Results for the twelve months ended 31 December 2014

Embargoed until 7am 27 February 2015 Good underlying performance in a year of significant strategic progress Results for the twelve months ended 31 December 2014 Financial Summary 2014 2013(1) Change Change at Underlying* £m £m % CC % Change % Revenue 746.3 793.9 -6.0 -0.8 3.6Adjusted operating profit* 179.8 186.3 -3.5 3.5Statutory operating profit 169.6 130.9 29.6Adjusted diluted EPS* (pence) 38.2 41.6(2) -8.2Statutory diluted EPS (pence) 46.0 27.9(2) 64.9Dividend per share (pence) 21.3 21.1(2) 1.0 1) Figures for 2013 reflect Continuing operations unless otherwise stated2) Adjusted to reflect rights issue * UBM uses a range of business performance indicators. All non-IFRS measuresare noted with a * throughout this results announcement; additionalinformation on these measures is set out on page 22 Highlights - Results in line with management expectations - `Events First' strategy announced in November - $972m Advanstar acquisition completed in December, financed by £564.6mrights issue, transforming UBM into the leading events organiser in the US - Reported revenue of £746.3m (2013: £793.9m), down 6.0% principallyreflecting currency headwind, OMS rationalisation and lower biennial revenuesin an `even' year; constant currency was down -0.8% with good underlyinggrowth of 3.6% - Adjusted operating profit declined 3.5% to £179.8m (2013: £186.3m) given thecurrency headwind, while adjusted operating margin rose by 60bps to 24.1%,benefitting from £11.0m non-recurring gains - Events underlying revenue growth of 6.0%, led by strong Emerging Markets,with adjusted operating margin of 31.2% (2013: 32.2%) - Other Marketing Services (OMS) adjusted operating profit was broadly flat at£11.0m (2013: £10.2m) on reduced revenue of £100.0m (2013: £129.4m) - PR Newswire revenue up 3.0% (underlying) at £195.8m (2013: £201.8m) at anadjusted operating margin of 22.9% (2013: 22.6%) - Adjusted diluted EPS down 8.2% to 38.2p (2013: 41.6p(2)) - Final dividend of 16.0p to bring full year dividend to 21.3p up 1.0% (2013:21.1p(2)) Robert Gray, Acting Chief Executive Officer, commented: "These results represent a good performance in a year of significant strategicprogress. UBM had a strong H2 and although the reported results reflectcurrency headwinds, the Group delivered good underlying revenue growth in bothEvents and PR Newswire, and solid operating margins in each of our threesegments. "The acquisition of Advanstar accelerates our `Events First' strategy, whichwe announced in November. This clear and well-defined strategy has beenembraced by the business and we have already made good progress during thefirst two months of 2015. The Advanstar integration is on track and trading inthe first couple of months of the year has started well." IFRS Statutory results 2014 2013(1) Change £m £m % Revenue 746.3 793.9 -6.0Operating profit 169.6 130.9 29.6Profit after tax 160.1 98.6 62.4Attributable profit 150.2 107.5 39.7Basic EPS 46.4p 28.3p(2) 64.0Basic EPS on profit for the period 46.4p 34.1p(2) 36.1Weighted av. no. of shares 323.5m 315.4m(2) 25.7 Contacts MediaPeter Bancroft Director of [email protected] +44(0) 20 7921 5961 Communications Jon Coles Brunswick Group [email protected] +44(0) 20 7404 5959Andy Rivett-CarnacCraig Breheny Investor RelationsKate Postans Head of Investor [email protected] +44(0) 20 7921 5023 Relations UBM will host a presentation to analysts at 11am at the London Stock Exchange,10 Paternoster Square, EC4M 7LS. A live webcast of the results presentationwill be made available via UBM's website. To access the webcast please go towww.ubm.com. A recording of the webcast will also be available on demand fromUBM's website after 4pm. Notes to Editors UBM plc is a leading global marketing services and communications company,whose primary focus is events. We help businesses do business, bringing theworld's buyers and sellers together at events, online and in print. Our 5,200staff in more than 20 countries are organised into specialist teams whichserve commercial and professional communities, helping them to do business andtheir markets to work effectively and efficiently. For more information, go to www.ubm.com; for UBM corporate news, follow us onTwitter at @UBM_plc and go to http://media.ubm.com/social for more UBM socialmedia options. SUMMARY STATEMENT 2014 - Good underlying performance in a year of significant strategic progress We are pleased with the continued progress made by the business during 2014,although reported revenue reflected currency headwinds. We deliveredunderlying revenue growth in our key Events and PR Newswire businesses, whilstcontinuing to tighten our focus on Events with four event acquisitions,notably Advanstar, and three small disposals in OMS. We also made furtherprogress against the People & Culture and Responsible Business initiatives forsustainable performance. In May, Tim Cobbold joined the Group as CEO and, in November, set out UBM's`Events First' strategy to become the world's leading B2B events business. UBMwill drive profitable growth by focusing its resources on its largest and mostprofitable shows and those with the potential to become large, aligning itsOMS activities with those events, increasing its efficiency and effectivenessthrough the consistent use of standardised systems and focusing on operationalexcellence. To implement the strategy UBM expects to make capital investments ofapproximately £15m (during 2015-17) and associated implementation andrationalisation costs of between £15m and £20m (also during 2015-17) which areexpected to be taken as operating expenses. These investments are expected togive rise to annualised cost savings beginning in 2016 which will build to£10m per annum. In the medium term, the strategy will enable UBM to growrevenue ahead of global GDP in our Events business and provide a basis formargin expansion. Near term revenue growth will reflect the decision torationalise UBM's smaller Events and to exit from certain activities in OMS.To support this strategy UBM intends to target a leverage ratio of between1.5-2.0 times Net Debt / EBITDA which is consistent with investment grademetrics, will provide flexibility for biennial cycles and will providecapacity to invest in the business. In late December, Advanstar (which generated $290.4m revenue and $97.1m EBITDAin 2014) was acquired for $972m financed, in part, through a £564.6m rightsissue. The acquisition had no impact on UBM's 2014 operating results but is animportant strategic milestone within our `Events First' strategy. Advanstar increases UBM's focus on Events to 74.1% pro forma 2014 adjustedoperating profit. Advanstar's revenue is primarily from the US which, combinedwith UBM's operations, makes us the number one events business in the US witha leading position in the fashion industry vertical. It adds an attractiveportfolio of large tradeshows to our events business - six would rank amongUBM's 2014 Top 20. Advanstar also balances our Emerging Markets exposurebringing us more in line with the global exhibitions industry. The financialrationale for the transaction is similarly compelling: we expect it to beimmediately accretive to EPS in 2015 and for the ROI to exceed WACC in 2015. Segmental Summary 2014 2013(1) Change Change at Underlying*Revenue £m £m % CC % Change % Events 450.5 462.7 -2.6 3.0 6.0OMS 100.0 129.4 -22.7 -19.3 -5.5PR Newswire 195.8 201.8 -3.0 3.0 3.0Total Revenue 746.3 793.9 -6.0 -0.8 3.6 Adjusted Operating Profit*Events 140.6 148.9 -5.6 1.0OMS 11.0 10.2 7.8 11.0PR Newswire 44.8 45.6 -1.8 4.8Net Corporate Costs (16.6) (18.4) 9.8 8.5Total Adjusted Operating Profit* 179.8 186.3 -3.5 3.5 Adjusted Operating Profit Margin*Events 31.2% 32.2% -100bpsOMS 11.0% 7.9% 310bpsPR Newswire 22.9% 22.6% 30bpsTotal Adjusted Operating Profit 24.1% 23.5% 60bpsMargin* 1) Figures for 2013 reflect Continuing operations unless otherwise stated Revenue Reported revenue in 2014 was £746.3m, 6.0% lower than 2013 (2013: £793.9m)reflecting a foreign exchange headwind (which had an adverse impact of£41.9m), reduced revenue as we rationalised the OMS segment and lower biennialrevenue in an `even' year. On a constant currency basis revenue was down 0.8%.Underlying Group revenue growth, which adjusts for foreign exchange (FX),biennials, structural discontinuations, disposals and acquisitions was 3.6%,with underlying growth in the Events segment of 6.0% and 3.0% at PR Newswire.OMS revenue declined 5.5% on an underlying basis with growth of online morethan offset by declines in print. Adjusted operating profit Adjusted operating profit for 2014 was 3.5% lower at £179.8m (2013: £186.3m),reflecting the FX headwind. The segmental margins were slightly ahead of ourguidance: the Events margin was down 100bps to 31.2% (2013: 32.2%) reflectingthe lower biennial contribution, the OMS margin rose 310bps to 11.0% (2013:7.9%) while PR Newswire was broadly constant at 22.9% (2013: 22.6%). Theoverall margin of 24.1% (2013: 23.5%) included £11.0m of non-recurring gainsas disclosed in our Interim Results for 30 June 2014 (for further details seepage 9.) Continuing fully diluted EPS Whilst interest expense fell to £22.2m (2013: £25.7m), taxes of £22.9m (2013:£18.4m) coupled with the FX headwind on the operating performance resulted infully adjusted diluted EPS down 8.2% at 38.2p (2013: 41.6p.) Both current andhistoric figures reflect the rights issue. Cash generated and impact on capital structure Free cash flow (after capital expenditure and before discretionaryinvestment), was lower at £85.4m (2013: £97.7m) because of the elevated levelof capital expenditure, an outflow of working capital in a down biennial yearand an adjustment for non-cash operating gains. Capital expenditure of £50.2mreflected the continued investment on the implementation of CORE, our financesystem, across UBM EMEA and UBM Americas. It also reflected the fit-out andcosts of relocating UBM's principal UK office to 240 Blackfriars (but not the£6m landlord contribution to fit out.) The move to the new office took placein February 2015. During the year, UBM benefitted from £16.1m cash repayment of the Delta VendorLoan Note. As at 31 December 2014 there was £31.6m of Loan Notes outstanding. Investment in acquisitions, including Advanstar, totalled £648.4m (net of cashacquired). We also received proceeds of £4.0m from business disposals as wellas the £564.6m from the right issue. Net debt at 31 December 2014 was £538.0m.This represents 2.8 times 2014 EBITDA or 2.2 times including Advanstar EBITDAon a pro forma basis. Cash conversion was 70.2% (2013: 97%). ROACE Return on average capital employed* for 2014 was 13.3% (2013: 17.7%). Thisdecline year on year reflects the increased capital employed at year end inrespect of the Advanstar acquisition but no Advanstar earnings have beenincluded in the twelve month period. Excluding Advanstar and the rights issueimpact the ROACE would be 18.8%. Dividend Subject to shareholder approval, the Board has recommended a final dividend of16.0 pence per share (2013: 15.9 pence) to bring the full year 2014 dividendto 21.3p (2013: 21.1p). This final dividend on ordinary shares will be paid on27 May 2015 to shareholders on the register on 2 May 2015. Trading update and outlook Trading in the first two months of the year has been good. The performance ofthe large events which have run thus far, notably MAGIC - Las Vegas and MD&MWest, has been in line with our plans, and forward bookings are tracking asexpected. We are very pleased with the progress made to date on theintegration of Advanstar, with both trading and synergy delivery in line withthe Board's expectations at acquisition. Good progress is being made in the implementation of the `Events First'strategy. We have already sold or discontinued a number of smaller, lessprofitable shows and rationalised a range of OMS activities which were notwell-aligned with the strategy. In line with the strategy, we continue to expect revenue from our Eventsbusiness (including Advanstar) to grow at GDP+. However, the growth rate in2015 will reflect the on-going rationalisation of the portfolio. We anticipatethat underlying growth in annual events revenue will continue to besignificantly weighted towards the second half of the year which is when werun many of our largest events. Events operating margin (before costs associated with strategy implementation)will be broadly in line with 2014. Competitive pressure at the Furniture Chinashow in Shanghai and reduced contribution resulting from portfoliorationalisation will offset the margin uplift from the inclusion ofAdvanstar's events and the large `odd' year biennial events. Rationalisation of OMS activities will continue and we expect 2015 OMSrevenue, including Advanstar, to be in the range £130-140m (at currentexchange rates), with an operating margin (before costs associated withstrategy implementation) of approximately 13%. At PR Newswire trading early in the year has been good and, as we focus on PRNewswire's core distribution strength, we expect revenue growth to be in linewith GDP growth at a sustained margin. Overall, the outlook for 2015 continues to reflect the guidance provided atthe presentation of the `Events First' Strategy in November 2014 and the Boardis confident of meeting its expectations for the year. EVENTS 2014 2013(1) Change Change at Underlying* £m £m % CC % Change(2) %RevenueAnnual Events Revenue 429.2 424.6 1.1 6.8 6.0Biennial Events Revenue 21.3 38.1 -44.1 -39.3 2.1Total Events Revenue 450.5 462.7 -2.6 3.0Adjusted Operating Profit* 140.6 148.9 -5.6 1.0Total Adjusted Operating Profit 31.2% 32.2% -100bpsMargin* 1) Figures for 2013 reflect Continuing operations unless otherwise stated2) Biennial underlying growth computed as CAGR over prior editions Reported revenue declined 2.6% to £450.5m (2013: £462.7m) as good underlyinggrowth in the business was more than offset by adverse currency movements andlower biennial events revenue. Biennial Events revenue was, as expected in this `even' year, down 44.1% to£21.3m (2013: £38.1m). The 37 biennials hosted during the year (2013: 36biennials) grew 2.1% CAGR over their prior editions in 2012. Annual Events revenue was up 1.1% to £429.2m (2013: £424.6m); on an underlyingbasis growth was 6.0%. Net square metres of annual events increased to 1.6m(2013: 1.5m) while visitor numbers increased by 14.6% to 2.2m (2013: 1.9m).The mix of revenue remains unchanged with 75% from stand sales, 17%sponsorship and other and 8% attendee paid. (2013: 75% stand sales, 17%sponsorship and other and 8% attendee.) Our Top 20 shows continue to be an important driver of the Events segment'soverall performance, accounting for 52% of annual revenue and 71% of adjustedprofit in 2014 (2013: 52% and 70% respectively.) The 2014 Top 20 eventsrevenue grew slightly ahead of the overall portfolio, up by 7.1% on anunderlying basis during 2014. We invested £697.0m (including cash acquired) in the acquisition of Advanstarand a further £21.8m (including £2.1m of contingent and deferredconsideration) in buying CIHAC and Abastur, two events businesses in Mexico,as well as Seatrade, with whom we already had an existing partnershipagreement. We launched a number of new events during 2014 which contributed £2.5m torevenue growth. We also discontinued a number of events which generatedrevenue of £2.6m in 2013. The Advanstar acquisition completed on 18 December and has been consolidatedfrom 31 December 2014 and consequently there was no Income Statement impact onUBM during 2014. Advanstar has a high quality portfolio of large events - six shows will moveinto our 2014 Top 20 increasing the threshold for entry from £4.9m to £6.7m.It also means that the combined Top 20 shows would have accounted for 42.7% ofcombined revenue. During 2014, in line with expectations, the Advanstar Events generated $212mof revenue and $70.7m of EBITA (after allocation of Advanstar's overhead). Thesubdued 0.3% revenue growth in 2014 was due to $12.7m of certain non-recurringfactors - most notably, the discontinuation of uneconomic temporary pavilionsat MAGIC (allowing the Mandalay Bay venue to build more permanent space) andsignificant declines at the DealerExpo event coupled with phasing and smallerevent discontinuations. Annual Events Revenue 2014 2013(1) Change Change at Underlying* £m £m % CC % Change % Emerging Markets 218.1 200.7 8.7 15.8 10.8North America 105.8 113.8 -7.0 -1.0 2.8UK 45.1 48.2 -6.5 -8.5 -4.9Continental Europe 49.5 50.6 -2.2 4.5 4.5RoW 10.7 11.3 -5.3 6.3 6.1Annual Events Revenue 429.2 424.6 1.1 6.8 6.0 1) Figures for 2013 reflect Continuing operations unless otherwise stated Emerging Markets accounted for 50.8% of 2014 annual Events revenue with eventsin China accounting for 35.9% of annual Events (Mainland 20.3%, Hong Kong15.6%). Underlying revenue growth in China was 8.5%. In addition to strongperformances from our largest Chinese shows which feature in our Top 20, suchas CBME, Hotelex Shanghai, Cosmoprof Asia and Sign and LED China, the IstanbulJewellery & Gem Fair also performed well. This performance was moderated byslower growth at other large shows, particularly Furniture China. North American Events revenue rose by 2.8% on an underlying basis. Stronggrowth in our Top 20 shows (such as Black Hat, Game Developer Conference,Enterprise Connect and Cruise Shipping Miami) was offset by declines insmaller events and cancellations (notably of lower margin single sponsorcustom events) reflecting our continued focus on tail management. In the UK, a strong performance from IFSEC following its relocation to Excelin London did not offset the declines at Ecobuild. In Continental Europe, theincreases reflects a good performance at CPhI WW coupled with a very stronglaunch of European Jewellery & Gem Fair partially offset by thediscontinuation of ATC in Europe as well as the soft performance of a numberof events serving the healthcare sector. Adjusted operating profit was £140.6m (2013: £148.9m) with an operating marginof 31.2% (2013: 32.2%). The annual events margin was 31.3% (2013: 31.1%) whilethe biennial margin reduced to 30.2% (2013: 43.8%) reflecting the portfolio ofsmaller lower margin even year biennials. As at 31 January 2015 forward bookings for the 2014 Top 20 events are up 8.7%(after adjusting for the effect of foreign currency, phasing and invoicetiming differences). Unadjusted forward bookings are down 1.5% on a constantcurrency basis. OTHER MARKETING SERVICES (OMS) 2014 2013(1) Change Change at Underlying* £m £m % CC % Change % OMS - Online 74.9 94.8 -21.0 -17.8 0.9OMS - Print 25.1 34.6 -27.6 -23.5 -19.3Total OMS Revenue 100.0 129.4 -22.7 -19.3 -5.5Adjusted Operating Profit* 11.0 10.2 7.8 11.0Total Adjusted Operating Profit 11.0% 7.9% 310bpsMargin* 1) Figures for 2013 reflect Continuing operations unless otherwise stated OMS revenue was down 22.7% to £100.0m (2013: £129.4m), principally reflectingmanagement actions, including restructuring our UBMTech business, to focus onsustainable online and print marketing services closely aligned with Eventsand to improve profitability. Adjusting for activities disposed of ordiscontinued through restructuring, the underlying revenue decline was 5.5%.Print revenue declined 19.3% on an underlying basis while Online revenue rose0.9% on an underlying basis. As a result of the `Events First' strategy we have recognised an impairment of£14.6m for the Tech Online business which will be rationalised as we align OMSrevenue to Events operations. Adjusted operating profit was £11.0m (2013: £10.2m), representing a 11.0%margin (2013: 7.9%). The table above shows the 2014 results for UBM and does not include anycontribution from Advanstar. During 2014 the Advanstar print revenue was$57.8m while the online Advanstar revenue was $20.7m. Adjusted EBITA forAdvanstar OMS activities was $13.5m after allocation of Advanstar's overhead. PR NEWSWIRE 2014 2013 Change Change at Underlying* £m £m % CC % Change %RevenueUS Distribution 94.4 96.0 -1.7 4.1 4.1US Other 19.7 19.9 -0.9 4.9 4.9US Vintage 22.3 23.9 -6.6 -0.4 -0.4CNW 27.3 30.3 -10.0 -1.1 -1.1Europe 20.7 20.9 -1.0 2.2 2.2Asia & LatAm 11.3 10.7 5.6 10.7 10.7Total PR Newswire Revenue 195.8 201.8 -3.0 3.0 3.0Adjusted Operating Profit* 44.8 45.6 -1.8 4.8Total Adjusted Operating Profit 22.9% 22.6%Margin* PR Newswire's revenue was up 3.0% on an underlying basis. On a reported basis,revenue declined by 3.0% in 2014 to £195.8m (2013: £201.8m) reflectingcurrency headwind. US Distribution underlying revenue growth was 4.1%, principally reflectingcontinued growth in the text press release market (particularly internationalactivity) and increased cross-selling of multimedia features. We have made further progress in migrating customers to long-term contracts,especially in CNW. 31.0% of North American distribution revenue was generatedunder contract, up from 28.0% the previous year. Earnings releases continue todecline in importance to the business, with revenue from such releasestotalling just £8.2m (4.2% of PR Newswire total revenue), down from £9.3m(4.6%) the previous year. US Other revenue grew 4.9% on an underlying basis, principally reflectinggrowth in MultiVu broadcast and webcast production and progress in selling ourproprietary monitoring product to our US clients. US Vintage underlying revenue was broadly flat (-0.4%) as growth in EDGAR andtypesetting services were offset by reduced XBRL revenue reflectingcompetitive market conditions. CNW revenue was down 1.1% on an underlying basis, principally reflecting areduction in the number of releases and some softness in sales of MediaVantageto Canadian clients. Europe revenue was up 2.2% on an underlying basis with solid progress acrossmultiple countries. For Asia and Latin America underlying growth was 10.7%, with wire growth inAsia, especially China, more than offsetting softness in Brazil. Adjusted operating profit was £44.8m (2013: £45.6m) representing a 22.9%margin (2013: 22.6%). CORPORATE OPERATIONS Total corporate costs for 2014 were £29.0m (2013: £22.8m). These corporatecosts were partially offset by internal cost recoveries from UBM's operatingbusinesses, results from joint ventures and associates and sundry income whichwas not attributable to any reporting segment, resulting in a net corporatecost of £16.6m (2013: £18.4m). Non-recurring items included within corporateoperations for 2014 include: the pension settlement gain of £5.8m (2013:£1.9m) and gains on disposals of non-discontinued businesses totalling £5.2m.Non-recurring cost totalling £4.0m relating to systems implementation andother corporate change initiatives, most notably the implementation of projectCORE, were incurred during the year. Our share of post tax results from jointventures and associates was £1.4m (2013: £2.5m). SUSTAINABLE PERFORMANCE During 2014 UBM has continued to make good progress with People & Culture andResponsible Business initiatives. Some key highlights include: - Embedding the UBM Commitments with 205 champions from 17 countries runningmonthly activity sessions. - Continuing to run a number of initiatives to help our talented femaleemployees achieve their career aspirations and consciously working to increasethe number of women in senior leadership roles. - Launching UBM's Code of business conduct: `Doing Business at UBM' which setsout the basic principles which govern the way we are all expected to behaveand directs employees to the various UBM policies. - Running a global Business Leaders Programme (BLP) event where 17 of our mostsenior leaders focused on the theme of `Navigating our Future'. - Holding a further Leadership Development Programme (LDP) in Europe. - Becoming one of only six organisations to achieve the Carbon Trust Standardglobally - Increasing our carbon disclosure score in the CDP FTSE 350 - achieving 88%(2013: 80%.) - Increasing UBM's `Green Team' membership globally to 140 people (2013: 100). - Increasing energy accuracy - 35% of UBM office square footage monitored byonline smart meters (2013: 33%.) - Achieved ISO 20121 - Sustainable Event Management system certification at 11events (2013: five events.) - 9% reduction in emissions per person since 2010 For more detail please see pages 32 and 33 of the 2014 Annual Report - whichis expected to be available on the website in mid-March. FINANCIAL REVIEW The table below presents selected items from UBM's consolidated incomestatement (which accompanies this summary), together with a reconciliation toIFRS measures. IFRS Measures As adjusted(b) FY FY FY Continuing £m FY 2014 2013 % Change 2014 2013 % Change Revenue 746.3 793.9 -6.0 746.3 793.9 -6.0Other operating income 12.5 6.5 12.5 6.5Operating expenses(excluding (a) line items below) (566.8) (600.9) (566.8) (600.9)Share of tax on profit in JV & associates (a) (0.6) (0.9) (b) (b)Exceptional operating items (a) 25.5 (22.8) (b) (b)Impairment charges (a) (15.7) (10.4) (b) (b)EBITDA 192.0 199.5 -3.7Depreciation (a) (12.2) (13.2) (12.2) (13.2)EBITA 179.8 186.3 -3.5Amortisation - intangible assetsarising on acquisition (a) (19.4) (21.3) (b) (b)Operating profit 169.6 130.9 29.5 179.8 186.3 -3.5Net interest and pension finance expense (22.2) (25.7) (22.2) (25.7)Exceptional finance income/expense (2.6) 4.1 (b) (b)Financing income/expense - other 0.4 0.2 (b) (b)PBT 145.2 109.5 32.6 157.6 160.6 -1.9Taxation 14.9 (10.9) (22.9) (18.4)PAT from continuing operations 160.1 98.6 62.4 134.7 142.2 -5.2Discontinued operations adjusted PAT - 2.1 - 2.1Profit/(loss) on disposal/assetsheld for sale and adjusting items - 16.3 - (b)Profit for the year 160.1 117.0 134.7 144.3Non-controlling interest (9.9) (9.5) (9.9) (9.5)Attributable profit 150.2 107.5 124.8 134.8 (a) Expenses not included within operating expenses figure(b) All non-IFRS measures and business performance measures have beendesignated with a * and additional information on these measures has beenprovided on page 22 Weighted average no. of shares(million) 323.5 315.4 323.5 315.4Fully diluted weighted averageno. of shares (million) 326.6 319.1 326.6 319.1Earnings per share (pence)Continuing operations - basic 46.4 28.3 64.0 38.6 42.0 -8.1Continuing operations - diluted 46.0 27.9 64.9 38.2 41.6 -8.2Profit for the year - basic 46.4 34.1 36.1 38.6 42.7 -9.6Profit for the year - diluted 46.0 33.7 36.5 38.2 42.2 -9.5Dividend per share (pence) 21.3 21.1 Exceptional operating items Associate gain PA Group, the parent company of the Press Association, sold its weatherforecasting business, MeteoGroup in January 2014. We report our 17% interestin PA Group as an associate and have recognised our share of the MeteoGroupgain (£21.9m) as an exceptional gain from associates. Acquisition exceptional items Acquisition costs of £8.0m (2013: £0.8m) have been expensed as exceptionalitems. The charge includes costs in relation to the acquisition of Advanstarof £7.4m (a further £20m of fees relating to the equity issue have beendeducted from the share premium account on the balance sheet). An exceptionalcharge of £1.3m (2013: credit £1.9m) was recognised relating to revisedcontingent consideration estimates for prior year acquisitions. Impairment charges We have reviewed the carrying value of goodwill and intangible assets in lightof current trading conditions, the `Events First' strategy and future outlook.As a result of this review, we have recognised an impairment of £14.6m for theUBMTech operations which will be rationalised as we align OMS activities toEvents operations. In addition we recognised an impairment charge of £1.1m inrespect of two small joint ventures in Asia. Impairment charges in 2013 were£10.4m. FOREIGN CURRENCY We do not generally hedge our Income Statement currency exposure, although wedo issue debt in certain of our trading currencies (principally the US Dollarand the Canadian Dollar). This debt is designated as a hedge against balancesheet exposure and interest expense provides a modest hedge against operatingearnings generated in those currencies. The following table outlines thecurrency profile of our revenue and adjusted operating profits for 2014: Adjusted Average exchange rate operating Revenue % profit* % 2014 2013 US Dollar 42.8 31.2 1.6476 1.5657Hong Kong Dollar 12.4 22.0 12.7771 12.1453Euro 10.9 18.7 1.2456 1.1770Renminbi 9.8 12.0 10.1623 9.6217UK Pound Sterling 9.2 2.7 1.000 1.000Canadian Dollar 3.7 4.6 1.8221 1.6191Japanese Yen 2.0 2.3 174.7409 153.9662Indian Rupee 1.9 1.4 100.4508 92.1418Brazilian Real 1.7 2.0 3.8740 3.3923Other 5.6 3.1 - -Total 100.0 100.0 Our income statement exposure to foreign exchange risk is shown for our mostimportant foreign currency exposures in the sensitivity analysis below, basedon 2014 operations: Effect on adjusted Effect on operating Average revenue profit* exchange rate Currency value in 2014 rises/ falls by +/- £m +/- £m US dollar 1.6476 1 cent 2.5 0.7Euro 1.2456 1 cent 0.7 0.3 The Group closely monitors its exposure to foreign currencies, and seeks tomatch revenue and costs when possible. The revolving credit facility may bedrawn in currencies other than Pound Sterling. We also hold cash and cashequivalents in Pounds Sterling, the Renminbi and US Dollar and othercurrencies closely linked to the US Dollar. Given our large and diversecustomer base, there are no significant concentrations of credit risk. INTEREST AND FINANCING EXPENSE Net interest expense represents interest payments on UBM's bonds and bankloans, net of interest receipts on cash holdings and vendor loan notes. Netinterest expense in 2014 was £21.4m, compared with £24.0m in 2013. Thedecrease was due to lower borrowings on average during 2014 and interestincome from the Delta Vendor Loan Note. Financing expense includes an IAS 19pension interest charge of £0.8m (2013: £1.7m). Further information is set outin the capital structure section on page 14. Net financing income - other includes a net gain of £0.9m (2013: net loss£0.4m) in respect of ineffective fair value hedges and net investment hedgesand a net loss of £0.5m (2013: net gain of £0.5m) in respect of foreignexchange losses on forward contracts and other fair value adjustments. TAX As part of our focus on improved transparency in relation to taxation, the UBMplc board has formally adopted the CBI's Statement of Principles forresponsible tax management. Our aim is to explain the amount of tax we pay andwhere we pay it in a clear and transparent manner. Our contribution to government tax revenues Our contribution to the economies in which we operate is predicated on ourability to run successful, profitable businesses that generate employment,stimulate economic growth and contribute to tax revenues. This is particularlyimportant in emerging markets where the taxes which we pay to and collect onbehalf of governments is an important part of our economic footprint. Our relationship with tax authorities We believe that it is important to have transparent and positive engagementwith the relevant tax authorities in the territories in which we operate. Thisapproach is reflected in the tax policies and principles that have beenadopted by the Board of Directors. We are committed to ensuring that we complywith all legal requirements and pay all taxes in the countries in which weoperate and we engage in tax planning that is aligned with commercial andeconomic activity and does not lead to abusive results. Current tax UBM's effective tax rate* for the year was 14.5% (2013: 11.5%). Movements inour tax creditor balance during 2014 were as follows: £m Current tax liability at 1 January 2014 45.4Current tax charge 20.9Tax paid (23.6)Currency translation and other movements (0.6)Current tax liability at 31 December 2014 42.1 Overall our current tax liability decreased from £45.4m as at 31 December 2013to £42.1m as at 31 December 2014. The tax creditor includes provisions for taxsettlements in various jurisdictions in which UBM operates. Current tax liability analysed:By Geography: By Year % % US and Canada 39.1 Up to 2010 5.7Europe 26.8 2011 13.6China 22.4 2012 17.1Other Emerging Markets 8.1 2013 25.3Rest of World 3.6 2014 38.3Total 100.0 Total 100.0 We have necessarily made judgments as to the outcome of tax matters notconcluded. This creditor has been consistently classified as a short termliability in accordance with our accounting policy. The total cash paid inrespect of income taxes was £23.6m in 2014. We pay the majority of our tax in Emerging Markets. Of the total £23.6m paid,£14.6m was in Emerging Markets. A further breakdown is provided in Note 3.6 tothe financial statements. Below shows a reconciliation of the 2014 expected tax charge to actual cashtax paid: Adjusted Exceptional & Other IFRS Adjusting Items Expected Tax Charge at UK Rate 33.9 (2.7) 31.2Different tax rate on overseas earnings 12.3 (3.8) 8.5UBM Tax Charge at Weighted Average Tax Rate 46.2 (6.5) 39.7 US Goodwill Amortisation (8.6) - (8.6)Intragroup Financing(1) (12.8) - (12.8)Exceptional Deferred Tax Credit - (29.9) (29.9)Net DT Movement on Intangible Assets - (7.3) (7.3)Other (1.9) 5.9 4.0Tax Charge 22.9 (37.8) (14.9) Tax Paid in Different Period to Charged 2.7 - 2.7Exclude Deferred Tax and JVs and Associates Tax (2.0) 37.8 35.8UBM Actual Tax Paid 23.6 - 23.6 1) Profit arising in Luxembourg in relation to interest paid is covered byLuxembourg tax losses. These losses arose in 2002 as a consequence ofinvestment write downs. Our total tax contribution In the year ended 31 December 2014, our total tax contribution was £51.9m -this includes corporate income tax on our profits as well as employee taxesand any other taxes that we bear. The geographical split of our total taxcontribution is as follows: £m Emerging Markets US & Canada Other Profit taxes borne 14.6 2.4 6.6Employment taxes borne 4.0 8.4 8.1Other taxes (e.g. business 2.6 1.5 3.7rates)Total 21.2 12.3 18.4 In addition to this, in 2014 we collected taxes on behalf of governments (e.g.employee taxes and sales taxes) amounting to £62.6m. Deferred tax Deferred tax liabilities totalling £99.4m have been recognised during theperiod relating to intangible assets acquired as part of the Advanstaracquisition. Deferred tax assets of an equal amount have been recognised andoffset against these deferred tax liabilities, including £29.9m which havebeen included as an exceptional deferred tax credit in the Income Statement.In addition, at 31 December 2014 the Group had unrecognised deferred taxassets, including relating to tax losses carried forward in the UK of £51.1mand the US of £73.4m that are available to offset against future taxableprofits. CAPITAL STRUCTURE Debt and liquidity Our funding strategy is to maintain a balance between continuity of fundingand flexibility through the use of capital markets, bank loans and overdrafts. Our debt facilities include £250m of 6.5% Sterling bonds maturing November2016; $350m of 5.75% US Dollar bonds maturing November 2020; £300m syndicatedbank loan facility which expires in May 2016; and a $100m bridge facilityavailable until March 2016, which was put in place for the Advanstaracquisition. We have commenced negotiations to refinance our syndicated loanfacility which we would expect to complete in the first half of 2015. Ourhedging arrangements and policies are detailed in Note 5.5 to the financialstatements. At 31 December 2014, UBM had drawn £71.4m from the syndicated bankfacility and all conditions precedent were met, leaving the unutilisedcommitment of £228.6m available. The Group maintains a strong liquidity position. In addition to the unutilisedcommitment of £228.6m, we had cash on hand of £74.4m at 31 December 2014. £m Facility Drawn Undrawn Maturity Margin % Fair value hedges Syndicated bank facility 300.0 71.4 228.6 May-16 LIBOR + 1.0£250m fixed rate sterling bond 250.0 250.0 - Nov-16 6.5% fixed Floating rate swap for £150m US$ LIBOR + 3.14%$350m fixed rate dollar bond 224.5 224.5 - Nov-20 5.75% fixed Floating rate swap for $100m US$ LIBOR + 2.63%$100m bridge facility 64.1 64.1 - Mar-16 LIBOR + 0.8Total 838.6 610.0 228.6 The Group's treasury policy does not allow significant exposures tocounterparties that are rated less than A by Standard & Poor's, Moody's orFitch and we consistently monitor the concentration of risk. The following table summarises our estimated payment profile for contractualobligations, provisions and contingent consideration as of 31 December 2014: £m 2015 2016 2017 2018 Thereafter Long-term debt - 385.5 - - 224.5Interest payable1 31.2 30.0 12.9 12.9 28.5Derivative financial liabilities 0.6 8.2 - - -Operating lease payments 24.7 11.4 11.3 10.7 65.6Pension contributions 3.5 3.5 3.5 3.5 -Trade and other payables 464.3 2.4 - - -Provisions 8.9 2.2 0.9 0.1 6.1Contingent and deferredconsideration 2.9 - - - -Put options over non-controllinginterests 4.1 2.3 3.4 0.5 6.3Total 540.2 445.5 32.0 27.7 331.0 1 Interest payable based on current year rates. Capital management Our policy is to maintain prudent debt capital ratios to ensure continuingaccess to capital on attractive terms and conditions. Borrowings increasedyear on year as a result of the additional borrowing to fund the Advanstaracquisition in December. To support our `Events First' strategy UBM intends totarget a leverage ratio of between 1.5-2.0 times Net Debt / EBITDA which isconsistent with investment grade metrics, will provide flexibility forbiennial cycles, and will provide capacity to invest in the business. TheCompany will not seek to immediately mechanically move into the target rangebut will do so gradually within 12-18 months. UBM's consolidated net debt at 31 December 2014 stood at £538.0m, up from£443.4m at the end of 2013 due to the debt utilised to fund Advanstar. During2014, cash generated from operations increased to £169.8m (2013: £165.8m). Thebusiness also received cash proceeds from the repayments on the Delta VendorLoan Note of £16.1m, dividends from Joint Ventures and Associates of £10.9mand small disposals of £4.0m. Most significantly we received £544.6m of cashfrom the rights issue and paid cash of £697.0m for Advanstar and £23.8m onother acquisitions, earn out payments in relation to acquisitions made inprior years and increases in stakes in subsidiaries (net of cash acquired).Dividends to shareholders (excluding dividends paid to non-controllinginterests) totalled £67.0m. The ratio of net debt to earnings before interest, taxation, depreciation andamortisation was 2.8 times. If the earnings before interest, taxation,depreciation and amortisation of Advanstar were included for the full year,the ratio of net debt would be 2.2 times: £m 2014 2013 Financial liabilities 626.3 531.8Financial assets (88.3) (88.4)Net debt*1 538.0 443.4Adjusted earnings before interest, taxation,depreciation and amortisation* 192.0 199.5Net debt to EBITDA ratio* 2.8 times 2.2 times 1 Includes fair value adjustments We target investment grade ratings from each of Moody's and Standard & Poor's.In assessing the leverage ratios of net debt to adjusted earnings beforeinterest, taxation, depreciation and amortisation, both Moody's and Standard &Poor's take account of a number of other factors, including future operatinglease obligations and pension deficit. Pensions UBM operates a number of defined benefit and defined contribution schemes,based primarily in the UK. The most recent actuarial funding valuations forthe majority of the UK schemes were carried out during 2014 and updated to 31December 2014 using the projected unit credit method. At 31 December 2014, theaggregate deficit under IAS 19 was £53.2m, an increase of £27.3m compared tothe deficit of £25.9m at the previous year end, due to changes in actuarialassumptions and reduced asset returns. The pension interest expense of £0.8m was down from £1.7m reported for 2013due to the decline in the discount rate. Pension schemes operating costincreased to £1.8m compared to £1.2m in 2013. The costs have been offset bythe settlement gain of £5.8m recognised in Corporate Operations in respect ofpension liabilities settled as a result of the UK schemes merger. On 30December 2013, the three main UK schemes (the United Pension Plan, the UnitedMagazines Final Salary Scheme and the defined benefit section of the UnitedGroup Pension Scheme) were merged into the new UBM Pension Scheme. Members ofthe former schemes were offered the chance to take up a winding-up lump sum inlieu of pension benefits. The amounts paid were less than the accountingreserve held in respect of the liabilities that were extinguished resulting ina settlement gain of £5.8m. These schemes are closed to new members, furtherdetails are provided in Note 7.2 to the financial statements. CASH FLOW Cash generated from operations was £169.8m (2013: £165.8m), cash conversion*of 70.2% of adjusted operating profit* (2013: 97.0%) was impacted by thecapital expenditure on CORE and the new London and New York offices. Free cashflow* prior to cash invested in acquisitions was £85.4m (2013: £97.7m). Areconciliation of net cash inflow from operating activities to free cash flowis shown below: £m 2014 2013 Adjusted cash generated from operatingactivities* 195.8 185.9Restructuring payments (11.6) (12.9)Other adjustments (14.4) (7.2)Cash generated from operations (IFRS) 169.8 165.8 Dividends from JVs and associates 10.9 3.7Net interest paid (21.5) (24.3)Taxation paid (23.6) (25.4)Capital expenditure (50.2) (22.1)Free cash flow* 85.4 97.7Acquisitions (649.8) (19.8)Proceeds from disposals 4.0 107.9Repayment of vendor loan notes 16.1 -Advances to JVs, associates and minoritypartners 0.3 (0.2)Free cash flow after investment activities (544.0) 185.6Net share issues 545.3 1.4Dividends (76.6) (74.5)Purchase of ESOP shares (2.8) (6.0) Net debt*1 as at 31 December (538.0) (443.4)Net debt/EBITDA* as at 31 December (times) 2.8 2.2 (1) Includes FV adjustments Cash conversion is calculated as follow: £m 2014 2013 Adjusted Operating Profit 179.8 188.4Depreciation 12.2 13.4Capital Expenditure (50.2) (22.1)Movement in Working Capital (8.6) (0.6)Associates and JVs pre tax (2.6) (3.9)Dividends from Associates and JVs 0.7 3.7Non Cash Movements (9.0) 3.8Proceeds from Disposals 4.0 - 126.3 182.7 Cash Conversion 70.2% 97.0% Capital expenditure Capital expenditure for the year was £50.2m (2013: £22.1m), due to capitalexpenditure on the new London office and New York office consolidation and theongoing investment in CORE. We have consolidated 500 London-based staff into new premises as the lease onour principal UK office expires in March 2015. The 15-year lease commenced inMarch 2014. Total capital expenditure, including relocation costs, wasapproximately £24m (£18m net of the landlord's contribution accounted for as alease incentive and recognised over the lease term) which will be depreciatedover the term of the lease. The new building will result in an incrementalannual cost of approximately £2.8m including depreciation of the capitalexpenditure. We continued to invest in the implementation of CORE - our new global ERPsystem and outsourced finance processes. The project has been focussed on ourEvents-led businesses, and will result in improved management informationsupporting benchmarking and best practice initiatives - consistent with ourstrategy. CORE was deployed for our EMEA and Americas divisions, and we havecompleted the first phase of roll-out in Asia in January 2015. Totalcapitalised costs of the programme at 31 December 2014 was £35.7m whilst £2.3mwas amortised during the year. We expect to continue to generate significant free cash flow in 2015 becauseof our business model and believe that our cash on hand, cash from ouroperations and available credit facilities will be sufficient to fund our cashdividends, debt service and acquisitions in the normal course of business. Acquisitions and disposals Advanstar was acquired on 18 December 2014 for a total consideration of£697.0m (includes working capital adjustment and cash acquired of £72.4m). Werecognised goodwill of £389.4m and intangible assets of £284.1m along withdeferred tax liabilities of £99.4m. Net assets were recognised of £122.9m. Adetailed purchase price allocation exercise as required by IFRS3 will beperformed in the first half of 2015. A contingent forward exchange contract was utilised to fix the purchase priceof the Advanstar acquisition at 30 September 2014. The gain of £12.9m on thederivative instrument has been taken directly to the Income Statement andincluded within operating exceptional items. We also invested £21.8m (including £2.1m of expected contingent and deferredconsideration) in acquiring three new events businesses. These comprised twoleading events in Mexico in the construction and hospitality sectors, CIHACand Abastur, together with Seatrade which strengthens our position in theCruise shipping vertical. These acquisitions were closely aligned to ourstrategic priorities, increasing our exposure to attractive communities andgeographies. We also invested cash of £1.4m in the purchase of non-controllinginterests and made payments for contingent and deferred consideration foracquisitions made in the current and prior years totalling £4.5m. The 2014 acquisitions contributed adjusted operating profit of £2.5m sinceacquisition. On a pro forma basis they achieved a pre-tax return oninvestment* of 7.8% because of phasing of events and a large odd-year biennialin Seatrade. The following table shows the performance of our acquisitionssince 2012 relative to our target pre-tax cost of capital threshold of 10%: Consideration(2) Return on investment* £m 2012 2013 2014 2012 acquisitions 29.0 16.2% 8.6% 9.7%2013 acquisitions 14.3 - 13.5% 6.0%2014 acquisitions(3) 25.5 - - 7.8%Total 68.8 8.2%(4) 2 Net of cash acquired and includes the latest estimate of expected contingentconsideration. 3 2014 Return on investment calculated on a full year pro forma basis. 4 2014 Return on 3 year initial (cash) consideration is 9.3%. We generated £4.0m in net cash proceeds from the sale of three OMS businessesand a small event in line with our strategy. The aggregate gain on disposal of£5.2m has been reported in the Corporate Operations segment as other income,consistent with our Group policy. RELATED PARTY TRANSACTIONS Details of related party transactions in the twelve months ended 31 December2014 are disclosed in Note 8.2 on page [56]. RETURN ON AVERAGE CAPITAL EMPLOYED The return on average capital employed (ROACE)* for 2014 was 13.3% (2013:17.7%). This decline year on year reflects the increased capital employed atyear end in respect of the Advanstar acquisition but no Advanstar earningsincluded in the twelve month period. Excluding Advanstar and the rights issueimpact the ROACE would be 18.8%. The table below shows our performance overtime: £m 2010 2011 2012 2013 2014 Operating profit before exceptionalitems5 (£m) 143.2 163.7 165.5 164.1 159.8Average capital employed (£m) 971.1 1,124.1 1,074.4 928.1 1,204.2Return on average capital employed*(ROACE) (%) 14.7 14.6 15.4 17.7 13.3 5 Including discontinued operations RIGHTS ISSUE The rights issue raised cash of £544.6m net of associated expenses of £20m(total cash of £564.6m). These expenses were deducted from the share premiumaccount. The issuance of 197m new ordinary shares on 12 December 2014 resulted in aweighted average number of shares for 2014 of 323.5m (2013: 315.4m) and thediluted number of shares of 326.6m (2013: 319.1m). The comparative 2013 numberof shares have been adjusted to reflect the bonus element of the rights issue(calculated as 1.288). DIVIDENDS Our progressive dividend policy, targeting two times cover through economicand biennial cycles, remains unchanged. The 2013 comparative and 2014 interimdividend have been restated for the impact of the bonus element of the rightsissue (calculated as 1.288). In line with this policy the Board hasrecommended a final dividend of 16.0p (2013: 15.9p). This brings the totaldividend for the year to 21.3p (2013: 21.1p), representing an increase of 1.0%in the full year dividend. Subject to shareholder approval, the final dividendon ordinary shares will be paid on 27 May 2015 to shareholders on the registeron 2 May 2015. GOING CONCERN After making enquiries, the Directors have a reasonable expectation that UBMhas adequate resources to continue in operational existence for theforeseeable future. Accordingly, they continue to adopt the going concernbasis in preparing the financial statements. In reaching this conclusion, thedirectors have had due regard to the following: - After taking account of available cash resources and committed bankfacilities, none of UBM's borrowings fall due within the next 12 months.Further information is provided in Note 5.3 - The cash generated from operations, committed facilities and UBM's abilityto access debt capital markets, taken together, provide confidence that UBMwill be able to meet its obligations as they fall due - Further information on the financial position of UBM, its cash flows,financial risk management policies and available debt facilities are describedin the my review on the preceding pages. UBM's business activities, togetherwith the factors likely to impact its future growth and operating performanceare set out in the Strategic Report of the Annual Report By order of the Board Robert GrayChief Financial Officer BOARD OF DIRECTOR CHANGES The Directors who held office during 2014 are as disclosed in the AnnualReport and Accounts for the year ended 31 December 2013, except for thefollowing changes: - John McConnell was appointed as a Director on 27January 2014 - David Levin ceased to be a Director on 1 March 2014; - Karen Thomson ceased to be a Director on 31 March 2014; - Tim Cobbold was appointed as a Director and Chief Executive Officer of theGroup on 6 May 2014; and - Mary McDowell was appointed as a Director on 1 August 2014 STATEMENT OF DIRECTORS' RESPONSIBILITY UBM's annual report and accounts for the year end, to be published in duecourse, will contain a responsibility statement as required under Disclosureand Transparency Rule 4.1.12, regarding responsibility for the financialstatements and the annual report. This responsibility statement is repeatedhere (below) solely for the purposes of complying with Disclosure andTransparency Rule 6.3.5. It is not connected to the extracted and unauditedinformation presented in this resultsannouncement. Each of the Directors confirms that, to the best of their knowledge: - the Group financial statements, which have been prepared in accordance withInternational Financial Reporting Standards (IFRS), as issued by theInternational Accounting Standards Board (IASB), give a true and fair view ofthe assets, liabilities, financial position and profit of the Group; and - the management report includes a fair review of the development andperformance of the business and the position of the Group and the undertakingsincluded in the consolidation taken as a whole, together with a description ofthe principal risks and uncertainties they face. The Directors of UBM plc will be listed in the annual report and are listed onthe UBM plc's corporate website: ubm.com. This press release contains statements which are not based on current orhistorical fact and which are forward looking in nature. These forward lookingstatements reflect knowledge and information available at the date ofpreparation of this press release and the Company undertakes no obligation toupdate these forward looking statements. Such forward looking statements aresubject to known and unknown risks and uncertainties facing the Groupincluding, without limitation, those risks described in this press release,and other unknown future events and circumstances which can cause results anddevelopments to differ materially from those anticipated. Nothing in thispress release should be construed as a profit forecast. SUMMARY OF MAJOR RISKS - Macro-economic slowdown and/or exchange rate fluctuations * A slowdown in the macro environment could adversely impact revenue, asadvertising, attendee, sponsorship and other discretionary revenue tends to becyclical. A downturn may also result in slower debt collections, therebyaffecting cash flow. * Foreign exchange rate fluctuations could adversely affect our reportedearnings and the strength of our balance sheet. - Advanstar integration * Integration issues or failure to realise operating benefits or synergies mayimpact the expected returns from the acquisition. - Specific country risk and emerging market exposure * Our business operates in many geographies, particularly Emerging Markets,which may present logistical and management challenges due to differentbusiness cultures, languages, anti-bribery laws, health and safety standardsor unfavourable changes in applicable law or compliance requirements. * Expansion through joint ventures reduces logistical and management issuesbut can create governance challenges or affect our ability to extract rewardsfrom our investment. - Inability to stage an event or inability of customers to travel to an event * A disaster or natural catastrophe, terrorism, political instability ordisease could affect people's willingness to attend our events, which couldhave an adverse effect on our revenue. * Similarly the business model relies on the availability of venues forhosting events. Additional venue capacity, for example in Shanghai, isintroducing competition as well as enhancing opportunities for growth. - Changes in our business environment * We cannot predict all the changes which may affect the competitiveness ofthe business, such as changes in customer behaviour or technologicalinnovations which would increase competition or make some products or servicesless relevant. Social media platforms, search engines and other onlinetechnologies could all pose a competitive threat to our businesses. * Similarly, additional venue capacity could introduce competition as well asenhance opportunities for growth. - Technological risk: execution and cyber security * As part of the strategy, UBM will be investing in the technology platformsof the business. Failure to deliver these projects effectively could lead toincreased costs, delays or erosion of UBM's competitive position. * System failure could have a significant impact on our business. Unauthorisedaccess to our systems by external parties could lead to reputational damageand legal action. The collapse of the Cloud on which various products andsystems are hosted could have negative consequences for our reputation. - Access to capital * Although the rights issue improved our balance sheet flexibility, changes inthe availability or cost of financing may affect our acquisition strategy. Explanation of non-IFRS measures Financial Measure How we define it Why we use it Underlying revenue and Underlying measures are Underlying growthunderlying operating adjusted for the estimated rates provide insightprofit effects of acquisitions, into the organic disposals, structural growth of the discontinued products, business. foreign exchange movements and biennial events. Adjusted operating profit Operating profit excluding Provides insight into amortisation of intangible ongoing profit assets arising on generation, acquisitions, exceptional individually and items and share of taxation relative to other on joint ventures and companies. associates.Margin Adjusted operating profit expressed as a percentage of revenue. EBITDA Earnings before interest, Measure of earnings tax, depreciation, and cash generative amortisation and capacity. exceptional items Adjusted profit before tax Profit before tax before Facilitates amortisation of intangible performance assets on acquisitions, evaluation, exceptional items, share of individually and taxation on profit from relative to other joint ventures and companies. associates and net financing expense adjustments.Adjusted EPS Adjusted EPS includes share of taxation on profit from joint ventures and associates but excludes movements on deferred tax balances recognised as a consequence of acquisition intangibles. Adjusted diluted EPS includes the impact of share options. Net debt Net debt is current and Measure of non-current borrowings and indebtedness - derivatives associated with includes benefit of debt instruments, less cash current cash and cash equivalents. available to pay down debt Net debt to EBITDA Net debt divided by EBITDA. Commonly used measureNet debt to LTM EBITDA Includes an annualised of financial EBITDA figure for interim leverage. reporting. Discretionary free cash Net cash provided by Measure of cashflow operating activities after available to repay meeting obligations for debt, pay dividends interest, tax and capital and invest in expenditures. acquisitions after capital expenditure. Adjusted operating cash Adjusted to exclude Provides anflow non-operating movements in understanding of our working-capital, such as operating cash flows. expenditure against reorganisation and restructuring provisions.Cash conversion Cash conversion is the ratio of adjusted cash generated from operations to adjusted operating profit. Pre-tax return on Attributable adjusted To assess returns oninvestment operating profit divided by acquisitions relative the cost of acquisitions. to our target pre-tax Calculated on a pro forma cost of capital basis, as if the acquired threshold of 10%. business were owned throughout the year. Estimated total Estimated total Provides a measure ofconsideration consideration includes total consideration initial consideration (net for businesses of cash acquired), the acquired. latest estimate of expected contingent consideration and deferred consideration. Return on average capital ROACE is operating profit Provides a measure ofemployed (ROACE) before exceptional items the efficiency of our divided by average capital capital investment. employed. Average capital employed is the average of opening and closing total assets less current liabilities. Effective tax rate The effective tax rate on Provides a more adjusted profit before tax comparable basis to reflects the tax rate analyse our tax rate. excluding movements on deferred tax balances recognised as a consequence of acquisition intangibles. Consolidated income statementfor the year ended 31 December 2014 Before Before exceptional Exceptional exceptional Exceptional items items Total items items Total 2014 2014 2014 2013 2013 2013Notes £m £m £m £m £m £m Continuing operations 2 Revenue 746.3 - 746.3 793.9 - 793.9 Other operating income 12.5 - 12.5 6.5 - 6.5 Operating expenses (581.6) - (581.6) (618.0) - (618.0) 3.1 Exceptional operating - (12.1) (12.1) - (33.2) (33.2) items Amortisation of (19.4) - (19.4) (21.3) - (21.3) intangible assets arising on acquisitions Share of results from 2.0 21.9 23.9 3.0 - 3.0 joint ventures and associates (after tax) Group operating profit 159.8 9.8 169.6 164.1 (33.2) 130.9 from continuing operations 5.2 Financing income 6.5 - 6.5 6.6 4.1 10.7 5.2 Financing expense (28.3) (2.6) (30.9) (32.1) - (32.1) 5.2 Net financing expense (21.8) (2.6) (24.4) (25.5) 4.1 (21.4) Profit before tax from 138.0 7.2 145.2 138.6 (29.1) 109.5 continuing operations 3.2 Tax (15.0) 29.9 14.9 (10.9) - (10.9) Profit for the year from 123.0 37.1 160.1 127.7 (29.1) 98.6 continuing operations Discontinued operations Profit for the year from - - - 1.8 16.6 18.4 discontinued operations Profit/(loss) for the 123.0 37.1 160.1 129.5 (12.5) 117.0 year Attributable to: Owners of the parent 150.2 107.5 entity Non-controlling 9.9 9.5 interests 160.1 117.0 Earnings per share (pence) 3.3 Continuing operations - 46.4p 28.3p basic* 3.3 Continuing operations - 46.0p 27.9p diluted* 3.3 Profit for the year - 46.4p 34.1p basic* 3.3 Profit for the year - 46.0p 33.7p diluted* £m £m Group operating profit 169.6 130.9 from continuing operations 3.1 Exceptional operating (9.8) 33.2 items Amortisation of 19.4 21.3 intangible assets arising on acquisitions Share of tax on profit 0.6 0.9 in joint ventures and associates Adjusted operating - 2.1 profit from discontinued operations Adjusted Group operating 179.8 188.4 profit** £m £m Dividends* 5.3 Interim dividend of 5.3p 16.7 16.4 (5.2p) 5.3 Proposed final dividend 70.8 50.3 of 16.0p (15.9p) * 2013 restated to reflect the bonus element of the rights issue. Details ofthe rights issue are provided in note 5.3. ** Adjusted Group operating profit represents Group operating profit excludingamortisation of intangible assets arising on acquisitions, exceptional itemsand share of tax on profit in joint ventures and associates. Consolidated statement of comprehensive incomefor the year ended 31 December 2014 2014 2013Notes £m £m Profit for the year 160.1 117.0 Other comprehensive (loss)/income Other comprehensive income/(loss) to be reclassified to profit or loss in subsequent periods 5.3 Currency translation differences on foreign 30.3 (22.3) operations - Group 5.3 Net investment hedge (18.8) 6.9 Currency translation differences on foreign 0.6 (0.4) operations - joint ventures and associates Reclassification adjustment for foreign operations - (26.0) disposed of in the year 3.2 Income tax relating to components of other - - comprehensive income 12.1 (41.8) Other comprehensive income/(loss) not to be reclassified to profit or loss in subsequent periods Remeasurement of defined benefit obligation (34.5) 18.1 Irrecoverable element of pension surplus (0.3) 0.4 Remeasurement of defined benefit obligation of (0.8) (0.4) associates 3.2 Income tax relating to components of other - - comprehensive income (35.6) 18.1 Other comprehensive loss for the year, net of tax (23.5) (23.7) Total comprehensive income for the year net of tax 136.6 93.3 Attributable to: Owners of the parent entity 125.2 86.6 Non-controlling interests 11.4 6.7 136.6 93.3 Consolidated statement of financial positionat 31 December 2014 31 December 31 December 2014 2013Notes £m £m Assets Non-current assets 4.1 Goodwill 1,188.1 776.7 Intangible assets 407.3 111.4 Property, plant and equipment 49.8 21.3 Investments in joint ventures and associates 35.4 20.4 Other fixed asset investments 1.7 1.7 Vendor loan note 31.6 38.6 Derivative financial instruments 14.0 14.4 Retirement benefit surplus 4.3 3.4 3.2 Deferred tax asset 3.3 3.7 1,735.5 991.6 Current assets Trade and other receivables 268.3 200.7 Cash and cash equivalents 74.4 74.0 Assets of disposal group classified as held for 0.9 0.9 sale 343.6 275.6 Total assets 2,079.1 1,267.2 Liabilities Current liabilities 3.2 Current tax liabilities 42.1 45.4 Trade and other payables 464.3 349.2 Provisions 8.9 16.7 Borrowings 1.3 - Derivative financial instruments 4.1 5.1 Liabilities associated with assets of disposal 0.4 0.4 group classified as held for sale 521.1 416.8 Non-current liabilities 3.2 Deferred tax liabilities 4.4 22.1 Trade and other payables 2.4 2.6 Provisions 9.3 11.6 Borrowings 619.1 530.5 Derivative financial instruments 18.5 11.9 Retirement benefit obligation 57.5 29.3 711.2 608.0 Total liabilities 1,232.3 1,024.8 Equity attributable to owners of the parent entity 5.3 Share capital 44.3 24.6 5.3 Share premium 533.5 7.9 5.3 Other reserves (640.1) (652.1) Retained earnings 900.0 854.7 Put options over non-controlling interests (17.5) (19.4) Total equity attributable to owners of the parent 820.2 215.7 entity Non-controlling interests 26.6 26.7 Total equity 846.8 242.4 Total equity and liabilities 2,079.1 1,267.2 These financial statements were approved by the Board of Directors and weresigned on its behalf on 26 February 2015 by: Robert Gray Director Consolidated statement of changes in equityfor the year ended 31 December 2014 Total equity Put options attributable over non- to owners Non- Share Share Other Retained controlling of parent controlling Total capital premium reserves earnings interests entity interests equityNotes £m £m £m £m £m £m £m £m At 1 January 24.6 7.9 (652.1) 854.7 (19.4) 215.7 26.7 242.4 2014 Profit for the - - - 150.2 - 150.2 9.9 160.1 year Other - - 10.6 (35.6) - (25.0) 1.5 (23.5) comprehensive (loss)/income Total - - 10.6 114.6 - 125.2 11.4 136.6 comprehensive (loss)/income for the year 5.3 Equity - - - (67.0) - (67.0) - (67.0) dividends Non-controlling - - - - - - (9.6) (9.6) interest dividends 6.1 Non-controlling - - - - - - - - interest arising on business combinations Acquisition of - - - - 1.9 1.9 (1.9) - non-controlling interests 5.3 Issued in - 0.7 - - - 0.7 - 0.7 respect of share option schemes and other entitlements Share-based - - - 1.9 - 1.9 - 1.9 payments 5.3 Shares awarded - - 8.2 (8.2) - - - - by ESOP 5.3 Issued in 19.7 524.9 - - - 544.6 - 544.6 respect of rights issue 5.3 Own shares - - (6.8) 4.0 - (2.8) - (2.8) purchased by the Company At 31 December 44.3 533.5 (640.1) 900.0 (17.5) 820.2 26.6 846.8 2014 At 1 January 24.5 6.6 (618.5) 802.6 (13.0) 202.2 27.2 229.4 2013 (Loss)/profit - - - 107.5 - 107.5 9.5 117.0 for the year Other - - (39.0) 18.1 - (20.9) (2.8) (23.7) comprehensive loss Total - - (39.0) 125.6 - 86.6 6.7 93.3 comprehensive (loss)/income for the year 5.3 Equity - - - (65.2) - (65.2) - (65.2) dividends Non-controlling - - - - - - (9.3) (9.3) interest dividends Non-controlling - - - - (7.8) (7.8) 3.0 (4.8) interest arising on business combinations Acquisition of - - - (0.6) 1.4 0.8 (0.9) (0.1) non-controlling interests 5.3 Issued in 0.1 1.3 - - - 1.4 - 1.4 respect of share option schemes and other entitlements Share-based - - - 3.7 - 3.7 - 3.7 payments 5.3 Shares awarded - - 25.5 (25.5) - - - - by ESOP 5.3 Own shares - - (20.1) 14.1 - (6.0) - (6.0) purchased by the Company At 31 December 24.6 7.9 (652.1) 854.7 (19.4) 215.7 26.7 242.4 2013 Consolidated statement of cash flowsfor the year ended 31 December 2014 Notes 2014 2013 £m £m Cash flows from operating activities Profit for the year from continuing operations 160.1 98.6 Profit/(loss) for the year from discontinued - 18.4 operations Profit/(loss) for the year 160.1 117.0 Add back: Exceptional items (excluding fair value adjustments 1.9 14.7 below) 6.1 Fair value adjustments of contingent consideration 1.3 (2.2) 3.2 Tax (14.9) 10.9 Amortisation of intangible assets 19.4 21.6 Amortisation of website development costs and 5.7 5.0 internally generated software Depreciation 6.5 8.4 Share of results from joint ventures and associates (2.0) (3.0) (after tax) 5.2 Financing income (6.5) (6.6) 5.2 Financing expense 30.9 32.1 Other non-cash items (including disposal gain and (9.0) 3.8 pension settlement gain) 193.4 201.7 Payments against provisions (11.6) (12.9) Pension deficit contributions (3.5) (3.5) Decrease in inventories 0.4 - (Increase)/decrease in trade and other receivables (25.2) 15.1 Increase/(decrease) in trade and other payables 16.3 (34.6) Cash generated from operations 169.8 165.8 Cash generated from operations - continuing 169.8 164.4 Cash generated from operations - discontinued - 1.4 Interest and finance income received 2.9 1.4 Interest and finance costs paid (24.4) (25.7) 3.2 Tax paid (23.6) (25.4) Dividends received from joint ventures and associates 10.9 3.7 Net cash flows from operating activities 135.6 119.8 Net cash flows from operating activities - continuing 135.6 118.4 Net cash flows from operating activities - - 1.4 discontinued Cash flows from investing activities 6.1 Acquisition of interests in subsidiaries, net of cash (648.4) (19.0) acquired Investment in joint ventures - (0.1) Purchase of investments - (0.4) Proceeds from repayment of vendor loan note 16.1 - Purchase of property, plant and equipment (31.1) (5.8) Expenditure on intangible assets (19.1) (16.3) 6.2 Proceeds from sale of businesses, net of cash 4.0 107.9 disposed Advances to joint ventures and associates 0.3 (0.2) Net cash flows from investing activities (678.2) 66.1 Net cash flows from investing activities - continuing (678.2) 78.3 Net cash flows from investing activities - - (12.2) discontinued Cash flows from financing activities 5.3 Proceeds from issuance of ordinary share capital 545.3 1.4 Acquisition of non-controlling interests (1.4) (0.3) Dividends paid to shareholders (67.0) (65.2) Dividends paid to non-controlling interests (9.6) (9.3) Investment in own shares - ESOP (2.8) (6.0) Increase/(decrease) in borrowings 74.8 (117.8) Net cash flows from financing activities 539.3 (197.2) Net cash flows from financing activities - continuing 539.3 (196.0) Net cash flows from financing activities - - (1.2) discontinued Net decrease in cash and cash equivalents (3.3) (11.3) Net foreign exchange difference 2.4 (1.4) Cash and cash equivalents at 1 January 74.0 86.7 Cash and cash equivalents at 31 December 73.1 74.0 Notes to the consolidated financial statementsat 31 December 2014 UBM plc is a public limited company incorporated in Jersey under the Companies(Jersey) Law 1991. The registered office is Ogier House, The Esplanade, St.Helier, JE4 9WG, Jersey. UBM plc was tax resident in the Republic of Irelanduntil 30 November 2012 when it returned to the United Kingdom. The principalactivities of the Group are described in Section 2. The preliminary announcement was approved by the Board of Directors on 26February 2015. The figures and financial information for the year ended 31 December 2014 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. The figuresand financial information for the year ended 31 December 2013 included in thepreliminary announcement do not constitute the statutory financial statementsfor that year. Those financial statements have been delivered to the Registrarand included the auditor's report which was unqualified. They are prepared in accordance with International Financial ReportingStandards (IFRS) as issued by the International Accounting Standards Board(IASB). The consolidated financial statements comply with the Companies(Jersey) Law 1991 and are prepared under the historical cost basis except forderivative financial instruments and hedged items which are measured at fairvalue. The consolidated financial statements are presented in pounds sterling,which is the functional currency of the parent company, UBM plc. All amountsare rounded to the nearest £0.1m unless otherwise indicated. The accounting policies adopted in the preparation of the consolidatedfinancial statements are consistent with those used for the previous financialyear, except for the adoption of the following new and amended IFRSs. Accounting Requirements Impact on financialstandard statements IFRS 10 These amendments provide an exception to None; The parent`Consolidated the consolidation requirement for company in the GroupFinancial entities that meet the definition of an does not qualify toStatements' investment entity under IFRS 10 be an investment(amended), IFRS Consolidated Financial Statements. The entity under IFRS 10.12 `Disclosures exception to consolidation requiresof Interests in investment entities to account forOther Entities' subsidiaries at fair value through(amended) and profit or loss.IAS 27`Separate Adopted retrospectively from 1 JanuaryFinancial 2014.Statements'(amended) IAS 32 These amendments clarify the meaning of None.`Financial `currently has a legally enforceableInstruments: right to set-off' and the criteria forPresentation' non-simultaneous settlement mechanisms(amended) of clearing houses to qualify for offsetting. Adopted retrospectively from 1 January 2014. IAS 39 These amendments provide relief from None; the Group has`Financial discontinuing hedge accounting when not novated anyInstruments: novation of a derivative designated as a derivatives duringRecognition and hedging instrument meets certain the current or priorMeasurement' criteria. periods. IAS 36 These amendments reduce the The Group has`Impairment of circumstances in which the recoverable considered theAssets amount of assets or CGUs is required to amendments in the be disclosed and to disclose the disclosures included discount rate used in determining an within Note 4.1 given impairment where recoverable amount is the impairment charge determined using a present value recognised in the technique. year. IFRIC 21 The interpretation clarifies when an None.`Levies' entity recognises a liability for a levy imposed by governments under legislation, other than outflows that are within the scope of other standards and fines or other penalties for breaches of legislation. Adopted from 1 January 2014. Discontinued operations There are no operations classified as discontinued in the 2014 financialinformation. Discontinued operations in the comparative period relate to theGroup's disposal of the UBM Channel business and certain UBM Built EnvironmentMarketing Services. Comparative information On 6 November 2014, the Group announced a fully underwritten 4 for 5 rightsissue of 196,734,453 new shares at 287 pence per new share for shareholders onthe London Stock Exchange. As a result, the Earnings per share and Dividend pershare comparative information has been restated to reflect the bonus element. Going concern After making enquiries, the Directors have a reasonable expectation that theGroup has adequate resources to continue in operational existence for theforeseeable future (see going concern section of the Operating and FinancialReview). The consolidated financial statements are therefore prepared on thegoing concern basis. 2. Segment information Operating segments The Group considers that operating segments presented on a products andservices basis are the most appropriate way to demonstrate the performance ofthe Group. This is consistent with the internal reporting provided to the GroupChief Executive Officer and the Group Chief Financial Officer, together thechief operating decision maker (CODM), and reflects the way in which resourcesare allocated. The segment results do not include amounts for discontinued operations. TheCODM considers there to be four operating segments: * Events which provide face-to-face interaction in the form of exhibitions, tradeshows, conferences and other live events; * Marketing Services - Online which provide website sponsorships and banner advertising as well as online directory and data products; * Marketing Services - Print which publishes magazines and trade press to specialist markets; and * PR Newswire which provides communications products and services to professionals working in marketing, public relations, corporate communications or investor relations roles - distributing messages, identifying target audiences and monitoring the impact. Marketing Services - Online and Marketing Services - Print have been aggregatedto form one reportable segment `Other Marketing Services'. The two operatingsegments have similar economic characteristics and meet the aggregationcriteria defined in IFRS 8 `Operating segments'. Segment measures The CODM assesses the performance of the operating segments and the allocationof resources using revenue and adjusted operating profit. Adjusted operatingprofit is IFRS operating profit excluding amortisation of intangible assetsarising on acquisitions, exceptional items and share of tax on results of jointventures and associates. Finance income/expense and tax are not allocated to operating segments and arereported to the CODM only in aggregate. Segment assets and liabilities are not reported to the CODM. Transactions between segments are measured on the basis of prices that wouldapply to third-party transactions. Year ended 31 December 2014 Other Marketing PR Corporate Group Events Services Newswire costs total £m £m £m £m £m Revenue Total segment revenue 451.7 100.0 196.5 - 748.2 Intersegment revenue (1.2) - (0.7) - (1.9) External revenue 450.5 100.0 195.8 - 746.3 Result Depreciation (including (4.9) (1.1) (4.9) (1.3) (12.2)amortisation of websitedevelopment costs andinternally generatedsoftware) Share of pre-tax 0.9 - 0.3 1.4 2.6results from jointventures and associates Segment adjusted 140.6 11.0 44.8 (16.6) 179.8operating profit Amortisation of intangible assets (19.4)arising on acquisitions Exceptional operating items 9.8 Share of tax on profit (0.6)in joint ventures andassociates Group operating profit 169.6 Financing income 6.5 Financing expense (28.3) Exceptional items relating to net (2.6)financing expense Profit before tax 145.2 Tax 14.9 Profit for the year 160.1 Total corporate costs were £29.0m (2013: £22.8m). Corporate costs were offsetby internal cost recoveries, and share of pre-tax results from joint venturesand associates of £1.4m (2013: £2.5m). Non-recurring items included incorporate costs include the £5.8m pension settlement gain and £5.2m gain ondisposals reported in Other Operating income. Year ended 31 December 2013 Other Dis- Marketing PR Corporate Continuing continued Events Services Newswire costs total operations Total £m £m £m £m £m £m £m Revenue Total segment 463.6 129.4 202.6 - 795.6 24.3 819.9revenue Intersegment (0.9) - (0.8) - (1.7) - (1.7)revenue External revenue 462.7 129.4 201.8 - 793.9 24.3 818.2 Result Depreciation (4.6) (1.3) (6.6) (0.7) (13.2) (0.2) (13.4)(includingamortisation ofwebsite developmentcosts) Share of pre-tax 1.0 - 0.4 2.5 3.9 - 3.9results from jointventures andassociates Segment adjusted 148.9 10.2 45.6 (18.4) 186.3 2.1 188.4operating profit Amortisation of intangible (21.3) (0.3) (21.6)assets arising on acquisitions Exceptional (33.2) 0.3 (32.9)operating items Exceptional discontinued items - 16.3 16.3 Share of tax on profit in (0.9) - (0.9)joint ventures and associates Group operating 130.9 18.4 149.3profit Financing income 6.6 - 6.6 Financing expense (32.1) - (32.1) Exceptional items relating to 4.1 - 4.1net financing expense Profit before tax 109.5 18.4 127.9 Tax (10.9) - (10.9) Profit for the year 98.6 18.4 117.0 Geographic information Revenue is allocated to countries based on the location where the products andservices are provided. Non-current assets are allocated to countries based onthe location of the businesses to which the assets relate. Continuing revenue Year ended Year ended 31 December 31 December 2014 2013 £m £m United Kingdom 82.8 83.6 Foreign countries United States and Canada 335.3 376.9 Europe 67.1 80.7 China (including Hong Kong) 169.7 174.8 Emerging Markets1 76.2 62.3 Rest of the world 15.2 15.6 663.5 710.3 External revenue 746.3 793.9 1 Emerging Markets comprise the non-G10 countries - most notably for the Group:Brazil, India, Indonesia, Malaysia, Mexico, Singapore, Thailand and Turkey. There are no revenues derived from a single external customer which aresignificant. Non-current assets 2014 2013 £m £m United Kingdom 343.6 295.7 Foreign countries United States and Canada 1,185.3 480.7 Europe 21.2 22.2 China (including Hong Kong) 31.9 32.8 Emerging Markets1 94.3 94.3 Rest of the world 6.0 5.8 1,338.7 635.8 Total non-current assets 1,682.3 931.5 Non-current assets consist of goodwill, intangible assets, property, plant andequipment, investments in joint ventures and associates and other investments. 3. Operating profit and tax 3.1 Exceptional operating items Certain items are recognised as exceptional items since, due to their nature orinfrequency, such presentation is relevant to an understanding of the Group'sfinancial statements. These items are not part of the Group's normal ongoingoperations (Charged)/credited to continuing operating profit 2014 2013 £m £m Acquisition costs on Advanstar (7.4) - Gain on Advanstar contingent forward contract 12.9 - Acquisition costs on other business combinations (0.6) (0.8) Changes in estimates of contingent consideration (1.3) 1.9 Aborted acquisition costs - (1.2) Exceptional items relating to acquisitions 3.6 (0.1) Restructuring and business reorganisation - (16.6) Global ERP and process outsourcing implementation cost - (8.6) Other restructuring items - 2.5 Exceptional items relating to reorganisation and - (22.7)restructuring Gain on disposal reported by associates 21.9 - Exceptional items in share of results from joint 21.9 -ventures and associates Impairment of goodwill and intangible assets (14.6) (5.3) Impairment of assets - (1.0) Impairment of joint ventures and associates (1.1) (1.5) Impairment of joint venture loan note - (2.6) Impairment charge (15.7) (10.4) Total credited/(charged) to continuing operating profit 9.8 (33.2) Advanstar Acquisition costs of £7.4m have been expensed as exceptional items relating tothe acquisition of Advanstar. These relate mainly to due diligence andprofessional fees paid to various advisors. We have recognised a gain of £12.9m on the contingent forward exchange contractutilised to hedge the purchase price of the Advanstar acquisition when theacquisitions was announced on 30 September 2014. The acquisition completed on18 December 2014; further details are provided in Note 6.1. Acquisition exceptional items Other acquisition costs of £0.6m have been expensed in the year. An exceptionalcharge of £1.3m was recognised relating to revised contingent considerationestimates for prior year acquisitions. Exceptional items in joint ventures and associates PA Group, the parent company of the Press Association, sold its weatherforecasting business, MeteoGroup, in January 2014. The Group accounts for its17% interest in PA Group as an associate. The Group has recognised its share ofthe gain on disposal of £21.9m as an exceptional item. Impairment The Group has reviewed the carrying value of goodwill and intangible assets inlight of current trading conditions and future outlook. As a result of thisreview, impairment charges of £14.6m relating to goodwill have been recognised.Furthermore, a charge of £0.9m and £0.2m has been recognised for the Group'sinvestments in Beijing Zhong Wen Fa International Cultural Exchange Co. Limitedand Cosmoprof Shanghai Exhibitions Limited respectively. The taxation effect of the exceptional items reported above on the amountscharged to the income statement is nil. 3.2 Tax Income statement 2014 2013 £m £m Continuing Current tax expense (20.9) (17.5) Exceptional deferred tax credit 29.9 - Other deferred tax credit 5.9 6.6 Income tax credit/(expense) 14.9 (10.9) As a consequence of the acquisition of Advanstar, deferred tax assets incertain US companies that had previously not been recognised have now beenrecognised. An exceptional tax credit of £29.9m has therefore been takenthrough the income statement. Reconciliation of total tax expense to the accounting profit: 2014 2013 £m £m Profit before tax from continuing operations 145.2 109.5 Profit before tax from discontinued operations - 18.4 Profit before tax 145.2 127.9 Profit before tax multiplied by UK rate of corporation 31.2 29.7tax of 21.5% (2013: 23.25%) Effect of: Different tax rates on overseas earnings 8.5 6.8 Expenses not deductible for tax purposes 16.1 12.5 Non-taxable income (12.4) (11.7) Net movement in uncertain tax positions (5.7) (6.3) Prior year adjustments 0.8 (4.3) Benefit of intragroup financing (12.8) (12.1) Exceptional deferred tax credit (29.9) - Movement in other deferred tax assets recognised (2.6) (1.2) Losses brought forward and utilised (10.5) (3.9) Surplus losses carried forward 6.5 9.9 Deduction for amortisation (9.3) (10.9) Effects of other unrecognised temporary differences 6.1 2.2 Share of results from associates and joint ventures (0.5) (0.7)(after tax) Other (0.4) 0.9 Total tax (credit)/expense (14.9) 10.9 The prior year tax reconciliation has been restated in order to better reflectthe nature of the reconciling items. Reconciliation to adjusted tax charge 2014 2013 £m £m Income tax (credit)/expense (14.9) 10.9 Exceptional deferred tax credit 29.9 - Net deferred tax movement on intangible assets 7.3 6.6 Share of tax on profit in joint ventures and associates 0.6 0.9 Adjusted tax charge (Note 3.3) 22.9 18.4 The Group has assessed the impact of changes in tax rates in variousjurisdictions in which it operates and has determined that the changes do nothave a significant impact on the current or future tax charges. Other comprehensive income No current or deferred tax relates to items reported in other comprehensiveincome (2013: nil). Statement of financial position: current tax 2014 2013 £m £m Current tax liability at 1 January 45.4 52.7 Current tax expense 20.9 17.5 Tax paid (23.6) (25.4) Currency translation and other movements (0.6) 0.6 Current tax liability at 31 December 42.1 45.4 During the year, tax has been paid in the following jurisdictions: 2014 £m China 11.1 Netherlands 3.7 Canada 1.9 Brazil 1.8 France 1.7 Other Emerging Markets 1.7 Other 1.7 Total 23.6 Statement of financial position: deferred tax Deferred tax liabilities/(assets) Consolidated Consolidated statement of income statement financial position 2014 2013 2014 2013 £m £m £m £m Intangibles 66.2 44.1 24.7 (6.2) Accelerated capital allowances (2.2) 1.9 0.1 (0.8) Tax losses (53.1) (17.1) 12.1 3.7 Other temporary differences (9.8) (10.5) (1.1) (3.3) 1.1 18.4 35.8 (6.6) The movement in deferred tax balance during the year is: 2014 2013 £m £m Net deferred tax liability at 1 January 18.4 24.6 Acquisition of subsidiaries (Note 6.1) 20.0 0.7 Amounts credited to net profit (35.8) (6.6) Disposals (0.2) - Currency translation (1.3) (0.3) Net deferred tax liability at 31 December 1.1 18.4 Analysed in the statement of financial position, afteroffset of balances within countries, as: Deferred tax assets (3.3) (3.7) Deferred tax liabilities 4.4 22.1 1.1 18.4 The deferred tax asset of £3.3m (2013: £3.7m) relates to tax losses and othertemporary differences. These have been recognised because the Group expects togenerate taxable profits against which these losses will be used. The Group has the following unused tax losses for which no deferred tax assetshave been recognised: * £255.6m (2013: £219.0m) in UK subsidiaries which are available to offset against future UK corporate tax liabilities; * £209.7m (2013: £236.8m) in US subsidiaries which are available to offset against future US federal tax liabilities. Of these £209.0m expire between 2019 and 2034 (2013: £234.8m between 2019 and 2033); * £232.1m (2013: £232.1m) of UK capital losses which are only available for offset against future capital gains; * £6.7bn (2013: £7.1bn) that have arisen in Luxembourg holding companies as a result of revaluations of those companies' investments for local GAAP purposes; and * £3.7m (2013: £0.5m) in respect of companies in other countries. No deferred tax asset has been recognised in respect of any of these amounts asit is uncertain that these losses will be utilised. In addition the Group has unrecognised deferred tax assets in relation to otherdeductible temporary differences of £15.0m (£12.5m in relation to the UK, nilin relation to the US, and £2.5m in relation to other countries) (2013: £35.1m(£5.5m, £28.5m and £1.1m respectively)). No deferred tax assets have beenrecognised in respect these assets as it is uncertain that they will beutilised. At 31 December 2014, net deferred tax liabilities of £1.1m have been recognisedfor taxes that would be payable on the unremitted earnings of the Group'ssubsidiaries. No other deferred tax liabilities have been recognised as theGroup has determined that profits of subsidiaries will not be distributed inthe foreseeable future. The temporary differences associated with investments in subsidiaries for whicha deferred tax liability has not been recognised amount in aggregate to £4.2bn(2013: £4.2bn). 3.3 Earnings per share Basic earnings per share is calculated by dividing net profit for the yearattributable to owners of the parent entity by the weighted average number ofordinary shares outstanding during the year. Adjusted basic earnings per share excludes amortisation of intangible assetsarising on acquisitions, deferred tax on amortisation of intangible assets,exceptional items and net financing expense adjustments (detailed in Note 5.2). Diluted earnings per share is calculated by dividing net profit for the yearattributable to owners of the parent entity by the weighted average number ofordinary shares outstanding during the year plus the weighted average number ofordinary shares that would be issued on conversion of all the dilutivepotential ordinary shares into ordinary shares. The impact of dilutivesecurities in 2014 would be to increase weighted average shares by 3.1 millionshares (2013: 3.7 million shares). To fund the acquisition of Advanstar, the Group announced a fully underwritten4 for 5 rights issue of 196,734,453 new shares at 287 pence per new share. The2013 numbers have been restated to reflect the bonus element of the rightsissue. The weighted average number of shares excludes ordinary shares held by theEmployee Share Ownership Plan (the ESOP). Continuing operations Restated Weighted Weighted average average Restated no. Earnings no. Earnings of per of per Earnings shares share Earnings shares share 2014 2014 2014 2013 2013 2013 £m million pence £m million Pence Adjusted Group operating 179.8 186.3profit Net interest expense (21.4) (24.0) Pension schemes finance (0.8) (1.7)expense Adjusted profit before tax 157.6 160.6 Tax (3.2) (22.9) (18.4) Non-controlling interests (9.9) (9.5) Adjusted earnings per share 124.8 323.5 38.6 132.7 315.4 42.1 Adjustments Amortisation of intangible (19.4) (6.0) (21.3) (6.7)assets arising onacquisitions Net deferred tax movements 7.3 2.3 6.6 2.1on intangible assets Exceptional items 9.8 3.0 (33.2) (10.5) Exceptional deferred tax 29.9 9.2 - -credit Net financing income - other (2.2) (0.7) 4.3 1.3 Basic earnings per share 150.2 323.5 46.4 89.1 315.4 28.3 Dilution Options - 3.1 (0.4) - 3.7 (0.4) Diluted earnings per share 150.2 326.6 46.0 89.1 319.1 27.9 Adjusted earnings per share 124.8 323.5 38.6 132.7 315.4 42.1(as above) Options - 3.1 (0.4) - 3.7 (0.5) Diluted adjusted earnings 124.8 326.6 38.2 132.7 319.1 41.6per share Group Restated Weighted Weighted average average Restated no. Earnings no. Earnings of per of per Earnings shares share Earnings shares share 2014 2014 2014 2013 2013 2013 £m million pence £m million Pence Adjusted Group operating 179.8 188.4profit Net interest expense (21.4) (24.0) Pension schemes finance (0.8) (1.7)expense Adjusted profit before tax 157.6 162.7 Tax (22.9) (18.4) Non-controlling interests (9.9) (9.5) Adjusted earnings per share 124.8 323.5 38.6 134.8 315.4 42.7 Adjustments Amortisation of intangible (19.4) (6.0) (21.6) (6.7)assets arising onacquisitions Net deferred tax movements 7.3 2.3 6.6 2.1on intangible assets Exceptional items 9.8 3.0 (16.6) (5.3) Exceptional deferred tax 29.9 9.2 - -credit Net financing income - other (2.2) (0.7) 4.3 1.3 Basic earnings per share 150.2 323.5 46.4 107.5 315.4 34.1 Dilution Options - 3.1 (0.4) - 3.7 (0.4) Diluted earnings per share 150.2 326.6 46.0 107.5 319.1 33.7 Adjusted earnings per share 124.8 323.5 38.6 134.8 315.4 42.7(as above) Options - 3.1 (0.4) - 3.7 (0.5) Diluted adjusted earnings 124.8 326.6 38.2 134.8 319.1 42.2per share 4. Statement of Financial Position 4.1 Goodwill Goodwill is allocated and monitored by management at a CGU level, consisting ofthe six business units operating across the Group's operating segments. Not allbusiness units are active in all segments; there are 14 CGUs at 31 December2014 (2013: 11 CGUs). The increase in the CGUs in 2014 is due to the Advanstaracquisition (3). For reporting purposes, the CGUs have been aggregated into thereportable segments, as shown in the tables below. The CGUs are individuallytested for impairment each year. 31 December 2014 Other Marketing PR Events Services Newswire Total £m £m £m £m Cost At 1 January 2014 644.3 98.5 83.5 826.3 Advanstar 313.5 75.9 - 389.4acquisition (Note6.1) Other acquisitions 13.5 - - 13.5(Note 6.1) Disposals (6.2) (2.9) (3.0) - (5.9) Currency 23.8 4.4 3.9 32.1translation At 31 December 992.2 175.8 87.4 1,255.42014 Impairment At 1 January 2014 4.1 45.5 - 49.6 Charge for the - 14.6 - 14.6year Currency 0.3 2.8 - 3.1translation At 31 December 4.4 62.9 - 67.32014 Carrying amount At 1 January 2014 640.2 53.0 83.5 776.7 At 31 December 987.8 112.9 87.4 1,188.12014 Within the Events segment, management considers the UBM Tech Events, UBMConnect Events, UBM Live Events and Advanstar Events CGUs to be significant.The carrying amount of goodwill attributed to these CGUs at 31 December 2014was £171.7m, £125.9m, £257.4m and £313.5m respectively. In 2013, UBM TechEvents (£167.0m), UBM Connect Events (£94.3m) and UBM Live Events (266.4m) wereconsidered significant. The PR Newswire CGU is also considered to besignificant. During the year various Other Marketing Services activities were discontinuedwhich were not closely aligned to the Events business. As a result, animpairment of £14.6m has been recorded against the Tech Online CGU, leaving aremaining carrying amount of £6.3m at 31 December 2014. The carrying amountattributable to the CGU is based on its value in use. The Advanstar acquisition completed on 18 December 2014 and the purchase priceallocation is ongoing on the date of issuing the consolidated financialstatements. The goodwill identified on a provisional basis has been allocatedbetween Events, Marketing Services - Online and Marketing Services - Printbased on contribution to profit. 5. Capital Structure and financial policy 5.1 Movements in net debt Net debt reflects the Group's cash and cash equivalents, borrowings andderivatives associated with debt instruments. This definition facilitates anaccurate reflection of the estimated settlement at maturity and is consistentwith reporting by other companies. 1 January Non-cash Currency 31 December 2014 items Cash flow translation 2014 £m £m £m £m £m Cash and cash equivalents 74.0 - (2.3) 2.7 74.4(including held for sale) Bank overdrafts - - (1.3) - (1.3) Net cash 74.0 - (3.6) 2.7 73.1 Bank loans due in more than (61.4) - (74.8) 0.7 (135.5)one year Bonds due in more than one (469.1) (1.2) - (13.3) (483.6)year Borrowings (530.5) (1.2) (74.8) (12.6) (619.1) Derivative assets associated 14.4 (0.8) - 0.4 14.0with borrowings Derivative liabilities (1.3) 0.1 - (4.8) (6.0)associated with borrowings Net debt (443.4) (1.9) (78.4) (14.3) (538.0) 1 January Non-cash Currency 31 December 2013 items Cash flow translation 2013 £m £m £m £m £m Cash and cash equivalents 86.9 - (11.5) (1.4) 74.0(including held for sale) Bank overdrafts (0.2) - 0.2 - - Net cash 86.7 - (11.3) (1.4) 74.0 Bank loans due in more than (178.3) - 117.8 (0.9) (61.4)one year Bonds due in more than one (482.8) 9.7 - 4.0 (469.1)year Borrowings (661.1) 9.7 117.8 3.1 (530.5) Derivative assets associated 26.5 (12.1) - - 14.4with borrowings Derivative liabilities (5.5) 1.5 2.7 - (1.3)associated with borrowings Net debt (553.4) (0.9) 109.2 1.7 (443.4) 5.2 Net financing expense Net financing expense Before Before Exceptional Exceptional exceptional Exceptional Items items Total items items Total 2014 2014 2014 2013 2013 2013 £m £m £m £m £m £m Financing expense Borrowings and loans (25.4) - (25.4) (26.5) - (26.5) Other (0.4) - (0.4) (0.4) - (0.4) Total interest expense (25.8) - (25.8) (26.9) - (26.9)for financialliabilities notclassified at fair valuethrough profit or loss Pension schemes net (0.8) - (0.8) (1.7) - (1.7)finance expense Fair value movement on (1.8) - (1.8) (6.4) - (6.4)interest rate swaps Fair value movement on 1.4 - 1.4 5.8 - 5.8£250m bond Ineffectiveness on fair (0.4) - (0.4) (0.6) - (0.6)value hedges Fair value movement on 1.5 - 1.5 (5.3) - (5.3)interest rate swaps Fair value movement on (1.7) - (1.7) 4.8 - 4.8$350m bond Ineffectiveness on fair (0.2) - (0.2) (0.5) - (0.5)value hedges Fair value movement on - (2.6) (2.6) - - -put options overnon-controllinginterests Other fair value (1.1) - (1.1) (2.4) - (2.4)movements (28.3) (2.6) (30.9) (32.1) - (32.1) Financing income Cash and cash 2.1 - 2.1 1.3 - 1.3equivalents Vendor Loan Note 2.3 - 2.3 1.6 - 1.6 Total interest income 4.4 - 4.4 2.9 - 2.9 Foreign exchange gain 1.5 - 1.5 0.8 - 0.8 Fair value movement on - - - - 4.1 4.1put options overnon-controllinginterests Foreign exchange gain on - - - 1.0 - 1.0forward contracts Other fair value 0.6 - 0.6 1.9 - 1.9movements 6.5 - 6.5 6.6 4.1 10.7 Net financing expense (21.8) _(2.6) (24.4) (25.5) 4.1 (21.4) The ineffectiveness on fair value hedges represents the difference between thefair value movement of the interest rate swaps designated as hedge instrumentsand the fair value movement of the hedged portions of the £250m 6.5% sterlingbonds due 2016 and the $350m 5.75% dollar bonds due 2020. The exceptional financing items comprise £2.6m loss relating to the fair valuemovement on put options over non-controlling interests (2013: £4.1m gain). 5.3 Equity and dividends Rights Issue Offer On 6 November 2014, the Group announced a fully underwritten 4 for 5 rightsissue of 196,734,453 new shares at 287 pence per new share for shareholders onthe London Stock Exchange. The offer period commenced on 6 November 2014 andclosed for acceptance on 11 December 2014. The final number of shares issuedwas 196,734,453. The rights issue raised £544.6m net of expenses of £20.0m. The issue price of287 pence per new ordinary share represented a 47 percent discount on theclosing price of 541 pence per share on 6 November 2014. Accounting for the Rights Issue The rights issue proceeds were received over the offer period and initiallycredited to a "shares to be issued" account resulting in the recognition ofcash inflow of £544.6m. Share capital Authorised 2014 2013 £m £m 1,217,124,740 (2013: 1,217,124,740) ordinary shares of 10 121.7 121.7pence each Issued and fully paid Ordinary Ordinary Shares Shares Number £m At 1 January 2013 245,467,129 24.5 Issued in respect of share option schemes and other 293,458 0.1entitlements At 31 December 2013 245,760,587 24.6 Issued in respect of share option schemes and other 157,480 -entitlements Issue of new shares on equity placing pursuant to the 4 196,734,453 19.7for 5 rights issue At 31 December 2014 442,652,520 44.3 The ESOP Trust owns 0.05% (2013: 0.17%) of the issued share capital of theCompany in trust for the benefit of employees of the Group and theirdependents. The voting rights in relation to these shares are exercised by theTrustees. Share premium 2014 2013 £m £m In issue at 1 January 7.9 6.6 Premium on shares issued, net of costs 0.7 1.3 Premium on issue of new shares on equity placing pursuant 524.9 -to the 4 for 5 rights issue In issue at 31 December 533.5 7.9 £20m of issue costs were recognised and charged against share premium inrespect of the rights issue. Therefore the total net increase in share capitaland share premium was £544.6m. Dividends 2014 2013 £m £m Declared and paid during the year* Equity dividends on ordinary shares Final dividend for 2013 of 15.9p (2012: 15.5p) 50.3 48.8 Interim dividend for 2014 of 5.3p (2013: 5.2p) 16.7 16.4 67.0 65.2 Proposed (not recognised as a liability at 31 December) Equity dividends on ordinary shares Final dividend for 2014 of 16.0p (2013: 15.9p) 70.8 50.3 *Historic amounts have been restated to reflect the impact of the rights issue. There are no income tax consequences to the Group arising from the payment ofdividends by the Company to its shareholders. Other reserves Foreign currency Total Merger translation ESOP Other other reserve reserve reserve reserve reserves £m £m £m £m £m Balance at 1 January 2013 (732.2) (3.3) (8.3) 125.3 (618.5) Total comprehensive income for - (39.0) - - (39.0)the year1 Shares awarded by ESOP - - 25.5 - 25.5 Own shares purchased by the - - (20.1) - (20.1)Company Balance at 31 December 2013 (732.2) (42.3) (2.9) 125.3 (652.1) Total comprehensive income for - 10.6 - - 10.6the year2 Shares awarded by ESOP - 8.2 - 8.2 Own shares purchased by the - (6.8) - (6.8)Company Balance at 31 December 2014 (732.2) (31.7) (1.5) 125.3 (640.1) 1 The amount included in the foreign currency translation reserve for 2013represents the currency translation difference on foreign operations of Groupsubsidiaries of £(19.5)m (excluding £(2.8)m relating to non-controllinginterests), on the reclassification adjustment for foreign operations disposed£(26.0)m on net investment hedges of £6.9m and on joint ventures and associatesof £(0.4)m. 2 The amount included in the foreign currency translation reserve for 2014represents the currency translation difference on foreign operations of Groupsubsidiaries of £28.8m (excluding £1.5m relating to non-controlling interests),on net investment hedges of £(18.8)m and on joint ventures and associates of £0.6m. Merger reserve The merger reserve is used to record entries in relation to certainreorganisations that took place in previous accounting periods. The majority ofthe balance on the reserve relates to the capital reorganisation that tookplace in 2008 which created a new holding company which is UK-listed,incorporated in Jersey and with its tax residence in the Republic of Ireland.The return of the Company's tax residency to the United Kingdom has had noimpact on these balances. Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differencesarising from the translation of the financial statements of foreignsubsidiaries. It is also used to record the effect of hedging net investmentsof foreign operations. ESOP reserve The ESOP reserve records ordinary shares held by the ESOP to satisfy futureshare awards. The shares are recorded at the cost of purchasing shares in theopen market. During the year ended 31 December 2014, 1,025,000 shares werepurchased by the ESOP (2013: 2,855,000 shares). 6. Acquisitions and disposals 6.1 Acquisitions Acquisitions The fair value of the identifiable assets and liabilities acquired in respectof acquisitions (excluding equity transactions) made in 2014 and 2013 was: Other All All Advanstar acquisitions acquisitions acquisitions 2014 2014 2014 2013 £m £m £m £m Intangible assets arising on 284.1 10.0 294.1 4.7acquisition Intangible assets acquired with 7.0 - 7.0 -acquisition Property, plant and equipment 4.5 0.1 4.6 0.2 Trade and other receivables 32.2 5.7 37.9 1.6 Deferred tax asset 79.8 - 79.8 - Cash and cash equivalents 72.4 0.4 72.8 1.8 480.0 16.2 496.2 8.3 Trade and other payables (73.0) (7.5) (80.5) (1.8) Provisions - - - - Deferred tax liability (99.4) (0.4) (99.8) (0.7) (172.4) (7.9) (180.3) (2.5) Identifiable net assets 307.6 8.3 315.9 5.8 Goodwill arising on acquisition 389.4 13.5 402.9 9.3 Non-controlling interests - - - (3.0) 697.0 21.8 718.8 12.1 Trade and other receivables acquired have been measured at fair value which isthe gross contractual amounts receivable. All amounts recognised are expectedto be collected. The intangible assets acquired as part of the acquisitions were: Other All All Advanstar acquisitions acquisitions acquisitions 2014 2014 2014 2013 £m £m £m £m Brands 194.3 3.5 197.8 2.3 Order backlog 0.7 1.3 2.0 - Customer relationships 88.5 5.0 93.5 1.8 Customer contracts and 89.2 6.3 95.5 1.8relationships Databases 0.6 0.2 0.8 0.6 Total 284.1 10.0 294.1 4.7 The total consideration transferred on acquisitions is as follows: Other All All Advanstar acquisitions acquisitions acquisitions 2014 2014 2014 2013 £m £m £m £m Cash and cash equivalents 697.0 19.7 716.7 9.7 Fair value of contingent - - - 0.4consideration Deferred consideration - 2.1 2.1 2.0 - Total consideration transferred 697.0 21.8 718.8 12.1 Acquisition costs of £8.0m (2013: £0.8m) have been recognised as an exceptionaloperating item in the income statement and are included in operating cash flowsin the statement of cash flows. Cash flow effect of acquisitions The aggregate cash flow effect of acquisitions was as follows: Other All All Advanstar acquisitions acquisitions acquisitions 2014 2014 2014 2013 £m £m £m £m Net cash acquired (72.4) (0.4) (72.8) (1.8) Cash paid to acquire 697.0 19.7 716.7 9.7 Contingent consideration paid: 2010 acquisitions - - - 2.2 2011 acquisitions - - - 1.4 2012 acquisitions - - - 1.8 2013 acquisitions - 2.3 2.3 0.2 2014 acquisitions - - - - Deferred consideration paid: 2011 acquisitions - - - 3.9 2012 acquisitions - 0.1 0.1 1.6 2013 acquisitions - 2.1 2.1 - 2014 acquisitions - - - - Net cash outflow on acquisitions 624.6 23.8 648.4 19.0 The Group paid £2.3m of contingent consideration during 2014 in relation toRotaforte International Trade Fairs & Media and Shanghai Tiansheng ExhibitionService Co., Ltd (Tiansheng). The Group also paid £2.2m of deferredconsideration during 2014 in relation to NTSR, Greenbuild and Epica. The Group paid £5.4m of contingent consideration during 2013 in relation 2010acquisitions of SharedVue, Corporate 360 and The Route Development Group, the2011 acquisitions of Rotaforte International Trade Fairs & Media andInternational Business Events Limited, the 2012 acquisitions of Shanghai UBMShowStar Exhibition Co. Limited and RISI Inc. The Group also paid £5.5m ofdeferred consideration during 2013 in relation to the 2011 acquisitions of AMBExhibitions Sdn Bhd and AMB Exhibitions Events Sdn Bhd, International BusinessEvents Limited and Online Marketing Summit, the 2012 acquisition of ShanghaiUBM ShowStar Exhibition Co. Limited, Insight Media Limited, MalaysianInternational Furniture Fair, I.C.C. Fuarcilik ve Organizasyon Ticaret A.S andEco Exhibitions Sdn Bhd. 2014 acquisitions Each acquisition strengthens our exposure to certain industry verticals and arein line with the Group's strategy to enhance and expand its internationalpresence in geographic regions of significant growth. The Group has acquired 100% of the voting rights in all cases whereacquisitions involved the purchase of companies unless otherwise stated below.All 2014 and 2013 acquisitions where less than 100% of the voting rights of acompany were purchased have been accounted for using the full goodwill method. Acquisition Initial and 2014 Deferred Maximum acquisition Consideration contingent date Activity Segment £m consideration Centro Impulsor 9 May Construction event Events 10.7 -de laHabitacion y laConstruccion,A.C. (CIHAC) Abastecedores 17 June Hotel, restaurant Events 5.6 -Turisticos and catering event(Abastur) Seatrade 31 July Global maritime Events 5.5 -Communications events andLimited publishing business Advanstar 18 December Fashion events Events 697.0 -CommunicationsInc 718.8 - Advanstar Communications Following the announcement to acquire Advanstar for a base purchase price of$972m (on a cash free and debt free basis), on 18 December 2014, the Groupacquired the business for a final cash consideration of $1,086.7m (£697.0m)including cash acquired with the business of £72.4m and £2.7m working capitaladjustments. Net assets of £50.5m including cash of £72.4m and intangibleassets of £284.1m have been recognised on acquisition. A goodwill balance of £389.4m has been recorded. These amounts have been based on a preliminaryvaluation performed by valuation experts for the purpose of the ShareholderCircular and Prospectus published in November 2014. These numbers areprovisional valuations and subject to change in accordance with IFRS 3 BusinessCombinations (revised 2008) once the full purchase price allocation and fairvalue analysis has been completed. The transaction completed on 18 December 2014 at which point control wasobtained. Advanstar is an event and marketing services business that serves businessprofessionals and consumers in the fashion, licensing, pharmaceutical andmedical and powersports and automotive industries. Advanstar is one of thelargest US tradeshow operators and holds the market-leading position in certainkey tradeshow industries including fashion, licensing and powersports.Advanstar has 555 employees in North America and Europe and is headquartered inSanta Monica, with additional offices in New York, several other US locations,and the UK. Advanstar manages a portfolio of 54 tradeshows, 30 publications and 194websites/digital products. Advanstar also offers a variety of educational anddirect marketing products and services to the fashion, licensing,pharmaceutical, medical and powersports and automotive industries. KeyAdvanstar brands include MAGIC Marketplace, Licensing Expo, CBI, theInternational Motorcycle Shows, Coterie, Accessorie Circuit, IntermezzoCollections, Children's Club and ENK Vegas. In 2014, Advanstar derived 72.9% per cent of its revenue from events. Eventsare Advanstar's highest margin products, and have had strong recent growth.Advanstar has been able to drive significant margin improvements from 2011through 2014 through its acquisition and integration of the ENK fashion eventportfolio and operations; reengineering of key business systems; andrenegotiation of its contract with its primary event services contractor,Global Experience Specialists, Inc. Advanstar has also been able to drivestrong revenue growth and improved margins in its digital products. The goodwill of £389.4m arising from the acquisition of Advanstar relates tothe following factors: * the acquisition provides UBM with market leadership in a new vertical, making it the leading player in the USA fashion industry events thereby allowing it to benefit from expected growth in the sector; * the acquisition provides UBM with increased scale, adding six events to UBM's portfolio which would rank amongst its top 20 events; and * the acquisition provides balance against UBM's strong events portfolio in Emerging Markets and reinforces its position as a core events business. None of the goodwill recognised on the acquisition of Advanstar is expected tobe deductible for tax purposes. 2013 acquisitions The goodwill of £9.3m recognised relates to certain intangible assets thatcannot be individually separated. These include items such as customer loyalty,market share, skilled workforce and synergies expected to arise after theacquisition completion. Of the goodwill arising, an amount of £0.7m is expectedto be deductible for tax purposes. Acquisition Initial and 2013 deferred Maximum acquisition consideration contingent date Activity Segment £m consideration JV Novomania 18 March Urban/street Events 0.3 £2.0m payableLimited fashion event over the next(JVNML), 60% three years PT Pameran 15 April Events operator Events 0.2 -Niaga Indonesia(PTPNI), 51% China 2 August Starch and starch Events 0.7 £0.2m payable(Shanghai) derivatives over the nextInternational exhibition three yearsStarch & StarchDerivativesExhibition(Epica) NTSR Fuar ve 29 November Maritime, Events 8.4 -Gösteri infrastructure,Hizmetleri A.Ş agriculture,(NTSR) 75% lighting and leisure boating exhibitions Shanghai 16 December Vending machine Events 2.1 £2.3m payableTiansheng and digital over the nextExhibition signage three yearsService Co., exhibitionsLtd (Tiansheng) 11.7 £4.5m Put and call options There are no new transactions during the year. During the prior year, the Group has recognised the following put and calloptions. These reflected new transactions and options which were alsorecognised following evaluation in the context of the new consolidationstandards. Put options are reported within derivative financial instruments.The fair value of call options are not material to the Group. 31 December 2013 Option price Option exercise date Put option 2013 £m JV Novomania Limited 40% Fair value of the 18 March 2018 -put and call options shares as agreed by the parties capped at RMB 80.0m (£ 8.6m) PT Pameran Niaga Indonesia Rp1,470.0m (£0.1m) At any time -49% call option China (Shanghai) Fair value of the 2 August 2016 -International Starch & shares as agreed byStarch Derivatives the partiesExhibition (Epica) 10%call option I.C.C. Fuarcilik ve Fair value of the Put: 15% after 0.6Organizasyon Ticaret A.S. shares as agreed by finalisation of 201530% put and call options the parties capped accounts; further 15% at $10.0m (£6.0m) after finalisation of 2017 accounts Call: finalisation of 2022 accounts Intermodal Organizacao de 5.5x EBITDA capped 30 day period after 2.2Eventos S.A. 25% put and at $20.0m (£12.0m) 31 December 2015 andcall options each subsequent 31 December UBM Mexico Exposiciones, 5.0x EBITA capped Put: 31 December 2020 0.7S.A.P.I. De C.V. 20% put at MXP200.0m (£ to 31 December 2023and call options 10.1m) Call: after 31 December 2020 UBMMG Holdings Sdn Bhd 25% 6.0x EBITA capped Put: 31 December 1.1put and call options at $30.0m (£18.1m) 2014, 2015 or 2017 or any date after 31 December 2019 Call: after 31 December 2022 NTSR Fuar ve Gösteri 7x EBITA plus Between 1 Jan 2020 1.3Hizmetleri A.Ş (NTSR) 25% 6x new/organic and 31 March 2022put and call options branded and non-branded EBITA capped at €50m (£ 41.7m) UBM Istanbul - 25%'s put 11.2 x EBITA plus Between 1 Jan 2020 0.7and call options 6-11.2x new/organic and 31 March 2022 branded and non-branded EBITA capped at €50m (£ 41.7m) PT Dyandra UBM 5x EBITA for 21 Feb 2018 1.2International (Dyandra) previous year capped at $20.0m (£ 12.0m) Acquisition performance From 18 December 2014 to 31 December 2014, Advanstar contributed nil tooperating profit and revenue to the Group. Had Advanstar been acquired at thebeginning of 2014, it would have contributed £48.7m to operating profit and £176.3m to revenue of the Group. From their respective dates of acquisition to 31 December 2014, the otheracquisitions completed in 2014 contributed £9.1m to revenue and £2.5m tooperating profit to the Group. If the other acquisitions had taken place at thebeginning of 2014, the acquisitions would have contributed £11.0m to revenueand £1.1m to operating profit of the Group. From their respective dates of acquisition to 31 December 2013, theacquisitions completed in 2013 contributed £2.2m to revenue and £0.3m tooperating profit to the Group. If the acquisitions had taken place at thebeginning of 2013, the acquisitions would have contributed £6.5m to revenue and£1.6m to operating profit of the Group. Contingent and deferred consideration The potential undiscounted amount for all future payments that the Group couldbe required to make under the contingent consideration arrangements for 2014acquisitions are nil. The contingent consideration for each acquisition madeduring the year is based on the terms set out in the relevant purchaseagreements. The amounts recognised in the consideration tables below as thefair values of contingent considerations have been determined by reference tothe projected financial performance in relation to the specific contingentconsideration criteria for each acquisition. The movement in the contingent and deferred consideration payable during theyear was: Contingent Deferred Total Contingent Deferred Total 2014 2014 2014 2013 2013 2013 £m £m £m £m £m £m At 1 January 2.1 1.9 4.0 7.5 5.6 13.1 Acquisitions and equity - 2.1 2.1 2.3 2.0 4.3transactions Consideration paid (2.3) (2.2) (4.5) (5.6) (5.5) (11.1) Changes in estimates 0.8 0.5 1.3 (2.2) - (2.2)(income statement) Currency translation - - - 0.1 (0.2) (0.1) At 31 December 0.6 2.3 2.9 2.1 1.9 4.0 Current 0.6 2.3 2.9 2.1 1.9 4.0 Non-current - - - - - - At 31 December 0.6 2.3 2.9 2.1 1.9 4.0 Income Statement changes are reported within `Exceptional operating items'. 6.2 Disposals The Group continues to make disposals in order to further progress towards aportfolio of integrated cross-media marketing and communication servicesdesigned to serve specific commercial and professional communities. Thesedisposals have generated resources to invest in activities that are closelylinked to the Group's strategic priorities. Disposals are disclosed as part ofthe Group's discontinued operations when they represent a single major line ofbusiness or geographical area of operations, as required by IFRS 5 `Non-currentassets held for sale and discontinued operations'. Accounting policy When the Group disposes of, or loses control, joint control or significantinfluence over a subsidiary, joint venture or associate, it derecognises theassets (including goodwill) and liabilities of the entity, the carrying amountof any non-controlling interest and any cumulative translation differencesrecorded in equity. The fair value of the consideration received and the fairvalue of any investment retained is recognised. The resulting gain or loss fordisposals not disclosed as discontinued operations is recognised in profit orloss within `Other operating income'. 2014 disposals Initial and 2014 deferred Gain/(loss) disposal consideration on disposalDisposal date Activity Segment £m £m International 1 Customer Events 0.3 0.2Customer January managementManagement consultingInstitute (ICMI) Pyramid Research 1 Telecoms research Other 2.0 0.1 January Marketing Services Light Reading1 31 Telecoms marketing Other 9.2 4.866% January and research Marketing Services Pharmalive 1 May Publications Other 0.1 0.1 database Marketing Services 11.6 5.2 1 The group accounts for the remaining 34% as an investment in associate The aggregate effect of the disposals on the Group's assets and liabilitieswere as follows: Light Other Pyramid Reading Disposals Total Total 2014 2014 2014 2014 2013 £m £m £m £m £m Goodwill (1.0) (4.9) - (5.9) (128.4) Intangible assets (0.6) (0.6) - (1.2) (26.6) Property, plant and equipment - - - - (8.3) Investments in joint ventures and - - - - (3.1)associates Trade and other receivables (0.7) (3.1) (0.1) (3.9) (44.4) Inventories - - - - (5.6) Cash and cash equivalents - - - - (9.8) Total assets (2.3) (8.6) (0.1) (11.0) (226.2) Trade and other payables 0.5 0.6 - 1.1 63.3 Deferred tax liability - 0.2 - 0.2 8.7 Total liabilities 0.5 0.8 - 1.3 72.0 Identifiable net assets (1.8) (7.8) (0.1) (9.7) (154.2) Costs associated with disposal (0.2) (0.1) - (0.3) (12.0) Cumulative exchange gain - - - - 26.0reclassified to profit and loss ondisposal Fair value of retained interest - 3.6 - 3.6 1.7 Profit on disposal (0.1) (4.8) (0.3) (5.2) (16.3) Consideration received 2.1 9.1 0.4 11.6 154.8 Vendor loan note - (7.4) - (7.4) (37.1) Less cash disposed and deferred - - (0.2) (0.2) (9.8)consideration Net cash inflow 2.1 1.7 0.2 4.0 107.9 The Light Reading vendor loan note of £7.4m is split between Tranche A andTranche B loan amounts. Tranche A accrues an annual interest coupon of 12% plus3 month LIBOR, and Tranche B accrues an annual interest coupon of 5.5% plus 3month LIBOR. 7. Events after the reporting period On 21st January 2015, the Group disposed of Leisure Industry Week for initialcash consideration of £0.2m, subject to working capital adjustments. On 30th January 2015 the Group disposed of PG Promotion for initial cashconsideration of £0.6m, subject to working capital adjustments.