11th Apr 2012 12:29
UBM plc ANNUAL REPORT & NOTICE OF 2012 ANNUAL GENERAL MEETING
UBM plc ("the Company") announces that its Annual General Meeting will be held on 11 May 2012 at 12.30pm at the Fitzwilliam Hotel, St. Stephen's Green, Dublin 2, Ireland. In connection with this, the following documents have been posted or made available to shareholders today:
Annual Report & Accounts for the year ended 31 December 2011
Notice of 2012 Annual General Meeting
Form of Proxy for the 2012 AGM
In accordance with Listing Rule 9.6.1, copies of these documents have also been submitted to the UK Listing Authority via the National Storage Mechanism and will be available for viewing shortly at www.hemscott.com/nsm.do
The 2011 Annual Report & Accounts and Notice of the 2012 Annual General Meeting will also shortly be available on the Company's website at www.ubm.com.
The appendices to this announcement contain additional information which has been extracted from the Annual Report & Accounts for the year ended 31 December 2011 ("the Annual Report") for the purposes of compliance with the Disclosure and Transparency Rules ("DTR") and should be read together with the Final Results Announcement, which can be downloaded from the Company's website www.ubm.com. This announcement should be read in conjunction with, and is not a substitute for, reading the full Annual Report. Together these constitute the information required by DTR 6.3.5 which is required to be communicated to the media in full unedited text through a Regulatory Information Service.
Anne SiddellCompany SecretaryAPPENDICES
Appendix A: Directors' responsibility statement
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. The Companies (Jersey) Law 1991 requires the directors to prepare financial statements for each financial period in accordance with generally accepted accounting principles prescribed for the purposes of the Law for market traded companies. The financial statements of the Company are required by law to give a true and fair view of, or be presented fairly in all material respects so as to show, the state of affairs of the Company at the end of the period covered by the accounts and of the profit or loss of the Company for that period. In preparing these financial statements, the directors should:
- Select suitable accounting policies and then apply them consistently.
- Make judgements and estimates that are reasonable and prudent.
- Specify which generally accepted accounting principles have been followed in their preparation.
- Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping accounting records which are sufficient to show and explain the Company's transactions and are such as to disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements prepared by the Company comply with the requirements of the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Each of the directors at the date of this report, whose names and functions are listed on pages 52 to 54 confirm that, to the best of their knowledge:
- the Group financial statements in this report, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and IFRIC interpretations, and the Company financial statements in this report, which have been prepared in accordance with United Kingdom generally accepted
accounting principles, give a true and fair view of the assets, liabilities, financial position and result of the Company and the undertakings included in the consolidation taken as a whole.
- the management report contained in this report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
Appendix B: Principal Risks
A description of the principal risks that the Company faces is extracted from pages 41 to 43 of the Annual Report.
Sound risk management is an essential discipline for running the business efficiently and pursuing our strategy successfully. Our internal audit function manages a UBM-wide annual risk mapping exercise - reviewing with each division the risks they have identified and agreeing measures and controls to mitigate their risks wherever possible. This process is reviewed by the Audit Committee and then by the Board, to ensure a consistent and coherent approach to the principal risk factors and to those other risk factors that may arise or which may become material in the future.
The risks listed do not necessarily comprise all those associated with UBM.
Sector trends: UBM operates in highly competitive international markets which change in response to technological innovation and other global political factors. It is not possible to predict with certainty the changes which may affect the competitiveness of the business, or whether technological innovation or disruptive technologies will render some existing products and services partially or wholly obsolete. With increased agility and innovation within UBM's businesses, our current organisational structure and control systems may not evolve at the same pace and lose alignment with the business needs.
UBM's strategy of creating a balanced portfolio of products improves our ability to meet the changing needs of our customers. We have responded to the continuing digital revolution by acquiring and developing innovative digital products, while at the same time actively managing the contraction of our print magazine portfolio. We closely monitor trends relevant to our businesses and regularly discuss with senior management. We consider relevant risk factors in the development of new products and services, and develop appropriate control systems for new products. We aim to achieve a balance between the requirement for increasing innovation and agility which enable us to compete, with the requirement for control and scalability.
Economic conditions: Advertising and other discretionary marketing spend tends to be cyclical. An economic slowdown or recession, possibly exacerbated by the Eurozone crisis, could impact revenue as companies spend less on advertising. Any downturn may also result in slower debt collections, thereby affecting cash flow.
UBM's business is diversified across many different markets and geographies, some of which exhibit lower levels of cyclicality than others. The geographic spread of the business helps to limit the impact of economic downturn in any specific country or region. Market trends are closely monitored at a divisional level and regularly reported upon. Each division closely manages credit risk monitoring collections performance and reviewing credit policies.
Attracting, retaining and succession planning for key management personnel: UBM operates in a number of industry segments in which there is intense competition for experienced and highly qualified individuals. The ability to attract talent and retain highly skilled, experienced, and motivated personnel plays an important part in the continued successful execution of the strategy.
We place significant emphasis on succession planning and developing and retaining management talent. We do this through a variety of means - including incentive schemes, by developing a more agile, entrepreneurial and innovative company culture and by running a number of talent management and specific succession planning programs to develop high calibre business leaders.
Geographic and Emerging Market exposures: UBM has businesses in many geographic regions including growing operations in rapidly developing countries. Operations in these new territories may present logistical, political and management challenges due to different business cultures, laws and languages. In addition, foreign exchange rate fluctuations could adversely affect our earnings and the strength of our balance sheet. Expansion in geographical locations remote from the centres of management increases the spans of control and oversight.
We are addressing each of the control, operational and reputation risks by sending experienced employees into new regions to form part of local management teams and through review by internal audit, and close board monitoring. Foreign currency exposures are hedged under a policy of denominating borrowings in currencies where significant transaction exposure exists.
Force majeure: A disaster or natural catastrophe, terrorism, political instability or disease could affect our ability to continue to do business if it renders offices unavailable and/or curtails travel.
We have developed business continuity arrangements, including IT disaster recovery plans and back-up delivery systems, to minimise any business disruption in the event of a major disaster. Insurance coverage may reduce losses in certain circumstances. We also strengthen terms and conditions of contracts to minimise liabilities, plan for
alternatives and diversify to reduce dependence on particular products or countries.
Acquisitions - identification, execution and integration: Our strategy involves acquiring companies which are accretive to UBM's performance. The availability of suitable acquisition candidates, obtaining regulatory approval for any acquisition and changes in the availability or cost of financing may affect our ability to execute on this strategy. Where businesses are acquired, any delays in integration or unexpected costs or liabilities, as well as the risk of failing to realise operating benefits or synergies from completed transactions may affect the impact of the acquisition.
Risks are mitigated by applying strict financial criteria to any potential acquisition including the costs associated with financing the transaction, and subjecting the process to close monitoring and review by internal audit and the Board. The liquidity profile of UBM is closely managed by Treasury. Senior management and directors are involved in acquisitions on a regular basis and strict processes are applied to integrations including a rigorous review process for major acquisitions which is designed to identify and rectify integration issues at an early stage. We also provide in-house integration training as part of career development for certain management positions.
Credit/counterparty exposure and access to capital: We seek to limit interest rate and foreign exchange risk by the use of financial instruments. As a result we have an unsecured credit risk from the potential non-performance by counterparties to these financial instruments. The credit risk is normally limited to the amount of any mark to market gain on the instrument and not the notional amount being hedged. We also have credit exposure for the amount of cash and cash equivalents on the balance sheet. UBM liquidity issues or restrictions in access to capital may curtail the ability to make certain acquisitions, while local liquidity issues could have a negative reputational impact, particularly with suppliers.
UBM's central treasury is principally concerned with managing internal and external funding requirements and monitoring our working capital. The Head of Treasury is accountable to the Chief Financial Officer and the Board. We maintain a balance between continuity of funding and flexibility through the use of capital markets, bank loans and overdrafts. We maintain a range of borrowing facilities to fund requirements at short notice and at competitive rates. To facilitate access to these sources of funds we seek to maintain a long term investment grade credit rating with both Moody's (current rating: Baa3 - stable outlook) and Standard & Poor's (current rating: BBB - stable outlook). Credit risk is controlled by Treasury policy which restricts the counterparties with whom funds can be invested and derivative contracts can be entered into, principally to licensed commercial and investment banks with strong, long term credit ratings. The policy does not allow significant exposures with counterparties that are rated less than A by Standard & Poor's, Moody's or Fitch and we monitor the concentration of risk constantly. Given our large and diverse customer base, there are no significant concentrations of credit risk with respect to trade receivables. No single customer accounts for more than 1% of UBM's revenues.
Major project execution: Significant projects may be required to secure future revenue streams and may involve significant capital investment (specifically IT and system development). The failure to manage and execute these projects successfully could lead to increased costs, delays in completion or erosion of UBM's competitive position. We seek to mitigate project-related risks through robust project management discipline, monitoring by internal audit and assigning responsibility for projects at an executive management level within UBM.
Litigation, regulation and compliance: The global nature of UBM means we are subject to laws in the various jurisdictions in which we operate. We are therefore exposed to the risk of unfavourable changes in applicable law and its interpretation. These risks include, among others, disputes over intellectual property, trade terms with customers and/or suppliers, customer losses resulting from our IT system delay or failure (for example, arising from a breach of Payment Card Industry Data Security Standards) and violations of data protection and privacy laws. The initiation of a claim, proceedings or investigation could have a material effect on our reputation, business or financial position. New legislation changes may inhibit our ability to grow (e.g. requirements to maintain marketing data under data protection issues) or have an adverse effect on revenues (e.g. changes in government health policies on the use of generic drugs may adversely affect the pharmaceutical companies' advertising spend).
Risks are managed through legal reviews, operational reviews and staff training to raise awareness of the need for compliance in certain areas. The divisions seek to monitor legislative changes and regularly discuss with senior management.
Tax: The management of tax liabilities is a matter of regulatory compliance and legal structure. Failure to comply with the necessary legislation could expose UBM to penalties or challenges to legal structures such that future tax payments may exceed recorded liabilities. Similarly changes to taxation legislation may result in higher levels of taxation than previously guided to.
We manage our tax affairs actively including monitoring tax developments, liaising with external advisors and regularly reviewing the tax planning schemes.
Pensions: The cost of providing pension benefits to existing and former employees is subject to changes in pension fund values and changing mortality. Asset returns might be insufficient to cover changes in the schemes' liabilities over time.
We mitigate this by active management of the investment portfolio and additional contributions have been made to the UK schemes. UBM has acted to close its defined benefit schemes to new members and neither the CEO nor the CFO belongs to such a scheme.
Appendix C: Related party transactions (extracted from pages 140, Note 34, Annual Report)
The Group entered into the following transactions with related parties duringthe year: Balances Balances (owed by) (owed by) / / due to due to the Group Value of the Group Value of at at 31 transactions 31 transactions December December
Transactions with Nature of Nature of 2011 2011 2010 2010
related parties relationship transactions £m £m £m £m CMPWekaVerlag GmbH1 Joint Licensing - - - 0.2 Venture revenue Guangzhou Beauty Joint Commission 0.1 - 0.1 0.1 Fair Venture and management fees GML (Exhibitions) Joint Advances - - 0.3 - Thailand Co Limited Venture PA Group Limited Associate Newswire - (0.6) - - service ShanghaiTekviewIC Investment IT services -* -* 0.1 - AnalysisTechnologyCo Limited
* Transactions and balances (owed by)/due to the Group less than £0.1m.
1- The CMP Weka Verlag GmbH joint venture was sold on 29 November 2010. The related party transactions between the Group and CMP Weka Verlag GmbH disclosed above represent transactions until this date.
The disposal of the EDN China, EDN Asia and certain associated titles to the Group's joint venture, eMedia Asia Limited is also a related party transaction (Note 31).
John Botts, Chairman of the Group was a director of Convera Inc., an IT consultancy specialising in search technologies, until 8 February 2010. Convera Inc. is party to a five-year contract with the Group under which it is entitled to receive a share of revenues from certain related products. Payments under this contract in the prior year until 8 February 2010 were nil. The Group also provided services to Convera Inc. during this period for fees of £1,680.
The Group has provided services to Euromoney Institutional Investor plc, an international publishing, events and electronic information group, during the year for fees of £3,975 (2010: £3,916). John Botts is a director of Euromoney Institutional Investor plc.
Allen & Company, a US investment bank, provided services to the Group during the year for fees of nil (2010: £2.0m). John Botts is a senior advisor of Allen & Company.
Leaders Quest, a non-profit organisation, organised various management conferences for the Group in the prior year for fees of £15,000. There were no transactions during the year ended 31 December 2011. Lindsay Levin, wife of David Levin, Chief Executive Officer of the Group, is a partner of Leaders Quest.
During 2011, the Group provided advertising services and event sponsorship to Microland, an IT infrastructure management outsourcing services provider, for £ 4,649 (2010: £3,226). In the prior year, Microland also provided services to the Group for fees of £64,170. Pradeep Kar, a non-executive director of the Group, is founder, chairman and managing director of Microland.
Computacenter plc, a provider of IT infrastructure services, provided services to the Group during the year for fees of £22,000 (2010: £146,000). Greg Lock, a non-executive director of the Group, is the chairman of Computacenter plc.
During the year, the Group provided services to Kofax plc, a business solutions provider, for fees of £12,000 (2010: nil). Greg Lock is the non-executive chairman of the Board and chairman of the Nomination committee of Kofax plc.
During the prior year, the Group provided services to Target Group, a provider of software and servicing solutions, for fees of £16,568. At 31 December 2010, the Group had a trade receivable with Target Group of £8,687. Greg Lock is a non-executive director of Target Group.
The Swets group of companies, information service providers, provided services to the Group during the year for fees of £13,719 (2010: nil). Also during the year, the Group provided services to Swets for fees of £11,930 (2010: nil). At 31 December 2011, the Group had a trade receivable with Swets of £9,420 (2010: nil). Jonathan Newcomb, a non-executive director of the Group, is chairman of the Swets Board.
Transactions with related parties are made at arm's length. Outstanding balances at year-end are unsecured and settlement occurs in cash. There are no bad debt provisions for related party balances as at 31 December 2011, and no debts due from related parties have been
Compensation of key management personnel of the Group
Key management personnel are the Group's Executive directors and the following is the aggregate compensation of these directors:
2011 2010 £m £m Short-term employee benefits 2.8 2.6 Post employment benefits - 0.1 Share-based payments 2.1 1.3 4.9 4.0 CFD-#10114459-v1
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