5th Mar 2010 07:00
Disciplined and resilient performance in tough year Results for the Year Ended 31 December 2009Key Results 2009 2008Revenue £847.6m £887.0mAdjusted operating profit £171.2m £173.5mAdjusted EPS 55.1p 57.0pDividend per share 24.2p 23.8p Statutory group operating (loss)/profit £(25.8)m £107.6mStatutory profit after tax £81.8m £82.7mStatutory EPS 30.9p 31.5pStatutory EPS (diluted) 30.5p 30.8pFinancial Highlights
- Strong margins maintained; adjusted operating profit flat
- Robust operating cash flow; cash conversion up to 102.0% (2008 - 100.1%)
- Continuing cost discipline - headcount reduced by 479 during 2009
- Emerging markets revenue up 35.9%: c.20% of UBM adjusted operating profits
from China, India & Brazil (2008 - c.15%)
- £46.5m payment in March 2010 to settle major tax issues, £135.2m tax
creditor release
- £153m impairment charge reflects structural pressures on print-heavy units
- Exceptional charge of £16.5m for restructuring costs
- Positive FX contribution: at constant currency, revenues declined 15%,
adjusted operating profit down 13%
- Balance sheet remains strong - debt / EBITDA 1.2 times; cash & undrawn
facilities of £467.1m
Trading Highlights
Resilient Events performance: 51% of adjusted operating profits (2008 - 47%)
- Revenues down 1.5%, adjusted operating profit up 6.1%, margins up 2.2 points
to 30.3%
- Very strong H2 biennial tradeshow performance; revenues up 55% on 2007
Solid performance in Data, Services & Online: 22% of adjusted operating profits (2008 - 18%)
- Revenues up 3.4%, adjusted operating profit up 22%, margins up 2.5 points to
16.3%
Active management of Print - magazine portfolio: 5% of adjusted operating profits (2008 - 14%)
- Revenues down 23.1%, adjusted operating profit down 62.8%, margins down 5.7
points to 5.4%
Robust performance in Targeting, Distribution & Monitoring: 26% of adjusted operating profits (2008 - 25%); revenues up 4.6%, adjusted operating profit up 3.5%, margins down 0.3 points to 27.8%
Outlook
Overall, the outlook for underlying performance in 2010 is stable; UBM is well positioned for medium term growth in Events; Data Services & Online; and Targeting, Distribution & Monitoring which now account for 95% of UBM's adjusted operating profit before corporate operations.
Events: Robust performance expected to continue, especially in high growth emerging markets
- 12 month forward bookings for top 20 annual events down 1.7%
Data, Services & Online: Modest revenue growth anticipated in 2010
- Further investment to support print / digital transition pressures margins
slightly
Print - magazines: Continued management towards more focused print portfolio in medium term
- Further revenue falls and title closures anticipated but margins stable
Targeting, Distribution & Monitoring: On track for modest revenue growth in 2010
- Performance driven by multimedia products and international
- Margins in mid-20s as investment continues
Note: We provide a number of adjusted financial measures to facilitate comparison of performance across periods. Definitions of these measures are provided in Section 1.
David Levin, Chief Executive Officer of UBM said:
"UBM produced a disciplined and resilient performance in 2009. We continued tomake progress both strategically and operationally in all of our divisions. Wehave reshaped our businesses towards market opportunities that providesustainable growth revenue streams and we are increasingly well positioned totake advantage of global economic recovery. The Board has declared a secondinterim dividend of 18.2p, bringing the full year dividend to 24.2p, a 1.7%increase on 2008 (2008 - 23.8p).""Our Events business traded well in 2009, contributing more than half ouradjusted operating profits and demonstrating the growing importance ofmarket-leading face to face events in the digital age. Our large tradeshowsfared particularly well with our top 20 annual events - which contributearound half of our events revenue and over two thirds of our events adjustedoperating profits - growing nearly 12%. As expected our second half biennialshows in Asia and Europe were notably strong.""The performance across our Data, Services & Online business was satisfactorywith margins improving by 2.5 percentage points. In Targeting, Monitoring &Distribution we maintained our share of US news distribution market and heldour margins while market volumes shrank 3.1%. We continue to grow ourmultimedia news release business and to broaden our product portfolio toaddress the opportunities offered by the web as well as expanding ourinternational operations.""We continued to progress UBM's strategic development. Our long term strategyto build our business in emerging economies is proving successful, with China,India and Brazil now contributing over 20% of UBM's adjusted operating profitsand nearly 14% of our revenues, representing revenue and adjusted operatingprofit growth of more than 35%. Our revenues from the rest of Asia Pacific,Latin America, Africa and Middle East amounted to a further £41.0m, up 17.1%on 2008. These territories contributed 4.5% of UBM's adjusted operatingprofits in 2009 (2008 - 3%).""We are pleased to have resolved our decade-long dialogue with the UK taxauthorities over the tax payable on the sale of our Regional Newspapersbusiness in 1998. We have agreed to make a payment of £46.5m in settlement ofthis and a number of other tax issues. This, together with the resolution of anumber of other tax matters, has resulted in a release of £135.2m of ourprevious tax creditor."
"We go into 2010 with our strategy clearly defined and with the operational and financial resources in place to implement that strategy. Despite the tentative and uneven economic recovery we see across our markets, we believe we are very well positioned for profitable growth in the medium term."*
David LevinChief Executive Officer, UBM5 March 2010
* A detailed outlook by UBM business segment is given in Section 2.5
ContactsMediaPeter Bancroft Director of CommunicationsE-mail [email protected] telephone +44 20 7921 5961 Chris Barrie Citigate Dewe RogersonE-mail [email protected] telephone +44 20 7282 2943Mobile +44 796 872 72 89 Analysts / InvestorsE-mail [email protected] telephone +44 20 7921 5095Robert Gray +44 20 7921 5019Andrew Crow +44 20 7921 5940A live webcast of the results presentation will be made available from UBM'swebsite from around 8.30am, 5 March 2010. To access the webcast please go towww.ubm.com.
A video recording of the webcast will also be accessible from UBM's website, www.ubm.com.
Notes to EditorsAbout UBMUBM is a leading global provider of events; data, marketing and informationproducts; print products; and targeting, distribution and monitoring servicesto specialist business communities. Our 5,800 staff in more than 30 countriesare organised into specialist teams that serve these communities, helping themand their markets to work effectively and efficiently.
For more information, go to www.ubm.com
Results for the year ended 31 December 2009
1 Summary group income statement
The table set out below presents selected items from UBM's consolidated incomestatement (which accompanies this summary), together with a reconciliation tonon-GAAP measures, which we provide to assist in the comparison of the resultsbetween periods. Year ended 2009 2008 £m £m % Revenue 847.6 887.0 (4.4) Group operating profit before exceptionalitems 143.7 146.7Add back:- Amortisation of intangible assets arisingon acquisition 26.8 26.1- Depreciation 13.2 12.9- Share of tax on profit in JVs andassociates 0.7 0.7EBITDA[1] 184.4 186.4Depreciation (13.2) (12.9)Adjusted operating profit [2] 171.2 173.5 (1.3) Net interest costs (13.0) (6.4)Financing income:- Pension schemes 2.2 4.4
- Foreign exchange gain on forward contracts 4.7 - Adjusted profit before tax[3]
165.1 171.5 (3.7)Net financing income - other 2.9 0.3Net financing expense - other (6.7) (4.6)Amortisation of intangible assets (26.8) (26.1)Exceptional items:- Restructuring (16.5) (39.1)- Impairment (153.0) - (Loss) / Profit before tax (35.0) 102.0Taxation (18.4) (20.9)Tax on exceptional items - 1.6Exceptional tax credit 135.2 -Profit after tax 81.8 82.7Minority interest (6.6) (6.3)Attributable profit 75.2 76.4 Dividend (pence) 24.2 23.8 1.7Adjusted EPS (pence) [4] 55.1 57.0 (3.3)Adjusted EPS (diluted) - (pence) [5] 54.2 55.8 (2.9)EPS (pence) 30.9 31.5 (1.9)EPS (diluted) 30.5 30.8 (1.0)
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[1] EBITDA is adjusted group operating profit before depreciation.
[2] Adjusted operating profit is group operating profit excluding amortisationof intangible assets arising on acquisitions, exceptional items and share oftaxation on profit from joint ventures and associates.
[3] Adjusted profit before tax is before amortisation of intangible assets arising on acquisitions, exceptional items, share of taxation on profit from joint ventures and associates, net financing expense - other and excluding discontinued operations.
[4] Adjusted earnings per share is before amortisation of intangible assets arising on acquisitions, certain exceptional items, deferred tax on intangible assets, taxation relating to exceptional items and net financing expense - other.
[5] Adjusted diluted earnings per share is before amortisation of intangible assets arising on acquisitions, certain exceptional items, deferred tax on intangible assets, taxation relating to exceptional items and net financing expense - other, after adjusting for the impact of share options.
2 2009 Review
2.1. Summary of operating results
The table below presents the revenue and adjusted operating profit for our business segments - Events; Data, Services & Online; Print - magazines; and, Targeting, Distribution & Monitoring.
Revenue Constant currency 2009 2008 Change change Under-lying2 £m £m % % % Events 287.5 291.8 (1.5) (12.1) (8.8)Data, Services &Online 232.9 225.3 3.4 (9.3) (9.2)Print - Magazines 165.8 215.6 (23.1) (30.3) (18.6)Targeting,Distribution &Monitoring 161.4 154.3 4.6 (9.1) (9.6) 847.6 887.0 (4.4) (15.2) (11.1) Adjusted operating profit1 Constant currency 2009 2008 Change change Under-lying2 £m £m % % % Events 87.2 82.2 6.1 (6.0) (9.9)Data, Services &Online 37.9 31.1 21.9 7.4 0.9Print - Magazines 8.9 23.9 (62.8) (65.8) (49.9)Targeting,Distribution &Monitoring 44.8 43.3 3.5 (9.7) (13.8) CorporateOperations3 (7.6) (7.0) 8.6 n/a n/a 171.2 173.5 (1.3) (13.0) (13.9)
1 Adjusted operating profit is operating profit excluding amortisation of intangible assets arising on acquisitions, exceptional items and share of taxation on profit from joint ventures and associates.
2 Underlying: adjusted for the effects of acquisitions, discontinued products, foreign exchange and biennial events.
3 Corporate operations comprises net central operating costs, together with those equity accounted investments which do not form part of one of the group's operating divisions.
2.2. 2009 summaryIn 2009 UBM delivered a disciplined and resilient operational and financialperformance in a very difficult worldwide economic environment. We maintainedour strong cash flow, margins and Sterling-reported profits, althoughunderlying profits fell 13.9%. We have maintained our second interim dividendwhich, together with the first interim dividend, represents a modest increaseof 1.7% for the year as a whole.
Despite extremely challenging conditions in many of our markets, our major growth segments (Events; Data, Services & Online; Targeting, Distribution & Monitoring) all performed robustly, with notable results from our larger tradeshows, Asian operations and online activities. During the year we continued to ensure that we maintained a cost base appropriate to market conditions. The principal focus of our action was on our Print -magazine segment which faced the challenge of combined acute structural and cyclical pressures and reported a 30.3% revenue reduction year on year in constant currency terms. In response we closed 31 titles.
During the year we built our businesses in markets and geographies which offeropportunities for sustainable, profitable growth. Live events are of growingstrategic importance to UBM: in 2009 we ran more than 300 events and our widerevent portfolio generated more than half of our profits. Live events have astrong future in the digital age. We also see developing businessopportunities in linking live events and online `virtual' products as part ofa rich, integrated offering to specialist communities.Despite 2009's economic conditions we continued to expand our successfulproducts and services, particularly tradeshows, in fast-growing emergingeconomies. This has been a long term UBM strategic priority and a key elementin driving profitable growth in the future. Our primary - but not exclusive -focus has been on China, India and Brazil. Of these, our largest presence isin China where we now employ over 700 people. We have recently appointed asenior executive to represent UBM in Beijing to build our governmentalrelationships at all levels and to facilitate our expansion across China. In2009 the revenues we generated in China, India and Brazil grew nearly 36% andthese countries contributed over 20% of our profits, doubling theircontribution since 2006.In 2009 we invested £27.7m in the acquisition of four new businesses, andincreased our stake in a fifth. These were all `bolt-on' acquisitions toadvance the development of our existing businesses. Acquisitions made in thelast three years continue to perform well, generating an aggregate return oninvestment of 9.2% in 2009, reinforcing our track record of selecting goodacquisition targets, acquiring them at attractive valuations and integratingthem effectively.
In 2009 we continued to make progress both strategically and operationally in all of our divisions and we are increasingly well positioned to generate superior returns as the global economy recovers.
2.3. UBM strategy summary
In 2009 we have continued to implement our clearly defined strategy. UBMorganises live events and provides marketing services, data, communicationsand media products and services which support the business activities ofspecialist communities in a wide range of countries worldwide. By operatingclose to these communities, our businesses have the deep market insight todevelop the best possible products and services. We deploy our core skillsacross and between markets, transferring best practice and innovation from onecommunity to another, from one geography to another, from one product type toanother.Our strategy for profitable growth targets products and markets which willprosper in the emerging digital age and which provide us with global growthopportunities. Our focus is on developing our live events (in particulartradeshows), our specialist data and online businesses, and our targeting,distribution and monitoring business. We are building our businesses infast-growing, emerging markets, with a particular emphasis on China, India andBrazil. We also invest to acquire businesses that can accelerate our growth inmarkets, communities and geographies. We continue to manage our remainingprint magazines appropriately in a difficult structural context; however wesee a long term role for leading print titles in the overall future media mix.
2.4. 2009 business review
2.4.1. Events - UBM's largest business
2009 2008 Reported Underlying Constant change growth currency £m £m % % %
Turnover 287.5 291.8 (1.5) (8.8) (12.1) Operating Profit 87.2 82.2 6.1 (9.9) (6.0)
In 2009 our events portfolio generated 33.9% of UBM's total revenue (2008 - 32.9%) and 50.9% of total adjusted operating profit (2008 - 47.4%). Revenue fell by 1.5% to £287.5m (2008 - £291.8m) and adjusted operating profit increased by 6.1% to £87.2m (2008 - £82.2m). These results reflect lower Sterling exchange rates; on a constant currency basis revenues and adjusted operating profit were down 12.1% and 6.0% respectively.
Our Events portfolio proved its resilience in 2009, with sales of exhibitionstand space of nearly 1 million square metres in line with 2008 (including87,000 square meters at 2009 biennial shows, up from 76,000 for 2008biennials). We hosted more than 1,250,000 visitors across our 300 eventsworldwide, up 10% on the prior year. Notably, stand revenues excludingbiennial events were up 12% over 2008 at reported exchange rates, and wereflat in constant currency terms. These stable stand revenues were offset byweaker paid attendee and sponsorship revenues, reflecting cyclical pressureson corporate travel and marketing budgets. The impact of this reduction wasconcentrated at our paid attendee US technology events. Attendee revenuescontribute around 10% of our overall Events revenues.Our major event franchises, such as CPhI and Cosmoprof ran successfully duringthe year. We saw particularly good performances from our Asia events such asthe September Hong Kong Jewellery Show (now our largest event and the largestjewellery show in the world), Furniture China and CPhI China, all of whichgrew by more than 10%.Our biennial tradeshows were also very strong, notably the Marintec China showin Shanghai and Food Ingredients Europe in Frankfurt, both of which ran duringthe second half of the year. Overall, biennial events contributed revenue of£29.7m and adjusted operating profit of £13.9m, up from £18.0m and £5.9mrespectively in 2008, and notably, up from £19.1m and £7.6m from the 2007editions.
The performance of our events in Japan and in the UK's construction and property-related sectors reflected difficult market conditions, as previously indicated.
Despite the difficult environment in 2009 we continued to geo-clone oursuccessful events, particularly in emerging economies. Worldwide we launched atotal of 36 new events in 2009, including 15 in China, India and Brazil,taking our total number of events in these countries to 59, up from 44 in2008. In India we ran a total of 22 shows in 2009, compared with just three in2006 and we launched eleven new events including the Jewellery Show (Chennai),Informex India, Footwear Manufacturing (New Delhi) and Interop India. Theevents traded successfully, helping lay the foundations for our future growthin this rapidly growing economy. We also took our BSEC event (BuiltEnvironment for Schools) to the Middle East for the first time.Events are a key focus of UBM's growth strategy, founded on our belief in thegrowing importance of live, `in person' interaction in the digital age and itsrole in sustaining and advancing the development of commercial communities.The events market provides us with substantial profitable growth opportunitieswhich are both resistant and complementary to digital developments takingplace in other media markets. We are increasingly well placed to use thecombined strengths of our global operational infrastructure and of ourin-depth knowledge of the specialist communities we serve to deliversuccessful, profitable, `in person' events worldwide.Forward bookings for our top 20 annual events due to run over the next twelvemonths are currently 1.7% below last year's level. Our top 20 annual eventscontribute around half of our events revenues and over two thirds of ourevents profits. For a more detailed business by business Outlook, see Section2.5.
2.4.2. Data, Services & Online
2009 2008 Reported Underlying Constant change growth currency £m £m % % % Turnover 232.9 225.3 3.4 (9.2) (9.3)Operating 37.9 31.1 21.9 0.9 7.4ProfitOur Data, Services & Online businesses generated 27.5% of UBM's total revenuein 2009 (2008 - 25.4%) and 22.1% of total adjusted operating profit (2008 -17.9%). Revenue rose by 3.4% to £232.9m (2008 - £225.3m) and adjustedoperating profit climbed by 21.9% to £37.9m (2008 - £31.1m). On an underlyingbasis, revenues and adjusted operating profit down 9.2% and up 0.9%respectively.Overall the performance across the Data, Services & Online segment wassatisfactory with margins improving by 2.5 percentage points to 16.3% (2008 -13.8%). Margins increased due to cost savings, favourable exchange movementsand higher margins in acquired businesses and new products such as virtualevents moving from loss into profit. Reflecting the diverse markets andgeographies in which we operate, the results for individual products andbusinesses were mixed, with structural market shifts and the year's tougheconomic conditions having different impacts.During 2009 we continued to invest in the development of innovative,customised marketing solutions which deliver empirical metrics of engagement(and return on investment) with increasingly targeted customer audiences.Reflecting the shift in demand towards these products, as well as the cyclicaleconomic pressures on marketing spend, traditional online banner advertisingrevenues declined by around 10% on a constant currency basis in the year.
Across our data-oriented products, Vidal (drug information directories) performed well and ABI (construction health and safety data) in the UK reported good sales growth but tough trading conditions drove lower revenues in electronics (Semiconductor Insights), aviation (OAG), trade and transportation (PIERS) and Paper & Forestry markets (RISI).
Over the last several years we have invested in the development of our virtualevents. In 2009 we ran a total of 38 virtual events, more than double thenumber we ran in 2008. Our virtual events included recruitment and careersfairs, content-rich seminars and conferences, as well as expo-type events. Themajority of our virtual events took place within the technology market but wealso ran events in markets such as UK commercial property, cruise shipping andUS healthcare.The rapid growth in the number of these events and their attractive audienceengagement metrics have led to increasing sponsorship by our major customers.This demonstrates the ability of virtual events to provide a powerful, costeffective means of bringing customers together to engage and to interact withbranded business content and as well as a means of building professionalbusiness community interaction. We now run a number of our live virtual and`in person' tradeshow events in parallel and we believe there is a symbioticrelationship between virtual and `in person' tradeshows which is generatingsignificant business opportunities.
To reinforce our leadership position in virtual events, we established UBM Studios to provide support across UBM, enabling us to deliver a range of specialised, engaging online interactive products to the communities we serve, complementing the other on- and offline products offered by our businesses (see www.ubmstudios.com for examples).
Revenues generated from other forms of online products such as net seminars,webcasts and webinars remained broadly in line with 2008. Notably, in 2009 ourvirtual events moved into profit after two years of investment.We see significant strategic opportunities in building data-intensive servicesand products for specific, niche markets. After significant investment at theUBM Aviation business, we launched a new technology platform to facilitatemigration away from the business's legacy mainframe systems. The new platformsallow us to enhance the existing products and to develop new products whichbetter exploit our rich data resources. Similarly we are investing in thedevelopment of our healthcare business's global Drug Information Systemcapabilities and in 2009 we also made further progress in converting printdata products to digital products such as Vidal and MIMS in Asia.In 2009 we made two acquisitions in the Data, Services & Online businesssegment. We acquired Iasist (www.iasist.com) for a total cash consideration of€6.4m. Iasist is a provider of benchmarking data and software to regionalhealth authorities, hospitals and other health service providers, principallyin Spain and Portugal. The acquisition further expands our range of healthcaredata solutions, both in Iberia and beyond. We also acquired the remaining 48%equity of RISI, Inc (www.risiinfo.com) for a total cash consideration of$14.3m.
2.4.3. Print - magazines - structural change and economic downturn
2009 2008 Reported Underlying Constant change growth currency £m £m % % % Turnover 165.8 215.6 (23.1) (18.6) (30.3)Operating 8.9 23.9 (62.8) (49.9) (65.8)ProfitIn 2009 Print - magazines generated 19.6% of UBM's total revenue (2008 -24.3%) and 5.2% of adjusted operating profit (2008 - 13.8%). 2009's economicconditions accelerated the long term structural decline in print advertisingrevenues, resulting in UBM's Print - magazine portfolio reported revenuefalling 23.1% to £165.8m (2008 - £215.6m) and adjusted operating profit of£8.9m, down from £23.9m in 2008. On an underlying basis, revenue and adjustedoperating profit fell 18.6% and 49.9% respectively. On a constant currencybasis revenue and adjusted operating profit were down 30.3% and 65.8%respectively.We continued to take action to mitigate the effects of both structural declineand cyclical pressures on revenues, closing 31 titles as well as merging andreducing the frequency of a number of other titles. These actions resulted ina reduction in revenue and adjusted operating profit of £31.8m and £6.5mrespectively. Our exceptional charge of £16.5m largely reflects the costs oftaking these actions. The margins generated by our Print - magazine businessrecovered in the second half to 7.1%, compared with the 3.8% achieved for thefirst half of the year.The B2B magazine world remains significantly over-published in the developedworld and a significant number of titles will close in the coming years. Inmany - but not all - of the markets we serve, there will continue to besufficient demand to support one or two leading titles, a position which eachmarket will reach by means of a "last man standing" process. We continue tomanage our print portfolio actively towards a medium term goal of a smaller,commercially sustainable, more profitable portfolio in which most titlesoperate as part of an integrated portfolio of products serving a particularcommunity.Reader demand for quality content in print remains robust in many markets andgeographies. We continue to see opportunities in emerging economies for newprint titles and during 2009 we launched a number of new publications to testmarkets in India. In addition data derived from registrations for controlledcirculation publications, particularly those serving the US technologymarkets, represent an important resource for our event lead generation andperformance marketing businesses, providing them with a significantcompetitive advantage over their `internet only' competitors.2.4.4. Targeting, Distribution & Monitoring - opportunities in convergingcommunications markets 2009 2008 Reported Underlying Constant change growth currency £m £m % % % Turnover 161.4 154.3 4.6 (9.6) (9.1)Operating 44.8 43.3 3.5 (13.8) (9.7)ProfitTargeting, Distribution and Monitoring generated 19.0% of UBM's total revenue(2008 - 17.4%) and 26.2% of adjusted operating profit (2008 - 25.0%). Revenuerose by 4.6% to £161.4m (2008 - £154.3m) and adjusted operating profit rose3.5% to £44.8m (2008 - £43.3m) although these results reflect favourableexchange rate movements on the results of the US business. We continued toinvest in the business and capital expenditure at PR Newswire was £5.6m (2008- £5.5m). Notwithstanding the increased depreciation charges from our historicand continued investment in the business, margins were broadly flat (dropping0.3 percentage points).The business was affected by difficult economic conditions, lower aggregatelevels of corporate and market activity and the associated general reductionin marketing and communications expenditure. In the US news distributionbusiness, which generated nearly 50% of overall 2009 revenues, we maintainedmarket share, although message volumes across the market fell by 3.1%. Thefall in aggregate volume was concentrated in the first half of the year withthe market recovering to end the second half of the year flat.Non-wire targeting and monitoring products in the US were also affected bylower levels of corporate spending. However we saw strong growth in the volumeof multimedia news releases (up 35%) and in the hosted website engagementproducts, MediaRoom and IR Room (up almost 65%). Our significant presence inthese markets was enhanced during the year by the acquisitions of the FuelTeam (a provider of specialist website modules for communicationsprofessionals) and Virtual Press Office (PR services provider for the Eventsindustry) for a total of $9m.The performance outside North America was mixed with challenging tradingconditions in the UK, Mexico and Dubai but with strong growth in France andGermany. Revenue growth in China and the rest of Asia was also good despitethe weak Chinese IPO market which has previously contributed a significantproportion of revenue. Growth in other emerging markets (India, Brazil,Argentina and Russia) has also been strong. These emerging markets contributednearly 5% of total revenues (2008 - 3.3%) and in aggregate grew by more than20% in the year.In addition to our continued geographical expansion, we see marketopportunities arising from the convergence of marketing, public relations,investor relations and corporate communications practice, a shift which isbeing driven by the fragmentation of traditional media and the rise of socialand online media. We aim to leverage our core global distribution capabilitiesto take advantage of these opportunities, by means of organic productdevelopment and acquisitions. Revenues in these areas already substantiallyoutstrip those generated in the regulatory disclosure market, with just over17% of total revenue being generated in this area, the remainder beingaccounted for by communications, PR and marketing.We are creating new cost-effective marketing products and services to supportour customers' development of ongoing, interactive relationships withincreasing specifically-targeted audiences. During the year we launched anumber of new products such as Social Media Monitoring, an intelligence toolthat enables communications professionals and marketers to monitor, analyseand measure the impact of what is being said about an organisation, a brand, aspokesperson or a competitor across the social media landscape.In addition to new products, we also enhanced existing products, includingvisibility reports, online proofing to news releases within the Online MemberCentre, as well as completely overhauling the main PR Newswire website and itssupporting IT systems (see www.prnewswire.com). The investment made during2009 is reflected in the profit margin, which, together with the decline inrevenue, accounts for the fall from 28.1% in 2008 to 27.8% in 2009.Virtual Press Office, acquired in December, will be integrated with ourexisting global events platform to position the Targeting, Distribution andMonitoring business as the leading marketing and communications serviceprovider in the US live event market. Announcements relating to live eventsalready account for 8.1% of total releases in the USA and are in the top 3 ofall categories of releases. This service will be used across UBM's globalevents portfolio, as well as by other event organisers, exhibitors andattendees worldwide. The business will also be well placed to continue itsgrowth beyond the domestic US market both through its access to UBM's globaltradeshow and other live event portfolio, as well as through VPO's existingextensive relationships with leading event organisers around the world,particularly in Europe and Asia.
2.5. Outlook
Our overall underlying trading performance is stable. Our Events business isperforming well and we see long term opportunities in this and in our Data,Services & Online and our Targeting, Distribution & Monitoring businesses. Weanticipate continued contraction in print and, given the tentative and uneveneconomic recovery, have limited visibility on attendee revenues and clientmarketing spend. Our Asian and emerging market positions are set to continueto grow - and this represents an increasing part of our business.In the light of these factors, we believe UBM is increasingly well positionedfor sustainable, profitable growth in the medium term.We note that 2010 is a `negative' biennial year for our Events portfolio andthat the exchange rate for 2010 may be significantly different from the $1.57average rate in 2009.2.5.1. Outlook for Events
In 2009 our Events portfolio contributed 33.9% of UBM's revenues and 50.9% of adjusted operating profits.
In aggregate we expect the robust performance of our Events portfolio tocontinue, particularly in high growth emerging markets. Forward bookings forour top 20 annual events running in the next twelve months - which contributedaround half of our total events revenue and over two thirds of total eventsadjusted operating profits in 2009 - are 1.7% lower than at this point lastyear. However because we will run fewer of our large biennial tradeshows in2010 than in 2009, revenues will be lower. 2009 biennial revenues were £29.7mand 2008 biennial revenues were £19.9m at a constant currency rates.We anticipate that events which serve markets and geographies that continue tobe affected by the downturn, such as the UK furniture industry and our eventsin Japan, will continue to contract modestly in 2010. Our UK furniture showwhich ran in January 2010 was down by 10% although rebookings for the January2011 event were 12.5% up.In comparison to our exhibitor-paid events, we have limited visibility on ourUS paid attendee events which are predominantly US technology events such asGame Developer Conference, Interop and Black Hat and note that the pattern ofattendee bookings has shifted significantly later. Paid attendee revenuerepresents around 10% of our total events revenue.We believe our Events business is well placed to generate medium term growthin excess of GDP. Given our focus on emerging markets within that portfolio,we are anticipating trough to trough or peak to peak growth across theportfolio of around GDP plus 3-5% a year in the markets we serve.
2.5.2. Outlook for Data, Services & Online
In 2009 our Data, Services & Online activities contributed 27.5% of UBM's overall revenues and 22.1% of adjusted operating profits.
The Vidal drug information products have largely traded for 2010 and are in line with our expectations. We anticipate that the results of our subscription data products will reflect reduced 2009 renewals.
We believe our Data, Services & Online business is well placed to secure medium term growth in excess of GDP.
We see significant strategic opportunities to invest in data-intensive services & products serving specific markets. We continue to migrate data products to workflow solutions.
2.5.3. Outlook for Print - magazines
In 2009 our Print - magazine business contributed 19.6% of UBM's overall revenues and 5.2% of adjusted operating profits.
We continue to manage our Print - magazine portfolio actively in response tointense structural and cyclical pressures. Our medium term goal is toestablish a smaller, commercially sustainable, more profitable portfolio. Theproportion of UBM's revenues generated by print magazine products willcontinue to fall and we anticipate that it will be less than 15% by the end of2010.
2.5.4. Outlook for Targeting, Distribution & Monitoring
In 2009 our Targeting, Distribution & Monitoring business contributed 19.0% of UBM's overall revenues and 26.2% of adjusted operating profits.
Our share of the US news distribution market - which generates nearly half of revenue - has been stable in 2009 but overall market volumes declined 3.1% over the year, principally in the first half of the year.
We continue to grow our non-wire, multimedia and online products such as ProfNet, MultiVu and MediaRoom. We expect to continue to expand our revenues generated in China, Europe and Latin America.
We believe our Targeting, Distribution and Monitoring business is well placedto secure medium to long term growth in excess of GDP. While we expectcontinued competitive pressure in the US news distribution market,particularly in lower value text-based releases, we see significant growthopportunities in web-based multimedia, monitoring and targeting products andin driving the business's international growth.
3 Acquisitions
In 2009 we invested £27.7m in the acquisition of four new businesses, andincreased our stake in a fifth. Our investment comprised cash of £22.7m (netof cash acquired) and deferred contingent consideration of £5.0m. We also madepayments totalling £10.1m in respect of earnouts relating to acquisitions
madein prior years. Initial consideration net of cash Deferred Total2009 Acquisitions acquired** consideration consideration £m £m £mIasist - 3/7/09 5.5 - 5.5RISI (remaining 48%) - 8.7 - 8.73/7/09The Fuel Team - 31/7/09 1.5 2.8 4.3CIOE (70% interest)* - 3.0 - 3.027/8/09Virtual Press Office - 4.0 2.2 6.214/12/09 22.7 5.0 27.7
* Subsequently transferred to eMedia joint venture with Global Sources Inc. ** Excluding working capital adjustments and acquisition costs.
Contingent deferred consideration Total £mAt 1 January 2009 38.6Change in estimate (5.7)Acquisitions during the year 5.0Earnouts paid (10.1)Foreign exchange gain (2.7) At 31 December 2009 25.1Acquisition performance Consideration Pre-tax return £m * on investment 2007 2008 2009 2007 acquisitions 91.2 10.4% 9.1% 9.3%2008 acquisitions 51.3 - 12.4% 6.5%2009 27.7 - - 14.8%acquisitions**Total 170.2 9.2%
* Consideration (net of cash acquired) includes the latest estimate of expected earnouts.
** Return on Investment calculated on a proforma basis.
2009 acquisitions contributed adjusted operating profit of £2.6m since their acquisition and achieved a pre-tax return of 14.8% on a pro forma basis.
4 Dividend
The Board has declared a second interim dividend of 18.2 pence per share (2008- 18.2 p) in lieu of a final dividend, bringing the total dividend for theyear to 24.2p, an increase of 1.7% on the prior year (2008 - 23.8p). Dividendcover (based on adjusted EPS) is 2.3 times for 2009.
The second interim dividend on ordinary shares will be paid on 20 May 2010 to shareholders on the register at close of business on 16 April 2010.
Pursuant to the Dividend Access Plan, shareholders may elect to receive theirdividend from a UK source. Shareholders who hold more than 50,000 shares andwho wish to receive their dividend from a UK source must make an election.Shareholders who held 50,000 or fewer UBM shares on the date of admission ofthe Company's shares to the London Stock Exchange or (if later) on the firstdividend record date after they became shareholders in the Company, will beautomatically deemed to have elected to receive a UK-sourced dividend. Allelections remain in force indefinitely unless revoked. Unless shareholdershave made, or are deemed to have made, an election under the Dividend AccessPlan, their dividends will be paid from an Irish source and will be taxedaccordingly.
5 Cash flow and cash conversion
Cash generated from operations rose to £142.7m from £136.1m in 2008,reflecting continued tight discipline in controlling costs and working capitalgeneration. Cash conversion[***] rose to 102.0% of adjusted operating profits(2008 - 100.1%). Free cash flow was £98.7m, compared with £101.5m in 2008,despite the difficult trading conditions in a number of our key markets.
During 2009, we paid £34.3m for acquisitions (net of cash acquired) and earnout payments in relation to acquisitions made in prior years. Following the payment of £58.8m of dividends to shareholders and a foreign exchange movement of £27.9m, consolidated net debt at 31 December 2009 stood at £226.4m, down from £260.4m at the end of 2008.
[***] Cash conversion is adjusted cash generated from operating activities expressed as a percentage of the adjusted operating profit.
6 Financing and interest expense
In November 2009 we further strengthened our capital resources through theissuance of £250m of 6.5% Sterling bonds maturing 2016, lengthening UBM's debtmaturity profile and and diversifying funding sources. The proceeds of thisissue were used to repay outstanding debt. We entered into currency andinterest rate swaps so that £100m of the issue effectively carries a US Dollarfixed rate of approximately 6.3%; the balance is swapped into US Dollarfloating LIBOR + a spread of approximately 3.1%.We have maintained our £325m multi-currency revolving credit facility providedby key relationship banks, which matures in July 2012. At 31 December 2009 UBMhad drawn £16.8m from the facility leaving £308.2m available. Cash andequivalents totalled £158.9m at year end 2009.
Our balance sheet remains strong, with net debt at 31 December 2009 of £226.4m, or 1.23 times 2009 EBITDA of £184.4m.
Net finance expense for 2009 was £9.9m, including an exceptional cost of £6.7m incurred on the unwind of interest rate swaps hedging debt repaid upon issuance of the sterling bond. The composition of the net expense was as follows:
£m £mInterest income - Cash and cash 1.8equivalentsInterest expense (14.8) Financing income: 6.9Pension schemes 2.2Foreign exchange gain on forward 4.7
contracts
Financing income - other 2.9Early settlement of interest rate swap (6.7)contracts Net finance expense (9.9)
Financing income from pension schemes for 2010 is anticipated to be £2.1m. It is not expected that the gains on foreign exchange forward contracts, other financing income items or the exceptional settlement cost will recur in 2010.
7 Currency
Our revenue and adjusted operating profit in 2009 were generated principally in currencies other than Sterling, as follows:
2009 2009 Revenue % Adjusted operating profit % US Dollar 57.8 57.0Euro 17.8 25.3UK Pound Sterling 15.5 10.3Canadian Dollar 3.1 4.7Japanese Yen 1.9 1.3Other 3.9 1.4 _____ _____Total 100 100
In the following table, we provide an estimate of the sensitivity of our revenue and adjusted operating profit to fluctuations in exchange rates of the key foreign currencies in which we operate:
Average Exchange rate Effect on Effect on exchange rate varies by revenue adjusted in 2009 operating profit +/- +/- US Dollar 1.57 1 cent £3.1m £0.6mEuro 1.12 1 cent £1.3m £0.4m8 Tax
UBM's effective rate of income taxation for the year was 15.0% (2008 - 15.9%).
We have resolved a number of outstanding tax issues with various taxauthorities worldwide (including the UK, USA, Netherlands and Luxembourg). Themost significant issues were with the UK tax authorities, including thelong-standing dispute relating to the disposal of our Regional Newspapersbusiness in 1998. We have agreed to make a total payment of £46.5m to HMRC inMarch 2010. The resolution of these issues has resulted in a release of£135.2m of our previous tax creditor. We have now resolved all outstandingissues in the UK for all years up to the end of 2007 and our overall taxcreditor at 31 December 2009 has been reduced to £109.0m (including the £46.5mpayable in March 2010).9 Pensions
UBM operates a number of defined benefit and defined contribution schemes, based primarily in the UK. The most recent actuarial funding valuations for the majority of the UK scheme liabilities were carried out in 2008, and updated to 31 December 2009 using the projected unit credit method. The next triennial valuation will take place in 2011.
For US schemes, annual funding valuations are performed and therefore the results are based on the 2008 valuation.
At 31 December 2009, the aggregate deficit under IAS 19 was £26.6m, a decreaseof £41.2m compared to the surplus of £14.6m at the previous year end,reflecting a decrease in discount rate and an increase in projected inflationrates, partially offset by asset returns.
The IAS 19 interest credit was £2.2m, representing the excess of expected asset growth during 2009 over the interest accretion on the scheme liabilities.
10 Exceptional items10.1. Impairment charge
UBM recorded total impairment charges of £153.0m during 2009. Of this amount, £149.8m was taken in respect of the following cash generating units:
- CMP Medica £67.0m- UBM Technology £47.0m
- Commonwealth Business Media £35.8m
The impairment charges were taken against acquisition goodwill recorded in these units and reflects our lowered expectations for these units, particularly the outlook for their Print - magazine products caused by the continuing structural decline in print markets which has been accelerated by the difficult economic climate during 2009.
We also recorded impairment charges totalling £3.2m to the carrying value of joint ventures and equity investments.
10.2. Restructuring and business reorganisation costs
During 2009 we closed 31 print magazine titles and merged and reduced the frequency of others.
The exceptional charge of £16.5m includes £10.5m relating to redundancy costsfor 479 staff and £2.1m relating to restructuring and business reorganisationcosts. Of the amount charged, £7.7m has been incurred in 2009 and the balanceis expected to be incurred in 2010. The charge also includes £3.9m of costs inrespect of vacant property which will be incurred over the remainder of the
respective lease terms. Reorganisation and restructuring provision £mAt 1 January 2009 20.6Arising in the year 12.5Utilised in the year (22.0)Currency translation (1.3)At 31 December 2009 9.8
The cost savings relating to the future vacant space and title closures do notrepresent an improvement to the future profitability of the business but arethe elimination of future costs.
10.3. Other exceptional items
Following our issue of a £250m sterling corporate bond in November 2009, andthe subsequent repayment of outstanding debt, UBM unwound interest rate swapsused to manage the interest rate exposure on $300m of the debt repaid. Thisresulted in an exceptional charge of £6.7m, representing the mark to marketcost on the unwind.Consolidated income statementfor the year ended 31 December 2009 Before Before exceptional Exceptional exceptional Exceptional items items Total items items Total 2009 2009 2009 2008 2008 2008Notes £m £m £m £m £m £m
Continuing operations 3 Revenue 847.6 - 847.6 887.0 - 887.0 Other operating income 9.7 - 9.7 10.2 - 10.2 Operating expenses (688.8) - (688.8) (725.5) - (725.5) Amortisation of intangible (26.8) - (26.8) (26.1) - (26.1) assets arising on acquisitions 4 Exceptional reorganisation and - (16.5) (16.5) - (37.5) (37.5) restructuring costs 4 Other exceptional costs - - - - (1.6) (1.6) 4 Impairment charge - (153.0) (153.0) - - - Share of results from joint 2.0 - 2.0 1.1 - 1.1 ventures and associates (after tax)
Group operating (loss)/profit 143.7 (169.5) (25.8) 146.7 (39.1) 107.6
Financing income/(expense) 5 Interest income 1.8 - 1.8 4.6 - 4.6 5 Interest expense (14.8) - (14.8) (11.0) - (11.0) 5 Financing income 6.9 - 6.9 4.4 - 4.4 5 Financing income - other 2.9 - 2.9 0.3 - 0.3 5 Financing expense - other - (6.7) (6.7) (4.6) - (4.6) (Loss)/profit before tax 140.5 (176.2) (35.7)
140.4 (39.1) 101.3
6 Taxation (17.7) - (17.7)
(20.2) 1.6 (18.6)
4 Exceptional taxation credit - 135.2 135.2 - - - (17.7) 135.2 117.5 (20.2) 1.6 (18.6) Profit for the year 122.8 (41.0) 81.8 120.2 (37.5) 82.7 Attributable to: Equity shareholders - ordinary 75.2 75.9 Equity shareholders - B shares - 0.5 Minority interests 6.6 6.3 81.8 82.7 Earnings per share (pence) 7 -basic 30.9p 31.5p 7 -diluted 30.5p 30.8p £m £m Adjusted Group operating 171.2 173.5 profit* Amortisation of intangible (26.8) (26.1) assets arising on acquisitions 4 Impairment charge (153.0) - 4 Exceptional reorganisation and (16.5) (37.5) restructuring costs 4 Other exceptional costs - (1.6) Share of taxation on profit in (0.7) (0.7) joint ventures and associates Group operating (loss)/profit (25.8) 107.6 Dividends £m £m 8 - Interim dividend of 6.00p 14.6 13.5 (5.60p) 8 - Proposed second interim 44.3 44.0 dividend of 18.20p (18.20p)* Adjusted Group operating profit represents Group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional itemsand share of taxation on profit in joint ventures and associatesConsolidated statement of comprehensive incomefor the year ended 31 December 2009 2009 2008Notes £m £m Profit for the year 81.8 82.7
Other comprehensive income:
Currency translation differences on foreign operations (50.3) 105.5
- Group
Cash flow hedges
Gains/(losses) on cash flow hedges arising during the 0.2 (8.3)
year
Add/(less) reclassification adjustments for 7.7
(3.4)
losses/(gains)included in profit or loss
7.9
(11.7)
12 Actuarial losses recognised in the pension schemes (63.9) (9.3)
12 Irrecoverable element of pension surplus 13.8
(2.2)
Share of other comprehensive income of joint ventures and associates Currency translation differences on foreign operations (1.5) 4.3 Actuarial losses recognised in the pension schemes of (3.9) (3.3) associates (5.4) 1.0 6 Income tax relating to components of other -
-
comprehensive income
Other comprehensive (losses)/income for the (97.9)
83.3
year net of tax
15 Total comprehensive (losses)/income for the (16.1) 166.0 year net of tax Attributable to: Equity shareholders (22.6) 157.0 Minority interests 6.5 9.0 (16.1) 166.0Consolidated statement of financial positionat 31 December 2009 As restated 31 December 31 December 2009 2008Notes £m £m Assets Non-current assets 9 Goodwill 820.9 1,039.2 Intangible assets 110.6 143.4 Property, plant and equipment 38.2
40.1
Investments in joint ventures 17.0
23.8
and associates
12 Retirement benefit surplus -
30.2 Other investments 0.6 2.0 987.3 1,278.7 Current assets Inventories 7.7 9.3 Trade and other receivables 169.8
202.0
Derivative financial instruments 0.3
-
10 Cash and cash equivalents 158.9 172.4 336.7 383.7 Total assets 1,324.0 1,662.4 Liabilities Current liabilities 11 Borrowings 0.3 58.5 Trade and other payables 315.8
356.2
Derivative financial instruments 10.9 10.9 Provisions 23.4 43.1 6 Current tax liabilities 109.0 237.2 459.4 705.9 Non-current liabilities 11 Borrowings 385.0 374.3
12 Retirement benefit obligation 26.6
15.6
Trade and other payables 12.9
24.7
Provisions 26.6
35.5
6 Deferred tax liabilities 27.7
35.2 478.8 485.3 Total liabilities 938.2 1,191.2 Shareholders' equity 13 Share capital 24.4 24.4 14 Share premium 1.2 1.0 15 Other reserves (597.7) (567.5) 15 Retained earnings 948.4 1,005.7 Total shareholders' equity 376.3
463.6
15 Minority interest in equity 9.5
7.6
Total equity 385.8
471.2
Total equity and liabilities 1,324.0
1,662.4
Consolidated statement of changes in equityfor the year ended 31 December 2009 Share Share Other Retained Minority Total capital premium reserves earnings interests equityNotes £m £m £m £m £m £m At 1 January 2009 24.4 1.0 (567.5) 1,005.7 7.6 471.2 Profit for the year - - - 75.2 6.6 81.8 Other comprehensive losses - - (43.8) (54.0)
(0.1) (97.9)
15 Total comprehensive - - (43.8) 21.2
6.5 (16.1)
(losses)/income for the year 13, 14 Issued in respect of share - 0.2 - -
- 0.2
options chemes and other entitlements
Share-based payments - - - 2.4
- 2.4
8 Equity dividends - - - (58.8)
- 58.8
15 Minority interest dividends - - - -
(4.4) (4.4)
16 Acquisition of minority - - - (8.5)
(0.2) (8.7)
interests
15 Shares awarded by ESOP - - 13.6 (13.6) - - At 31 December 2009 24.4 1.2 (597.7) 948.4 9.5 385.8 At 1 January 2008 82.7 361.3 217.7 (301.3) 5.7 366.1 Profit for the year - - - 76.4 6.3 82.7 Other comprehensive - - 95.4 (14.8) 2.7 83.3 income/(losses)
15 Total comprehensive income for - - 95.4 61.6
9.0 166.0
the year13, 14 Issued in respect of share 0.1 1.9 - -
- 2.0
options schemes and schemes
and other entitlements
13 Capital reorganisation (58.1) (362.2) (885.4) 1,305.7
- -
13 Capital reorganisation - (0.3) - 0.3 (9.3)
- (9.3)
repurchase of B shares
Share-based payments - - - 7.9
- 7.9
8 Equity dividends - - - (54.4)
- (54.4)
15 Minority interest dividends - - - -
(7.1) (7.1)
15 Shares awarded by ESOP - - 4.5 (4.5) - - At 31 December 2008 24.4 1.0 (567.5) 1,005.7 7.6 471.2Consolidated statement of cash flowsfor the year ended 31 December 2009 As restated 2009 2008Notes £m £m
Cash flows from operating activities Reconciliation of profit to operating cash flows Profit for the year 81.8 82.7 Add back: 6 Taxation (117.5) 18.6 Depreciation 12.3 11.5 Amortisation of website development 0.9 1.4 costs Amortisation of intangibles arising 26.8 26.1 on acquisition 5 Interest income (1.8) (4.6) 5 Interest expense 14.8 11.0 5 Financing income (6.9) (4.4) 5 Financing income - other (2.9) (0.3) 5 Financing expense - other 6.7 4.6 Other non-cash items 2.9 8.4 Share of results from joint (2.0) (1.1) ventures and associates (after tax) 4 Non-cash exceptional items and 169.5 39.1 charges to provision 184.6 193.0 Payments against provisions (41.3) (41.3) 12 Pension deficit contributions (3.7) (1.7) Decrease in inventories 0.9 - Decrease in trade and other 25.5 23.1 receivables Decrease in trade and other (23.3) (37.0) payables Cash generated from operations 142.7 136.1 Interest and finance income 7.8 3.8 received Interest and finance costs paid (22.3) (8.0) Taxation paid (16.5) (18.7) Dividends received from joint 1.5 3.3 ventures and associates Net cash flows from operating 113.2 116.5 activities Cash flows from investing activities Acquisition of interests in (25.6) (47.5) subsidiaries, net of cash acquired Purchase of property, plant and (14.5) (15.0) equipment and intangibles Purchase of interest in joint - (0.4) ventures and associates Proceeds from sale of investments 3.4 - Net cash flows from investing (36.7) (62.9) activities Cash flows from financing activities 14 Proceeds from issuance of ordinary 0.2 2.0 share capital Return of capital to shareholders - (9.3) (including costs) Acquisition of minority interests (8.7) - 15 Dividends paid to shareholders (58.8) (54.4) 15 Dividends paid to minority (4.4) (7.1) interests Repayment of borrowings (254.5) (7.1) Issue of £75m floating rate reset - 75.0 bonds Issue of £250m fixed rate sterling 247.1 - bonds 2016 Net cash flows from financing (79.1) (0.9) activities Net (decrease)/increase in cash and (2.6) 52.7 cash equivalents Net foreign exchange difference (7.3) 21.3 10 Cash and cash equivalents at 1 168.7 94.7 January 10 Cash and cash equivalents at 31 158.8 168.7 DecemberNotes to the consolidated financial statementsfor the year ended 31 December 2009
1. General information
United Business Media Limited (`UBML') is a company incorporated in Jerseyunder the Companies (Jersey) Law 1991. The address of the registered office isWhiteley Chambers, Don Street, St. Helier, JE4 9WG, Jersey. UBML is taxresident in the Republic of Ireland. The nature of the Group's operations andits principal activities are set out in Note 3.
The preliminary announcement was approved by the Board of Directors on 5 March 2010.
The figures and financial information for the year ended 31 December 2009 donot constitute the statutory financial statements for that year. Thosefinancial statements have not yet been delivered to the Jersey Registrar ofCompanies, but include the auditor's report which was unqualified and did notcontain a statement under Article 111(2) or Article 111(5) of the Companies(Jersey) Law 1991. The figures and financial information for the year ended 31December 2008 included in the preliminary announcement do not constitute thestatutory financial statements for that year. Those financial statements havebeen delivered to the Registrar and included the auditor's report which wasunqualified and did not contain a statement under Article 111(2) or Article111(5) of the Companies (Jersey) Law 1991.The comparative information for the year ended 31 December 2008 has beenrestated for acquisition accounting adjustments which have been finalised inrelation to certain acquisitions made in 2008. The comparative information hasbeen restated in accordance with IFRS 3 `Business Combinations'. The impact ofthis restatement is to increase goodwill, property, plant and equipment, cashand cash equivalents and accruals and deferred income by £0.8m, £0.7m, £0.2mand £1.6m respectively, with a corresponding reduction in prepayments andaccrued income by £0.1m.
Principal risks and uncertainties
Principal risks and uncertainties affecting the Group will be detailed withinthe Annual Report for the year ended 31 December 2009, a copy of which will bemade available on the Group's website at www.ubm.com.
Changes to the composition of the Group
Year ended 31 December 2009
The Group has made a number of acquisitions in the year as disclosed in Note 16. These acquisitions are accounted for using the purchase method of accounting.
Year ended 31 December 2008
On 1 July 2008, as part of a reorganisation of the corporate structure of theGroup, UBML was created as a new holding company and parent company of theGroup. UBML is UK-listed, incorporated in Jersey and with its tax residence inthe Republic of Ireland. United Business Media plc (`UBM plc') became asubsidiary of UBML. The former UBM plc shareholders were issued new shares inUBML on a one-for-one basis following a Scheme of Arrangement (`the Scheme')under Part 26 of the Companies Act 2006 which was approved by UBM plcshareholders. Immediately following the Scheme, the former shareholders of UBMplc held the same economic interest in UBML as they held in UBM plcimmediately prior to its implementation.The acquisition of UBM plc by UBML falls outside the scope of IFRS 3 `BusinessCombinations'. Following the guidance regarding the selection of anappropriate accounting policy provided by IAS 8 `Accounting policies, changesin accounting estimates and errors', the transaction was accounted for in thecomparative period of these financial statements using the pooling ofinterests method, which reflects the economic substance of the transaction.
2. Significant accounting policies
Basis of preparation
The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (`IFRS') as issued by the InternationalAccounting Standards Board and IFRIC interpretations. The financial statementsare prepared in compliance with the provisions of the Companies (Jersey) Law1991.The consolidated financial statements have been prepared on a historical costbasis, except for derivative financial instruments that have been measured atfair value.
Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except as follows:
The Group has adopted a number of new, revised and amended IAS, IFRS and IFRIC interpretations as of 1 January 2009. Adoption of the following new and revised standards has affected the presentation and disclosure in the financial statements of the Group, but has had no affect on the amounts reported:
IAS 1 Presentation of Financial statements (revised) IAS 36 Impairment of Assets (part of Improvements to IFRSs - (May 2008)) IFRS 7 Financial Instruments: Disclosures (amendment) IFRS 8 Operating Segments IFRS 8 Operating Segments (amendment)
The principal effects of these changes are as follows:
IAS 1 - Presentation of financial statements (revised)
The Group adopted this revised standard on 1 January 2009. The revisionseparates owner and non-owner changes in equity. The statement of changes inequity includes only details of transactions with owners, with non-ownerchanges in equity presented as a single line. In addition, the standardintroduces the statement of comprehensive income to be presented either as asingle statement, or as two linked statements. The Group has elected topresent two statements.
IAS 36 Impairment of Assets
When discounted cash flows are used to estimate `fair value less costs tosell', additional disclosure is required about the discount rate, consistentwith disclosures required when discounted cash flows are used to estimate`value in use'. For those cash generating units where the Group is required tocompute the recoverable amount, fair value less costs to sell is used on anearnings multiples approach. Where the fair value less costs to sell test doesnot demonstrate that the recoverable amount is in excess of the carryingamount, the cash generating unit is tested under value in use. Thisimprovement does not have any impact on the presentation of the financialstatements in the current year. Additional disclosures will be included in thefuture where applicable.
IFRS 7 - Financial Instruments: Disclosures
As of 1 January 2009, the Group adopted this amendment which requiresincreased disclosures about fair value measurements and liquidity risk. Fairvalue measurements related to items recorded at fair value are to be disclosedby source of inputs using a three level fair value hierarchy, by class, forall financial instruments recognised at fair value. The amendments alsoclarify the requirements for liquidity risk disclosures with respect toderivative transactions and assets used for liquidity management. The fairvalue measurement and liquidity risk disclosures are presented in Note 21 ofthe Group financial statements. The Group has elected not to providecomparative information for these expanded disclosures in the current year inaccordance with the transitional reliefs offered in the amendment.
IFRS 8 - Operating Segments
The Group adopted IFRS 8 as of 1 January 2009. This new standard requiresdisclosure of information about the Group's operating segments and replacesthe requirement to determine primary (business) and secondary (geographical)reporting segments of the Group. Adoption of this Standard did not have anyeffect on the financial position or performance of the Group. The Groupdetermined that the four operating and reportable segments are Events, Data,Services and Online, Print - Magazines and Targeting, Distribution andMonitoring. Additional disclosures about each of these segments are shown inNote 3.
IFRS 8 - Operating Segments (amendment)
The Group has adopted early the amendment to IFRS 8 as of 1 January 2009. Theamendment was issued as part of the Annual Improvements to IFRSs 2009. Itremoves the requirement to present segment asset information if it is notregularly provided to the chief operating decision maker. Adoption of thisamendment did not have any effect on the financial position or performance ofthe Group; disclosure of segment assets is not given in the financialstatements. Further details are given in Note 3.
The standards and interpretations adopted in these financial statements which have had no effect on the amounts reported, presentation or disclosure are:
IAS 23 Borrowing costs (revised)IAS 27 Consolidated and Separate Financial Statements (amendment)IAS 32 Financial Instruments: Presentation and IAS 1 - Presentation of Financial Statements - Puttable Financial Instruments and
Obligations Arising on Liquidation (amendments) IFRS 2 Share-based Payment - Vesting Conditions and Cancellations (amendment) IFRIC 9 Re-assessment of embedded derivatives (amendment) IFRIC 15 Agreements for Construction of Real Estate IFRIC 16 Hedges of net Investment in a Foreign Operation Improvements to IFRSs - (May 2008)
Those standards listed above which have resulted in a change in accounting policy are:
IAS 23 - Borrowing costs (revised)
The revised IAS 23 requires capitalisation of borrowing costs that aredirectly attributable to the acquisition, construction or production of aqualifying asset. The Group's previous policy was to expense borrowing costsas they were incurred. In accordance with the transitional provisions of therevised IAS 23, the Group has adopted the standard on a prospective basis. Itapplies to borrowing costs arising on qualifying assets where the commencementdate for capitalisation is on or after 1 January 2009. It did not have animpact on the financial position or performance of the Group in 2009.
IFRS 2 - Share-based Payment - Vesting Conditions and Cancellations (amendment)
This amendment specifies that only service and performance conditions are vesting conditions. It also prescribes that all cancellations should result in an acceleration of the vesting period. The Group has adopted the revised standard on 1 January 2009; it did not have an impact on the financial position or performance of the Group.
IFRIC 16 - Hedges of Net Investment in a Foreign Operation
The interpretation provides guidance to be applied prospectively on theaccounting for a hedge of a net investment. It provides guidance onidentifying foreign currency risks that qualify for hedge accounting in a netinvestment hedge; which entity in the Group can hold the hedging instrumentsused in the hedge of a net investment; and how an entity should determine theamount of foreign currency gain or loss, relating to both the net investmentand hedging instrument, to be recycled on disposal of the net investment. TheGroup has adopted IFRIC 16 on 1 January 2009, it did not have any impact onthe financial position or performance of the Group.
Improvements to IFRSs - (May 2008)
In May 2008, the IASB issued a collection of amendments to its standards, primarily to remove inconsistencies and to clarify wording. Most of the improvements are effective from 1 January 2009 and there are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies but did not have any impact on the financial position or performance of the group.
- IAS 1 Presentation of Financial Statements: assets and liabilities classified as held for trading in accordance with IAS 39 Financial Instruments: Recognition and Measurement are not always required to be presented as current in the statement of financial position. The Group has assessed whether this would result in any reclassifications of financial instruments between current and non-current in the statement of financial position and determined that it would not.
- IAS 16 Property, Plant and Equipment: replaces the term `net selling price'with `fair value less costs to sell'. The Group has applied this improvement,although it did not result in any changes to the financial position orperformance of the Group.- IAS 23 Borrowing costs: the definition of borrowing costs is revised toconsolidate the two types of items that are considered components of`borrowing costs' into one - the interest expense calculated in accordancewith IAS 39 Financial Instruments: Recognition and Measurement. The Group hasamended its accounting policy accordingly which did not result in a change tothe financial position or performance of the Group.- IAS 38 Advertising and promotional activities: the improvements clarify thatan entity is permitted to recognise a prepayment asset for advertising orpromotional expenditure only up to the point at which the entity has the rightto access the goods purchase or services received. Mail order catalogues havebeen specifically identified as a form of advertising and promotionalactivities. Clarification of this standard has not resulted in any changes tothe financial position or performance of the Group.
Other amendments resulting from Improvements to IFRSs did not have any impact on the accounting policies, financial position or performance of the Group.
3. Segment information
Business segments
The chief operating decision maker (`CODM') for the purpose of IFRS 8reporting is the executive management team - the Group Chief Executive Officerand the Group Chief Financial Officer. The Group considers there to be fourreportable operating segments organised around products and services. TheGroup operates in a number of different markets and communities and considersthat presentation of financial results on a products and services basis is themost appropriate way to demonstrate the performance of the Group. For thepurpose of resource allocation and assessment of performance, the CODMregularly reviews information based on the products and services at a revenueand adjusted operating profit level.
- Events which provide face to face interaction in the form of exhibitions, trade shows, conferences and other live events;
- Data, Services and Online which provide a range of services including data-based workflow products, intellectual property consultancy and analytical services, sales lead generation programmes, website sponsorships and banner advertising as well as print and online directory products;
- Print - Magazines which publishes magazines and trade press to specialist markets; and
- Targeting, Distribution and Monitoring which operates in the targeting and distribution of company information and the evaluation of its impact on targeted audiences.
No operating segments have been aggregated to form the above reportable segments. The Group's management reporting and controlling systems use the accounting policies that are the same as those referred to in Note 2.
Segment measures
The Group measures the performance of its operating segments through a measureof segment profit or loss which is referred to as adjusted operating profit.Adjusted operating profit, as defined in the footnote to the Income Statement,represents operating profit excluding amortisation of intangible assetsarising on acquisitions, exceptional items and share of taxation on results ofjoint ventures and associates. This measure is reported to the CODM for thepurposes of resource allocation and assessment of performance.
Interest income, interest expense and income tax expense are not included in the adjusted operating profit measure which is reviewed by the CODM.
Intersegment revenue is recorded at values that represent estimated third-party selling prices.
Segment assets and liabilities are not regularly provided to the CODM. TheGroup has elected as provided under IFRS 8 `Operating segments' (amended) notto disclose a measure of segment assets or liabilities where these amounts arenot regularly provided to the CODM.With respect to geographical regions, revenue is generally allocated tocountries based on the location where the products and services are provided.Non-current assets are disclosed according to the location of the businessesto which the assets relate.Year ended 31 December 2009 Depreciation Share of (including pre-tax amortisation results Segment of website from JVs adjusted External Intersegment Total development and operating revenue revenue revenue costs) associates profit* £m £m £m £m £m £mEvents 287.5 0.4 287.9 (3.6) 0.8 87.2Data, Services and Online 232.9 - 232.9 (2.9) 0.1 39.7Print - magazines 165.8 - 165.8 (2.1) 0.2 8.9Targeting, Distribution 161.4 0.5 161.9 (4.2) 1.1 44.8and MonitoringTotal segments 847.6 0.9 848.5 (12.8) 2.2 178.8 Other corporate - - - (0.4) 0.5 (7.6)Eliminations - (0.9) (0.9) - - - 847.6 - 847.6 (13.2) 2.7 171.2Amortisation of (26.8)intangibles arisingon acquisitionsImpairment charge (153.0)Exceptional reorganisation (16.5)and restructuring costsShare of taxation on (0.7)profit in jointventures and associatesGroup operating loss (25.8)Interest income 1.8Interest expense (14.8)Financing income 6.9Financing income - other 2.9Financing expense - other (6.7)Loss before tax (35.7) * Adjusted operating profit represents operating profit excluding amortisationof intangible assets arising on acquisitions, exceptional items and share oftaxation on profit in joint ventures and associatesTotal corporate costs for 2009 were £15.5m (2008: £15.1m). The corporate costsare offset by a level of internal cost recoveries from the Group's operatingbusinesses and by sundry income which is not attributable to any of theGroup's operations.Year ended 31 December 2008 Depreciation Share of (including pre-tax amortisation results Segment of website from JVs adjusted External Intersegment Total development and operating revenue revenue revenue costs) associates profit* £m £m £m £m £m £mEvents 291.8 0.2 292.0 (3.8) 0.8 82.2Data, Services and Online 225.3 - 225.3 (3.0) - 31.1Print - magazines 215.6 - 215.6 (2.8) 0.5 23.9Targeting, Distribution 154.3 - 154.3 (2.9) 0.9 43.3and MonitoringTotal segments 887.0 0.2 887.2 (12.5) 2.2 180.5 Other corporate - - - (0.4) (0.4) (7.0)Eliminations - (0.2) (0.2) - - - 887.0 - 887.0 (12.9) 1.8 173.5Amortisation of (26.1)intangibles arisingon acquisitionsExceptional reorganisation (37.5)and restructuring costsOther exceptional items (1.6)Share of taxation of (0.7)profit in jointventures and associatesGroup operating profit 107.6Interest income 4.6Interest expense (11.0)Financing income 4.4Financing income - other 0.3Financing cost - other (4.6)Profit before tax 101.3 * Adjusted operating profit represents operating profit excluding amortisationof intangible assets arising on acquisitions, exceptional items and share oftaxation on profit in joint ventures and associates
Revenue by products and services
Revenue from external customers analysed by products and services is given inthe above segment tables. The Group's reportable segments are organised aroundproducts and services provided to external customers.
Geographic information
Year ended Year ended 31 December 31 DecemberRevenues from external customers 2009 2008
£m £mUnited Kingdom 129.6 178.3 Foreign countriesUnited States* 386.6 421.6Other Americas 6.1 5.0Europe and Middle East 163.8 154.1China 101.4 75.8Japan 18.5 18.4Other Asia/Pacific 41.6 33.8 718.0 708.7 Total revenue 847.6 887.0* United States revenue also includes Canada due to the integrated nature ofthe business in North America 2009 2008Non-current assets £m £mUnited Kingdom 236.6 252.6 Foreign countriesUnited States* 426.1 583.0Other Americas 33.9 44.8Europe and Middle East 248.8 314.3China 7.2 8.2Japan 6.1 13.0Other Asia/Pacific 28.6 32.6 750.7 995.9 Total non-current assets 987.3 1,248.5* United States non-current assets also includes Canada due to the integratednature of the business in North America. Non-current assets for this purpose consist of goodwill, intangible assets, property, plant and equipment, investments in joint ventures and associates
and other investments. 4. Exceptional itemsExceptional items are presented separately as, due to their nature or for theinfrequency of the events giving rise to them, this allows shareholders tounderstand better the elements of financial performance for the year, tofacilitate comparison with prior periods, and to assess better the trends offinancial performance. 2009 2008 £m £mCharged to operating (loss)/profitReorganisation and restructuring costs- Vacant property costs (3.9) (11.4)- Redundancy (10.5) (16.8)
- Restructuring and business reorganisation costs (2.1) (5.1) - Change of domicile
- (4.2) (16.5) (37.5)Other exceptional items - (1.6)Impairment of goodwill (see Note 9) (149.8) -Impairment of joint ventures and associates (1.9) -Impairment of other investments (1.3) -Total charged to operating (loss)/profit (169.5) (39.1) Charged to (loss)/profit before taxFair value adjustment - early settlement of (6.7) -
interest rate swap contracts
Credited to profit after taxTaxation relating to exceptional items - 1.6Exceptional taxation net credit 135.2 -Total credited to profit after tax 135.2 1.6 Total charged to profit for the year (41.0) (37.5)
Charged to operating (loss)/profit
Year ended 31 December 2009
During 2009, UBM continued to actively manage its product portfolio. Thisincluded the closure and merging of a number of print titles, and a headcountreduction of approximately 500 people. The exceptional charge of £16.5mincludes £10.5m relating to redundancy, £2.1m relating to restructuring andbusiness reorganisation costs and £3.9m relating to vacant property. Theredundancy and restructuring and business reorganisation costs will besubstantially incurred by 31 December 2010, and the amount relating to vacantproperty will be incurred over the remainder of the lease terms.
Total impairment losses of £153.0m have been recognised during the year of which £149.8m relates to goodwill; details are given in Note 9. The carrying value of investments in joint ventures and associates and other investments have been impaired by £1.9m and £1.3m respectively.
Year ended 31 December 2008
In April 2008, UBM announced that it was undertaking a reorganisation of thecorporate structure of the Group which would create a new holding companywhich is UK-listed, incorporated in Jersey and with tax residency in theRepublic of Ireland. The scheme was approved by shareholders on 2 June 2008and was formally implemented on 1 July 2008. The exceptional charge of £4.2mrepresents the professional fees and other costs arising in connection withthis change of domicile.
In November 2008, the CPhI India and P-MEC India events were cancelled as a result of the terrorist attacks in Mumbai. The irrecoverable costs incurred by CMP Asia and CMP Information, which total £1.6m, have been recorded as an exceptional item, classified within other exceptional items.
During the year, UBM reorganised its core operations, replacing the historic`divisional' structure with a much flatter, market-focused organisation. InFebruary, UBM Technology was reorganised into four separate market-focusedbusinesses, followed by CMP Information into five businesses in June andCommonwealth Business Media into two businesses in December. UBM alsoimplemented a number of restructuring and reorganisation projects across theGroup. The objectives of these projects are to achieve greater alignment ofproduct portfolios and organisational structure to the changing needs ofcustomers, to better position the businesses to take advantage of highergrowth areas and to improve profitability. This involved closure and merger ofsome print titles and a headcount reduction of over 500 people.The exceptional charge of £33.3m includes £16.8m relating to redundancy costsand £5.1m relating to restructuring and business reorganisation. Of the amountcharged, £8.4m has been incurred in 2008 and the balance is expected to beincurred in 2009. The charge also includes £11.4m of vacant property and otherproperty costs which will be incurred over the remainder of the lease terms.Charged to loss before taxYear ended 31 December 2009
The fair value adjustment relates to early settlement of six interest rate swap contracts which were previously designated as cash flow hedges of expected payments under $300m of borrowing from the Group's £325m variable rate multi-option facility. Further details are given in Note 5.
Credited to profit after tax
Year ended 31 December 2009
As a consequence of the resolution of a large number of outstanding taxationitems, in various jurisdictions, there was a net exceptional tax credit of£135.2m. Further details are given in Note 6.Year ended 31 December 2008
There is a £1.6m tax credit in relation to the £5.5m of redundancy and restructuring costs incurred by UK companies.
5. Finance income/(expense) 2009 2008 Before 2009 2009 Before 2008 2008 Exceptional Exceptional Total exceptional Exceptional Total £m £m £m £m £m £mInterest incomeCash and cash equivalents 1.8 - 1.8 4.6 - 4.6 Interest expenseBorrowings and loans (13.2) - (13.2) (9.3) - (9.3)Other (1.6) - (1.6) (1.7) - (1.7) (14.8) - (14.8) (11.0) - (11.0) Financing income:Pension schemes 2.2 - 2.2 4.4 - 4.4Foreign exchange gain on 4.7 - 4.7 - - -forward contracts 6.9 - 6.9 4.4 - 4.4 Financing income - otherForeign exchange gain on 1.0 - 1.0 - - -forward contractsIneffective portion of net 0.3 - 0.3 - - -investment hedgesIneffective portion of cash 0.1 - 0.1 - - -flow hedgesNet foreign exchange gain 1.3 - 1.3 - - -Other fair value 0.2 - 0.2 0.3 - 0.3adjustments 2.9 - 2.9 0.3 - 0.3 Financing expense - otherFair value adjustments - - (6.7) (6.7) - - -early settlement ofinterest rate swapcontractsIneffective portion of cash - - - (0.3) - (0.3)flow hedgesNet foreign exchange loss - - - (4.3) - (4.3) - (6.7) (6.7) (4.6) - (4.6) Net finance expense (3.2) (6.7) (9.9) (6.3) (6.3)
In December 2009, the Group settled early six interest rate swap contracts which were previously designated as cash flow hedges of expected payments under $300m of borrowing from the Group's £325m variable rate multi-option facility. Following the issue of the £250m fixed rate sterling bonds in November 2009, that $300m of borrowings was repaid. Three of the swap contracts totaling $150m were due to mature in January 2011 with the other three contracts totaling $150m were due to mature in July 2012. The early settlement resulted in a loss of £6.7m which has been included as an exceptional item.
Foreign exchange gain on forward contracts within financing income representsrealised gains on foreign currency contracts against profits of the overseasoperations.6. TaxationMajor components of income tax income for the year ended 31 December 2009 are: 2009 2008 £m £mConsolidated income statementCurrent tax:Current tax charge (24.2)
(24.8)
Exceptional taxation net credit 135.2
-
Deferred tax:Origination and reversal of temporary 6.5
6.2
differences
Income tax credit/(charge) in the consolidated 117.5
(18.6)
income statement
Consolidated statement of other comprehensiveincomeCurrent tax - -Deferred tax - -
Income tax recognised in other comprehensive -
-
income
Factors affecting tax (credit)/charge for the year
A reconciliation of income tax expense applicable to loss before tax at thestatutory tax rate to tax expense for the year ended 31 December 2009 is asfollows: 2009 2008 £m £m(Loss)/profit before tax (35.7) 101.3 (Loss)/profit before tax multiplied by (4.5)
12.7
standard rate of corporation tax in Republic of Ireland of 12.5%(2008:12.5%)Effect of:Expenses not deductible for tax purposes 23.7
4.0
Tax effect of items not recognised in (9.1)
(9.8)
consolidated financial statementsOrigination and reversal of temporary (9.5)
(4.8)
differences not recognisedDifferent tax rates on overseas earnings 19.3
19.1
Share of results from associates and joint (0.6)
(0.3)
ventures (after tax)Non-taxable income (1.6)
(2.3)
Exceptional taxation net credit (135.2)
-
Income tax (credit)/charge reported in the (117.5)
18.6
consolidated income statement
The amounts relating to current tax recognised in the statement of financialposition are: 2009 2008 £m £mAt 1 January 2009 237.2 227.6Current tax charge 24.2 24.8Exceptional tax credit (135.2) -Tax paid (16.5) (18.7)
Foreign exchange and other movements (0.7)
3.5At 31 December 2009 109.0 237.2At 31 December 2008 the current tax liability of £237.2m included anassessment of the Group's uncertain tax positions in various jurisdictions,including the dispute with HMRC in relation to the sale of the RegionalNewspapers business in 1998 where the tax in dispute was estimated at £80m.During the year the Group has resolved a large number of outstanding items
invarious jurisdictions.This included:(i) the dispute in relation to the sale of the Regional Newspapers business,for which a payment (including interest) of £36.4m is due to be paid in March2010;
(ii) other UK issues for accounting periods up to 31 December 2007 for which a payment (including interest) of £10.1m is due to be paid in March 2010, and
(iii) other non-UK issues for which a payment of £3m was made during the year.
The £46.5m due to be paid in March 2010 is included in the current tax liabilities at 31 December 2009.
The amounts included in the current tax liability at 31 December 2008 inrelation to these issues, over and above the amounts paid and payable above,have therefore been released. As a consequence there was a net exceptional taxcredit of £135.2m.
The Group does not expect the tax cash outflow in 2010 in respect of this creditor to exceed £10m in addition to the £46.5m referred to above.
Deferred tax
Deferred tax at 31 December relates to the following:
Consolidated statement of Consolidated income financial position statement 2009 2008 2009 2008 £m £m £m £mDeferred taxIntangible assets acquired 26.0 33.4 (6.4) (6.4)Other temporary differences 1.7 1.8 (0.1) 0.2 27.7 35.2 (6.5) (6.2)
At 31 December 2009, there was no recognised deferred tax liability for taxes that would be payable on the unremitted earnings of certain of the Group's subsidiaries as the Group has determined that undistributed profits of its subsidiaries will not be distributed in the foreseeable future.
The temporary differences associated with investments in subsidiaries for which a deferred tax liability has not been recognised amount in aggregate to £5.3bn (2008: £13.1bn). There are no income tax consequences to the Group arising from the payment of dividends by the Company to its shareholders.
2009
2008
£m
£m
The movement in the net deferred tax liabilitywas as follows:Net liability at 1 January 35.2
30.8
Acquisition of subsidiaries (see Note 16) 1.3
3.0
Amounts credited to net profit (6.5) (6.2)Currency translation (2.3) 7.6Net liability at 31 December 27.7 35.2The Group has unrecognised deferred tax assets of £59.2m relating todeductible temporary differences and £105.5m (of which £63.9m will expirebetween 2019 and 2029) relating to unused tax losses (2008: £80.1m and £63.6mof which £50.6m will expire within 2018 and 2028 respectively). No deferredtax asset has been recognised in respect of these amounts due to theunpredictability of future taxable profit streams. The Group also hasunrecognised deferred tax assets of £52.3m (2008: £52.3m) relating to unusedcapital losses which can only be utilised against future capital gains.
7. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity shareholders of the parent by the weighted average number of ordinary shares outstanding during the year (reflecting the movements set out in Note 13).
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary shareholders of the parent by the weighted average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options).
Adjusted earnings per share is calculated on adjusted Group operating profit(net profit for the year attributable to ordinary equity shareholders, lessamortisation of intangible assets arising on acquisitions, certain exceptionalitems, deferred tax on amortisation of intangible assets, taxation relating toexceptional items and net financing expense - other) divided by the weightedaverage number of ordinary shares outstanding during the year. Certainexceptional items, net financing expense - other, taxation related toexceptional items and deferred tax on amortisation of intangible assets areexcluded from this calculation, as due to their nature and the infrequency ofthe events giving rise to them, separate presentation allows shareholders tounderstand better the elements of financial performance for the year, so as tofacilitate comparison with prior periods and to assess better the trends offinancial performance.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
2009 2008 Weighted Weighted average 2009 average 2008 2009 no. Earnings 2008 no. Earnings Earnings of shares per share
Earnings of shares per share
£m million pence
£m million pence
Adjusted Group operating profit 171.2
173.5 Net interest expense (13.0) (6.4) Financing income 6.9 4.4
Adjusted profit before tax 165.1
171.5 Taxation (24.8) (27.3) Minority interests (6.6) (6.3) B share dividend - (0.5)
Adjusted earnings per share 133.7 243.1 55.1 137.4 241.2 57.0
Adjustments
Amortisation of intangible assets (26.8) (11.0) (26.1) (10.8) arising on acquisitions Deferred tax on amortisation of 6.4 2.6 6.4 2.6 intangible assets Adjustments in respect of non-tax (169.5) (69.8) (39.1) (16.2) exceptional items Tax exceptional item 135.2 55.6 - - Taxation relating to exceptional - - 1.6 0.7 items Net financing expense - other (3.8) (1.6)
(4.3) (1.8) Basic earnings per share 75.2 243.1 30.9 75.9 241.2 31.5 Dilution Options - 3.4 (0.4) - 5.1 (0.7)
Diluted earnings per share 75.2 246.5 30.5
75.9 246.3 30.8
Adjusted earnings per share (as above) 133.7 243.1 55.1
137.4 241.2 57.0
Options - 3.4 (0.9)
- 5.1 (1.2)
Diluted adjusted earnings per share 133.7 246.5 54.2
137.4 246.3 55.8
The Group has one category of dilutive potential ordinary shares: those shareoptions granted to employees where the exercise price is less than the averagemarket price of the Company's ordinary shares during the year. The impact ofdilutive securities in 2009 would be to increase weighted average shares by3.4 million shares (2008: 5.1 million shares) for employee share options.
The weighted average number of shares excludes ordinary shares held by the Employee Share Ownership Plan (the `ESOP') and the Qualifying Employee Share Ownership Trust (the `QUEST').
8. Dividends 2009 2008 £m £mDeclared and paid during the yearEquity dividends on ordinary sharesSecond interim dividend for 2008 of 18.20p 44.2
40.4
(2007: 16.76p)Interim dividend for 2009 of 6.00p (2008: 14.6
13.5
5.60p)
Equity dividends - B shares -
0.5
58.8
54.4
Proposed (not recognised as a liability at 31December)Equity dividends on ordinary sharesSecond interim dividend for 2009 of 18.20p 44.3
44.0
(2008: 18.20p)
The proposed second interim dividend has not been recognised as a liability in these financial statements.
Pursuant to the Dividend Access Plan (`DAP') arrangements put in place as partof the Scheme of Arrangement, shareholders in the Company are able to elect toreceive their dividends from a UK source (the `DAP election'). Shareholderswho held 50,000 or fewer shares (i) on the date of admission of the Company'sshares to the London Stock Exchange and (ii) in the case of shareholders whodid not own the shares at that time, on the first dividend record date afterthey become shareholders in the Company, unless they elect otherwise, will bedeemed to have elected to receive their dividends under the DAP arrangements.Shareholders who hold more than 50,000 shares and who wish to receive theirdividends from a UK source must make a DAP election. All elections remain inforce indefinitely unless revoked. Unless shareholders have made a DAPelection, or are deemed to have made a DAP election, dividends will bereceived from an Irish source and will be taxed accordingly.9. Goodwill31 December 2009 Common- Targeting, wealth Distribution UBM CMP UBM UBM Business and Technology Medica Asia* Information** Media RISI Monitoring*** Total £m £m £m £m £m £m £m £mCost
At 1 January 2009 300.3 321.5 19.7 212.9 104.1 5.0
75.7 1,039.2Acquisitions (see (1.5) 3.4 2.5 0.4 (0.5) -
4.3 8.6Note 16)Transfer to joint - - (2.5) - - - - (2.5)venture
Transfers (0.2) - (4.6) 4.8 - - - -Currency translation (29.9) (25.0) (1.9) (1.5) (8.9) - (7.4) (74.6)At 31 December 2009 268.7 299.9 13.2 216.6 94.7 5.0 72.6 970.7ImpairmentAt 1 January 2009 - - - - - - - -Charge for the year 47.0 67.0 - - 35.8 - - 149.8At 31 December 2009 47.0 67.0 - - 35.8 - - 149.8Carrying valueAt 1 January 2009 300.3 321.5 19.7 212.9 104.1 5.0 75.7 1,039.2At 31 December 2009 221.7 232.9 13.2 216.6 58.9 5.0
72.6 820.9
* Formerly CMP Asia** Formerly CMP Information*** Formerly B2B Distribution, Monitoring and Targeting
31 December 2008 (as restated)
Common- Targeting, wealth Distribution UBM CMP UBM UBM Business and Technology Medica Asia Information Media RISI
Monitoring Total
£m £m £m £m £m £m £m £m
Cost
At 1 January 2008 188.6 243.9 14.8 202.6 80.0 5.0
51.4 786.3Acquisitions (see 33.4 0.3 - 6.0 0.1 - 5.1 44.9Note 16)Currency translation 78.3 77.3 4.9 4.3 24.0 -
19.2 208.0
At 31 December 300.3 321.5 19.7 212.9 104.1 5.0
75.7 1,039.22008ImpairmentAt 1 January 2008and31 December 2008 - - - - - - - -Carrying value
At 1 January 2008 188.6 243.9 14.8 202.6 80.0 5.0 51.4 786.3At 31 December 2008 300.3 321.5 19.7 212.9 104.1 5.0
75.7 1,039.2
The amounts shown for the year ended 31 December 2008 have been restated to reflect the finalisation of acquisition accounting adjustments relating to certain acquisitions made in 2008 (see Note 1).
Financial results of cash generating units
The tables below show the revenue and adjusted operating profit measures of each cash generating unit (`CGU') in the current and prior year. The amounts are shown to provide additional financial information in respect of the financial performance of these CGUs and as a context for the reasons for impairment set out below. The same measures for the Group's reportable segments of Events, Data, Services and Online, Print - Magazines and Targeting, Distribution and Monitoring are set out in Note 3.
31 December 2009 Common- Targeting, UBM wealth Distribution UBM CMP UBM Business and Technology Medica Asia Information Media RISI Monitoring Total £m £m £m £m £m £m £m £mExternal revenue 162.2 178.7 117.6 154.1 58.2 15.4 161.4 847.6Inter-CGUrevenue - - 0.4 - - - 0.5 0.9Total CGUrevenue 162.2 178.7 118.0 154.1 58.2 15.4 161.9 848.5 Eliminations (0.9)Total revenue 847.6 CGU Adjustedoperatingprofit* 15.1 28.4 39.7 38.5 10.5 1.8 44.8 178.8Other corporate (7.6)Total adjustedoperating profit* 171.2 * Adjusted operating profit represents operating profit excluding amortisationof intangible assets arising on acquisitions, exceptional items and share oftaxation on profit in joint ventures and associates.31 December 2008 Common- Targeting, UBM wealth Distribution UBM CMP UBM Business and Technology Medica Asia Information Media RISI Monitoring Total £m £m £m £m £m £m £m £mExternal revenue 194.0 182.3 91.1 190.0 60.9 14.4 154.3 887.0Inter-CGUrevenue - - 0.2 - - - - 0.2Total CGUrevenue 194.0 182.3 91.3 190.0 60.9 14.4 154.3 887.2 Eliminations (0.2)Total revenue 887.0 CGU Adjustedoperatingprofit* 29.3 29.1 26.2 43.4 7.7 1.5 43.3 180.5Other corporate (7.0)Total adjustedoperatingprofit* 173.5* Adjusted operating profit represents operating profit excluding amortisationof intangible assets arising on acquisitions, exceptional items and share oftaxation on profit in joint ventures and associates.
Impairment tests for goodwill
Goodwill has historically been recorded at the level of business units, whichhave comprised the Group's CGUs. The CGUs represent the lowest level withinthe Group at which goodwill is monitored for internal management purposes.Goodwill has not been sub-allocated to three of the Group's reportablesegments (Events, Data, Services and Online, and Print - Magazines).Accordingly, the 2009 annual impairment review has been undertaken using theGroup's seven CGUs.
A summary of the goodwill allocation to the Group's CGUs is given in the above tables.
Management tests goodwill annually for impairment as at 30 September eachyear, or more frequently if there are indicators that goodwill may beimpaired. The recoverable amount of a CGU is the higher of a CGUs fair valueless costs to sell and its value in use. In calculating the fair value lesscosts to sell and value in use of its CGUs, management is assisted by the workof external advisors.
The recoverable amount of a CGU is not re-computed annually by management if all of the following criteria are met:
- The component assets and liabilities of the CGU have not changed significantly since the last recoverable amount calculation;
- The previous assessment of recoverable amount exceeded the carrying amount of the CGU by a substantial margin; and
- Based on an analysis of events that have occurred and circumstances that have changed since the most recent recoverable amount calculation, the likelihood that a current recoverable amount determination of the CGU would be less than its carrying value is remote.
Management has considered all of the above criteria in conjunction with the financial results for the CGUs in 2009 and the forecast results for 2010 and future years, along with consideration of events that have taken place, and any changes to economic conditions that have occurred, since the previous goodwill impairment test. Management consider that three CGUs - Targeting, Distribution and Monitoring, UBM Asia and RISI meet all three of the carry forward criteria, and the results of prior year calculations of the recoverable amounts of these CGU's, based on fair value less costs to sell, have been rolled forward for the purpose of the 2009 impairment test.
Fair value less costs to sell has been applied for UBM Information and value in use has been applied for UBM Technology, CMPMedica and Commonwealth Business Media as the most appropriate test basis for each CGU.
Impairment charges recognisedThe impairment charges in respect of goodwill recognised in the consolidatidated income statement as a separate statement line item with operating loss are
as follows: 2009 2008Cash generating unit Segment £m £m UBM Technology Events, Data, 47.0 - Services and Online, and Print - Magazines*CMPMedica Events, Data, 67.0 - Services and Online, and Print - Magazines*Commonwealth Business Media Events, Data, 35.8 - Services and Online, and Print - Magazines* 149.8 -
* Assets (including goodwill) and liabilities of the CGUs have not been allocated to the three business segments within Events, Data, Services and Online, and Print - Magazines
UBM Technology
During the year ended 31 December 2009, the goodwill in relation to UBMTechnology was impaired by £47.0m, mainly due to the continued decline inprint revenue and operating profit within the technology sector. Over the pastfew years, UBM has actively managed the print magazine portfolio to adapt tothe long term structural shifts in the media environment. A number of titleshave either been discontinued, consolidated or the frequency of publicationreduced, resulting in a significant decline in print-based revenue andoperating profit, further accelerated in 2009 by the difficult economicclimate.
CMPMedica
The goodwill in relation to CMPMedica was impaired by £67.0m during the yearended 31 December 2009. This was primarily due to reduced print magazinerevenue and operating profit. A number of CMPMedica titles were discontinuedin 2009, resulting in a significant decline in print-based revenue andoperating profit, further accelerated by the reduction in General Practitioneradvertising revenue reflecting the difficult economic climate. In addition,regulatory change in the US has resulted in reduced spending by thepharmaceutical companies for Continuing Medical Education, resulting in thecancellation of a number of planned meeting series.
Commonwealth Business Media
During the year ended 31 December 2009, the goodwill in relation toCommonwealth Business Media was impaired by £35.8m. As with UBM Technology andCMPMedica, the charge is mainly attributable to the decline in print magazineand print directory revenue and operating profit. Both magazines anddirectories within the trade and transportation sector have been impacted bythe long term structural shift away from print media towards digital andface-to-face media. This decline has been accelerated in 2009 as a result ofthe difficult economic environment, particularly in the US.
Value in use impairment test
The recoverable amounts for the UBM Technology, CMPMedica and CommonwealthBusiness Media CGUs were determined using value in use. The value in use testsfor each CGU have been based on the estimated future cash flows which arediscounted to their present value using a pre-tax discount rate that reflectsmanagement's estimate of the CGU's weighted average cost of capital.
The key assumptions used by management in the value in use calculation for the above mentioned CGU's which are considered to be most sensitive were:
Forecast EBITA
Forecast EBITA is based upon the financial projections approved by managementcovering a five year period. The projections have been determined by using acombination of past experience, long term trends, industry forecasts andmanagement estimates.Management's estimates and long term trends reflect the following factors:
- The continued rebalancing of the product portfolio, away from print to digital and face-to-face media.
- Margin improvements due to restructuring and business reorganisation plans,that have taken place during 2008 and 2009 within each CGU. Each restructuringprogramme aims to either rebalance the product portfolios to better meet thefuture needs of customers and audiences, or to ensure the support platformsand divisional structures are cost efficient. This was undertaken by acombination of cost reductions and investment in organic product developmentand acquisitions. The EBITA projections take into account these marginimprovements and do not include any cash flows relating to restructuring notprovided at the time of the annual impairment test.
Management has considered industry specific growth rates in their calculation of the five year EBITA forecast, together with exceptions specific to the healthcare, trade and transportation and technology industries.
Discount rate
The discount rate for each CGU is based on the risk-free rate for 20 yeargovernment bonds in the respective market, adjusted for a risk premium toreflect the increased risk of investing in equities, the systematic risk ofthe specific CGU and taking into account the relative size of the CGU and thespecific territories in which it operates. The increased risk of investing inequities is assessed using an equity market risk premium which reflects theincreased return required over and above a risk free rate by an investor whois investing in the whole market. Management has used an equity market riskpremium based on studies by independent economists and historic equity marketrisk premiums.
The risk adjustment for the systematic risk, beta, of each CGU reflects the specific risk relating to that CGU relative to the market as a whole. This has been determined by management using an average of the betas of comparable companies within respective sectors.
Perpetuity growth rates
The cash flows subsequent to the approved budget period are based upon the weighted average projected real gross domestic product growth rate in 2013 of each of the territories in which the CGU's operate. Growth rates for each territory have been weighted based on contribution to 2010 budgeted revenue.
The key assumptions for discount rate and perpetuity growth rate used in themost recent value in use calculation in the year ended 31 December 2009 are
asfollows: 2009 2008 Pre-tax Perpetuity Pre-tax Perpetuity discount growth rate discount growth rate rate rate UBM Technology 12.0% 2.5% n/a* n/a*CMPMedica 12.6% 2.6% 12.6% 2.3%Commonwealth Business Media 13.3% 2.3% n/a* n/a*
* Value in use calculation not performed in 2008
Following the charge for impairment, the estimated recoverable amount of theUBM Technology, CMPMedica and Commonwealth Business Media CGU's are equal totheir carrying value at 31 December 2009. Consequently, any adverse change inkey assumption would, in isolation, cause a further impairment loss to berecognised.
The table below shows the (increase)/decrease in the aggregate impairment loss of a reasonably possible change in each assumption:
UBM CMP Commonwealth Technology Medica Business Media £m £m £mEBITA forecastsDecrease by 10% (19.0) (22.9) (7.5)Increase by 10% 19.0 22.9 7.5Pre-tax discount rateIncrease by 20 basis points (3.8) (4.1) (1.3)Decrease by 20 basis points 3.9 4.3 1.3Perpetuity growth rateIncrease by 0.5 percentage point 7.0 7.5 2.2
Decrease by 0.5 percentage point (6.3) (6.8) (2.0)
Fair value less costs to sell impairment test
The recoverable amount of the UBM Information CGU has been determined usingfair value less costs to sell. The estimate of fair value less costs to sellis based on the best information available and refers to the amount at whichthe CGU could be sold in a current transaction between willing parties. Thevaluation method is based on an earnings multiple approach using transactionrevenue and EBITA multiples obtained from comparable businesses andtransactions in comparable businesses in the professional media sector. Adiscount to the multiples from the peer group has been applied due to thesmaller size of UBM Information compared to the peer group. The multiplesrange from 1.6 to 2.2 (2008: 1.3 to 1.9) for revenue and 7.5 to 9.5 (2008: 6.5to 8.5) for EBITA.
The calculation uses actual sales and EBITA results for 2009 and forecast sales and EBITA for 2010, based upon financial budgets approved by management. Costs to sell are estimated to be 3% of the value of a CGU, based on experience of prior disposals by the Group.
In the determination of fair value less costs to sell, the calculation of fairvalue is most sensitive to the precedent transaction multiples used. Based onthe conditions at the balance sheet date, management determined that areasonably possible change in any of the key assumptions would not cause animpairment to be recognised in respect of UBM Information.In 2008, impairment tests for UBM Technology and Commonwealth Business Mediawere also performed under the fair value less costs to sell methodology, asdescribed above. The multiples ranged from 1.0 to 1.8 for revenue and 8.0 to11.0 for EBITA. The calculation used actual sales and EBITA results for 2008and forecast sales and EBITA for 2009, based upon financial budgets approvedby management.In the determination of fair value less costs to sell in 2008, the calculationof fair value is most sensitive to the precedent transaction multiples used.During the year ended 31 December 2008, the deterioration in the economicclimate and fall in equity markets has resulted in lower sales and EBITAmultiples across the group. Management conducted a sensitivity analysis inrelation to multiples used in the impairment test. For UBM Technology, ifthere was a further reasonably possible decline in multiples of companies inthe professional media sector of 20% to 25%, the sensitivity analysis showsthat the recoverable amount would continue to exceed the carrying value of theCGU. The fair value for Commonwealth Business Media, which was acquired in2006, exceeded its carrying value by approximately £15m. A reasonably possibledecline in multiples could reduce the fair value less costs to sell of theCommonwealth Business Media CGU to a level comparable with its carrying value.
10. Cash and cash equivalents
As restated 2009 2008 £m £mCash at bank and in hand 61.9 33.5Short term deposits 97.0 138.9 158.9 172.4
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying periods of between one day and three months and earn interest at the respective short-term deposit rates.
The fair value of cash and cash equivalents at 31 December 2009 is £158.9m (2008: £172.4m).
The Group only deposits surplus cash with major banks of high quality credit standing.
The Group classifies all its cash and short term deposits as loans and receivables.
The amounts shown for the year ended 31 December 2008 have been restated to reflect the finalisation of acquisition accounting adjustments relating to certain acquisitions made in 2008.
For the purposes of the consolidated statement of cash flows, cash and cash equivalents comprise the following at 31 December:
2009 2008 £m £mCash at bank and in hand 61.9 33.5Short term deposits 97.0 138.9 158.9 172.4Bank overdrafts (see Note 11) (0.1) (3.7) 158.8 168.711. Borrowings 2009 2008 £m £mCurrentBank overdrafts 0.1 3.7Current installments due on bank loans 0.2 50.97.75% US bonds - 3.9 0.3 58.5
Non-current
Non-current installments due on bank 64.2 299.3
loans
£250m fixed rate sterling bonds 2016 245.8 -£75m floating rate reset bonds 75.0 75.0 385.0 374.3
The Group classifies all its derivative financial instruments at fair value through profit and loss and its bank overdrafts, bank loans, fixed rate bonds, floating rate reset bonds and 7.75% US bonds as financial liabilities at amortised cost.
Bonds
£250m fixed rate sterling bonds due 2016
On 23 November 2009 the Group issued £250m fixed rate sterling bonds at99.384% of par. The bonds pay an annual interest coupon of 6.5% on 23 Novemberuntil maturity in 2016. The coupon of 6.5% would be increased by 1.25% in theevent the Group's long term credit rating were to be reduced below investmentgrade by either Standard and Poors (below BBB-) or Moodys (below Baa3). Theproceeds were used to repay outstanding bank debt. The Group entered intocurrency and interest rate swaps so that approximately £150m has been swappedinto floating rate US Dollars, at a rate of LIBOR plus 3.14%. The group alsoentered into currency swaps so that approximately £100m has been swapped intofixed rate US Dollars, at a rate of 6.34%.
£75m Floating rate reset bonds
In 2008, the Group raised £75.0m through the issue of 20 year floating ratereset bonds. The bonds bear interest at six month LIBOR plus 0.68% until 26September 2011. Thereafter the interest rate will be 4.70% plus a creditspread which will be reset every three years by auction. Bondholders may putthe bonds back to the issuer, at par, on 26 September 2011 and on eachtriennial interest reset date thereafter. The Group may call the bonds at fairmarket value on interest payment dates from September 2011. If not put orcalled, the bonds will mature in 2028.Bank loans 2009 2008 £m £m €53.1m floating rate reset loan 2012 47.2 -€53.1 variable rates loan 2009 - 50.9CAD26.0m variable rates loan 2010 - 14.7CAD6.0m variable rate multi-option - 0.8facility 2010£325m variable rate multi option 16.8 283.3facility 2012Other 0.4 0.5 64.4 350.231 December 2009€53.1m floating rate reset loan due 2012During 2008, the Group borrowed €53.1m under floating rate reset loans. Theseloans bear interest at six month LIBOR plus 1.80% until 16 March 2012.Thereafter the interest rate will be 4.16% plus a credit spread which will bereset every three years by auction. Lenders may put the loans back to theGroup, at par, on 16 March 2012 and on each triennial interest reset datethereafter. The Group may call the loans at fair market value on interestpayment dates from March 2012. If not put or called, the loans will mature in2024.CAD26.0m variable rates loan due 2010This loan was repaid and the facility cancelled in 2009
CAD6.0m variable rate multi option facility due 2010 This loan was repaid and the facility cancelled in 2009
£325m variable rate multi option facility due 2012 This £325m multicurrency unsecured revolving facility is repayable on 27 July 2012 and bears interest at LIBOR plus 0.325%.
Currency of borrowingm £mJapanese Yen 2,530.0 16.8 16.8
The undrawn portion of this facility is £308.2m.
31 December 2008
€53.1m variable rates loan due 2009 This unsecured loan was repayable on 16 March 2009 and bears interest at LIBOR plus 0.75%. This loan was refinanced through the issuance of €53.1m floating rate reset loan due 2012.
CAD26.0m variable rates loan due 2010 This unsecured loan is repayable on 27 May 2010 and bears interest at LIBOR plus 0.3%
CAD6.0m variable rate multi option facility due 2010 This unsecured revolving facility is repayable on 27 May 2010 and bears interest at LIBOR plus 0.3%. At 31 December 2008, CAD1.5m of this loan was drawn leaving CAD4.5m undrawn.
£325m variable rate multi option facility due 2012 This £325m multicurrency unsecured revolving facility is repayable on 27 July 2012 and bears interest at LIBOR plus 0.325%. Drawings from the facility at 31 December 2008 were US$380.0m (carrying value £261.3m) and Yen2,900.0m (carrying value £22.0m).
The undrawn portion of this facility is £41.7m.
12. Retirement benefit obligation
The Group operates a number of funded defined benefit and defined contributionpension schemes in the UK and overseas. The charge for the year in relation todefined contribution schemes was £6.0m (2008: £4.7m).The defined benefit pension schemes included in the following disclosures are(i) UK schemes: the United Pension Plan, the United Magazines Final SalaryScheme, the defined benefit section of the United Group Pension Scheme(`UGPS'), The Builder Group Pension Scheme (which was transferred to the UGPSduring 2008), the United Newspapers Executive Pension Scheme, the OAG PensionScheme, (ii) US schemes, being the CMP Media LLC Cash Balance Retirement Planand the CMP Post Retirement Medical Plan, and (iii) Retirement Indemnity Plansin France.
The most recent actuarial funding valuations for the majority of the UK scheme liabilities were carried out in 2008 and updated to 31 December 2009 by independent qualified actuaries using the projected unit credit method.
The amounts recognised in the statement of financial position are determinedas follows: UK Other UK Other schemes schemes Total schemes schemes Total 2009 2009 2009 2008 2008 2008 £m £m £m £m £m £mFair value of plan assets 415.6 23.6 439.2 382.1 23.2 405.3Benefit obligation (431.1) (32.2) (463.3) (335.6) (38.8) (374.4)
Irrecoverable element of pension (2.5) - (2.5) (16.3) - (16.3)surplus(Liability)/asset in the statement (18.0) (8.6) (26.6) 30.2 (15.6) 14.6of financial position
Any surplus on the UK schemes ultimately repaid by the Trustees would currently be subject to a 35% tax charge prior to being repaid. Two of the UK schemes are in surplus at 31 December 2009. The application of IFRIC 14 is such that this tax is shown as irrecoverable surplus.
The amounts recognised in the income statement are as follows:
UK Other UK Other schemes schemes Total schemes schemes Total 2009 2009 2009 2008 2008 2008 £m £m £m £m £m £mCurrent service cost 0.7 0.3 1.0 1.2 2.0 3.2Past service cost - - - 0.5 - 0.5Curtailments - - - - (2.1) (2.1) 0.7 0.3 1.0 1.7 (0.1) 1.6Interest cost 21.9 1.8 23.7 23.5
1.8 25.3 Expected return on plan assets (24.4) (1.5) (25.9) (27.8) (1.9) (29.7)
(2.5) 0.3 (2.2) (4.3)
(0.1) (4.4) Total pension (credit)/charge (1.8) 0.6 (1.2) (2.6) (0.2) (2.8)
Of the total pension (credit)/charge, a £1.0m charge and a £2.2m credit (2008: £1.6m charge and £4.4m credit) were included in `Operating expenses' and `Financing income' respectively. The total pension credit for 2010 is currently expected to be £2.1m (2009: £1.5m).
The main UK schemes are closed to new members, hence under the projected unitcredit method, the current service cost (expressed as a percentage of thesalaries of the remaining members) will increase as the members of the schemeapproach retirement.Following finalisation of the 2008 funding valuations in 2009, the Groupagreed to make special contributions to the UK pension schemes over the nextfive years of £3.1m per annum plus a one-off contribution in 2009 of £1.3m andto arrange letters of credit to be issued to the scheme trustees from one ormore of the Company's bankers to make up the difference between the valuationand 100% while this funding takes effect. The value of the letters of creditissued to the scheme trustees in 2009 is £13.0m (2008: £26.0m). The mainconditions under which these letters of credit could be drawn relate to eventswhich would imperil the interests of the scheme, such as insolvency, or theGroup failing to make agreed payments.
Pension deficit contributions of £3.7m (2008: £1.7m) were made to the UK schemes during the year and £nil (2008: £nil) were made to other schemes during the year.
The Group expects to contribute £3.1m to its defined benefit pension plans in 2010.
The movement in the (liability)/asset recognised in the statement of financialposition is as follows: UK Other UK Other schemes schemes Total schemes schemes Total 2009 2009 2009 2008 2008 2008 £m £m £m £m £m £mAt 1 January 30.2 (15.6) 14.6 26.2 (4.1) 22.1
Total income/(expenses) recognised 1.8 (0.6) 1.2 2.6 0.2
2.8in the income statementNet actuarial (losses)/gains (67.8) 3.9 (63.9) 1.5 (10.8) (9.3)recognised in the year
Irrecoverable element of pension 13.8 - 13.8 (2.2) -
(2.2)surplusContributions paid by UBM 4.0 2.5 6.5 2.1 2.0 4.1Currency translation - 1.2 1.2 - (2.9) (2.9)At 31 December (18.0) (8.6) (26.6) 30.2 (15.6) 14.6
The principal actuarial assumptions used in determining pension obligations for the Group's schemes are shown below:
UK Other UK Other schemes schemes schemes schemes 2009 2009 2008 2008 % % % %Discount rate 5.70 5.39 6.70 5.55Future salary increases 3.75 2.00 3.75 3.41
Weighted average pension increases 2.96 n/a 2.50
n/a
Inflation assumption 3.30 2.45 2.50
2.47
Expected return on scheme assets:Equities 8.90 9.50 9.30 9.50Bonds 5.70 5.50 6.70 5.50Gilts 4.40 n/a 3.80 n/aOther 0.50 3.00 2.00 2.00The mortality assumptions used at 31 December 2009 for UK schemes areconsistent with those applied at 31 December 2008. The death rates used are130% of the "2000 series" standard tables based on the year of birth of schememembers, which is currently on average 1939 for pensioners (2008: 1935) and1956 for non-pensioners (2008: 1957). Allowances for future reductions indeath rates were assumed to be in line with the "medium cohort" standardactuarial projection. These projections allow for life expectancy to improveover time due to improvements in medical treatments and other lifestylefactors such that younger members who have not yet reached pensionable age areexpected to live longer than current pensioner members.The assumed average life expectancy of current pensioner members when theywere aged 65 is 19.4 years for males and 21.8 years for females (2008: 19.0years and 21.4 years respectively). For current non-pensioner members who havenot yet reached pensionable age, the assumed average life expectancy when theyreach age 65 is 20.6 years for males and 22.9 years for females (2008: 20.6years and 22.9 years respectively). The average rate of improvement underlyingthe standard tables is an increase of approximately 0.7 years' life expectancyin every 10 years.
For the valuation of US scheme liabilities, RP 2000 tables are used in both years for all members. The life expectancy for a 65-year-old male is 18.8 years (2008: 18.8 years) and a 65-year-old female is 20.8 years (2008: 20.8 years).
Additional assumptions used for valuing the UK scheme liabilities are an allowance for between 60-80% (2008: 66-80%) of non-pensioners to exchange 32% (2008: 32%) of pension for tax-free cash on retirement.
Plan assets mainly consist of equity instruments and fixed income investments.The expected rate of return on equities at 31 December 2009 is based on anexpected long-term out-performance of equities over government bonds of 4.5%p.a. (2008: 5.5%).Management has used judgment to determine the assumptions used in calculatingthe pension obligations. The assumed discount rate, salary increases andmortality all have a significant effect on the IAS 19 accounting valuation.The following table shows the sensitivity of the valuation to changes in theseassumptions. Impact on deficit increase £m 0.25 percentage point decrease to discount rate 16.0
0.25 percentage point increase to inflation(including pension 8.0 increases linked to inflation)
Additional one year increase to life expectancy 15.0
The reconciliation of the defined benefit obligation is as follows:
UK Other UK Other schemes schemes Total schemes schemes Total 2009 2009 2009 2008 2008 2008 £m £m £m £m £m £m
Defined benefit obligation at 1 335.6 38.8 374.4 415.6 29.0
444.6JanuaryService cost 0.7 0.3 1.0 1.2 2.0 3.2Interest cost 21.9 1.8 23.7 23.5 1.8 25.3Employee contributions 0.3 - 0.3 0.4 - 0.4Curtailment gain - - - - (2.1) (2.1)Benefit payments (20.2) (5.4) (25.6) (20.6) (3.8) (24.4)Past service cost - - - 0.5 - 0.5Actuarial loss/(gain) on 92.8 0.1 92.9 (85.0) 0.7 (84.3)liabilitiesExchange rate (gain)/loss - (3.4) (3.4) - 11.2 11.2
Defined benefit obligation at 31 431.1 32.2 463.3 335.6 38.8 374.4 December
The reconciliation of the plan assets is as follows:
UK Other UK Other schemes schemes Total schemes schemes Total 2009 2009 2009 2008 2008 2008 £m £m £m £m £m £mAssets at 1 January 382.1 23.2 405.3 455.9 24.9 480.8Employer contributions 4.0 2.5 6.5 2.1 2.0 4.1Employee contributions 0.3 - 0.3 0.4 - 0.4Benefit payments (20.2) (5.4) (25.6) (20.6) (3.8) (24.4)Actual return on assets 49.4 5.5 54.9 (55.7) (8.2) (63.9)Exchange rate (loss)/gain - (2.2) (2.2) - 8.3 8.3Assets at 31 December 415.6 23.6 439.2 382.1 23.2 405.3
The assets held in the schemes are as follows, split by asset category:
UK Other UK Other schemes schemes Total schemes schemes Total 2009 2009 2009 2008 2008 2008 % % % % % %Equity 55.0 44.0 55.0 48.0 55.0 48.0Bonds 42.0 49.0 42.0 49.0 40.0 49.0Cash 1.0 7.0 1.0 1.0 5.0 1.0Annuity contracts 2.0 - 2.0 2.0 - 2.0 100.0 100.0 100.0 100.0 100.00 100.00
The plan assets do not include any shares in UBM or any property occupied by the Group.
Actuarial gains and losses recognised in the consolidated statement ofcomprehensive income: UK Other UK Other schemes schemes Total schemes schemes Total 2009 2009 2009 2008 2008 2008 £m £m £m £m £m £m
Experience losses/(gains) on plan 3.3 (0.3) 3.0 (11.5) 0.5 (11.0)liabilitiesActuarial losses/(gains) on plan 89.5 0.4 89.9 (73.5) 0.2 (73.3)liabilities due to assumptionsExperience (gains)/losses on plan (25.0) (4.0) (29.0) 83.5 10.1
93.6
assets
Effect of irrecoverable element of (13.8) - (13.8) - -
-pension surplusTotal loss/(gain) 54.0 (3.9) 50.1 (1.5) 10.8 9.3
The cumulative amount of actuarial gains recognised in the consolidated statement of comprehensive income is £21.1m (2008: £71.2m).
UK Other UK Other schemes schemes Total schemes schemes Total 2009 2009 2009 2008 2008 2008 % % % % % %
Experience losses/(gains) on plan 0.8 (0.9) 0.6 (3.4) 1.3 (2.9)liabilitiesExperience (gains)/losses on plan (6.0) (16.9) (6.6) 21.9 43.5
23.1
assets
History of experience gains and losses:
UK UK UK UK UK schemes schemes schemes schemes schemes 2009 2008 2007 2006 2005 £m £m £m £m £mDefined benefit obligation (431.1) (335.6) (415.6) (445.2) (453.2)Plan assets 415.6 382.1 455.9 445.0 411.2
Irrecoverable element of pension surplus (2.5) (16.3) (14.1) -
-
(Deficit)/surplus in statement of financial position (18.0) 30.2 26.2 (0.2)
(42.0)
Experience losses/(gains) on plan liabilities (3.3) 11.5 (4.2) (2.2)
22.8
Experience (gains)/losses on plan assets 25.0 (83.5) 1.5 7.9
37.0 Other Other Other Other Other schemes schemes schemes schemes schemes 2009 2008 2007 2006 2005 £m £m £m £m £mDefined benefit obligation (32.2) (38.8) (29.0) (31.9) (32.2)Plan assets 23.6 23.2 24.9 28.3 27.4
Irrecoverable element of pension surplus - - - -
-
(Deficit)/surplus in statement of financial (8.6) (15.6) (4.1) (3.6) (4.8)positionExperience losses/(gains) on plan liabilities 0.3 (0.5) 0.7 (2.0)
0.2
Experience (gains)/losses on plan assets 4.0 (10.1) (0.4) 1.1
0.1
Experience gains/(losses) on plan assets:
UK Other UK Other schemes schemes Total schemes schemes Total 2009 2009 2009 2008 2008 2008 £m £m £m £m £m £mExpected return on assets (24.4) (1.5) (25.9) (27.8) (1.9) (29.7)Actual return on assets 49.4 5.5 54.9 (55.7) (8.2) (63.9) 25.0 4.0 29.0 (83.5) (10.1) (93.6)13. Share capital 2009 2008 £m £mAuthorised
1,217,124,740 (2008: 1,217,124,740) Ordinary shares of 121.7
121.7
10 pence eachNil (2008: Nil) B shares of 8 and 23/44 pence each -
- 121.7 121.7 Ordinary Ordinary B B shares shares shares shares Total number £m number £m £mIssued and fully paidAt 1 January 2008 243,542,509 82.4 3,809,932 0.3 82.7
Issued in respect of share option 279,246 0.1 - -
0.1
schemes and other entitlementsAt 30 June 2008 (pre capital 243,821,755 82.5 3,809,932 0.3 82.8reorganisation)Capital reorganisation - (58.1) - - (58.1)
Capital reorganisation - repurchase - - (3,809,932) (0.3) (0.3)of B sharesIssued in respect of share option 260,617 - - -
-
schemes and other entitlementsAt 31 December 2008 244,082,372 24.4 - -
24.4
Issued in respect of share option 92,116 - - -
-
schemes and other entitlementsAt 31 December 2008 244,174,488 24.4 - - 24.4
Capital reorganisation and new holding company
On 1 July 2008, as part of a reorganisation of the corporate structure of theGroup, United Business Media Limited (`UBML') was created as a new holdingcompany and parent company of the Group. UBML is UK-listed, incorporated inJersey and with its tax residence in the Republic of Ireland. United BusinessMedia plc (`UBM plc') became a subsidiary of UBML. The former UBM plcshareholders were issued new shares in UBML on a one-for-one basis following aScheme of Arrangement (`the Scheme') under Part 26 of the Companies Act 2006which was approved by UBM plc shareholders. Immediately following the Scheme,the former shareholders of UBM plc held the same economic interest in UnitedBusiness Media Limited as they held in UBM plc immediately prior to itsimplementation.The effect of the Scheme was to increase share premium by £885.4m from £362.2mat the date immediately preceding the scheme, eliminate UBM plc's capitalredemption reserve of £52.1m and create a merger reserve with a negative/debitbalance of £833.3m.Also on 1 July 2008, UBM plc reduced and repaid its entire issued B sharecapital for total consideration of £9.4m (being 245p per share plus therelevant proportion of dividends outstanding). The effect of the reduction andrepayment of UBM plc's B share capital of £9.4m was to reduce share capital by£0.3m, increase the capital redemption reserve by £0.3m, reduce retainedearnings by £9.3m in relation to the redemption of the B shares and to recordthe £0.1m B share dividend for the period to the redemption date.On 4 July 2008, the Jersey Court approved the reduction of capital of UBML,whereby the nominal value of each ordinary share was reduced from 33 71/88p to10p and the balance of UBML's share premium account was transferred to theprofit and loss reserve. The effect of the reduction of capital was to reduceshare capital by £58.1m, reduce share premium by £1,247.6m and increase theprofit and loss reserve by £1,305.7m.
Share repurchases
The Group did not repurchase and cancel any of its own ordinary shares duringthe year (2008: nil). The total amount paid to acquire the ordinary shares was£nil and, as described above, £nil was paid to acquire B shares (2008: £nilfor ordinary shares and £9.4m for B shares).
B shares
The return of capital to shareholders undertaken in 2001 took the form of asubdivision and consolidation of the existing Company ordinary shares. On 23April 2001, each of the existing 507,901,885 ordinary shares of 25p then inissue were sub-divided into one share of 8 23/44p (B Shares) and one share of16 21/44p and immediately following such sub-division every issued share of 1621/44p was sub-divided into 29 shares of 25/44p. Every 44 shares of 25/44peach resulting from such sub-division were then consolidated into one ordinaryshare of 25p. The subdivision created a class of B shares with a total valueof approximately £1.25bn. UK shareholders had the option to sell these sharesback to the Company for 245p per share, to receive a single dividend of 245pper share, or to retain the B shares and receive a continuing dividend linkedto LIBOR. During the year ended 31 December 2008, as described above,3,809,932 shares were purchased by the Company for consideration of £9.4m.Cumulatively to 1 July 2008, 375,417,690 B shares had been purchased by UnitedBusiness Media plc for consideration of £919.8m. At 31 December 2009, no Bshares remain in issue (31 December 2008: no B shares).B shareholders were entitled to a non-cumulative preference dividend. Onwinding up, the B shareholders were entitled to 245p per share and therelevant proportion of the dividends outstanding. B shareholders did not haveany voting entitlements except in a resolution relating to a winding up of thecompany or if the B share dividend has been outstanding for more than sixmonths.
Company share schemes
The ESOP Trust and QUEST Trust own 0.27% (2008: 0.91%) of the issued sharecapital of the company in trust for the benefit of employees of the group andtheir dependents. The voting rights in relation to these shares are exercisedby the trustees.14. Share premium 2009 2008 £m £mIn issue at 1 January 1.0 361.3Premium on shares issued, net of costs 0.2 1.9Capital reorganisation (see Note 13) - (362.2)In issue at 31 December 1.2 1.0
The Company received £0.2m (2008: £2.0m) on the issue of shares in respect of the exercise of options awarded under various share option plans.
15. Other reserves Foreign Capital currency Total Merger redemption translation ESOP Other other Retained Minority reserve reserve reserve reserve reserve
reserves earnings interests Total
£m £m £m £m £m £m £m £m £mBalance at 1 101.1 51.8 (40.3) (24.0) 129.1 217.7 (301.3) 5.7 (77.9)January 2008
Total comprehensive - - 107.1 - (11.7) 95.4 61.6 9.0 166.0income for the year*Capital reorganisation (833.3) (52.1) - - - (885.4) 1,305.7 - 420.3Capital reorganisation - 0.3 - - - 0.3 (9.3) - (9.0)- repurchase of B shares Share-based payment - - - - - - 7.9 - 7.9Equity dividends - - - - - - (54.4) - (54.4Minority interest - - - - - - - (7.1) (7.1)dividendsShares awarded by - - - 4.5 - 4.5 (4.5) - -ESOPBalance at 31 (732.2) - 66.8 (19.5) 117.4 (567.5) 1,005.7 7.6 445.8December 2008Total comprehensive - - (51.7) - 7.9 (43.8) 21.2 6.5 (16.1)losses for the year**Share-based payment - - - - - - 2.4 - 2.4Equity dividends - - - - - - (58.8) - (58.8)Minority interest - - - - - - - (4.4) (4.4)dividendsAcquisition of minority - - - - - - (8.5) (0.2) (8.7)interests (see Note 16)Shares awarded by - - - 13.6 - 13.6 (13.6) - -ESOPBalance at 31 (732.2) - 15.1 (5.9) 125.3 (597.7) 948.4 9.5 360.2December 2009
* The amount included in the foreign currency translation reserve for 2008represents the currency translation difference on foreign operations on Groupsubsidiaries of £190.5m, on net debt of £(87.7)m and on joint ventures andassociates of £4.3m. The amount recognised in the other reserve represents thelosses on cash flow hedges arising during the year of £8.3m andreclassification adjustments for amounts included in profit or loss of £3.4m.The amount included in retained earnings represents profit attributable toordinary equity shareholders of £75.9m and B share equity shareholders of£0.5m, less actuarial losses recognised in the Group's pension schemes of£9.3m and the pension schemes of associates of £3.3m, less the movement in theirrecoverable element of the pension surplus of £2.2m. The amount included inthe minority interest represents the profit attributable to minority interestsof £6.3m plus currency translation difference on foreign operations of £2.7m.** The amount included in the foreign currency translation reserve for 2009represents the currency translation difference on foreign operations on Groupsubsidiaries of £(78.1)m, on net debt of £27.9m and on joint ventures andassociates of £(1.5)m. The amount recognised in the other reserve representsthe gains on cash flow hedges arising during the year of £0.2m andreclassification adjustments for amounts included in profit or loss of £7.7m.The amount included in retained earnings represents profit attributable toequity shareholders of £75.2m, less actuarial losses recognised in the Group'spension schemes of £63.9m and the pension schemes of associates of £3.9m, plusthe movement in the irrecoverable element of the pension surplus of £13.8m.The amount included in the minority interest represents the profitattributable to minority interests of £6.6m less currency translationdifference on foreign operations of £0.1m.
Merger reserve
During 2008 a reorganisation of the corporate structure of the Group took place to create a new holding company which is UK-listed, incorporated in Jersey and with its tax residence in the Republic of Ireland. This capital reorganisation that took place involved a Scheme of Arrangement and subsequent capital reduction and details relating to these transactions as well as an explanation of the impact on the financial statements is included in Note 13.
Capital redemption reserve
Entries were made to the capital redemption reserve during 2008 to ensurethere was no reduction in capital when the former parent company repurchasedits own shares in accordance with the Companies Act 1985. Under the Companies(Jersey) Law 1991 no entries will be required to the capital redemptionreserve in relation to any future transactions whereby the Company repurchasesits own shares.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also used to record the effect of hedging net investments of foreign operations.
Other reserve
This reserve includes unrealised gains and losses on hedging instruments for which cash flow hedge accounting is used.
ESOP reserve
The ESOP reserve records ordinary shares held by the ESOP to satisfy future share awards. The shares are recorded at cost.
16. Acquisitions
The Group completed five acquisitions during 2009.
On 3 July 2009, the Group acquired Iasist S.A. for a total cash consideration of €6.4m. Iasist S.A. is a provider of benchmarking data and software to regional health authorities, hospitals and other health service providers, principally in Spain and Portugal. Iasist S.A is reported within the Data, Services and Online segment.
On 3 July 2009, the Group acquired the remaining 48% of the voting rights ofRISI Inc. for a total cash consideration of $14.3m. This equity purchasebrings UBM's total shareholding in RISI Inc. to 79% (2008: 52%), although 100%of the voting rights are now owned (2008: 52%). RISI Inc. provides online andprinted market, pricing, news and analysis and benchmarking products andservices on the forest product industry. RISI Inc is reported within the Data,Services and Online segment.On 31 July 2009, the Group acquired The Fuel Team for an initial cashconsideration of $2.5m, with a further performance-related consideration of upto $4.5m payable over the next three years. The Fuel Team builds and hostsspecialist website modules (or, microsites) for communications professionalworking in businesses, healthcare and not-for-profit organisations. The FuelTeam is reported within the Targeting, Distribution and Monitoring segment.On 27 August 2009, the Group acquired a 70% interest in the ChinaInternational Optoelectronic Expo (`CIOE') for a total cash consideration of$5m. CIOE is the world's largest optoelectronics event held annually inShenzhen. The event covers all aspects of the market, including laser andinfrared applications, precision optics, optical communications and LEDs. CIOEwas allocated to the Events segment and was subsequently transferred at costto the joint venture eMedia Asia Limited on 30 December 2009.On 14 December 2009, the Group acquired Virtual Press Office for an initialcash consideration of $6.5m, with a further performance-related considerationof up to $3.5m payable over the next three years. Virtual Press Office is themarket-leading provider of communications and marketing services to live eventorganizers, exhibitors and attendees. Virtual Press Office is reported withinthe Targeting, Distribution and Monitoring segment.
The Group acquired 100% of the voting rights in all cases where acquisitions involved the purchase of companies unless where otherwise stated. The acquisition accounting for Virtual Press Office has been determined on a provisional basis as the valuation exercise at the date of acquisition is ongoing.
The following table sets out the carrying amounts of the identifiable assetsand liabilities acquired and their fair value in respect of the acquisition ofbusinesses (excluding RISI Inc.) during 2009: 2009 2009 Fair Acquiree's value carrying to Group amount £m £mIntangible assets 6.3 0.1Property, plant and equipment 0.1 0.1Cash and cash equivalents 2.8 2.8Trade receivables and other current assets 4.5 4.5 13.7 7.5
Trade payables and other current liabilities (3.5) (4.1) Deferred tax liability
(1.3) - (4.8) (4.1)Fair value of net assets 8.9Goodwill arising on acquisition 8.6 17.5
The total consideration paid and payable on acquisitions is shown below:
2009 £mConsideration:Cash paid 18.3Deferred consideration (0.8)Total consideration 17.5The acquisition of RISI Inc. has been accounted for using the entity conceptmethod as control was already held by the Group on the date of theacquisition. 2009 £mCash paid 8.7Carrying amount of minority interest on (0.4)acquisition dateRemaining minority interest after 3 July 0.2
2009
Recognised in equity (see Note 16) 8.5
The Group completed 14 acquisitions during 2008.
2 January 2008, the Group acquired certain assets from Mass Event Labs, Inc for an initial cash consideration of $1.2m, with a further performance-related consideration of up to $3.8m payable over the next four years.
22 January 2008, the Group acquired Think Service, Inc for an initial cash consideration of $24.5m, with a further performance-related consideration of up to $5.0m payable over the next year.
8 February 2008, the Group acquired Exposure Events UK Limited, for an initialcash consideration of £0.6m, with a further performance-related considerationof up to £1.9m payable over the next two years.
25 February 2008, the Group acquired AeroStategy's aviation data business for an initial cash consideration of $0.9m, with a further performance-related consideration of up to $1.2m payable over the next three years.
29 February 2008, the Group acquired Vision Events for a total cash consideration of $11.4m.
30 May 2008, the Group acquired the Embedded Systems Show for a total cash consideration of £0.1m.
30 May 2008, the Group acquired Next Level for an initial cash consideration of $5.0m, with a further performance-related consideration of up to $6.5m payable over the next three years.
22 July 2008, the Group acquired the International Direct Marketing Fair for a total cash consideration of £0.3m.
25 July 2008, the Group acquired the Sleep Event and the Arc Show for an initial cash consideration of £3.6m, with a further performance-related consideration of £0.4m payable over the next year.
22 August 2008, the Group acquired certain assets from Pyramid Research, LLC for a total cash consideration of $8.0m.
8 October 2008, the Group completed the acquisition of a 50% stake in Securexfor total cash consideration of ZAR6.8m. The Group accounts for Securex as ajoint venture.
14 November 2008, the Group acquired full control of Xinhua PR Newswire for a total cash consideration of $6m.
20 November 2008, the Group acquired Global Games Media for an initial cash consideration of €0.1m, with a further performance-related consideration of €1.4m payable over the next three years.
9 December 2008, the Group acquired Sanguine Microelectronics for an initialcash consideration of $8m, with a further performance-related consideration of$9.5m payable over the next three years.
The Group acquired 100% of the voting rights in all cases where acquisitions involved the purchase of companies unless where otherwise stated.
The following table sets out the carrying amounts of the identifiable assetsand liabilities acquired and their fair value in respect of the acquisition
ofbusinesses during 2008: 2008 2008 Fair Acquiree's value carrying to Group amount £m £mIntangible assets 18.7 0.7Property, plant and equipment 1.0 0.5Cash and cash equivalents 3.1 2.9
Trade receivables and other current assets 5.3 5.3 Associates and joint ventures
0.4 - 28.5 9.4
Trade payables and other current liabilities (12.5) (9.5) Deferred tax liability
(3.0) - (15.5) (9.5)Fair value of net assets 13.0Goodwill arising on acquisition 44.9 57.9
The total consideration paid and payable on acquisitions is shown below:
2008 £mConsideration:Cash paid 38.4Deferred consideration 19.5Total consideration 57.9
As disclosed in Note 1, the acquisition accounting adjustments have been finalised in relation to certain acquisitions which were made in 2008. The amounts disclosed above have been restated in accordance with IFRS 3 `Business Combinations'.
From the date of acquisition to 31 December 2009, the acquisitions made in 2009 have contributed £2.6m of profit to operating loss and £4.8m to revenue of the Group. If the acquisitions had taken place at the beginning of the year, the acquisitions would have contributed £2.8m of profit to operating loss and £9.6m to revenue of the Group.
Acquisitions made in 2008 contributed £5.1m to operating profit and £22.5m torevenue of the Group from the date of acquisition to 31 December 2008. If theacquisitions had taken place at the beginning of that year, the acquisitionswould have contributed £6.9m to operating profit and £31.4m to revenue of theGroup.
The goodwill of £9.3m (2008: £44.9m) recognised above relates to certain intangible assets that cannot be individually separated and reliably measured. These include items such as customer loyalty, market share and a skilled workforce.
The aggregate cash flow effect of acquisitions was as follows:
2009 2008 £m £mNet cash acquired with the subsidiaries (2.8)
(2.9)
Cash paid to acquire subsidiaries 18.3
38.0
Cash paid to acquire interests in associates and -
0.4
joint venturesDeferred consideration on 2005 acquisitions -
2.1
Deferred consideration on 2006 acquisitions 11.7
1.4
Deferred consideration on 2007 acquisitions 1.2
9.1
Deferred consideration on 2008 acquisition 7.2 -Net cash outflow on acquisitions 25.6
48.1
The movement in the deferred consideration payable during the year was:
2009 2008 £m £mBalance at 1 January 2009 38.6 23.1Acquisitions 5.0 18.9Deferred consideration paid (10.1) (12.6)Changes in estimates (5.7) 0.8Currency translation (2.7) 8.4Balance at 31 December 2009 25.1 38.6
The Group paid £10.1m of deferred consideration during 2009 in relation to the2006 acquisitions of Aviation Industry Group, Thames Gateway Forum andMediReach Healthcare Communication, the 2007 acquisitions of Energy SolutionsExpo, Semiconductor Insights Inc, How Machines Work Corporation andPortelligent Inc and the 2008 acquisitions of Mass Event Labs, Exposure EventsUK Limited, Aerostrategy's aviation data business, Next Level, SanguineMicroelectronics, the Sleep Event and the Arc Show. Under the terms of therelevant sale and purchase agreements, additional consideration was payable ifcertain revenue and profit targets were met. None of the deferredconsideration balances are individually material.The Group paid £12.6m of deferred consideration during 2008 in relation to the2005 acquisitions of ICMI and Black Hat, the 2006 acquisitions of the Softwareconference, Thames Gateway Forum, Aviation Industry Group and MediReachHealthcare Communications and the 2007 acquisitions of Semiconductor InsightsInc, Notilog, Energy Solutions Expo, Intermodal South America trade show andVintage Filings LLC. Under terms of the relevant sale and purchase agreements,additional consideration was payable if certain revenue and profit targetswere met. None of the deferred consideration balances are individuallymaterial.The intangible assets acquired as part of the acquisitions are as follows:
As restated 2009 2008 £m £mBrands 2.8 7.9Customer contracts and relationships 1.3 6.9Databases 0.7 2.2Subscription lists 0.3 -Software 1.2 1.7Total 6.3 18.7
17. Events after the reporting period
On 12 February 2010, the Group completed the acquisition of a 70% interest in Sign China for an initial cash consideration of $10.7m, with a further performance-related consideration of up to $3.9m payable over two years.
On 23 February 2010, the Group announced the acquisition of Game AdvertisingOnline for an initial cash consideration of $1.0m, with a furtherperformance-related consideration of up to $7.0m payable within 12 months ofcompletion.
On 3 March 2010, the Group completed the acquisition of E-Commerce Expo for an initial cash consideration of £0.6m, with a further performance-related consideration of up to £1.2m payable over the next year.
vendorRelated Shares:
UBM