December 2004 andadopted in the 2004 financial statements (Former UK GAAP) adjusted for mergerand other non-operating costs and goodwill amortisation and impairment (AdjustedOperating Profit). The divisional analysis under IFRS is shown in Note 4 to theInterim Report. Academic & Scientific Division Former UK GAAP H1 H1 Increase Constant 2005 2004 on 2004 Currency £'m £'m % %TurnoverSTM 66.9 67.5 -1 1HSS 45.2 44.2 2 5 112.1 111.7 - 3 Adjusted Operating ProfitSTM 16.6 17.2 -3 10HSS 6.5 6.6 -2 14 23.1 23.8 -3 11 Adjusted Operating Margin % 20.6 21.3 The Academic & Scientific division is comprised of two segments: • Scientific, Technical and Medical (STM), which comprises Taylor & Francis STM journals and books, PJB pharmaceutical publications business and the Informa Life Sciences events business; and • Humanities & Social Sciences (HSS) made up of Taylor & Francis HSS journals and books published under the Routledge imprint. Due to its high proportion of US dollar income, the division's results have beenadversely affected by exchange rate movements, at both the turnover andoperating profit levels. During the period a solid STM journal performance was offset by some decline inbook sales to academic bookshops and in life sciences events and publications.The life sciences conference business, particularly in the US, continued to beaffected by reduced drug discovery spend, although our European events, whichare more focused on pharmaceuticals and clinical practice, performed better. Thepharmaceutical publications business also reported a small decline inprofitability as a result of investments in new products and staff which weexpect to benefit the second half of the year. The division saw good revenue growth in HSS, with renewals at or above thelevels of recent years and good content growth in a number of our leadingjournals. Routledge books encountered the same challenges seen in the STM bookssegment as well as some movement of titles due to be published in the first halfinto the second half of the year. During the period we consolidated three third-party US book warehouse operationsinto one owned warehouse and distribution centre in Kentucky, a move which isalready producing increased efficiency and savings. The Academic & Scientific division continues to develop new on-line informationproducts and has announced new on-line pricing models for 2006. These have beenwell received by the library community and are expected to lead to anacceleration of the transition of our journal subscription base to on-linedelivery. Elsewhere, as part of a continued focus on the growth potential offered bydeveloping countries, the division has opened a new office in Beijing to drivesales of its product in China and has registered a new company in India todevelop local publishing initiatives. Professional DivisionFormer UK GAAP H1 H1 Increase Constant 2005 2004 on 2004 Currency £'m £'m % %TurnoverFinancial Information 30.1 30.2 - 3Insurance, Law and Tax 15.3 14.7 4 4 45.4 44.9 1 3 Adjusted Operating ProfitFinancial Information 8.5 8.0 6 9Insurance, Law and Tax 1.9 1.8 6 6 10.4 9.8 6 8 Adjusted Operating Margin % 22.9 21.8 The Professional division includes our US-led financial data and analysisbusiness together with our specialist publishing and event products forinsurance, legal, finance and tax professionals in the UK and Europe. The Financial Information business, which derives approximately 90% of itsrevenue in US dollars, saw turnover and profit adversely affected by therelative weakness of the US dollar upon translation of its results intosterling. Despite this, reported profit grew by 6% to £8.5m, or by 9% atconstant exchange rates. The largest unit in the Financial Informationbusiness, Informa Global Markets, continued to perform strongly and reinforcedits position as market leader of analytical services to the international fixedincome trading community. The Insurance, Law & Tax business achieved a strong performance from legalsubscription publishing. It also saw an improvement in advertising income fromthe insurance information portfolio and growth in one-off legal copy sales.There was also encouraging growth in legal conferences with two new largesponsored events; In-House Counsel and Legal Leaders Forum, contributing to theincreased profit. Commercial DivisionFormer UK GAAP H1 H1 Increase Constant 2005 2004 on 2004 Currency £'m £'m % %TurnoverTelecoms & Media 28.7 25.9 11 10Maritime, Trade & Transport 21.4 19.3 11 11Commodities 7.8 9.4 -17 -17International Conferences 43.2 35.1 23 21 101.1 89.7 13 12 Adjusted Operating ProfitTelecoms & Media 8.5 6.9 23 22Maritime, Trade & Transport 2.1 1.9 11 11Commodities 1.0 1.0 - -International Conferences 5.6 3.2 75 69 17.2 13.0 32 30 Adjusted Operating Margin % 17.0 14.5 The Commercial division comprises the Telecoms & Media, Maritime, Trade &Transport and Commodities events and publishing businesses, coupled with ourInternational Conferences business, which runs a wide range of events in anumber of European, Asian, Australian and Latin American territories. The division's turnover was up 13% and adjusted operating profit up 32%, withexchange rate movements having a minimal impact on the reported results. The mobile telecoms sector continued to rebound strongly with the arrival of 3Gservices and our own business capitalised on this, enjoying a strong start tothe year. The 3GSM World Congress event held in Cannes in February saw a healthygrowth in visitors, exhibitors and delegates, with overall attendance rising tosome 39,000 from 32,000 in the previous year. With the event's move to Barcelonanext February we are currently on target to achieve significant sponsorship andexhibition revenue growth. We are continuing to expand our telecoms eventportfolio and expect to run approximately 100 events this year with 37 havingtaken place in the first half. The maritime industry continued to enjoy a period of healthy freight rates. Thiscoupled with strong demand for oil and gas related events helped our Maritimeunit grow profit by 11% in the period. Advertising, electronic publishing anddata income all grew steadily and events also performed well. Our Commodities business saw an increase in conference revenue and resilientsubscription sales, offset by weaker data and consultancy sales to the USagriculture sector. A small fisheries-based information business wastransferred out of the Commodities business and into the Maritime unit duringthe period. Our regional events business grouped under the banner International Conferenceshad an outstanding start to the year, benefiting from general improvements ineconomic environments across Europe and Asia. Revenue was 23% higher and profitwas up 75% over the same period last year. The key drivers were a 17% increasein delegate numbers and a 10% rise in the number of events staged. Germany, thelargest of these units, continued to defy the relatively lacklustre performanceof its domestic economy while The Netherlands, the second largest eventsbusiness in this group, showed a welcome return to growth after two slow years.Scandinavia, Brazil and Australia also showed signs of encouraging growth.However, our French business sustained continued losses and with no prospect ofa likely turnaround we have decided to close this operation. Financial Review Results under Former UK GAAP Under Former UK GAAP turnover increased by 5% to £258.6m and adjusted operatingprofit (before goodwill amortisation and exceptional items) by 9% to £50.7m. Atconstant exchange rates the organic turnover growth was 6% and the adjustedoperating profit growth was 16%. Adjusted operating margins improved to 19.6%from 18.9%, despite investment in new products, geographic markets andadditional staff over the last six months. The results were adversely affected by exchange rate movements, as around 50% ofthe Group's revenues are received in US dollars and around 20% in Euros. In thefirst half of 2005, currency movements on translation reduced reported turnoverby £2.6m and adjusted operating profit by approximately £3.3m compared with thefirst half of 2004. Results under IFRS Under IFRS the Group reported an increase in turnover of 35%, to £259.7m from£191.7m for the first six months of the year. Under IFRS the combination ofInforma and Taylor & Francis is accounted for as an acquisition rather than as amerger under Former UK GAAP. Accordingly the 2004 comparative figures onlyreflect the contribution from T&F from 10 May 2004, the date of the merger. T&Fgenerated comparable turnover of £54.8m during the period 1 January to 9 May2004. As set out further in Note 6 to the Interim Report, the reported results havebeen materially adversely affected by a one-off goodwill write-off under IFRS of£86.6m, resulting in an operating loss of £50.3m and a loss before tax of £58.9mfor the first half of 2005. The post-tax results benefited from a deferred taxcredit of £116.6m arising as a result of a reorganisation of the Group's UKbusinesses in January 2005. This contributed to a (post-tax) profit for theperiod from continuing operations of £48.8m. Acquisitions With the merger integration largely completed, in the later part of the firsthalf of 2005 the Group spent £27.5m on the acquisition of a number of smallcomplementary businesses. Due to the timing of these acquisitions the effect onthe first half 2005 results was minimal, although the Group's net debt positionincreased as a result. Finance Costs and Investment Income Net finance costs for the first six months of 2005 were £8.5m (2004: £9.2 m).The 2004 comparative figure includes interest incurred by the T&F business onlyfrom 10 May 2004. Taxation Across the Group tax has been provided at an underlying rate of 32% (2004: 36%),which is the rate expected for the whole of 2005. The effective tax rate hasbeen materially distorted by the tax credit of £116.6m referred to above. EPS Diluted earnings per share for the first half of 2005 increased to 16.21p perordinary share compared to 7.73p in the first half of 2004. Dividend The Directors have declared an interim dividend of 2.70p per ordinary share(2004: 2.50p after adjusting for the Rights Issue in July 2005), representing anincrease of 8% per share. This dividend is payable on 4 November 2005 toordinary shareholders registered as of the close of business on 7 October 2005. Balance Sheet Goodwill decreased from £603.0m at 31 December 2004 to £545.8m, with additionsfrom the acquisitions made during the period offset by the write off of £86.6mreferred to previously. Net debt rose by £63.1m to £365.1m compared to 31 December 2004 (£302.0m),reflecting the usual seasonal nature of the Group's cash flows, £27.5m spent onacquisitions, negative exchange rate translation effects of £4.7m and a £10mspecial contribution made to the Group's defined benefit pension schemes. The deferred tax liability decreased by £86.6m in connection with thereorganisation of UK business referred to above. The Group's retirement benefit obligation in respect of defined benefit pensionschemes fell by £7.2m from 31 December 2004, partly reflecting the £10madditional pension contribution referred to above. P RigbyChief Executive22 September 2005 INDEPENDENT REVIEW REPORT TO INFORMA PLC Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2005 which comprises the consolidated incomestatement, the balance sheets, the cash flow statement, the consolidatedstatement of recognised income and expense, and related notes 1 to 18. We haveread the other information contained in the Interim Report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the Company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The Interim Report, including the financial information contained therein, isthe responsibility of, and has been approved by, the Directors. The Directorsare responsible for preparing the Interim Report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. International Financial Reporting Standards As disclosed in note 1, the next annual financial statements of the group willbe prepared in accordance with International Financial Reporting Standards asadopted for use in the EU. Accordingly, the Interim Report has been prepared inaccordance with the recognition and measurement criteria of IFRS and thedisclosure requirements of the Listing Rules. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2005. Deloitte & Touche LLPChartered AccountantsReading22 September 2005 Consolidated Income Statement For the six months ended 30 June 2005 - unaudited 6 months 6 months 12 months ended ended ended 31 30 June 30 June December 2005 2004 2004 Total Total Total Note £'000 £'000 £'000 Revenue 4 259,742 191,673 449,845 Change in inventories of finished goods and work in progress 4,128 4,184 4,447Raw materials and consumables used (74,640) (73,093) (150,028)Employee benefit expense (78,974) (58,510) (139,954)Depreciation expense (3,452) (3,597) (7,898)Amortisation of intangible fixed assets (8,680) (2,195) (8,781)Goodwill impairment - - (15,000)Goodwill written off 6 (86,562) - -Other expenses (61,906) (25,612) (70,292) Operating (loss)/profit 4 (50,344) 32,850 62,339 Non-operating income and expense 5 - (50) (1,118)Finance costs (9,772) (10,103) (20,534)Investment income 1,210 947 2,308 (Loss)/profit before tax (58,906) 23,644 42,995 Deferred tax credit arising from UK restructuring 6 116,557 - 35,386Other tax (8,882) (8,529) (8,545)Tax on profit on ordinary activities 6 107,675 (8,529) 26,841 Profit for the period from continuing operations 48,769 15,115 69,836 Attributable to:- Equity shareholders 48,758 15,121 69,862- Minority interests 11 (6) (26) Earnings per share 9From continuing operations- Basic (p) 16.29 7.81 28.51- Diluted (p) 16.21 7.73 28.31 Consolidated Statement of Recognised Income and Expense For the six months ended 30 June 2005 - unaudited 6 months 6 months 12 months ended ended ended 31 30 June 30 June December 2005 2004 2004 Total Total Total Note £'000 £'000 £'000 Actuarial (losses)/gains on pension schemes (2,130) 63 (2,054)Exchange differences on translation of foreign operations 2,624 (1,406) (6,800)Cash flow hedges:Losses taken to equity (1,572) - -Profit for the period 48,769 15,115 69,836Total recognised income and expense for the period 47,691 13,772 60,982 Attributable to:Equity holders of the parent 10 47,680 13,778 61,008Minority interests 11 (6) (26) Change in accounting policy to adopt IAS32 and IAS39: 3Equity holders of the parent (948) - -Minority interests - - - Consolidated Balance Sheet As at 30 June 2005 - unaudited 30 June 30 June 31 December 2005 2004 2004 Note £'000 £'000 £'000ASSETS Non-current assets Goodwill 545,786 618,463 603,023Other intangible assets 488,095 487,672 481,024Property and equipment 18,495 28,578 21,479Other investments 10,285 8,817 10,605 1,062,661 1,143,530 1,116,131Current assetsInventory 36,455 35,023 34,700Trade and other receivables 101,048 93,177 91,048Deferred tax assets 68,352 7,665 40,098Cash and cash equivalents 948 11,124 19,126 206,803 146,989 184,972Non-current assets classified as held for sale 5,924 - 5,924Total assets 1,275,388 1,290,519 1,307,027 EQUITY AND LIABILITIESCapital and reservesCalled up share capital 30,074 29,845 29,946Share premium account 195,870 190,621 192,097Reserve for shares to be issued 1,893 1,401 1,647Merger reserve 496,400 496,400 496,400Other reserve 37,398 37,398 37,398ESOP trust shares (3,641) (6,365) (4,731)Hedging and translation reserve (6,696) (1,406) (6,800)Retained losses (83,430) (158,414) (114,132)Equity attributable to equity holders of parent 10 667,868 589,480 631,825 Minority interests 64 73 53Total equity 667,932 589,553 631,878Non-current liabilitiesLong-term borrowings 356,326 353,164 305,721Deferred tax liabilities 15,339 101,901 101,901Retirement benefit obligation 15,287 18,881 22,535Provisions 390 9,686 660Other payables 519 461 465 387,861 484,093 431,282Current liabilitiesShort-term borrowings 9,725 7,764 15,346 Current tax liabilities 19,108 20,902 23,141 Trade payables and other payables 83,676 88,517 81,019 Deferred income 107,086 99,690 124,361 219,595 216,873 243,867 Total liabilities 607,456 700,966 675,149 Total equity and liabilities 1,275,388 1,290,519 1,307,027 The Board of Directors approved this interim report on 22 September 2005. Consolidated Cash Flow StatementFor the six months ended 30 June 2005 - unaudited 6 months 6 months 12 months ended ended ended 31 30 June 30 June December 2005 2004 2004 Total Total Total Note £'000 £'000 £'000Operating activitiesCash generated by operations 11 4,647 22,215 91,942 Income taxes paid (7,558) (5,100) (9,419)Interest element of finance lease payments (2) (2) (2)Interest paid (11,850) (7,633) (15,029) Net cash (used in)/from operating activities 11 (14,763) 9,480 67,492Investing activitiesInterest received 1,210 947 2,308Proceeds on disposal of trading investments - 11 11Proceeds on disposal of property and equipment 176 464 3,220Purchases of intangible software assets (3,810) - -Purchases of property and equipment (1,505) (880) (8,484)Purchases of non-current investments - (1,450) (1,427)Acquisition of subsidiaries and businesses 16 (27,516) (21,583) (22,063)Net cash used in investing activities (31,445) (22,491) (26,435)Financing activitiesDividends paid 8 (15,926) (7,480) (15,822)Repayments of borrowings (77,884) (187,366) (285,981)New bank loans raised 121,244 202,217 263,316Repayments of obligations under finance leases (19) - (40)Proceeds from the issue of share capital 3,901 1,943 3,412Net cash from/(used in) financing activities 31,316 9,315 (35,115) Net (decrease)/increase in cash and cash equivalents 12 (14,892) (3,697) 5,942 Cash and cash equivalents at beginning of period 15,125 9,183 9,183 Cash and cash equivalents at end of period 13 233 5,486 15,125 Notes to the Unaudited Interim Statements For the six months ended 30 June 2005 1 Basis of Preparation On 1 January 2005, Informa plc adopted International Financial ReportingStandards ("IFRS"), consequently the next annual financial statements of theGroup will be prepared in accordance with IFRS as adopted for use in the EU.Accordingly the financial information presented in these interim financialstatements has been prepared under the basis of IFRS. International FinancialReporting Standards are subject to ongoing review and amendment by the IASB andsubsequent endorsement by the European Commission and are therefore subject topossible change. As a result information contained within these statements mayrequire updating for any subsequent amendments to IFRS required for "first-timeadoption" (IFRS1) or any new standards that the Group may elect to adopt early.Informa plc has elected to adopt the amendments to IAS19 "Employee benefits",issued in December 2004, in advance of their effective date of 1 January 2006and is presenting actuarial gains and losses arising on defined benefit pensionschemes in the Statement of Recognised Income and Expense. The figures for the six months to 30 June 2005 and to 30 June 2004 areunaudited. The comparative figures for the six months ended 30 June 2004 andfor the financial year ended 31 December 2004 have been restated from accountingprinciples generally accepted in the United Kingdom as used in the production ofthe T&F Informa plc Annual Report and Financial Statements 2004 ("UK GAAP") toIFRS. A reconciliation between UK GAAP and IFRS on the profit and equity forthe six months to 30 June 2005, the six months to 30 June 2004 and the financialyear ended 31 December 2004 is included within these interim financialstatements (notes 17, 18 and 19). The IFRS1 exemptions adopted by the Groupalong with the key impact analysis between UK GAAP and IFRS on the financialyear ended 31 December 2004 are included within the Regulatory Announcement "REG-T&F Informa plc IFRS Statement" released on 13 June 2005. The Group adopted IAS32 'Financial Instruments: presentation and disclosure' andIAS39 'Financial Instruments: recognition and measurement' from 1 January 2005.The impact on the opening balance sheet as shown in the Regulatory Announcement"REG-T&F Informa plc IFRS Statement" made on 13 June 2005 is set out in note 3. The Group has chosen not to apply IAS34 'Interim Financial Reporting' in thepreparation of these interim financial statements. The information for the year ended 31 December 2004 does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. A copyof the statuory accounts for that year under UK GAAP has been delivered to theRegistrar of Companies. The auditors' report on those accounts was unqualifiedand did not contain a statement under Section 237 (2) of the Companies Act. The Group believes that adjusted operating profit (note 5), adjusted earningsper share (note 9) and adjusted cash generated by operations (note 11) provideadditional useful information on underlying trends to shareholders. Thesemeasures are used for internal performance analysis and incentive compensationarrangements for employees. The term adjusted is not a defined term under IFRSand may not therefore be comparable with similarily titled profit measurementsreported by other companies. It is not intended to be a substitute for, orsuperior to GAAP measurements of profit. The principal adjustments made are inrespect of: • Restructuring costs - the costs incurred by the Group in reorganising and integrating businesses, notably acquisitions, are classified as restructuring; • Amortisation and impairment of acquired intangibles - the Group continues to amortise these intangibles and test for impairment of those assets but does not see these charges as integral to the underlying trading; • Non-trading items - for example gains and losses on disposal of fixed assets; • Bank facility fees written off - capitalised facility fees are amortised over the loan periods but where syndicated loan facilities have been terminated early and new facilities undertaken on funding major acquisitions, the unamortised fees are immediately expensed. This accelerated expense is not viewed as being part of the operating activities and is thus excluded from the adjusted results; • Discontinuing activities - where the Group is in the process of exiting a major geographical location or line of business, having announced the decision but still being in the process of winding down trade. The Group's operations are split in to three broad market sectors of Academicand Scientific, Professional and Commercial. These divisions are furtheranalysed in to more specific segments which bring together products incomparable market areas under common business heads. This is how the Group'soperational management is structured and its results are reviewed and thus formsthe primary reporting segments (note 4). 2 Accounting policies The interim financial statements have been prepared under IFRS. Refer to thereconciliations in notes 17,18 and 19 and the Regulatory Announcement "REG-T&FInforma plc IFRS Statement" made on 13 June 2005 for the impacts of theaccounting policy alignment with IFRS. Basis of Consolidation The consolidated financial statements incorporate the accounts of the Companyand all of its subsidiaries and joint ventures. The results of subsidiariesacquired or sold are included in the consolidated financial statements from theeffective date of acquisition or up to the effective date of disposal, asappropriate. Where necessary, adjustments are made to the results of acquiredsubsidiaries to bring their accounting policies into line with those used byother members of the Group. Joint ventures are accounted for in accordance withthe proportional consolidation method. Minority interests in the net assets of the consolidated subsidiaries areidentified seperately from the Group's equity and consist of the amount of thoseinterests at the date of the original business combination plus their share ofchanges in equity since that date. A joint venture is a contractual arrangement whereby the Group and other partiesundertake an economic activity that is subject to joint control, that is whenthe strategic and operating policy decisions require the unanimous consent ofthe parties sharing control. The arrangements the Group has entered in toinvolve the establishment of a separate entity in which each venturer has aninterest. The Group reports its interests using proportionate consolidation andcombines its share of the assets, liabilities, income and expense with theequivalent items in the consolidated financial statements on a line by linebasis. Revenue Revenue represents the amount receivable excluding sales taxes, for products andservices supplied to customers and is stated after deduction of trade discountsand provisions for returns and cancellations. Subscription income is deferredand recognised over the period of the subscription. Conference income isdeferred and recognised when the conference is held. Income from managed eventsrepresents fees earned and is recognised when the event is held. Goodwill Goodwill arising on the acquisition of subsidiary companies and businesses iscalculated as the excess of the purchase consideration over the fair value ofthe net identifiable assets and liabilities at the date of acquisition. It isrecognised as an asset at cost, assessed for impairment at least annually andsubsequently measured at cost less accumulated impairment losses. Where animpairment test is performed a discounted cash flow analysis is carried outbased on the cash flows of the income generating unit compared with the carryingvalue of that goodwill. Management estimate the discount rates as the riskaffected cost of capital for the particular businesses. Any impairment isrecognised immediately in the Income Statement. Upon disposal the attributable carrying value of goodwill is included in thecalculation of the profit or loss on disposal. Intangible Fixed Assets Intangible fixed assets comprise book and journal titles at cost. For businesscombinations, cost is calculated based on the Group's valuation methodology,using discounted cash flows. These assets are amortised over their estimateduseful lives, which are as follows: Book lists 20 yearsJournal titles 20-40 years Software which is not integral to a related item of hardware is included inintangible assets. Capitalised internal-use software costs include externaldirect costs of materials and services consumed in developing or obtaining thesoftware, and payroll and payroll-related costs for employees who are directlyassociated with and who devote substantial time to the project. Capitalisationof these costs ceases no later than the point at which the project issubstantially complete and ready for its internal purpose. These costs areamortised over their expected useful life deemed to be 3-5 years. The expected useful lives of intangible fixed assets are reviewed annually. Property and equipment Property and equipment is recorded at cost less accumulated depreciation andprovision for impairment. Depreciation is provided to write off the cost lessthe estimated residual value of tangible fixed assets in equal instalments overthe estimated useful lives of the assets. The rates of depreciation are asfollows: Freehold property 50 yearsShort leasehold properties and improvements Over life of the leaseEquipment, fixtures & fittings 3-15 years Investments Investments held as fixed assets are stated at cost less provision for anyimpairment in value. Investments held by the Company in subsidiaries and jointventures denominated in foreign currencies are translated at rates of exchangeruling at the Balance Sheet date. Non-current assets classified as held for sale Non-current assets classified as held for sale are measured at the lower ofcarrying value and fair value less costs to sell. Inventory Inventories are stated at the lower of cost and net realisable value. Costcomprises direct materials and expenses incurred in bringing the inventory toits present condition and location. Net realisable value represents theestimated selling price less costs expected to be incurred in sale. Work inprogress includes costs (excluding promotional costs) incurred for conferencesplanned to be held after the Balance Sheet date. Foreign Currencies Monetary assets and liabilities denominated in foreign currencies are translatedinto the functional currency at the rates ruling at the dates of thetransactions. Monetary assets and liabilities denominated in foreign currenciesat the Balance Sheet date are retranslated at the rates ruling at that date.These translation differences are disclosed in the Income Statement. The financial statements of foreign subsidiaries are translated into sterling atthe closing rates of exchange. The results are translated at an average rate,recalculated for each month between that month's closing rate and the equivalentfor the preceeding month. The differences arising from the translation of the opening net investment inforeign subsidiaries at the closing rate are taken directly to the translationreserve. In addition the differences arising from retranslation of the foreignsubsidiaries' results from average rates to closing rate are taken directly tothe Group's translation reserve. Such translation differences are recognised inthe Income Statement in the financial year in which the operations are disposedof. The translation movement on matched long-term foreign currency borrowings,qualifying as hedged under IAS39, are also taken directly to the translationreserve. Leasing Assets held under finance leases and hire purchase contracts are capitalised attheir fair value on the inception of the lease and depreciated over the shorterof the period of the lease and the estimated useful economic lives of theassets. The finance charges are allocated over the period of the lease inproportion to the capital amount outstanding and are charged to the IncomeStatement. Operating lease rentals are charged to the Income Statement in equal annualamounts over the lease term. Rental income from sub leasing property space is recognised on a straight linebasis over the term of the relevant lease and is matched with the relevant leasepayments made by the Group on the same space. Taxation The tax expense represents the sum of the tax currently payable and deferredtax. The tax currently payable is based on taxable profit for the year. Taxableprofit differs from net profit as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. TheGroup's liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the Balance Sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if thetemporary difference arises from goodwill or from the initial recognition (otherthan in a business combination) of other assets and liabilities in a transactionthat affects neither the tax nor accounting profit. Deferred Tax is calculated for all business combinations from the transitiondate of 31 March 2004 in respect of intangible assets and properties. A deferredtax liability is recognised to the extent that the fair value of the assets foraccounting purposes exceeds the value of those assets for tax purposes and willform part of the associated goodwill on acquisition. Deferred tax liabilities are recognised for taxable temporary differencesarising on investments in subsidiaries and associates, including interests injoint ventures, except where the Group is able to control the reversal of thetemporary difference and it is probable that the temporary difference will notreverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each Balance Sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity. Pension Costs Certain Group companies operate defined contribution pension schemes foremployees. The assets of the schemes are held separately from the individualcompanies. The pension cost charge associated with these schemes representscontributions payable. The Group also operates funded defined benefit schemes for employees. The costof providing the benefits is determined using the Projected Unit Credit Method,with actuarial valuations being carried out at each Balance Sheet date. Pastservice cost is recognised immediately to the extent the benefits are vested,and otherwise are amortised straight line over the average period until thebenefits become vested. The current service cost and the recognised element ofany past service cost are presented within Operating Profit. The interest costarising on the pension liability less the interest return on the plan assets ispresented within Finance costs. Actuarial gains and losses are recognised infull in the period in which they occur, outside of the Income Statement and inthe Statement of Recognised Income and Expense. The expected return on planassets reflects the estimate made by management of the long-term yields thatwill arise from the specific assets held within the pension plan. The retirement benefit obligation recognised in the Balance Sheet represents thepresent value of the defined benefit obligation as adjusted for unrecognisedpast service cost and the fair value of any relevant scheme assets. Share based payments The Group issues equity settled share based payments to certain employees. Afair value for the equity settled share awards is measured at the date of grant. The fair value is measured using the Binomial model of valuation, which isconsidered to be the most appropriate valuation technique. The valuation takesinto account factors such as non-transferability, exercise restrictions andbehavioural considerations. An expense is recognised to spread the fair value of each award over the vestingperiod on a straight-line basis, after allowing for an estimate of the shareawards that will actually vest. The estimate of vesting is reviewed annually,with any impact on the cumulative charge being recognised immediately. Financial Instruments Derivative instruments utilised by the Group are interest rate swaps, crosscurrency swaps and forward foreign exchange contracts. The Group does not enterinto speculative derivative contracts. All derivative instruments are used forhedging purposes to alter the risk profile of an existing underlying exposure ofthe Group in line with the Group's risk management policies. Amounts payable orreceivable in respect of interest rate swaps are recognised as adjustments tointerest expense over the period of the contracts. Forward contracts for thepurchase and or sale of foreign currencies are used to manage the Group'sexposure to fluctuations in currency rates. Unrealised gains and losses on contracts are accounted for on maturity of thecontract. Where a currency forward contract no longer represents a hedge it isrestated to fair value and any gain or loss is taken to the Income Statement.Where the instrument qualifies as a hedge under IAS39, the difference betweencarrying amount and fair value is taken to the translation reserve. Termination payments are taken to the Income Statement as incurred. Finance Costs Finance costs of debts are capitalised against the debt value on first drawdownof the debt and are recognised in the Income Statement at a constant rate on thecarrying amount over the life of the debt. Own Shares Own shares deducted in arriving at shareholders' funds represent the cost of theCompany's ordinary shares acquired by the Employee Share Option Plan (ESOP)trusts in connection within certain of the Group's employee share schemes. Restructuring Provisions Restructuring provisions are recognised when the Group has a detailed formalplan for the restructuring that has been communicated to the affected parties. 3 IAS32 and IAS39 The Group adopted IAS32 'Financial Instruments: presentation and disclosure' andIAS39 'Financial Instruments: recognition and measurement' from 1 January 2005. In the preparation of its financial statements in accordance with IFRS for theyear ended 31 December 2004, the Group continued to apply the hedge accountingrules of UK GAAP, taking advantage of the exemption available within IFRS1 'First time adoption of IFRS'. The Group is required to recognise transitional adjustments in accounting forits financial instruments in accordance with the measurement requirements ofIAS39 at 1 January 2005. The financial impact of the adoption is detailed in theStatement of Recognised Income and Expense. IFRS1 requires the Group to recognise various transitional adjustments toaccount for those hedging relationships at 1 January 2005. The accounting forthose hedging relationships at transition depends on the nature of the hedgeditem and the hedged risk. The Group's interest rate swaps and forward exchange contracts and similarinstruments that were accounted for as fair value hedges of borrowings under UKGAAP were not previously measured at fair value. In these cases, the differencebetween the derivative's fair value and its previously reported carrying valuehas been recognised directly in opening retained earnings (translation reserve). This has the effect of increasing prepayments by £1.5m and increasing accrualsby £2.5m. Future adjustments to hedged borrowings will be recognised inearnings on an amortised basis. All derivative instruments will continue to be recognised on the balance sheetat fair value with future gains and losses being recognised immediately inearnings, except when the hedging requirements of IAS39 are met, in which casegains and losses are recognised in Equity. 4 Business segments For management purposes, the Group is currently organised into the operatingdivisions as set out below. These divisions are the basis on which the Groupreports its primary segment information. Analysis by market sector Revenue Profit/(loss) from operations 6 months 6 months 12 months 6 months 6 months 12 months 2005 2004 2004 2005 2004 2004 £'000 £'000 £'000 £'000 £'000 £'000 Academic & Scientific DivisionScientific, Technical & Medical 66,257 37,259 121,737 10,113 9,294 24,881Humanities & Social Sciences 45,940 19,597 67,754 3,208 1,570 9,546 112,197 56,856 189,491 13,321 10,864 34,427Professional DivisionFinancial Information 30,129 30,235 60,212 7,065 7,742 15,908Insurance, Law & Tax 15,270 14,702 33,136 1,559 1,724 1,099 45,399 44,937 93,348 8,624 9,466 17,007Commercial DivisionTelecoms & Media 28,696 25,902 37,695 7,291 6,691 8,010Maritime, Trade & Transport 19,822 19,736 39,838 1,894 1,778 (7,508)Commodities 9,444 9,434 17,741 845 1,000 1,997International Conferences 44,184 34,808 71,732 4,243 3,051 8,406 102,146 89,880 167,006 14,273 12,520 10,905Goodwill written off (Note 6) - - - (86,562) - - 259,742 191,673 449,845 (50,344) 32,850 62,339 Adjusted operating profit 6 months 6 months 12 months 2005 2004 2004 £'000 £'000 £'000Academic & Scientific DivisionScientific, Technical & Medical 16,030 11,551 35,985Humanities & Social Sciences 6,147 2,856 16,508 22,177 14,407 52,493Professional DivisionFinancial Information 7,600 7,742 15,908Insurance, Law & Tax 1,653 1,724 5,311 9,253 9,466 21,219Commercial DivisionTelecoms & Media 7,733 6,691 8,648Maritime, Trade & Transport 1,977 1,778 2,489Commodities 896 1,000 2,150International Conferences 6,077 3,051 8,406 16,683 12,520 21,693Adjusted operating profit (Note 5) 48,113 36,393 95,405 Adjusted operating figures are stated before restructuring and re-organisationcosts, acquired intangible asset amortisation, goodwill impairment anddiscontinuing operations. 5 Adjusted figures 6 months 6 months 12 months 2005 2004 2004 £'000 £'000 £'000Discontinuing operations 1,511 - -Restructuring and re-organisation costs 2,496 1,348 9,285Intangible asset amortisation* 7,888 2,195 8,781Goodwill written off/impairment 86,562 - 15,000Adjusted operating profit items 98,457 3,543 33,066Operating (loss)/profit (50,344) 32,850 62,339Adjusted operating profit 48,113 36,393 95,405 Adjusted operating items 98,457 3,543 33,066Non-operating income and expenseLoss on disposal of fixed assets - - 921Profit/(loss) on sale of businesses - 50 (3)Impairment of other investment - - 200 - 50 1,118Finance costsBank facility fees written off - 2,415 2,415Adjusted profit before tax items 98,457 6,008 36,599(Loss)/profit before tax (58,906) 23,644 42,995Adjusted profit before tax 39,551 29,652 79,594 Adjusted profit before tax items 98,457 6,008 36,599Deferred tax credit arising from tax restructuring (116,557) - (35,386)Attributable tax expense on adjusting items (3,115) (1,063) (5,420) (21,215) 4,945 (4,207)Profit for the period 48,769 15,115 69,836Adjusted profit for the period 27,554 20,060 65,629 *Only in respect of acquisitions Restructuring and re-organisation costs for the six months ended 30 June 2005consists of £1,200,000 Board level changes, £400,000 fees relating toacquisition integration and £896,000 costs of merging the UK back offices ofTaylor & Francis Group plc and Informa Group plc post combination.Restructuring and re-organisation costs of £1,348,000 in the 6 months ended 30June 2004 consists of costs of integrating acquisitions. Restructuring andre-organisation costs of £9,285,000 in the the 12 months ended 31 December 2004consist of costs of re-organising book publications operations in the UK and USof £4,200,000, redundancy costs of £3,657,000, property move costs of £762,000and other re organisation costs of £666,000. 6 Tax on profit on ordinary activities 6 months 6 months 12 months 2005 2004 2004 £'000 £'000 £'000Current tax:United Kingdom corporation tax 5,201 4,440 8,116Foreign tax 2,223 4,555 8,325Prior year adjustments - - (6,964) 7,424 8,995 9,477Deferred tax:Current year 1,458 (466) (932)Recognition of deferred tax asset (116,557) - (35,386) (107,675) 8,529 (26,841) Current tax for the interim period is charged at 32% (12 months ended December2004 36%), representing the best estimate of the weighted average annual taxexpected for the full financial year, excluding the impact of any prior yearadjustments. On the combination of Informa Group plc and Taylor & Francis Group plc on 10 May2004 a deferred tax liability of £101,901,000 in respect of intangible and otherassets, excluding goodwill, was recognised with a corresponding increase ingoodwill. On the transfer of the trade and assets of PJB Publications Limited to T&FInforma UK Limited on 1 September 2004, a deferred tax asset of £35,386,000 hasbeen recognised, with a resultant credit to the Income Statement. On 1 January 2005 a deferred tax asset of £116,557,000 has been recognised inrespect of the transfer of the UK trade and assets of the Taylor & Francis Groupbusinesses to T&F Informa UK Limited with a resultant credit to the IncomeStatement. On 1 January 2005, following the restructuring of the UK business, goodwill hasbeen written down by £86,562,000 in relation to the UK deferred tax liabilityoriginally provided on the combination with Taylor & Francis Group plc. 7 Joint ventures Under the proportional consolidation method the Group's share of joint venturesare as follows: 6 months 6 months 12 months 2005 2004 2004 £'000 £'000 £'000 Revenue 1,098 221 441Employee benefit expense (319) (74) (147)Other expenses (794) (202) (565)Loss for the period from (15) (55) (271)continuing operationsTax on loss on ordinary (45) - -activitiesLoss for the period from (60) (55) (271)continuing operations 8 Dividends 6 months 6 months 12 months 2005 2004 2004 £'000 £'000 £'000Amounts recognised as distributions to equityholders in the period:Final dividend for the year ended 31 December - 7,480 7,4802003 of 4.94p per share Interim dividend for the year ended 31 December - - 8,3422004 of 2.80p per share Final dividend for the year ended 31 December 15,926 - -2004 of 5.33p per share 15,926 7,480 15,822 The proposed interim dividend for the six months ended 30 June 2005 of 2.7 penceper share has been approved by the Board on 19 September 2005 and has not beenincluded as a liability as at 30 June 2005 in accordance with IAS1. 9 Earnings per share Basic The basic earnings per share calculation is based on a profit on ordinaryactivities after taxation of £48,769,000 (2004 profit: £15,115,000 six monthsand £69,836,000 twelve months). This profit (2004: six months profit and twelvemonths profit) on ordinary activities after taxation is divided by the weightedaverage number of shares in issue (less those non-vested shares held by employeeshare ownership trusts) which is 299,335,000 (2004: 193,647,000 six months and244,928,000 twelve months). Diluted The diluted earnings per share calculation is based on the basic earnings pershare calculation above except that the weighted average number of sharesincludes all potentially dilutive options granted by the Balance Sheet date asif those options had been exercised on the first day of the accounting period orthe date of the grant, if later, giving a weighted average of 300,900,000(2004: 195,557,000 six months and 246,713,000. twelve months). In accordancewith IAS 33 the weighted average number of shares includes the estimated maximumnumber of shares payable to the vendors of Routledge Publishing Holdings Limitedassuming that there are no claims for compensation by the Group that will reducethis deferred consideration and assuming that the Company does not exercise itsoption to pay the balance of deferred consideration in cash. The deferredconsideration shares are also assumed for the purposes of this calculation tohave been issued on 1 January 2005 at the closing mid-market share price on 30June 2005 of 379p making 335,000 (2004: 314,000 six months and 336,000 twelvemonths) ordinary shares potentially issued. The table below sets out the adjustment in respect of diluted potential ordinaryshares: 6 months 6 months 12 months 2005 2004 2004 Weighted average number of shares used in basic 299,334,804 193,646,662 244,927,883earnings per share calculationEffect of dilutive share options 1,230,032 1,597,198 1,449,594Shares potentially to be issued or allotted 334,734 313,624 335,629Weighted average number of shares used in diluted 300,899,570 195,557,484 246,713,106earnings per share calculation Adjusted earnings per share The basic and diluted adjusted earnings per share calculations has been made toallow shareholders to gain a further understanding of the trading performance ofthe Group. It is based on the basic and diluted earnings per share calculationsabove except profits are adjusted for goodwill amortisation and the after taxeffect of adjusting items as follows: 6 months 6 months 12 months 2005 2004 2004 £'000 £'000 £'000 Profit for the financial period 48,769 15,115 69,836 Adjusting items net of attributable taxation (Note 5) (21,215) 4,945 (4,207)Adjusted profit for the period after taxation from 27,554 20,060 65,629continuing operations Earnings per share:From continuing operations- Adjusted basic (p) 9.21 10.36 26.80- Adjusted diluted (p) 9.16 10.26 26.60 10 Statement of changes in equity for the six months ended 30 June 2005 6 months 6 months 12 months 2005 2004 2004 Note £'000 £'000 £'000 Total recognised income and expense for the 47,680 13,778 61,008periodDividends paid 8 (15,926) (7,480) (15,822)Utilisation of Other reserve - - (1)Reserve for shares to be issued 246 1,401 1,647Decrease/(increase) in ESOP shares 1,090 (2,724) (1,090)Proceeds of new share issues 3,901 517,176 518,754Net addition to equity holders' funds 36,991 522,151 564,496Opening equity holders' funds 631,825 67,329 67,329Change in accounting policy to adopt IAS32 3 (948) - -and 39Closing equity holders' funds 667,868 589,480 631,825 During the period to 30 June 2005, 1,276,116 share options were exercised for atotal consideration of £3,901,000. 11 Reconciliation of operating profit to net cash inflow from operating activities 6 months 6 months 12 months 2005 2004 2004 £'000 £'000 £'000Operating (loss)/profit (50,344) 32,850 62,339Goodwill written off 86,562 - -Profit from operations 36,218 32,850 62,339 Adjustments for:Depreciation of property and 3,451 3,127 7,898equipmentAmortisation of intangible assets 8,680 2,195 8,781Impairment of goodwill - - 15,000Gain/(loss) on disposal of 3 15 (92)property andequipmentOperating cash flows before 48,352 38,187 93,926movements in working capital (Increase)/decrease in inventories (1,755) 177 500Increase in receivables (9,310) (9,086) (7,381)Decrease in payables (28,886) (14,937) (5,294)(Decrease)/increase in retirement (7,248) 4,987 8,641benefit obligationMovement in other operating items 3,494 2,887 1,550Cash generated by operations 4,647 22,215 91,942 Income taxes paid (7,558) (5,100) (9,419)Interest element of finance lease (2) (2) (2)paymentsInterest paid (11,850) (7,633) (15,029) Net cash from operating activities (14,763) 9,480 67,492 Cash and cash equivalents (which are presented as a single class of assets onthe face of the balance sheet) comprise cash at bank and other short-term highlyliquid investments with a maturity of three months or less. Adjusted cash generated by operations 6 months 6 months 12 months 2005 2004 2004 £'000 £'000 £'000 Adjusted operating profit (Note 5) 48,113 36,393 95,405 Cash generated by operations 4,647 22,214 91,941Discontinuing operations 1,511 - -Restructuring and re-organisation costs 2,496 1,348 9,285Additional pension payment 10,000 - -Adjusting items on a cash flow basis 18,654 23,562 101,226Accrued in prior period 2,500 8,000 8,000Accrued at period end (948) (8,800) (2,500)Prepaid for future periods 2,095 - -Adjusted cash generated by operations 22,301 22,762 106,726 6 months 6 months 12 months 2005 2004 2004 % % %Percentage of adjusted operating profit converted to 46 63 112adjusted cash generated by operations 12 Reconciliation of net cash flow to movement in net debt 6 months 6 months 12 months 2005 2004 2004 £'000 £'000 £'000 (Decrease)/increase in cash and cash equivalents (14,892) (3,697) 5,942(Decrease)/increase in debt financing (43,341) (14,852) 22,705Change in net debt resulting from cash flows (58,233) (18,549) 28,647Foreign exchange translation difference (4,660) 6,578 13,600Non-cash movements (250) (166,009) (166,035)Movement in net debt during the period (63,143) (177,980) (123,788)Opening net debt (301,987) (178,199) (178,199)Closing net debt (365,130) (356,179) (301,987) Non-cash items in the period to 30 June 2005 represent amortisation of prepaidloan facility fees of £250,000. In the period to 30 June 2004 they represent netdebt assumed through the acquisition of Taylor & Francis Group plc of£166,009,000. In the year to 31 December 2004 they represent an addition of£26,000 to tangible fixed assets held under finance leases and net debt assumedthrough the acquisition of Taylor & Francis Group plc of £166,009,000. 13 Analysis of changes in net debt At 1 January Non-cash Cash flow Exchange At 30 June movements movements 2005 2005 £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 19,126 - (18,178) - 948Overdrafts (4,001) - 3,286 - (715) 15,125 - (14,892) - 233 Bank loans due in less than one year (5,156) - (3,500) 56 (8,600)Loan notes due in less than one year (6,189) - 5,779 - (410)Finance leases due in less than one year (29) (6) 19 - (16)Bank loans due after more than one year (305,721) (250) (45,639) (4,716) (356,326)Loan notes due after more than one year - - - - -Finance leases due after more than one (17) 6 - - (11)year (317,112) (250) (43,341) (4,660) (365,363) Total (301,987) (250) (58,233) (4,660) (365,130) 14 Contingent liabilities The Company has guaranteed the overdrafts of certain of its UK subsidiaries, upto a combined maximum of £23,522,000 (2004: 6 months £18,836,000, 12 months£18,988,000). As at 30 June 2005 the Company had entered into forward exchange contracts to beconverted into sterling as follows during 2005: July 2005 $10.0 million @ $1.814236 £325.0 million @ $1.818240 €3.0 million @ €1.503997 €145.0 million @ $1.254985 As at 30 June 2004 the Company had not entered into forward exchange contracts. As at 31 December 2004 the Company had entered into forward exchange contractsto be converted into sterling as follows during 2005: February 2005 $35.0 million @ $1.766488 €15.0 million @ €1.446640 15 Post balance sheet events On 6 July 2005 Informa plc completed the acquisition of IIR Holdings Limited forUS$1.4 billion (£768 million). The acquisition was funded initially by debt andthen partially by a 2 for 5 rights issue at 265p. The rights issue net of costsraised £311million. The new shares commenced dealing on 25 July 2005. A new bank facility of £1.25 billion was arranged as a result of theacquisition. The old facility was repaid on 6 July 2005 with the first drawdownon the new facility taking place also on that date. £300 million was repaid onthe new facility from the proceeds of the rights issue on 22 July 2005. The name of the Group was changed on the 18 August 2005 from T&F Informa plc toInforma plc. 16 Businesses acquired Date acquired Ashley Publications Limited Journal publishing 26 May 2005Medic-to-Medic Medical IT services 24 May 2005Triangle Journals Limited Journal publishing 29 April 2005The Book List of IOP Publishing Limited Book publishing 30 June 2005 Cash paid on acquisition net of cash acquired 2005 2004 2004 6 months 6 months 12 months £'000 £'000 £'000Current-year acquisitionsAshley Publications Limited 16,298(*1) - -Medic-to-Medic 6,270(*2) - -Triangle Journals Limited 1,500 - -The Book List of IOP Publishing Limited 2,000 - -Other 1,448 - -Prior-year acquisitionsTaylor & Francis Group plc - 15,703(*3) 15,7033PJB Publications Limited - 5,787(*4) 5,787Other - 93 573 27,516 21,583 22,063 *1 The consideration amount disclosed for Ashley Publications Limited is basedon the unaudited completion accounts and may change as a result of the audit. *2 Total consideration payable for the business of Medic-to-Medic is contingenton generated revenues in the year 2006 and will not exceed £15,000,000. Theconsideration of £6,270,000 has been paid in the first half of 2005. *3 Total consideration paid in cash for Taylor & Francis Group plc representscosts incurred relating to the business combination between Informa Group plcand Taylor & Francis Group plc *4 Cash paid in relation to the December 2003 acquisition of PJB PublicationsLimited is in respect of accrued costs brought forward. The combined impact on the Group's profit after tax from the newly acquiredbusinesses for the first half of 2005 amounted to £100,000 on revenues of£500,000. The total assets of newly acquired businesses amounted to £29,800,000as at 30 June 2005. All acquisitions, except for Taylor & Francis Group plc in 2004, were paid forin cash and in all acquisitions full control over the business has beenacquired, either by acquiring 100% of the outstanding shares or by means of anasset purchase deal. Ashley Publications Limited On May 26, 2005, the Group acquired 100% of the issued share capital of AshleyPublications Limited for cash consideration of £18,028,000. Net assets acquired Book value Fair value Fair value adjustments £'000 £'000 £'000 Property and equipment 42 - 42Debtors 446 - 446Creditors (1,687) - (1,687)Investments 3 - 3Cash and cash equivalents 1,730 - 1,730Provisions for liabilities and charges (6) - (6)Net assets 528 - 528Intangible assets 10,433Provisional goodwill 7,067Total consideration 18,028 Satisfied by:Cash 18,028 18,028 Net cash outflow arising on acquisitionCash consideration 18,028Cash and cash equivalents acquired (1,730) 16,298 The numbers above are based on the Ashley Publications Limited unaudited "Completion accounts" and are liable to change. Goodwill of £7,067,000 represents the excess of the purchase price over the fairvalue of the net tangible and intangible assets acquired, and is not deductiblefor tax purposes. If the acquisition of Ashley Publications Limited had taken place on the firstday of the financial year, Group revenues for the first half of 2005 would havebeen £900,000 higher and the Group profit attributable to Equity shareholderswould have been £500,000 higher. Ashley Publications Limited generated revenues of £200,000 and net income (basedon assumed tax rate of 30%) of £70,000 in the post acquisition period from 26May 2005 to 30 June 2005. Medic-to-Medic On 24 May 2005, the Group acquired the trading assets of Medic-to-Medic for acash consideration of £6,270,000 and further consideration contingent onrevenues in 2006. Total consideration will not exceed £15,000,000. Fair value Net assets acquired Book value adjustments Fair value £'000 £'000 £'000 Property and equipment 11 - 11Debtors 261 - 261Creditors (126) - (126)Net assets 146 - 146Intangible assets 10,470Provisional Goodwill 4,170Total consideration 14,786 Satisfied by:Cash 6,270Deferred consideration 4,200Contingent consideration 4,316 14,786Net cash outflow arising onacquisitionCash consideration 6,270Cash and cash equivalents acquired - 6,270 Goodwill of £4,170,000 represents the excess of the purchase price over the fairvalue of the net tangible and intangible assets acquired, and is not deductiblefor tax purposes. If the acquisition of Medic to Medic had taken place on the first day of thefinancial year, Group revenues for the first half of 2005 would have been£1,600,000 higher and the Group profit attributable to Equity shareholders wouldhave been £200,000 higher. Medic to Medic generated revenues of £300,000 and net income (based on assumedtax rate of 30%) of £30,000 in the post acquisition period from 24 May 2005 to30 June 2005. 17 Reconciliation of total equity from Former UK GAAP adopted by the Group to International Financial Reporting Standards 30 June 31 December 2004 2004 £'000 £'000 Total equity under Former UK GAAP 144,503 131,240Adjustments to opening IFRS balance sheet as at 1 (5,960) (6,389)January 2004 Use of Acquisition accounting for Taylor & Francis 441,039 441,680Group plc mergerDeferred promotional costs expensed rather than (209) (673)prepaid under IFRSRecognition in the pension charge of actuarial (49) (2,633)gains and losses on the Group pension schemesRecognition of dividends paid rather than accrued 889 8,389Intangible assets; change in amortisation charge 10,464 18,952from Former UK GAAP to IFRSRecognition of share based payments under IFRS (882) 604Attributable taxation effect (242) 41,048Attributable deferred tax on non-current assets - (340) classified as held for sale Total equity under IFRS 589,553 631,878 18a Effect of IFRS on income statement for the six months ended 30 June 2004 UK GAAP T&F Intan- Pen- Mer- Share Amor- Adjust- Joint Accoun- De- Total IFRSbalances in pre gible sions ger based tisation ments ven- ting ferred IFRSIFRS format acqui- assets costs and of to tures align- promo- and sition rever- em- intan- tax- ments tional ESOP re- sal ployee gible ation expen- adjust- sults of pay- assets diture ments good- ments will amor- tisa- tion £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue 246,494 (54,821) - - - - - - - - - (54,821) 191,673Share of (221) - - - - - - - 221 - - 221 -revenue ofjoint venturesChange in 116 4,366 - - - - - - - - (298) 4,068 4,184inventories offinished goodsand work inprogressRaw materials (81,711) 8,618 - - - - - - - - - 8,618 (73,093)andconsumablesusedEmployee (70,893) 14,077 - 106 - (1,800) - - - - - 12,383 (58,510)benefitexpenseDepreciation (4,517) 920 - - - - - - - - - 920 (3,597)expenseAmortisation (17,624) 4,965 12,659 - - - (2,195) - - - - 15,429 (2,195)and impairmentexpenseOther expenses (44,619) 18,215 - - - - - - (276) 1,068 - 19,007 (25,612)Share of (55) - - - - - - - 55 - - 55 -result ofjoint ventures ________ ______ _______ _____ ______ ________ ______ ______ _______ _______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ _______ ________ ________ Operating 26,970 (3,660) 12,659 106 - (1,800) (2,195) - - 1,068 (298) 5,880 32,850profit Merger costs (15,703) - - - 15,703 - - - - - - 15,703 -Non-operating (50) - - - - - - - - - - - (50)income andexpenditure Finance costs (11,006) 2,154 - (1,251) - - - - - - - 903 (10,103)Investment - - - 947 - - - - - - - 947 947income ________ ______ _______ _____ ______ ________ ______ ______ _______ _______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ _______ ________ ________Profit on 211 (1,506) 12,659 (198) 15,703 (1,800) (2,195) - - 1,068 (298) 23,433 23,644ordinaryactivitiesbeforetaxation Tax on Profit (7,235) 1,528 - (2,822) - - (1,294) (8,529)on ordinaryactivities ________ ______ _______ _____ ______ ________ ______ ______ _______ _______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ _______ ________ ________Profit for the (7,024) 22 12,659 (198) 15,703 (1,800) (2,195) (2,822) - 1,068 (298) 22,139 15,115financial year Less: Minority 6 - - - - - - - - - - - 6interest ________ ______ _______ _____ ______ ________ ______ ______ _______ _______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ _______ ________ ________Profit (7,018) 22 12,659 (198) 15,703 (1,800) (2,195) (2,822) - 1,068 (298) 22,139 15,121attributableto equityshareholders ======= ====== ======= ====== ====== ======== ====== ====== ======= ======= ======= ======= ====== ======= ====== ====== ======== ====== ====== ======= ======= ======== ========Statement ofrecognisedincome andexpenseReconciliation (4,423) 3,017 - 63 - - - - - - - 3,080 (1,343)from STRGL toIFRS statement ====== ======= ======= ======= ====== ======= ====== ====== ======== ====== ====== ======= ======= ======== ======== 18b Effect of IFRS on balance sheet as at 30 June 2004 UK GAAP Open- Acqui- De- Pen- Divi- Intan- Share Taxa- Total IFRSBalances in ing sition ferred sions dends gible based tion IFRSIFRS Format bal- Acco- Promo- assets pay- and ance unting tion ments ESOP sheet adjust- adjust- ments ments £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Non currentassetsIntangible 6,432 5,913 477,460 - - - (2,133) - - 481,240 487,672assetsGoodwill 533,085 - 72,781 - - - 12,597 - - 85,378 618,463Property and 34,575 (5,913) (84) - - - - - - (5,997) 28,578equipmentOther 8,817 - - - - - - - - - 8,817investments ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ 582,909 - 550,157 - - - 10,464 - - 560,621 1,143,530 ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ Current assetsInventory 42,298 (4,000) (2,977) (298) - - - - - (7,275) 35,023Trade and 93,817 - (640) - - - - - - (640) 93,177otherreceivablesDeferred tax 500 - 7,165 - - - - - - 7,165 7,665assetsCash and cash 11,124 - - - - - - - - 11,124equivalents ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ 147,739 (4,000) 3,548 (298) - - - - - (750) 146,989 ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ Fixed assets - - - - - - - - - - -held forresale ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ Total assets 730,648 (4,000) 553,705 (298) - - 10,464 - - 559,871 1,290,519 ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ EquityCalled up 29,845 - - - - - - - - - 29,845share capitalShare premium 186,279 - 500,742 - - - - - - 500,742 687,021accountReserve for 1,267 - - - - - - 134 - 134 1,401shares to beissuedOther reserve 37,398 - - - - - - - - - 37,398Merger reserve 34,540 - (34,540) - - - - - - (34,540) -ESOP trust (3,641) - (3,269) - - - - 545 - (2,724) (6,365)sharesRetained (141,258) (5,620) (21,894) (298) (135) 889 10,464 (1,800) (168) (18,562) (159,820)losses ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ Total equity 144,430 (5,620) 441,039 (298) (135) 889 10,464 (1,121) (168) 445,050 589,480shareholders'funds ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ Minority 73 - - - - - - - - - 73interests ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ Non-current -liabilitiesLong term 353,164 - - - - - - - - - 353,164borrowingsDeferred tax - (5,262) 107,602 - 27 - - - (466) 101,901 101,901liabilitiesRetirement - 13,894 4,879 - 108 - - 18,881 18,881benefitobligationProvisions for 9,686 - - - - - - - - - 9,686liabilitiesand chargesOther payable 461 - - - - - - - - - 461 ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ 363,311 8,632 112,481 - 135 - - - (466) 120,782 484,093 ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ CurrentliabilitiesShort term 7,764 - - - - - - - - - 7,764borrowingsCurrent tax 20,268 - - - - - - - 634 634 20,902liabilitiesTrade payable 95,112 (7,012) 185 - - (889) - 1,121 - (6,595) 88,517and otherpayablesDeferred 99,690 - - - - - - - - - 99,690income ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ 222,834 (7,012) 185 - - (889) - 1,121 634 (5,961) 216,873 ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ Total equity 730,648 (4,000) 553,705 (298) - - 10,464 - - 559,871 1,290,519andliabilities ________ ______ _______ _____ ______ ________ ______ ______ ________ ________ ______ _______ _____ ______ ________ ______ ______ _______ ________ 18c Effect of IFRS on income statement for the year ended 31 December 2004 UK GAAP T&F Intan- Amor- Pen- Mer- Share Joint Adjust- De- Total IFRSbalances in pre gible tisa- sions ger based ven- ments ferred IFRSIFRS format acqui- assets tion costs and tures to promo- and sition rever- of em- taxa- tional ESOP re- sal intan- ployee tion expen- adjust- sults of gible pay- diture ments good- assets ments will amor- tisa- tion £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue 504,666 (54,821) - - - - - - - - (54,821) 449,845Share of (441) - - - - - - 441 - - 441 -revenue ofjoint venturesChange in 1,042 4,366 - - - - - - - (961) 3,405 4,447inventories offinished goodsand work inprogressRaw materials (158,646) 8,618 - - - - - - - - 8,618 (150,028)andconsumablesusedEmployee (150,645) 14,077 - - 119 - (2,793) (712) - - 10,691 (139,954)benefitexpenseDepreciation (8,818) 920 - - - - - - - - 920 (7,898)expenseAmortisation (49,741) 4,965 29,776 (8,781) - - - - - - 25,960 (23,781)and impairmentexpenseOther expenses (88,507) 18,215 - - - - - - - - 18,215 (70,292)Share of (271) - - - - - - 271 - - 271 -result ofjoint ventures ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______Operating 48,639 (3,660) 29,776 (8,781) 119 - (2,793) - - (961) 13,700 62,339profit Merger costs (15,703) - - - - 15,703 - - - - 15,703 -Non-operating (1,118) - - - - - - - - - - (1,118)income andexpenditure -Finance costs (20,551) 2,154 - - (2,137) - - - - - 17 (20,534)Investment 1,117 - - - 1,191 - - - - - 1,191 2,308income ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______Profit on 12,384 (1,506) 29,776 (8,781) (827) 15,703 (2,793) - - (961) 30,611 42,995ordinaryactivitiesbeforetaxation Tax on Profit (12,284) 1,528 - - - - - 37,597 - 39,125 26,841on ordinaryactivities ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______Profit for the 100 22 29,776 (8,781) (827) 15,703 (2,793) - 37,597 (961) 69,736 69,836financial year Less: Minority 26 - - - - - - - - - - 26interest ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______Profit 126 22 29,776 (8,781) (827) 15,703 (2,793) - 37,597 (961) 69,736 69,862attributableto equityshareholders ======= ====== ====== ====== ====== ======= ====== ====== ====== ======= ======= ====== ====== ====== ====== ======= ====== ====== ====== ======= ========Statement ofrecognisedincome andexpenseReconciliation (9,817) 3,017 - - (2,054) - - - - 963 (8,854)from UK GAAPSTRGL to IFRSstatement ====== ======= ======= ======= ====== ======= ====== ====== ======== ====== ====== ======= ======= ======== ======== 18d Effect of IFRS on balance sheet as at 31 December 2004 UK GAAP Open- Acqui- De- Pen- Divi- Intan- Share Taxa- Fixed Total IFRSBalances in ing sition ferred sions dends gible based tion assets IFRSIFRS Format bal- Acco- Promo- assets pay- for and ance unting tion ments resale ESOP sheet adjust- adjust- ments ments £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Non currentassetsIntangible 6,258 5,913 477,387 - - - (8,534) - - - 474,766 481,024assetsGoodwill 497,986 - 75,508 - - - 29,529 - - - 105,037 603,023Property and 33,400 (5,913) (84) - - - - - - (5,924) (11,921) 21,479equipmentOther 10,605 - - - - - - - - - - 10,605investments ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______ 548,249 - 552,811 - - - 20,995 - (5,924) 567,882 1,116,131 ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______CurrentassetsInventory 42,638 (4,000) (2,977) (961) - - - - - - (7,938) 34,700Trade and 91,688 - (640) - - - - - - - (640) 91,048otherreceivablesDeferred tax 414 - 39,684 - - - - - - - 39,684 40,098assetsCash and cash 19,126 - - - - - - - - - - 19,126equivalents ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______ 153,866 (4,000) 36,067 (961) - - - - - - 31,106 184,972 ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______Fixed assets - - - - - - - - - 5,924 5,924 5,924held forresale ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______Total assets 702,115 (4,000) 588,878 (961) - - 20,995 - - - 604,912 1,307,027 ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______EquityCalled up 29,946 - - - - - - - - - - 29,946share capitalShare premium 187,755 - 500,742 - - - - - - - 500,742 688,497accountReserve for 1,267 - - - - - - 380 - - 380 1,647shares to beissuedOther reserve 37,398 - - - - - - - - - - 37,398Merger 34,540 - (34,540) - - - - - - - (34,540) -reserveESOP trust (3,641) - (3,269) - - - - 2,179 - - (1,090) (4,731)sharesRetained (156,078) (5,960) (19,240) (961) (2,881) 8,389 20,995 (2,793) 37,597 - 35,146 (120,932)losses ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______Total equity 131,187 (5,960) 443,693 (961) (2,881) 8,389 20,995 (234) 37,597 - 500,638 631,825shareholders'funds ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______Minority 53 - - - - - - - - - - 53interests ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______Non-currentliabilitiesLong term 305,721 - - - - - - - - - - 305,721borrowingsDeferred tax 5,901 (4,922) 140,121 - (881) - - - (38,318) - 96,000 101,901liabilitiesRetirement - 13,894 4,879 - 3,762 - - - - 22,535 22,535benefitobligationProvisions 660 - - - - - - - - - - 660forliabilitiesand chargesOther payable 465 - - - - - - - - - - 465 ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______ 312,747 8,972 145,000 - 2,881 - - - (38,318) - 118,535 431,282 ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______CurrentliabilitiesShort term 15,346 - - - - - - - - - - 15,346borrowingsCurrent tax 22,420 - - - - - - - 721 - 721 23,141liabilitiesTrade payable 96,001 (7,012) 185 - - (8,389) - 234 - - (14,982) 81,019and otherpayablesDeferred 124,361 - - - - - - - - - 124,361income ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______ 258,128 (7,012) 185 - - (8,389) - 234 721 - (14,261) 243,867 ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______Total equity 702,115 (4,000) 588,878 (961) - - 20,995 - - - 604,912 1,307,027andliabilities ________ ______ ______ _____ _____ ______ _____ ______ _______ ________ ________ ______ ______ _____ _____ ______ _____ ______ _______ _______ _______ 19 Reconciliation of consolidated Income Statement from Former UK GAAP adoptedby the Group to International Financial Reporting Standards 6 months 6 months 12 months 2005 2004 2004 £'000 £'000 £'000RevenueUnder Former UK GAAP 258,644 246,273 504,225Use of Acquisition accounting for Taylor & Francis Group plc - (54,821) (54,821)mergerInclude share of joint ventures' revenue 1,098 221 441Total IFRS adjustments to revenue 1,098 (54,600) (54,380)Revenue under IFRS 259,742 191,673 449,845 Operating (loss)/profitUnder Former UK GAAP excluding ESOP charge 29,722 26,970 48,639ESOP shares charge (1,090) - -Under Former UK GAAP 28,632 26,970 48,639Use of Acquisition accounting for Taylor & Francis Group plc - (3,660) (3,660)mergerFormer UK GAAP amortisation charge 16,975 12,659 29,776IFRS amortisation charge (7,888) (2,195) (8,781)Goodwill written off (86,562) - -Other IFRS adjustments (1,501) (924) (3,635)Total IFRS adjustments to operating profit (78,976) 5,880 13,700Operating (loss)/profit under IFRS (50,344) 32,850 62,339 Adjusted operating profitUnder Former UK GAAP excluding ESOP charge 50,704 46,620 108,343ESOP shares charge (1,090) - -Under Former UK GAAP 49,614 46,620 108,343Operating IFRS adjustments (78,976) 5,880 13,700Former UK GAAP amortisation charge (16,975) (12,659) (29,776)IFRS amortisation charge 7,888 2,195 8,781Goodwill written off 86,562 - -Change in adjusting items added back to operating profit - (5,643) (5,643)Total IFRS adjustments to adjusted operating profit (1,501) (10,227) (12,938)Adjusted operating profit under IFRS (Note 5) 48,113 36,393 95,405 (Loss)/profit before taxUnder Former UK GAAP 20,421 211 12,384IFRS adjustments to operating profit (78,976) 6,425 15,879Merger costs capitalised in to acquisition value - 15,703 15,703Net finance costs effect of IFRS (351) 1,305 (971)Total IFRS adjustments before tax (79,327) 23,433 30,611Profit before tax under IFRS (58,906) 23,644 42,995 Profit/(loss) after taxUnder Former UK GAAP 10,502 (7,024) 100Total IFRS adjustments (79,327) 23,433 30,611Attributable taxation effect 117,594 (1,294) 39,125Total IFRS adjustments 38,267 22,139 69,736Profit after tax under IFRS 48,769 15,115 69,836 This information is provided by RNS The company news service from the London Stock Exchange

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