Embargoed until 7am
28 February 2006
Preliminary Results for the Year Ended 31 December 2005
STRONG RESULTS FROM A FOCUSED BUSINESS
Headline Results
Revenue Up 21.3% to £675.8m (£557.3m)
Continuing operating profit* Up 27.3% to £137.1m (£107.7m)
Profit before tax** Up 7.2% to £152.1m (£141.9m)
EPS** Up 25.1% to 40.9p (32.7p)
Dividend Up 25.0% to 15.0p (12.0p)
- Underlying revenue up 4.1%
- Margins steady at 19.6% (2004 - 19.1%)
- Acquisitions performing in line with plan
- £105m invested in acquisitions in 2005
- £550m of capital returned via special dividend and share & bond buybacks
- Net cash of £246.8m at year end
- New senior management team in place
* Before non-recurring items and amortisation of intangible assets
** Before amortisation of intangible assets, non-recurring items, other net
financing cost other than interest and including discontinued operations
Statutory Results
Revenue Up 21.3% to £675.8m (£557.3m)
EBIT Up 161.8% to £241.1m (£92.1m)
Profit before tax Up 129.7% to £232.2m (£101.1m)
EPS - continuing Up 15.3% to 67.8p (58.8p)
David Levin, Chief Executive of United Business Media plc said:
"In 2005 we have achieved strong financial results, and have made substantial
progress in reshaping UBM for the future. We achieved EPS growth of 25% and
have increased our dividend by 25%. In conjunction with these strong results,
we have simplified UBM to focus on businesses that support buyers and sellers,
through the distribution of market information (PR Newswire), and through
providing media channels that support market activity (CMP's trade shows,
print and online publishing)."
"We intend to accelerate the rate of acquisitions from the £105m achieved in
2005 towards the £150m to £250m level annually whilst maintaining our strict
financial criteria for acquisitions. At the same time it is our intention to
move towards a prudent leveraged balance sheet over the next two years.
Subject to our trading over these few years, we expect to be in a position to
return in excess of £300m of capital to shareholders during that period."
"2006 has begun with a solid performance. PR Newswire is continuing to perform
well. Our events business remains strong worldwide and forward bookings are
ahead of the prior year. Our performance in print is mixed, for example a good
performance in France being offset by weaker revenue in the UK. Whilst our
online revenues are growing rapidly (albeit from a small base) and we plan to
accelerate that growth through further investment, we will focus on improving
the profitability of our online offerings."
Contacts
Analysts
Catherine Southgate Head of Investor Relations
Email catherine.southgate@ubmgroup.biz
Direct telephone +44 20 7921 5031
Mobile +44 771 046 8996
Media
Peter Bancroft Director of Communications
E-mail peter.bancroft@ubmgroup.biz
Direct telephone +44 20 7921 5961
Chris Barrie Citigate Dewe Rogerson
E-mail chris.barrie@citigatedr.co.uk
Direct telephone +44 20 7282 2943
Mobile +44 796 872 72 89
Simon Rigby Citigate Dewe Rogerson
E-mail simon.rigby@citigatedr.co.uk
Direct telephone +44 20 7282 2847
Mobile +44 777 178 4446
Interviews with David Levin, CEO, and Nigel Wilson, CFO, are available in
video, audio and text on http://www.unitedbusinessmedia.com and
http://www.cantos.com
UBM's results presentation will be webcast live from UBM's website from
9.30am, 28th February 2006. To access the webcast please go to
www.unitedbusinessmedia.com.
A video recording of the webcast will also be accessible from UBM's
website. The presentation will also be available from UBM's website as a
podcast.
Notes to Editors
About United Business Media plc
United Business Media is one of the world's leading global business
information companies. UBM brings together the world's buyers and sellers,
helping their markets work effectively and efficiently through PR Newswire's
news distribution network and CMP's portfolio of events, print and on-line
publications.
For more information, go to www.unitedbusinessmedia.com
About PR Newswire - PR Newswire is the world's leading corporate news
distribution service. Headquartered in New York, PR Newswire distributes news
globally on behalf of over 40,000 customers, including many of the world's top
companies and agencies, helping them take the latest news to the media, the
investment community, and the general public. For more information, go to
www.prnewswire.com
About CMP - CMP's portfolio of more than 200 newspapers, magazines and
directories, 200 websites and 300 events brings together buyers and sellers
from a range of global sectors including technology, healthcare, the built
environment, lifestyle, fashion and ingredients. Our customers come to us for
direct access to their key audiences: business decision-makers.
CMP operates globally through four divisions:
- CMP Media - the USA's leading high tech B2B media company and provider of
healthcare education and information. For more information, go to
www.cmpmedia.com
- CMP Information: the European magazine and events business, based in the UK.
For more information, go to www.cmpinformation.com
- CMP Asia: a leader in exhibitions and publications in key markets in Asia.
For more information, go to www.cmpasia.com
- CMPMedica: pharmaceutical marketing solutions including medical information
and trade press in Europe and Asia. For more information, go to
www.cmpmedica.com
CMP's key brands include:
- InformationWeek magazine: US circulation of 500,000 IT professionals
www.informationweek.com
- Vidal Pharmaceutical Dictionary: the top-selling medical dictionary in
Europe
- September Hong Kong Jewellery & Watch Fair: attracts more than
38,000 visitors each year www.jewellerynetasia.com/exhibitions
- LightReading.com: the world's largest online telecoms publication, with a
monthly audience of more than 400,000 www.lightreading.com
Disclaimer
This press release includes statements which are not historical facts and are
considered "forward-looking" within the meaning of Section 27 of the
Securities Act of 1933, as amended. These forward-looking statements reflect
UBM's current views about future events, business and growth strategy and
financial performance. These forward-looking statements are identified by
their use of terms and phrases such as "believe," "expect," "plan,"
"anticipate," "on target" and similar expressions identifying forward-looking
statements. Investors should not rely on forward-looking statements because
they are subject to a variety of risks, uncertainties and other factors that
could cause actual results to differ materially from UBM's expectations. UBM
expressly does not undertake any duty to update forward-looking statements.
Management does not attempt to update forecasts unless conditions materially
change.
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005
CONTENTS
1. Chief Executive Review
2. Summary Group Income Statement
3. Summary of preliminary financial results for 2005
4. Divisional commentary
5. Dividend
6. Cash and cash conversion
7. Investments
8. Pensions
9. Tax
10. Interest and financing
11. Return of capital in 2005
12. Non-recurring items
13. IFRS
Appendix 1 - Segmental analysis
1. CHIEF EXECUTIVE REVIEW
Results summary
"In 2005 we have achieved strong financial results, and have made substantial
progress in reshaping UBM for the future.
In 2005 revenues from our continuing operations grew by 21.3% to £675.8m (2004
- £557.3m), with operating profit from continuing operations rising by 27.3%
to £137.1m (2004 - £107.7m). Profit before tax was £152.1m excluding profits
on disposals, and £501.4m including disposal profits. Margins were steady at
19.6% (2004 - 19.1%). We ended the year with almost £250m of net cash on the
back of solid trading, coupled with strong balance sheet and cash flow
management. Earnings per share rose by 25.1% to 40.9p from 32.7p. The Board is
proposing a final dividend of 11.0p, taking the total dividend for 2005 to
15.0p, an increase of 25% from 12.0p in 2004.
Strategy
In the course of 2005 we simplified UBM to focus on two principal businesses -
PR Newswire, our global news distribution business, and CMP, our international
events, print and online publishing business. In achieving this, we disposed
of assets for a total of nearly £750m, including NOP for £383m and our 35%
stake in five for £248m. We demonstrated our continuing commitment to
shareholder value and returned £550m of capital, including a special dividend
of £298m.
UBM is well placed to capitalise on the new audience dynamics as the audience
for media shifts from using horizontal media to vertical media. UBM is now
focused on businesses that support buyers and sellers, through the
distribution of market information (PR Newswire), and through providing media
channels within many specific vertical markets that support our customers
activity (CMP's trade shows, print and online publishing). We will grow these
businesses organically and by making bolt-on' acquisitions, with a focus on
B2B markets, on faster growing economies, on vertical markets where we already
have a strong position, and in markets where we can leverage a leading
position with an audiences in one medium into another, for example from print
into exhibitions or online.
We intend to keep investing and acquiring to develop our business. We intend
to accelerate the rate of acquisitions from the £105m achieved in 2005 towards
the £150m to £250m level annually whilst maintaining our strict financial
criteria. At the same time it is our intention to move towards a prudent
leveraged balance sheet over the next two years. In so doing, and of course
subject to our trading over these few years, we expect to be in a position to
return in excess of £300m to shareholders during that period.
Business environment
Our customers increasingly look to reach their target audiences within a given
vertical market across multiple media, with online media taking a growing
proportion of advertising spend. We are seeking to manage this structural
shift while recognising that there will continue to be very significant demand
for print in many markets.
We look to meet our customers' needs to access their audiences by using our
three main media forms (print, events, online), offering them a rich and
integrated mix of products each with distinct benefits and attributes. We
continue to see a critical role for print as a part of the media mix and we
have acquired and launched new titles, including the acquisition of Le
Quotidien du Medecin (a daily newspaper for doctors in France) and the launch
of Global Services (a monthly magazine for the global outsourcing and
offshoring industry). The underlying revenue of our print titles varied by
geography with aggregate underlying revenues falling in the US, flat in Europe
and growing in Asia, resulting in a decline of 2% overall. At an aggregate
level we did, however reduce our exposure to print by selling or closing
titles where we felt UBM was not able to develop or grow the franchise
(including the disposal of Exchange & Mart). We will continue to review our
portfolio of all products (and indeed all media) and will maintain the
discipline of selling where we believe our ability to add value is unlikely.
We are increasingly focused on further development of our portfolio of events
and online assets alongside print. In doing so, we seek to drive profitable
revenue growth and to transition the business to revenue streams that are
sustainable in the digital era that we foresee coming in the longer term.
In the course of 2005 and early 2006, we acquired a range of new events,
including, among others, Informex (chemical ingredients), Black Hat (IT
security), Bar Show, the Japan Jewellery Fair, and RFID World. During 2005 we
also acquired successful, innovative online media businesses through the
acquisitions of Light Reading and TechOnLine.
The need to do business face-to-face at exhibition and trade show events
remains as strong as ever. Paradoxically in our increasingly digital world,
the face-to-face meeting is becoming a more and more important part of doing
business. Our events business showed healthy growth in 2005 with total
revenues rising by 21% to £161.5m (and an underlying growth rate of around
10%). The business will continue to be a major focus for organic development
and acquisitions in the future.
Revenues across UBM's online businesses grew to £42.7m in 2005 with an
underlying growth rate of 24.4%. The online media business environment
continues to be highly dynamic as the new generation of broadband digital
technology and content media emerge and are adopted more widely. The current
imbalance of advertising spend between online and more traditional media
relative to their respective audiences suggests there will be a substantial
demand for online advertising over the coming years. However, given the
unproven profitability of many such business models, particularly in
comparison to their print equivalents, we will continue to invest carefully in
the development of our online products and their associated business models.
We will look particularly towards achieving more comprehensive integration of
our offerings across multiple media.
Investments in acquisitions & organic growth
In 2005 we invested £105m in bolt-on' acquisitions of 11 businesses that
complemented existing market positions and enhanced our businesses' growth
opportunities. We also continued to invest to support organic growth
initiatives. We remain committed to our record of delivering shareholder value
by effective financial and operational management of our owned businesses and
our new acquisitions. Integration of acquisitions made in both 2004 and 2005
has progressed well and the performance of these businesses has met our
expectations.
People & management
Since my arrival in 2005 we appointed Steve Weitzner as CEO of CMP Media and
early in 2006 Gary Hughes joined us as CEO of CMP Information. Charles Gregson
relocated to New York to focus exclusively on the role as CEO of PR Newswire.
Henry Elkington was also appointed Group Corporate Development Director.
Outlook
2006 has begun with a solid performance. PR Newswire is continuing to perform
well. Our events business remains strong worldwide and forward bookings are
ahead of the prior year. Our performance in print is mixed, for example a good
performance in France being offset by weaker revenue in the UK. Whilst our
online revenues are growing rapidly (albeit from a small base) and we plan to
accelerate that growth through further investment, we will focus on improving
profitability of our on line offerings.
2. SUMMARY GROUP INCOME STATEMENT
The income statement set out below re-presents the group's full income
statement (which accompanies this summary) in order to show more clearly the
results from operations.
Year Ended 31 December
2005 2004
£m £m %
Revenue 675.8 557.3 21.3
Operating profit* - continuing 137.1 107.7 27.3
Operating profit* - discontinued 4.8 25.2
Operating profit* 141.9 132.9 6.8
Net interest income 12.7 12.4 2.4
Other financing costs - pension (2.5) (3.4)
schemes (26.5)
Profit before tax** 152.1 141.9 7.2
Net financing cost -other than (19.1) -
interest
Amortisation of intangible assets (11.4) (3.1)
Non-recurring items 379.8 7.2
Profit/(loss) before tax 501.4 146.0 243.4
Taxation (24.6) (28.6) (14.0)
Share of taxation of JV's and 1.9 (0.8)
associates
Taxation relating to (1.2) 121.0
non-recurring items -
Profit after tax 477.5 237.6 101.0
Minority interest (1.9) (1.8) 5.6
Retained profit for the period 475.6 235.8 101.7
Dividends paid in period 337.8 31.7
EPS ** (pence) 40.9 32.7 25.1
Basic EPS (pence) 157.1 70.4
* Before non-recurring items and amortisation of intangible assets
** Before amortisation of intangible assets, non-recurring items, net
financing cost other than interest and including discontinued operations
3. SUMMARY OF PRELIMINARY FINANCIAL RESULTS FOR 2005
Consistent with the Interim, the results presented below reflect continuing
businesses under the new management structure.
Revenue Operating Profit*
Year ended 31 December Year ended 31 December
2005 2004 Change Underlying 2005 2004 Change Underlying
£m £m (%) #(%) £m £m (%) #(%)
PR Newswire 104.1 94.8 9.8 8.8 29.2 23.9 22.2 20.7
CMP Asia 61.9 51.4 20.4 15.1 17.5 14.0 25.0 10.9
CMP Media 225.9 220.3 2.5 0.0 24.9 27.1 (8.1) (16.2)
CMPi 177.0 161.0 9.9 4.0 43.0 38.5 11.7 (4.0)
CMPMedica 106.9 29.8 - 2.8 19.4 3.4 - 26.7
Corporate+ - - - - 3.1 0.8 - -
Total 675.8 557.3 21.3 4.1 137.1 107.7 27.3 3.2
# Underlying: adjusted for the effects of acquisitions, discontinued
operations, biennial events and foreign exchange
* before amortisation of intangible assets, non-recurring items
+Corporate operations comprises net central operating costs, together with
those equity accounted investments which do not form part of one of the
group's operating divisions.
Underlying revenue was up 4.1% - after adjusting for the effects of
acquisitions, discontinued operations, biennials and foreign exchange. Group
revenue increased by £34.9m for acquisitions made in 2005 and operating profit
increased by £5.9m. The net effect of biennial events was to increase revenue
by £4.8m and operating profit by £2.9m in 2005.
The movement in the US dollar and Euro has a direct translation impact - with
approximately two thirds of UBM revenue reported locally in US dollars or
Euros, group revenue was increased by £4.5m as a result of foreign exchange.
The average rate of $:£ exchange for 2005 was $1.81(2004: $1.83); together
with the effects of other currency movements this increased operating profit
by £0.9m. A 1 cent movement in the US dollar against sterling is approximately
equivalent to a move in profit of around £300,000 to £400,000 over the full
year.
4. DIVISIONAL COMMENTARY
PR NEWSWIRE
PR Newswire delivered a strong performance in all main areas of operation.
Underlying revenue was up 8.8% and underlying operating profit was up 20.7%,
with the overall operating margin up from 25.2% to 28.0%. Increased traffic,
improved mix and growth of revenue from non-wire products, particularly
MEDIAtlas and MultiVu, contributed to the overall revenue increase. Businesses
in Europe and Asia achieved 5.3% revenue growth for the full year, with the
European operating margin up to 19.2% and a total Rest of the World operating
profit of £1.9m (£0.2m profit in 2004).
CMP ASIA
CMP Asia delivered a strong performance. Underlying revenue was up 15.1%, with
underlying operating profits up 10.9%. Operating margins were 28.3% (27.2%)
and the steady programme of new product launches continued - including more
geographic extensions into mainland China. In Japan, KSS continues to perform
well, the Japan Jewellery Fair was acquired and further launches are planned.
We plan to have our first exhibition in India in 2006.
CMP MEDIA
In dollar terms, technology revenues of $282.8m excluding acquisitions were
down 1.8%, reflecting the continuation of recent trends across the different
media platforms - with print declining and events and online growing. During
2005, we acquired two events businesses - Black Hat and ICMI and in January
2006 we acquired two further events organisers, MediaLive and Shorecliff. The
acquisitions of Light Reading and TechOnLine, will assist the development of
our online businesses as well as the evaluation of alternative online business
models.
On a proforma basis, the 2005 results reflect that the mix of revenue has
changed such that events now account for 34% and online for 16% of CMP Media's
revenue (compared to 23% and 14% in 2004).
Healthcare revenue growth was re-established in the second half as the medical
education businesses' customers have now restructured themselves to address US
regulatory concerns. Revenue increased to $67.1m for the full year, an
increase of 5.8%.
Entertainment revenues were stable compared to 2004 and Princeton revenue was
up 4.3%.
The decline in operating profits across CMP Media largely reflects the
previously announced increased level of investment in new product development
- in particular in online and the relaunch of certain titles including
Information Week.
CMP INFORMATION
With revenue of £177m and operating profit of £43m, CMPi is our largest profit
contributor and has strong results from its events business. CMPi's results
include the operations of the non motoring titles previously reported by UAP.
Underlying revenue of the combined entity was up 4.0% while underlying
operating profit was down 4.0%. The decline in profits from underlying trading
is due to investment in new product development. We have continued to make
acquisitions and disposals and rationalise the portfolio. The 2005
acquisitions of ABI, The Publican, Theme & Bar and Informex are performing in
line with expectations.
CMPMEDICA
CMPMedica was acquired on 30 July 2004, with the acquisition of additional
MediMedia (France Medical Press and Services) assets completed on 31 March
2005. The business has been trading in line with its acquisition case. Its
performance reflects a strong seasonal weighting towards the first half of the
year. The drug information products have performed well, particularly in
France, but there was some softness in the Asia-Pacific trade press markets.
In 2006 we intend to make additional investment in DIS and CME products,
strengthen our events portfolio and expand geographically.
CORPORATE
Corporate operations comprises net central operating costs, together with
those equity accounted investments which do not form part of one of the
group's operating divisions. Our share of operating profit from five prior to
disposal was a £1.9m pre tax profit compared to a loss of £(1.8) million in H1
2004.
5. DIVIDEND
In line with the progressive dividend policy, the Board is recommending a
final dividend of 11.0 pence (8.37 pence), bringing the total for the year to
15.0 pence (12.0 pence), an increase of 25 per cent. This increase reflects
the strong performance achieved in 2005 and the directors' confidence in the
long-term outlook for the business.
The final dividend on the ordinary shares will be paid on 25 May to
shareholders on the register on 28 April.
The dividend on the 4,830,923 outstanding B shares will be 9.0 pence per
share. This dividend will be paid on 24 April to shareholders on the register
on 31 March.
6. CASH AND CASH CONVERSION
Our balance sheet remains strong. Net cash at the end of the year was £246.8m
after expenditure of £115.6m on acquisitions during the year, receipts of
£737.7m from disposals and a return of capital of £550m to investors by means
of a special dividend and convertible and bond buybacks. Continuing operating
cash conversion was 103% of operating profit.
7. INVESTMENTS
During the year UBM disposed of its investment in five, SIS and SDN for £302m,
Under IFRS, these investments were equity accounted for the period until
disposal.
8. PENSIONS
At 31 December 2005 the aggregate deficit under IAS 19 had decreased
significantly to £52.3m from £96.0m. This reflects the additional
contributions of £17.2m made by the group and strong asset returns offset by a
change in mortality assumptions increasing expected life.
The IAS 19 interest charge was £2.5m (2004: £3.4m).
9. TAX
The UK GAAP effective tax rate in 2005 was 20.0% (2004: 21.8%). The effective
tax rate under IFRS was 17.1% (2004: 20.9%). Overall UBM'S tax creditor is
£219.4m (2004: £208.0m). No payments were made in respect of this creditor in
2005 and we do not expect the tax cash outflow in respect of this creditor in
2006 to exceed £20.0m.
In 2005 the total tax payments, net of refunds totalled £17.4m.
UBM are in dispute with HMRC with regards to a technical matter arising in
relation to the Sale of Regional Newspapers in 1998. It is expected that the
issue will be heard by the Special Commissioners later in 2006, although no
date has been set. The tax in dispute is estimated at £80m. We remain
confident that no tax will be ultimately be payable and have obtained
extensive and strong support for our technical position, both at the time of
the transaction and subsequently. Due to the uncertainty of litigation, we
continue to make a prudent assessment in the group accounts for this and other
matters. We do not expect the matter to be finally resolved until 2007 at the
earliest.
10. INTEREST AND FINANCING
Net interest income for the year was £12.7m (£12.4m).
Interest income of £28.2m included £21.6m of return on surplus cash balances
and investments and £6.6m of interest on loans to five prior to disposal.
Interest expense of £15.5m included the cost of UBM's fixed rate borrowings
and drawings from the syndicated bank facility.
Net financing cost other than interest of £19.1m includes £11.2m relating to
the fair value adjustment for the equity option embedded in the convertible
bond, £4.8m accretion of the debt component of the convertible bond, £11.5m
premium on the repurchase of bonds, net of an exchange gain of £8.4m.
11. RETURN OF CAPITAL IN 2005
During 2005 a total of £550m of capital was returned or repaid to shareholders
and bondholders by way of a special dividend, share and bond buybacks.
In June a special dividend (with share consolidation) of £298m was paid
representing 18% of share capital at that point. A buyback of a further £15m
of ordinary shares was undertaken during the summer.
At the start of 2005 UBM had a $400m convertible bond containing options to
convert to 47.8m UBM shares before December 2006 at a dollar share price of
$8.36. Between August and December, we bought back and cancelled $234.6m (59%)
of the bond for an aggregate consideration of $285.4m. This has reduced the
number of shares on conversion by 28.0m to 19.8m.
UBM also tendered for the remaining $185m of the $250m 7.75% Yankee bond not
already owned. This successful tender resulted in the cancellation of all but
$5.7m of these bonds, reducing UBM's interest expense on an ongoing basis.
12. NON-RECURRING ITEMS
The Summary Group Income Statement shown on page 3 shows a non-recurring
credit of £379.8m. This comprises:
£m
Profit on disposal of businesses and equity accounted investments 417.0
Restructuring and business reorganisation costs (37.2)
379.8
During 2005, the group sold its market research business NOP World, and the
Exchange & Mart and Auto Exchange titles. We also sold our equity investments
in five, SDN and SIS. Total profits on disposal amounted to £417.0m after
costs.
As reported in the December trading update, we have implemented a number of
restructuring and reorganisation projects across several of our businesses.
The objectives of these projects are to simplify the group structure following
the disposals referred to above, to achieve greater geographical alignment of
our publishing divisions and to achieve greater customer and product focus
whilst delivering lower operating costs. The charge also includes the costs of
integrating businesses acquired during the year. The total cost of the
projects is £37.2m, of which £7.2m has been spent in 2005. With the exception
of amounts relating to vacant property, which will be incurred over the
remainder of the lease terms, we anticipate spending the balance of the charge
in 2006.
The total charge for restructuring and reorganisation may be analysed as:
£m
Vacant property costs 8.8
Redundancy 8.6
Re-engineering of business processes 10.3
Restructuring and business reorganisation costs 7.8
Acquisition integration 1.7
37.2
13. INTERNATIONAL FINANCIAL REPORTING STANDARDS "IFRS"
UK GAAP TO IFRS RECONCILIATION OF 2005 YEAR END RESULTS
The following table reconciles the adjusted group operating profit, PBT and
EPS between the reported IFRS results and the UK GAAP' numbers consistent
with UBM's historical reporting:
Continuing Operating PBT* EPS*
operating profit*
profit*
£m £m £m Pence
UK GAAP' 132.7 138.5 146.3 38.0
Additional charge for share-based payments (2.3) (2.6) (2.6) (1.0)
Movement in holiday pay accrual 0.3 0.3 0.3 0.1
Accounting for equity inv pre tax 6.4 6.4 6.4 2.2
Share of tax for JVs and associates - - - 1.0
Adjustment to WIP overhead capitalisation - (0.7) (0.7) (0.2)
IAS 32 & 39 adjustments - - 2.4 0.8
IFRS 137.1 141.9 152.1 40.9
APPENDIX 1
Segmental analysis
The following table sets out the segmental analysis for turnover and operating
profit for the half year. Note: The table below is after adjusting for the
transfers of UAP, UEM and CMP Princeton.
Revenue Operating profit Margins
2005 2004 2005 2004 2005 2004
£m £m £m £m % %
Continuing
operations
CMP Media 225.9 220.3 24.9 27.1 11.0 12.3
CMPMedica 106.9 29.8 19.4 3.4 18.1 11.4
CMP Asia 61.9 51.4 17.5 14.0 28.3 27.2
CMP Information 177.0 161.0 43.0 38.5 24.3 23.9
News Distribution 104.1 94.8 29.2 23.9 28.0 25.2
Corporate operations - - 3.1 0.8
675.8 557.3 137.1 107.7 19.6* 19.1
Discontinued
operations
Market Research 76.8 222.4 4.4 20.3 5.7 9.1
UAP Motoring Titles 23.0 35.8 0.4 4.9 1.7 13.7
Total 775.6 815.5 141.9 132.9 18.2 16.3
* 2005 margin excludes equity accounted investments disposed of
Consolidated income statement
for the year ended 31 December 2005
As
Before Before Restated
Non-recurring Non-recurring Non-recurring Non-recurring
items items Total items items Total
2005 2005 2005 2004 2004 2004
Notes £m £m £m £m £m £m
Continuing operations
3 Revenue 675.8 - 675.8 557.3 - 557.3
Other operating income 11.9 - 11.9 9.1 - 9.1
Operating expenses (575.8) - (575.8) (473.8) - (473.8)
4 Non-recurring reorganisation and - (37.2) (37.2) - - -
restructuring costs
Share of results from associates and 4.2 8.5 12.7 6.0 - 6.0
joint ventures (after tax)
Income from investments 3.0 - 3.0 5.2 - 5.2
Group operating profit 119.1 (28.7) 90.4 103.8 - 103.8
Non-recurring items
4 Profit on disposal of equity accounted - 150.7 150.7 - - -
investments
Amounts written off investments - - - - (11.7) (11.7)
- 150.7 150.7 - (11.7) (11.7)
Earnings before interest and taxes 119.1 122.0 241.1 103.8 (11.7) 92.1
("EBIT")
Finance income/(costs)
5 Interest income 28.2 - 28.2 26.5 - 26.5
5 Interest cost (15.5) - (15.5) (14.1) - (14.1)
5 Financing income - other than interest 8.4 - 8.4
5 Financing cost - other than interest (13.8) (13.7) (27.5) - - -
5 Financing cost - pension schemes (2.5) - (2.5) (3.4) - (3.4)
Profit before tax 123.9 108.3 232.2 112.8 (11.7) 101.1
6 Taxation (23.6) (1.2) (24.8) (23.1) - (23.1)
4 Non-recurring taxation credit - - - - 121.0 121.0
Profit for the year from continuing 100.3 107.1 207.4 89.7 109.3 199.0
operations
Discontinued operations
14 Profit for the year from discontinued - 270.1 270.1 19.7 18.9 38.6
operations (after tax)
Profit for the year 100.3 377.2 477.5 109.4 128.2 237.6
Attributable to:
Equity shareholders - ordinary 475.2 235.4
Equity shareholders - B shares 0.4 0.4
Minority interests 1.9 1.8
477.5 237.6
Earnings per share - from continuing operations
7 - basic 67.8 p 58.8 p
7 - diluted 64.7 p 51.8 p
Earnings per share - continuing and discontinued operations
7 - basic 157.1 p 70.4 p
7 - diluted 142.8 p 61.8 p
Adjusted group operating 141.9 132.9
profit*
Amortisation of intangible (11.4) (3.1)
assets
Non-recurring reorganisation (37.2) -
and restructuring costs
Share of taxation on profit in joint ventures 1.9 (0.8)
and associates
Operating profit from (4.8) (25.2)
discontinued operations (before
tax)
Group operating profit from 90.4 103.8
continuing operations
Dividends
8 - Interim dividend 11.0 12.1
8 - Special dividend 298.3 -
8 - Proposed year end dividend (equity 30.6 28.1
shareholders - ordinary)
*Adjusted group operating profit represents group operating profit excluding
non-recurring items, amortisation of intangible assets, and including
operating profit from discontinued operations.
Consolidated balance sheet
at 31 December 2005
As restated
31 December 31 December
2005 2004
Notes £m £m
Assets
Non-current assets
Goodwill 590.6 583.8
Intangible assets 79.9 50.4
Property, plant and equipment 36.7 45.0
Investments accounted for using the equity 22.2 54.2
method
Other investments 5.0 47.9
734.4 781.3
Current assets
Inventories 9.4 14.9
Trade and other receivables 172.5 306.1
Derivative financial assets 2.9 -
9 Cash and cash equivalents 489.4 339.4
674.2 660.4
Assets classified as held for sale - 5.1
Total assets 1,408.6 1,446.8
Liabilities
Current liabilities
Borrowings 145.6 142.8
Convertible bond 93.7 -
Trade and other payables 318.8 295.4
Derivative financial liabilities 31.5 -
Provisions 38.8 12.7
Current tax liabilities 219.4 208.0
847.8 658.9
Non-current liabilities
Borrowings 3.3 96.1
Convertible bond - 208.7
Retirement benefit obligation 52.3 96.0
Trade and other payables 5.6 4.6
Provisions 31.2 35.9
Deferred tax liabilities 24.0 16.8
116.4 458.1
Total liabilities 964.2 1,117.0
Shareholders' equity
10 Share capital 84.9 84.5
11 Share premium 327.7 310.8
12 Other reserves 179.0 189.4
12 Retained earnings (149.9) (257.5)
Total shareholders' equity 441.7 327.2
12 Minority interest in equity 2.7 2.6
Total equity 444.4 329.8
Total equity and liabilities 1,408.6 1,446.8
These financial statements were approved by a duly appointed and authorised
committee of the Board of Directors on 28 February 2006 and were signed on its
behalf by:
Geoff Unwin Director
David Levin Director
Consolidated cash flow statement
for the year ended 31 December 2005
As restated
2005 2004
Notes £m £m
Cash flows from operating activities
Reconciliation of profit to operating cash
flows
Profit for the period 477.5 237.6
Add back:
Taxation 25.8 (92.3)
Depreciation 10.4 12.9
Amortisation 11.4 3.1
Interest income (28.2) (26.5)
Interest expense 15.5 14.1
Net financing costs - pension schemes 2.5 3.4
Net financing costs - other than interest 19.1 -
Share in profits from associates and joint (13.2) (5.0)
ventures
Income from fixed asset investments (3.0) (5.2)
Non-recurring items (379.8) (7.2)
138.0 134.9
Payments against provisions (19.9) (16.1)
Additional pension contributions (17.2) (7.0)
Other non-cash items 4.1 (0.6)
(Increase)/decrease in inventories (6.2) 2.4
(Increase)/decrease in trade and other (17.1) (3.7)
receivables
Increase/(decrease) in trade and other 18.4 (2.4)
payables
Cash generated from operations 100.1 107.5
Interest received 19.9 27.4
Interest paid (16.4) (19.6)
Taxation paid (17.4) (10.0)
Dividend received from joint ventures and
associates 2.8 4.8
Income from investments 3.0 4.8
Net cash flows from operating activities 92.0 114.9
Cash flows from investing activities
Acquisition of interests in subsidiaries, net
of cash acquired (115.6) (190.2)
Sale of discontinued operations 437.4 -
Purchase of property and equipment (9.7) (8.5)
Proceeds on sale of property and equipment 6.3 1.9
Sale of interests in associated companies and
joint ventures 300.3 (1.7)
Proceeds from sale of investments 42.8 67.1
Net cash flows from investing activities 661.5 (131.4)
Cash flows from financing activities
Proceeds from issuance of ordinary share 18.2 1.5
capital
Return of capital to shareholders (including (16.8) (1.9)
costs)
Dividend paid to shareholders (337.8) (31.2)
Dividend paid to minority interests (1.9) -
Investment in own shares - ESOP (7.4) (4.1)
Decrease in borrowings - (98.9)
Repurchase of bonds (273.2) -
Net cash flows from financing activities (618.9) (134.6)
Net decrease in cash and cash equivalents 134.6 (151.1)
Net foreign exchange difference 11.4 (8.0)
9 Cash and cash equivalents at 1 January 336.6 495.7
9 Cash and cash equivalents at 31 December 482.6 336.6
Consolidated statement of group total recognised income and expense
for the year ended 31 December 2005
2005 2004
£m £m
Profit for the financial year 477.5 237.6
Currency translation differences on foreign
operations:
Group (4.7) 2.6
Joint ventures 0.8 (0.5)
Minority interests 0.3 (0.2)
Actuarial gain/(loss) recognised in the pension 25.0 (14.9)
schemes
Other recognised losses for the year 21.4 (13.0)
Total recognised income 498.9 224.6
Attributable to:
Equity shareholders 496.7 223.0
Minority interests 2.2 1.6
498.9 224.6
Effects of changes in accounting policy
Effect of adopting financial instruments standards (41.0) -
IAS 32 & 39 (refer to note 16)
Equity shareholders (41.0) -
Minority shareholders - -
(41.0) -
Notes to the consolidated financial statements at 31 December 2005
1. General information
The figures and financial information for the year ended 31
December 2005 do not constitute the statutory financial statements for that
year. Those financial statements have not yet been delivered to the Registrar,
but include the auditors' report which was unqualified and did not contain a
statement under Section 237 (2) or (3) of the Companies Act 1985. The figures
and financial information for the year ended 31 December 2004 included in the
preliminary announcement do not constitute the statutory financial statements
for that year. Those financial statements have been delivered to the Registrar
and included the auditors' report which was unqualified and did not contain a
statement under Section 237 (2) or (3) of the Companies Act 1985.
This preliminary announcement was approved by a duly appointed and
authorised committee of the Board of Directors on 28 February 2006.
2. Significant accounting policies
Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted in the European Union and as
applied in accordance with the provisions of the Companies Act 1985. The
disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS
are given in note 16.
The consolidated financial statements have been prepared on a historical cost
basis, except for derivative financial instruments that have been measured at
fair value.
Changes in accounting policies
In 2005 the Group has adopted IFRS for the first time. Previously the Group
reported under UK generally accepted accounting principles ("UK GAAP").
The Group has applied IFRS 1 First-time Adoption of International Financial
Reporting and Accounting Standards to provide a starting point for reporting
under IFRS. The date of transition to IFRS is 1 January 2004 and all
information in these financial statements has been restated to reflect the
Group's adoption of IFRS.
The adoption of IFRS has resulted in the following principal changes to the
Group's accounting policies:
IFRS 2 Share-based Payment'
IFRS 2 Share-based Payment' requires an expense to be recognised where the
Group buys goods or services in exchange for shares or rights over shares, or
in exchange for other assets equivalent in value to a given number of shares
or rights over shares. The main impact of IFRS 2 on the Group is the expensing
of employees' and directors' share options and other share-based incentives by
using an option-pricing model to calculate the fair value at date of grant.
IFRS 3 Business Combinations', IAS 36 Impairment of Assets' and IAS 38
Intangible Assets'
The group has adopted the exemption in IFRS 1 to apply IFRS 3 only to
acquisitions after 31 March 2004.
On acquisition, the Group measures the identifiable assets and liabilities of
acquired entities at their fair values at the acquisition date. This includes
intangible assets which would not be capitalised had they been internally
developed. Under IFRS, more intangible assets will be recognised separately
from goodwill.
The adoption of IFRS has resulted in the Group ceasing goodwill amortisation
from 1 January 2004 and instead testing for impairment at the level of the
cash generating unit or group of cash generating units to which goodwill has
been allocated, annually and whenever there are indications of impairment.
The useful lives of intangible assets other than goodwill are assessed at the
individual asset level. Where an intangible asset has a finite life, it is
amortised over its useful life. Amortisation periods and methods for
intangible assets with finite useful lives are reviewed annually.
The Group has reassessed the useful lives of its intangible assets in
accordance with the provisions of IAS 38. No adjustment resulted from this
reassessment.
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations'
IFRS 5 requires an item to be classified as held for sale if its carrying
value will be recovered principally through a sale transaction rather than
continuing use. In addition, a component of an entity is classified as
discontinued when the criteria to be classified as held for sale have been met
or it has been disposed of and it represents a separate major line of business
or geographical area of operations, is part of a single co-ordinated major
line of business or geographical area of operations or is a subsidiary
acquired exclusively with a view to resale.
The adoption of IFRS 5 has resulted in the profit from discontinued operations
being disclosed as a single line on the face of the income statement
comprising the profit after tax for the discontinued operations prior to
disposal along with the related profit on disposal. The comparative period has
been restated accordingly.
Notes to the consolidated financial statements at 31 December 2005
2. Significant accounting policies (continued)
The group has adopted IFRS 5 from 1 January 2004. This resulted in £5.1
million of tangible assets reclassified as held for sale as at 31 December
2004.
IAS 18 Revenue' and IAS 11 Construction Contracts'
Under IAS 18, the recognition of revenue on service contracts should follow
the principles in IAS 11.
Under IAS 11, the stage of completion method must be adopted for the
recognition of revenue and expenditure on contracts where as under UK GAAP
recognition on a completed project basis is acceptable.
IAS 12 Income Taxes'
Under IFRS, the basis for recording deferred tax moves to a balance sheet
liability method. Under IAS 12, a deferred tax liability is recognised on the
difference between the balance sheet amount of intangible assets acquired as
part of the Group's acquisitions and the tax base of the intangible assets.
IAS 32 Financial Instruments: Disclosure and Presentation' and IAS 39
Financial Instruments: Recognition and Measurement'
IAS 39 Financial Instruments: Recognition and Measurement' requires that
assets and liabilities are all classified into one of five categories, which
dictates the accounting treatment. Items are measured either at fair value, or
at amortised cost using the effective interest rate method.
The group has adopted the exemption to implement IAS 32 and 39 from 1 January
2005, and has not restated its 2004 results.
The main impact of IAS 32 and IAS 39 on the Group is to record the movement in
fair values through the income statement for all derivatives. The embedded
derivatives within the credit link notes and the convertible bond are both
required to be at fair value on transition.
IAS 39 specifies three types of hedging relationships: fair value hedges, cash
flow hedges, and hedges of a net investment in a foreign operation. IAS 39
requires all hedges to be formally documented on transition, explaining the
hedging relationship and the objectives and strategy for undertaking the
hedge. The hedge must be expected to be highly effective, and effectiveness
must be able to be reliably measured. The Group is applying hedge accounting
for its hedges that qualify under IAS 39 on transition. For qualifying cash
flow hedges and hedges of a net investment, the change in the fair value of
the hedging instrument is deferred in equity to the extent the hedge is
effective. Accumulated fair value changes from qualifying hedges are released
from equity to the profit and loss account in the period when the hedged cash
flow effects the profit and loss account (for cash flow hedges) or on disposal
of the foreign operation (for hedges of net investments). For qualifying fair
value hedges the carrying value of recognised assets and liabilities that are
hedged items are otherwise carried at cost and adjusted to record changes in
fair values attributable to the risks that are being hedged. All gains or
losses on the hedging instrument are recognised immediately in the profit and
loss account.
IAS 32 Financial Instruments: Disclosure and Presentation' requires
convertible bonds denominated in a foreign currency to be split into the debt
component and the component representing the embedded derivatives in the bond.
IAS 39 requires the debt component to be measured at amortised cost, and the
embedded derivatives to be measured at fair value with movements reported in
the income statement. The Group's convertible bond is denominated in US
Dollars, so must be split into its relevant debt and derivative components and
measured accordingly.
The impact of accounting for the convertible bond in this way, in accordance
with current IFRS interpretation, from 1 January 2005 compared to UK GAAP is
to:
- increase finance cost - other than interest in the income statement;
- reduce the debt component of the bonds; and
- introduce volatility to the income statement through the change in fair
value of the embedded derivatives.
The Group has adopted the amended versions of IAS 17 Leases' and IAS 19
Employee Benefits', revised in 2004. The Group has decided not to adopt IFRS
7 Financial Instruments: Disclosure' early.
At the date of authorisation of these financial statements, the following
standards and interpretations, which have not been applied in these financial
statements but would be relevant for the group, were in issue but were not yet
effective. The date by which application is required is given in brackets.
IFRS 7 Financial Instruments: Disclosures, and the related amendment to IAS 1
on capital disclosures (1 January 2006)
IFRIC 4 Determining whether an Arrangement contains a Lease (1 January 2006)
The directors anticipate that the adoption of these standards and
interpretations in future periods will have no material impact on the
financial statements of the group except for additional disclosures on capital
and financial instruments when the relevant standards come into effect for the
periods commencing on or after 1 January 2006.
Notes to the consolidated financial statements at 31 December 2005
3. Segment information
Business segments
At 31 December 2005, the group is organised into five main business segments -
CMP Media, CMPMedica, CMP Asia, CMP Information, and News Distribution. These
segments are the basis on which the group reports its primary segment
information.
CMP Media's, CMPMedica's, CMP Asia's and CMP Information's main activities are
the production of magazines, trade press, directories, events and websites.
The News Distribution segment operates in the distribution, targeting and
evaluation of company information.
The market research business is included in discontinued operations as it was
disposed of on 1 June 2005. The main activities of this segment were
syndicated and custom market research. The motoring titles within CMP
Information are also included in discontinued operations, as they were
disposed of on 16 September 2005.
The following tables represent the revenue and profit information and certain
asset and liability information for the Group's business segments for the year
ended 31 December 2005.
Year ended 31 December 2005
Revenue Revenue Profit/(loss) Share of
from from from results
external other Total operating from equity Segment
customers segments Revenue activities investments result
£m £m £m £m £m £m
Continuing operations
Segments
CMP Media 225.9 - 225.9 16.0 0.9 16.9
CMPMedica 106.9 - 106.9 9.4 (0.3) 9.1
CMP Asia 61.9 0.3 62.2 17.0 - 17.0
CMP Information 177.0 - 177.0 26.0 - 26.0
News distribution 104.1 - 104.1 14.2 2.4 16.6
Corporate operations** - - (4.9) 9.7 4.8
675.8 0.3 676.1 77.7 12.7 90.4
Non-recurring items*** - - - - - 150.7
EBIT - - - - - 241.1
Discontinued operations
(note 14)
Market research 76.8 0.1 76.9 4.4 - 4.4
CMP Information 23.0 - 23.0 0.4 - 0.4
99.8 0.1 99.9 4.8 - 4.8
Eliminations - (0.4) (0.4) - - -
775.6 - 775.6 82.5 12.7 245.9
Continuing operations
Finance income/(cost)
Interest income 28.2
Interest cost (15.5)
Financing income - other 8.4
than interest
Financing cost - other than (27.5)
interest
Financing cost - pension (2.5)
schemes
(8.9)
Taxation (24.8)
Discontinued operations
Taxation (1.0)
Non-recurring items (note 266.3
14)
Profit for the year from
continuing and discontinued
operations 477.5
*Adjusted group operating profit represents group operating profit excluding
non-recurring items, amortisation of intangible assets, and including
operating profit from discontinued operations.
**Corporate operations comprises net central operating costs, together with
those equity accounted investments which do not form part of one of the
group's operating divisions.
***Non-recurring items include the profit on sale of businesses and equity
accounted investments during the year.
Notes to the consolidated financial statements at 31 December 2005
3. Segment information (continued)
Share of tax on
profit from Non-recurring Amortisation
*Adjusted equity items charged
operating accounted to operating of Segment
profit investments profit intangibles result
Continuing £m £m £m £m £m
operations
Segments
CMP Media 24.9 - (7.2) (0.8) 16.9
CMPMedica 19.4 - (2.0) (8.3) 9.1
CMP Asia 17.5 - (0.4) (0.1) 17.0
CMP Information 43.0 - (14.8) (2.2) 26.0
News distribution 29.2 (1.4) (11.2) - 16.6
Corporate 3.1 3.3 (1.6) - 4.8
operations**
137.1 1.9 (37.2) (11.4) 90.4
Non-recurring - - - - 150.7
items
EBIT 137.1 1.9 (37.2) (11.4) 241.1
Discontinued
operations
Market research 4.4 - - - 4.4
CMP Information 0.4 - - - 0.4
4.8 - - - 4.8
141.9 1.9 (37.2) (11.4) 245.9
Share of
results from
equity
Equity Equity investments
Share of results investment: Investment: (pre
from equity interest and
investments Interest Tax tax)
£m £m £m £m
Continuing
operations
Segments
CMP Media 0.9 - - 0.9
CMPMedica (0.3) - - (0.3)
CMP Asia - - - -
CMP Information - - - -
News distribution 2.4 - (1.4) 3.8
Corporate 9.7 (6.9) 3.3 13.3
operations**
12.7 (6.9) 1.9 17.7
Discontinued
operations
Market research - - - -
CMP Information - - - -
- - - -
12.7 (6.9) 1.9 17.7
Notes to the consolidated financial statements at 31 December 2005
3. Segment information (continued)
Adjusted group
operating profit*
Share of results from Adjusted group
( before equity equity investments operating profit*
accounted (before tax and
investments) amortisation) as reported
£m £m £m
Continuing
operations
Segments
CMP Media 23.5 1.4 24.9
CMPMedica 19.7 (0.3) 19.4
CMP Asia 17.5 - 17.5
CMP Information 43.0 - 43.0
News distribution 25.4 3.8 29.2
Corporate (3.3) 6.4 3.1
operations**
125.8 11.3 137.1
Discontinued
operations
Market research 4.4 - 4.4
Corporate 0.4 - 0.4
operations**
4.8 - 4.8
130.6 11.3 141.9
*Adjusted group operating profit represents group operating profit excluding
non-recurring items, and amortisation of intangible assets, and including
operating profit from discontinued operations.
**Corporate operations comprises net central operating costs, together with
those equity accounted investments which do no form part of one of the group's
operating divisions.
Segment Investments Total Segment Total Net
Assets in associates Liabilities Assets
and joint
ventures
£m £m £m £m £m
Continuing operations
Segments
CMP Media 276.2 5.6 281.8 (68.9) 212.9
CMPMedica 302.7 1.4 304.1 (59.5) 244.6
CMP Asia 45.6 - 45.6 (31.9) 13.7
CMP Information 240.2 - 240.2 (103.5) 136.7
News distribution 24.6 5.3 29.9 (50.7) (20.8)
Corporate operations** 497.1 9.9 507.0 (406.3) 100.7
1,386.4 22.2 1,408.6 (720.8) 687.8
Discontinued operations
Market research - - - - -
Corporate operations** - - - - -
- - - - -
Unallocated assets and - - - (243.4) (243.4)
liabilities
1,386.4 22.2 1,408.6 (964.2) 444.4
Notes to the consolidated financial statements at 31 December 2005
3. Segment information (continued)
Capital Capital Depreciation Impairment Other
expenditure expenditure losses
(acquisition of (tangible non-cash
businesses) assets) expenses
£m £m £m £m £m
Continuing operations
Segments
CMP Media 27.6 2.7 2.4 - 1.1
CMPMedica 23.3 1.0 1.0 - 0.2
CMP Asia 4.2 0.3 0.2 - 0.5
CMP Information 51.3 2.2 1.9 - 1.2
News distribution - 1.2 2.5 - 0.7
Corporate operations** - 0.8 0.5 - 0.1
106.4 8.2 8.5 - 3.8
Discontinued operations
Market research 9.2 1.5 1.2 - 0.3
CMP Information - - 0.7 - -
9.2 1.5 1.9 - 0.3
115.6 9.7 10.4 - 4.1
Geographical segments
Year Ended 31 December 2005
Segment Segment Capital Capital
revenue expenditure expenditure
assets (acquisition (tangible
of assets)
businesses)
£m £m £m £m
Segments
Continuing operations
United Kingdom 163.0 727.9 38.4 3.1
North America 317.4 321.1 40.5 3.9
Europe and Middle East 109.2 312.1 23.3 1.0
Pacific 86.2 47.4 4.2 0.3
675.8 1,408.6 106.4 8.2
Discontinued operations
United Kingdom 39.9 - - 0.9
North America 44.4 - 9.2 0.2
Europe and Middle East 15.2 - - 0.4
Pacific 0.3 - - -
99.8 - 9.2 1.5
775.6 1,408.6 115.6 9.7
Notes to the consolidated financial statements at 31 December 2005
Year ended 31 December 2004
Revenue Revenue Profit/(loss) Share of
from from from results
external other Total operating from equity Segment
customers segments Revenue activities investments result
£m £m £m £m £m £m
Continuing operations
Segments
CMP Media 220.3 - 220.3 25.9 1.2 27.1
CMP Medica 29.8 - 29.8 0.3 - 0.3
CMP Asia 51.4 0.3 51.7 14.0 - 14.0
CMP Information 161.0 - 161.0 38.5 - 38.5
News distribution 94.8 - 94.8 20.4 2.3 22.7
Corporate operations** - - - (1.3) 2.5 1.2
557.3 0.3 557.6 97.8 6.0 103.8
Non-recurring items - - - - - (11.7)
EBIT 557.3 0.3 557.6 97.8 6.0 92.1
Discontinued operations
Market research 222.4 0.1 222.5 20.3 - 20.3
CMP Information 35.8 - 35.8 4.9 - 4.9
258.2 0.1 258.3 25.2 - 25.2
Eliminations - (0.4) (0.4) - - -
815.5 - 815.5 123.0 6.0 117.3
Continuing operations
Finance income/(cost)
Interest income 26.5
Interest cost (14.1)
Financing cost - pension (3.4)
schemes
9.0
Taxation (23.1)
Non-recurring taxation credit 121.0
Discontinued operations
Interest Income 0.1
Taxation (5.6)
Non-recurring items 18.9
Net profit for the year 237.6
Share of
tax on
*Adjusted profit from Non-recurring Amortisation
group equity items charged
operating accounted to operating of Segment
profit investments profit intangibles result
Continuing operations £m £m £m £m £m
Segments
CMP Media 27.1 - - - 27.1
CMPMedica 3.4 - - (3.1) 0.3
CMP Asia 14.0 - - - 14.0
CMP Information 38.5 - - - 38.5
News distribution 23.9 (1.2) - - 22.7
Corporate operations** 0.8 0.4 - - 1.2
107.7 (0.8) - (3.1) 103.8
Non-recurring items - - - - (11.7)
EBIT - - - - 92.1
Discontinued operations
Market research 20.3 - - - 20.3
CMP Information 4.9 - - - 4.9
25.2 - - - 25.2
132.9 (0.8) - (3.1) 117.3
Notes to the consolidated financial statements at 31 December 2005
3. Segment information (continued)
Share of
results
from equity
Share of Equity Equity investments
results investment: Investment: (pre
from equity interest
investments Interest Tax and tax)
£m £m £m £m
Continuing operations
Segments
CMP Media 1.2 - - 1.2
CMPMedica - - - -
CMP Asia - - - -
CMP Information - - - -
News distribution 2.3 - (1.2) 3.5
Corporate operations** 2.5 (10.3) 0.4 12.4
6.0 (10.3) (0.8) 17.1
Discontinued operations
Market research - - - -
Corporate operations** - - - -
- - - -
6.0 (10.3) (0.8) 17.1
Adjusted
group
operating Adjusted
profit* Share of group
results operating
(before from equity profit*
equity nvestments
accounted (before as
investments) tax) reported
£m £m £m
Continuing operations
Segments
CMP Media 25.9 1.2 27.1
CMPMedica 3.4 - 3.4
CMP Asia 14.0 - 14.0
CMP Information 38.5 - 38.5
News distribution 19.2 3.5 22.7
Corporate operations** (0.1) 2.1 2.0
100.9 6.8 107.7
Discontinued operations
Market research 20.3 - 20.3
Corporate operations** 4.9 - 4.9
25.2 - 25.2
126.1 6.8 132.9
*Adjusted group operating profit represents group operating profit excluding
non-recurring items, and amortisation of intangible assets, and including
operating profit from discontinued operations.
**Corporate operations comprises net central operating costs, together with
those equity accounted investments which do no form part of one of the group's
operating divisions.
Notes to the consolidated financial statements at 31 December 2005
3. Segment information (continued)
Segment Investments Total Segment Total Net
Assets in Liabilities Assets
associates
& JVs
£m £m £m £m £m
Continuing operations
Segments
CMP Media 212.9 4.7 217.6 (43.5) 174.1
CMPMedica 251.9 1.7 253.6 (25.0) 228.6
CMP Asia 34.7 - 34.7 (23.5) 11.2
CMP Information 198.3 - 198.3 (75.7) 122.6
News distribution 25.5 4.9 30.4 (12.2) 18.2
Corporate operations** 481.6 42.9 524.5 (652.0) (127.5)
1,204.9 54.2 1,259.1 (831.9) 427.2
Discontinued operations
Market research 178.8 - 178.8 (60.3) 118.5
CMP Information 8.9 - 8.9 - 8.9
187.7 - 187.7 (60.3) 127.4
Unallocated assets and liabilities - - - (224.8) (224.8)
1,392.6 54.2 1,446.8 (1,117.0) 329.8
Capital Other
expenditure Capital
(acquisition expenditure non-cash
of (tangible Impairment
businesses) assets) Depreciation losses expenses
£m £m £m £m £m
Continuing operations
Segments
CMP Media - 1.5 2.3 - 0.6
CMPMedica 199.3 0.4 0.4 - 0.1
CMP Asia - 0.2 0.1 - 0.3
CMP Information 0.2 2.3 3.1 - 0.6
News distribution - 1.1 3.2 - 0.4
Corporate operations** - 0.4 0.7 - (2.6)
199.5 5.9 9.8 - (0.6)
Discontinued operations
Market research 4.8 2.6 3.1 - 0.4
CMP Information - - - - -
4.8 2.6 3.1 - 0.4
204.3 8.5 12.9 - (0.2)
Notes to the consolidated financial statements at 31 December 2005
3. Segment information (continued)
Geographical segments
The group's five business segments operate in four main geographical areas.
The geographical segment analysis is based on the location of assets.
Geographical segment analysis based on the location of customers or markets
would not be materially different. The following table provides an analysis of
the group's revenue, assets, and capital expenditure by the four geographical
regions.
Segment Segment Capital Capital
revenue expenditure expenditure
assets (acquisition (tangible
of assets)
businesses)
£m £m £m £m
Segments
Continuing operations
United Kingdom 154.1 692.8 0.2 2.8
North America 302.8 260.2 - 2.5
Europe and Middle East 37.3 271.6 199.3 0.4
Pacific 63.1 34.5 - 0.2
557.3 1,259.1 199.5 5.9
Discontinued operations
United Kingdom 94.7 31.0 - 1.0
North America 121.6 114.6 4.8 -
Europe and Middle East 40.8 42.1 - 1.6
Pacific 1.1 - - -
258.2 187.7 4.8 2.6
815.5 1,446.8 204.3 8.5
The amounts shown against CMP Media, CMP Asia and CMP Information for 31
December 2004 in the tables above have been restated to reflect the
intra-group transfer of United Entertainment Media in the US from CMP
Information to CMP Media, the transfer of CMP Princeton from CMP Asia to CMP
Media, and the transfer of United Advertising Publications to CMP Information.
For the year ended 31 December 2004, £21.0 million of revenue and £3.4 million
of operating profit for United Entertainment Media was transferred from CMP
Information to CMP Media, £5.5 million of revenue and £1.2 million of
operating profit for CMP Princeton was transferred from CMP Asia to CMP Media,
and £58.5 million of revenue and £13.2 million of operating profit for United
Advertising Publications was included in CMP Information.
Notes to the consolidated financial statements at 31 December 2005
4. Non-recurring items
2005 2004
£m £m
Charged to operating profit
Vacant property costs (8.8) -
Redundancy (8.6) -
Re-engineering of business processes (10.3) -
Restructuring and business reorganisation costs (7.8) -
Integration of acquired businesses (1.7) -
Total non-recurring reorganisation and restructuring costs (37.2) -
Share of results from associates disposed of during the year 8.5 -
Total charged to operating profit (28.7) -
Credited/(charged) to EBIT
Profit on disposal of equity accounted investments 150.7 -
Amounts written off investments - (11.7)
Total credited/(charged) to EBIT 122.0 (11.7)
Charged to profit before tax
Bond buybacks (13.7) -
Total credited/(charged) to profit before tax 108.3 (11.7)
(Charged)/credited to profit after tax
Tax on disposal of equity accounted investments (1.2) -
Exceptional taxation credit - 121.0
Total credited to profit after tax 107.1 109.3
Credited to discontinued operations
Profit on disposal of discontinued operations (note 14) 266.3 -
Profit from discontinued operations (note 14) 3.8 -
Additional profit on prior year disposals (note 14) - 18.9
Profit for the year after discontinued operations 377.2 128.2
During 2005, the group implemented a number of restructuring and
reorganisation projects. The objectives of these projects are to simplify the
group structure following the disposals of businesses in 2005, to achieve
greater geographical alignment of our publishing divisions and to achieve
greater customer and product focus within our operating businesses whilst
delivering lower operating costs.
The total cost of the projects is £37.2 million, which has been charged
separately as a one off cost in the profit and loss account for the year ended
31 December 2005. As indicated in the analysis above, the nature of the costs
incurred is principally redundancy, vacant space provisions arising from
relocation and consolidation, the re-engineering of business processes and the
costs of restructuring and business reorganisation. In addition, acquisition
integration costs of £1.6 million were incurred during the year. Of the amount
charged, £7.2 million was incurred during 2005. With the exception of amounts
relating to vacant property, which will be incurred across the remainder of
the unexpired lease terms, the balance of the costs is expected to be paid in
2006.
In 2004, the group had written down the carrying value of certain fixed asset
investments by £11.7 million to reflect their expected realisable value. The
group also resolved a number of outstanding items as a consequence of which
there was a net exceptional tax credit of £121 million.
Notes to the consolidated financial statements at 31 December 2005
5. Finance income/(cost)
Recurring Non-recurring Total
2005 2005 2005 2004
£m £m £m £m
Interest income
Cash and cash equivalents 28.2 - 28.2 26.5
Interest cost
Borrowings and loans (14.0) - (14.0) (11.8)
Other (1.5) - (1.5) (2.3)
(15.5) - (15.5) (14.1)
Financing income - other than interest
Net foreign exchange gain (a) 8.4 - 8.4 -
8.4 - 8.4 -
Financing cost - other than interest
Fair value loss on embedded derivative (b) (9.0) (2.2) (11.2)
Buyback of bonds (c) - (11.5) (11.5) -
Convertible bond (d) (4.8) - (4.8) -
(13.8) (13.7) (27.5) -
Financing cost - pension schemes (2.5) - (2.5) (3.4)
Net finance income/(cost) 4.8 (13.7) (8.9) 9.0
(a) Foreign exchange gain on US Dollar denominated balances held in
UK accounts. The majority of this gain arose from the strengthening of the US
Dollar in the first half of 2005.
(b) Accounting standards determine that UBM's US Dollar convertible bond
contains an embedded derivative, and this option is carried at fair value with
changes taken to the income statement. This charge is a result of the increase
in UBM's share price. The non-recurring fair value loss on the embedded
derivative of £2.2 million relates to the portion of the bond that was
repurchased during the year.
(c) In the second half of 2005, UBM repurchased $234.6 million of the
principal of the US Dollar convertible bond, and $179.3 million of the
principal of the US dollar fixed rate unsecured notes. This charge reflects
the premium paid and fees relating to these repurchases, and unamortised costs
being written off.
(d) The convertible bond is separated into fixed rate debt and an equity
derivative. This charge reflects the accretion of the debt to the value at
maturity.
6. Taxation
Major components of income tax expense for the year ended 31 December 2005
are:
2005 2004
£m £m
Consolidated income statement
Current tax:
Current tax charge 29.0 29.2
Deferred tax:
Origination and reversal of temporary differences (3.2) (0.5)
Income tax expense in the consolidated income statement 25.8 28.7
Less: income tax expense for discontinued operations (1.0) (5.6)
Income tax expense for continuing operations 24.8 23.1
Notes to the consolidated financial statements at 31 December 2005
6. Taxation (continued)
Factors affecting tax charge for the year
A reconciliation of income tax expense applicable to accounting profit before
tax at the statutory tax rate to tax expense for the year ended 31 December
2005 is as follows:
2005 2004
£m £m
Profit before tax from continuing operations 232.2 101.0
Profit before tax attributable to discontinued operations 271.1 44.2
(note 14)
Profit before tax 503.3 145.2
Profit before tax multiplied by standard rate of corporation 151.0 43.6
tax in UK of 30%
Effect of:
Expenses not deductible for tax purposes 10.6 5.2
Tax effect of items not recognised in consolidated financial (21.4) (19.0)
statements
Origination and reversal of temporary differences not 13.3 3.2
recognised
Higher tax rates on overseas earnings 5.1 4.3
Additional profit relating to prior year disposals not taxable - (5.7)
Foreign exchange gains (2.5) -
Share of results from associates and joint ventures (after (4.0) (1.8)
tax)
Profit on sale of discontinued operations and equity accounted (124.5) -
investments
Other (1.8) (1.1)
25.8 28.7
Income tax expense reported in the consolidated income 24.8 23.1
statement
Income tax attributable to discontinued operations (note 14) 1.0 5.6
25.8 28.7
Deferred income tax
Deferred income tax at 31 December relates to the following:
Consolidated balance Consolidated income
sheet statement
2005 2004 2005 2004
£m £m £m £m
Deferred tax liability
Fair value adjustments on acquisitions 22.6 15.4 (3.3) (0.9)
Other temporary differences 1.4 1.4 0.1 0.4
Deferred income tax income 24.0 16.8 (3.2) (0.5)
At 31 December 2005, there was no recognised deferred tax liability for taxes
that would be payable on the unremitted earnings of certain of the group's
subsidiaries as the group has determined that undistributed profits of its
subsidiaries will not be distributed in the foreseeable future.
The temporary differences associated with investments in subsidiaries for
which a deferred tax liability has not been recognised amount in aggregate to
£1.8 billion (2004: £1.6 billion).
There are no income tax consequences to the group attaching to the payment of
dividends by the Company to its shareholders.
2005 2004
£m £m
The movement in the net deferred tax liability was as follows:
Net liability at 1 January 16.8 -
Acquisition of subsidiaries (note 13) 10.7 16.3
Amounts charged to net profit (3.2) (0.5)
Exchange differences (0.3) 1.0
Net liability at 31 December 24.0 16.8
The group has unrecognised deferred tax assets of £55.2 million relating to
deductible temporary differences and £49.6 million relating to unused tax
losses (2004: £47.1 million and £38.5 million respectively). No deferred tax
asset has been recognised in respect of these amounts due to the
unpredictability of future taxable profit streams.
Notes to the consolidated financial statements at 31 December 2005
7. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the
year attributable to ordinary equity shareholders by the weighted average
number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit
attributable to ordinary shareholders (after deducting interest on the
convertible bond) by the weighted average number of ordinary shares
outstanding during the year (adjusted for the effects of dilutive options and
dilutive convertible bond).
Adjusted earnings per share is calculated on the net profit for the year
attributable to ordinary equity shareholders, less non-recurring items and
deferred tax, divided by the weighted average number of ordinary shares
outstanding during the year. Non-recurring items and deferred tax are excluded
from this calculation, as due to their nature and the infrequency of the
events giving rise to them, separate presentation allows shareholders to
understand better the elements of financial performance for the year, so as to
facilitate comparison with prior periods and to assess better the trends of
financial performance.
The following reflects the income and share data used in the total operations
basic and diluted earnings per share computations:
2005 2005 2005 2004 2004 2004
Weighted Weighted
Average Earnings Average Earnings
no. no.
Earnings of shares per share Earnings of shares per share
From continuing and discontinued £m million pence £m million pence
operations
Adjusted group operating profit 141.9 132.9
Net interest income 12.7 12.4
Financing cost - pension schemes (2.5) (3.4)
Adjusted profit before tax 152.1 141.9
Taxation (26.0) (30.3)
Minority interests (1.9) (1.8)
B share dividend (0.4) (0.4)
Adjusted earnings per share 123.8 302.5 40.9 109.4 334.4 32.7
Adjustments
Amortisation of intangible assets (11.4) (3.8) (3.1) (0.9)
Deferred tax on amortisation of 3.3 1.1 0.9 0.3
intangible assets
Non-recurring items 379.8 125.6 128.2 38.3
Taxation relating to (1.2) (0.4) - -
non-recurring items
Net financing income - other than (19.1) (6.3) - -
interest
Basic earnings per share 475.2 302.5 157.1 235.4 334.4 70.4
Dilution
Options - 3.3 (1.6) - 4.6 (1.0)
Convertible bond 19.1 40.4 (12.7) 3.5 47.8 (7.6)
Diluted earnings per share 494.3 346.2 142.8 238.9 386.8 61.8
From continuing operations
Adjusted group operating profit 141.9 132.9
Operating profit from (4.8) (25.3)
discontinued operations
Net interest income 12.7 12.4
Financing cost - pension schemes (2.5) (3.4)
Adjusted profit before tax 147.3 116.6
Taxation (25.0) (24.7)
Minority interests (1.9) (1.8)
B share dividend (0.4) (0.4)
Adjusted earnings per share 120.0 302.5 40.0 89.7 334.4 26.8
Adjustments
Amortisation of intangible assets (11.4) (3.8) (3.1) (0.9)
Deferred tax on amortisation of 3.3 1.1 0.9 0.3
intangible assets
Non-recurring items 113.5 37.2 109.3 32.6
Taxation relating to (1.2) (0.4) - -
non-recurring items
Net financing income - other than (19.1) (6.3) - -
interest
Basic earnings per share 205.1 302.5 67.8 196.8 334.4 58.8
Dilution
Options - 3.3 (0.7) - 4.6 (0.8)
Convertible bond 19.1 40.4 (2.4) 3.5 47.8 (6.2)
Diluted earnings per share 224.2 346.2 64.7 200.3 386.8 51.8
Notes to the consolidated financial statements at 31 December 2005
7. Earnings per share (continued)
The group has two categories of dilutive potential ordinary shares: those
share options granted to employees where the exercise price is less than the
average market price of the company's ordinary shares during the year, and
shares attributable to convertible debt. The impact of dilutive securities in
2005 would be to increase the profit by £19.1 million (2004: £3.5 million) for
convertible debt and to increase weighted average shares by 3.3 million shares
(2004: 4.6 million shares) for employee share options and 40.4 million shares
(2004: 47.8 million shares) for convertible debt.
The weighted average number of shares excludes ordinary shares held by the
ESOP and the QUEST. The weighted average number of shares was affected by the
share consolidation on 20 June 2005, where 17 existing ordinary shares were
converted to 14 new ordinary shares (refer to note 10).
8. Dividends
2005 2004
£m £m
Declared and paid during the year
Equity dividends on ordinary shares
Final dividend for 2004 of 8.37p (2003: 5.7p) 28.1 19.2
Special dividend for 2005 of 89.0p 298.3 -
Interim dividend for 2005 of 4.00p (2004: 3.63p) 11.0 12.1
Equity dividends - B shares 0.4 0.4
337.8 31.7
Proposed for approval at 2006 Annual General Meeting (not recognised as
a liability at 31 December)
Equity dividends on ordinary shares
Final dividend for 2005 of 11.0 p (2004: 8.37p) 30.6 28.1
The proposed final dividend is subject to approval by shareholders at the
Annual General Meeting and has not been included as a liability in these
financial statements.
The B shares have a fixed coupon, and the dividends of £0.4 million owing as
at 31 December 2005 have been accrued for accordingly.
9. Cash and cash equivalents
2005 2004
£m £m
Cash at bank and in hand 99.0 147.2
Short term liquid funds 0.6 192.2
Current asset investments 389.8 -
489.4 339.4
The effective interest rate on the short-term liquid funds range between 0%
and 5% for 2005 and 2004, and these liquid funds have an average maturity of
less than 3 months. The carrying amount of these assets approximates to fair
value.
For the purposes of the consolidated cash flow statement, cash and cash
equivalents comprise the following at December:
2005 2004
£m £m
Cash at bank and in hand 99.0 147.2
Short term liquid funds 0.6 192.2
Current asset investments 389.8 -
489.4 339.4
Bank overdrafts (6.8) (2.8)
482.6 336.6
Notes to the consolidated financial statements at 31 December 2005
10. Share capital
2005 2004
£m £m
Authorised
400,936,636 (2004: 486,851,630) Ordinary shares of 30 and 5/14 121.7 121.7
pence each
375,417,690 (2004: 375,417,690) B shares of 8 and 23/44 pence each 32.0 32.0
153.7 153.7
Ordinary Ordinary B B
shares Shares Shares Shares Total
Number £m Number £m £m
Issued and fully paid
At 1 January 2005 336,185,328 84.1 5,446,789 0.4 84.5
Allocated in respect of share
option 1,996,673 0.5 - - 0.5
schemes and other entitlements
Shares repurchased and cancelled (250,000) (0.1) - - (0.1)
At 20 June 2005 (Pre-share 337,932,001 84.5 5,446,789 0.4 84.9
consolidation)
Share consolidation (59,635,059) - - - -
B shares purchased by the - - (615,866) - -
company
Shares repurchased and cancelled (2,760,000) (0.8) - - (0.8)
Allocated in respect of share
option 2,685,178 0.8 - - 0.8
schemes and other entitlements
At 31 December 2005 278,222,120 84.5 4,830,923 0.4 84.9
The return of capital to shareholders undertaken in 2001 took the form of a
subdivision and consolidation of the existing United ordinary shares. On 23
April 2001, each of the existing 507,901,885 ordinary shares of 25 pence then
in issue were sub-divided into one share of 8 23/44 pence (B Shares) and one
share of 16 21/44 pence and immediately following such sub-division every
issued share of 16 21/44 pence was sub-divided into 29 shares of 25/44 pence.
Every 44 shares of 25/44 pence each resulting from such sub-division were then
consolidated into one ordinary share of 25 pence. The subdivision created a
class of B shares with a total value of approximately £1.25 billion. UK
shareholders had the option to sell these shares for 245 pence per share, to
receive a single dividend of 245 pence per share, or to retain the B shares
and receive a continuing dividend linked to LIBOR. During the year ended 31
December 2004, 766,030 B shares were purchased by the company for
consideration of £1.8 million. Cumulatively to 31 December 2005, 370,586,767 B
shares have been purchased by the company for consideration of £907.9 million.
At 31 December 2005, 4,830,923 B shares remain in issue.
The B shares are irredeemable however, the company has the authority to
convert into ordinary shares, at its option, all remaining B shares in issue
after 23 April 2011, if the number is less than 125 million. The conversion
into ordinary shares will be based on the market price of ordinary shares at
the time of the conversion.
B shares
B shareholders are entitled to a non-cumulative preference dividend based on
the principal of 245 pence per share. The dividend is the lower of 25 per cent
per annum or 75 per cent of the 12 month LIBOR rate of 5.03% (2004: 4.77%). On
winding up, the B shareholders are entitled to 245 pence per share and the
relevant proportion of the dividends outstanding. B shareholders do not have
any voting entitlements except in a resolution relating to a winding up of the
company or if the B share dividend has been outstanding for more than six
months.
The group repurchased and cancelled 3,010,000 of its own ordinary shares
during the year at an average price of 508.3p. The total amount paid to
acquire the ordinary shares was £15.3 million, and £1.5 million was paid to
acquire B shares.
On 20 June 2005, in conjunction with the special dividend of 89.0 pence per
share, a share consolidation was carried out to convert 17 existing ordinary
shares to 14 new ordinary shares. The share consolidation converted the
337,932,001 existing issued and fully paid ordinary shares into 278,296,942
new issued and fully paid ordinary shares. The weighted average number of
shares used in the calculation of earnings per share reflects the share
consolidation (refer to note 7).
Notes to the consolidated financial statements at 31 December 2005
11. Share premium
2005 2004
£m £m
In issue at 1 January 310.8 309.4
Premium on shares issued, net of costs 16.9 1.4
In issue at 31 December 327.7 310.8
The company received £16.9 million (2004: £1.4 million) on the issue of shares
in respect of the exercise of options awarded under various share option
plans, of which £16.9 million (2004: £1.4 million) is payable by employees to
the group for the issue of these shares.
12. Other reserves
Capital Foreign Total
redemption currency other
Merger reserve translation ESOP Other reserves Retained Minority
reserve reserve Reserve reserve earnings interests
Total
£m £m £m £m £m £m £m £m £m
Balance at 1 January 31.3 42.9 - (7.8) 125.0 191.4 (461.6) 1.0 (269.2)
2004
Changes in accounting - - - - - - 15.2 0.3 15.5
policy relating to
first-time adoption of
IFRS (note 16)
Restated balance at 1 31.3 42.9 - (7.8) 125.0 191.4 (446.4) 1.3 (253.7)
January 2004
Total recognised - - 2.1 - - 2.1 220.9 1.6 224.6
income and expense for
the year
B shares purchased by - - - - - - (1.8) - (1.8)
the company
Share-based payment - - - - - - 1.5 - 1.5
Equity dividend - - - - - - (31.7) - (31.7)
Minority interest - - - - - - - (0.3) (0.3)
dividend
Own shares purchased - - - (4.1) (4.1) - - (4.1)
by the company
-
Restated balance at 31 31.3 42.9 2.1 (11.9) 125.0 189.4 (257.5) 2.6 (65.5)
December 2004
Changes in accounting - - - - - - (41.0) - (41.0)
policy relating to
first-time adoption of
IAS 32 and 39
Restated balance at 1 31.3 42.9 2.1 (11.9) 125.0 189.4 (298.5) 2.6 (106.5)
January 2005
Total recognised - - (3.9) - - (3.9) 500.6 2.2 498.9
income and expense for
the year
Shares repurchased and - 0.9 - - - 0.9 (16.8) - (15.9)
cancelled by the
company
Share-based payment - - - - - - 2.6 - 2.6
Special dividend - - - - - - (298.3) - (298.3)
Equity dividend - - - - - - (39.5) - (39.5)
Minority interest - - - - - - - (2.1) (2.1)
dividend
Own shares purchased - - - (7.4) - (7.4) - - (7.4)
by the company
Balance at 31 December 31.3 43.8 (1.8) (19.3) 125.0 179.0 (149.9) 2.7 31.8
2005
Notes to the consolidated financial statements at 31 December 2005
13. Acquisitions and disposals
UBM has completed 12 acquisitions during the year.
On 1 February 2005, UBM acquired Tissue World, an events and
publication company, from Paperloop.com, Inc. The purchase price was $4.8
million.
On 7 February 2005, UBM acquired the licensed trade sector
publishing and events assets of Quantum Business Media (Quantum') for £21.0
million.
On 31 March 2005, UBM acquired the medical trade press and other professional
healthcare business information services in France from MediMedia. The
purchase price was €36.0 million in cash.
On 4 April 2005, UBM acquired DotNetJunkies.com and SqlJunkies.com for $0.2
million.
On 10 May 2005, UBM acquired ABI Building Data Limited for £12.0 million.
On 7 July 2005, UBM acquired ICMI for cash consideration of $3.75 million.
On 18 August 2005, UBM acquired Light Reading Inc, Informex, and Tech Online
for $27 million, $24 million, and $5.5 million respectively.
On 23 August 2005, UBM completed the acquisition of "Theme" magazine and the
"Bar" exhibition from Mondiale Publishing. The purchase price was £5 million
in cash.
On 16 November 2005, UBM acquired Black Hat and Japan Jewellery Fair for cash
consideration of $10 million and $2.7 million respectively.
The following table sets out the book values of the identifiable assets and
liabilities acquired and their fair value to the group in respect of the
acquisition of businesses during the year:
2005 2005
Fair Acquiree's
Value Carrying
to Group Value
£m £m
Intangible assets 41.3 22.8
Property, plant and equipment 1.5 1.5
Other non-current assets 0.2 0.2
Cash and cash equivalents 3.5 3.5
Stocks 0.6 0.6
Debtors and other current assets 21.9 21.5
69.0 50.1
Creditors and other current liabilities (37.0) (36.0)
Deferred tax liability (10.7) -
Pension liability (1.1) -
(48.8) (36.0)
Fair value of net assets 20.2
Goodwill arising on acquisition 93.5
113.7
2005
£m
Consideration:
Cash paid 109.9
Deferred consideration 3.8
Total consideration 113.7
The group also paid £9.2 million of deferred consideration during the year, in
relation to the 2001 acquisition of Allison-Fisher International, Inc. Under
the earn out arrangement, if certain profit targets over the period of
acquisition until 30 June 2004 were met, additional consideration was payable.
Notes to the consolidated financial statements at 31 December 2004
13. Acquisitions and disposals (continued)
The aggregate cash flow effect of acquisitions was as follows:
2005
£m
Net cash acquired with the subsidiary (3.5)
Cash paid 109.9
Deferred consideration on 2001 9.2
acquisitions
Net cash outflow on acquisitions 115.6
The intangible assets acquired as part of the acquisition can be analysed as
follows:
2005
£m
Brands 20.8
Software 0.4
Customer contracts and relationships 16.5
Subscription lists 0.1
Trademarks 2.1
Databases 1.4
Total 41.3
Disposals
On 27 April 2005, UBM completed the sale of its associate SDN
Limited for net proceeds of £31.5 million (£35.4 million consideration less
£3.9 million repayment of loan). A profit of £26.5 million arose on the
disposal of SDN Limited, being the proceeds of disposal less the carrying
amount of the associate's net assets and costs of disposal.
On 2 September 2005, UBM announced the sale of its 20% shareholding
in Satellite Information Services (Holdings) Ltd to Catalyst Media Group plc
for £23 million, and the sale of its 35.4% shareholding in Channel 5
Television Group Ltd to the RTL Group for £247.6 million. Profits on sale for
these disposals were £11.9 million and £112.3 million respectively.
The profits from these disposed investments have been included in
Corporate operations' for segmental reporting purposes.
The assets and liabilities disposed as part of the disposals can be analysed
as follows:
SDN SIS Channel 5 Total
£m £m £m £m
Non-current assets 3.3 10.9 29.1 43.3
Current assets - - 105.0 105.0
Net assets 3.3 10.9 134.1 148.3
The group also disposed of its market research business, and Exchange and Mart
and Auto Exchange titles, during the year. Refer to note 14.
14. Discontinued operations
On 15 April 2005, UBM announced the sale of its market research
business, NOP World, to GfK Aktiengesellschaft for £383.0 million. The
disposal was completed on 1 June 2005, on which date control of NOP World
passed to the acquirer. A profit of £235.8 million arose on the disposal of
NOP World, being the proceeds of disposal less the carrying amount of the
subsidiary's net assets, attributable goodwill and directly attributable
costs.
On 16 September 2005, UBM announced the sale of Exchange & Mart and
Auto Exchange to Newsquest Media Group Ltd for £50.25 million. A profit of
£30.5 million arose on the sale of these titles.
Notes to the consolidated financial statements at 31 December 2005
14. Discontinued operations (continued)
The results of the discontinued operations which have been included
in the consolidated income statement were as follows:
Exchange Exchange
& Mart & Mart
and Auto and Auto
NOP Exchange Total NOP Exchange Total
2005 2005 2005 2004 2004 2004
£m £m £m £m £m £m
Revenue 76.9 23.0 99.9 222.4 35.8 258.2
Share of profit from
equity accounted
investments - - - - - -
Operating expenses (72.5) (22.6) (95.1) (202.1) (30.9) (233.0)
Profit before tax 4.4 0.4 4.8 20.3 4.9 25.2
Interest income - - - 0.1 - 0.1
Profit before tax
attributable to
discontinued operations 4.4 0.4 4.8 20.4 4.9 25.3
Attributable taxation (0.9) (0.1) (1.0) (4.5) (1.1) (5.6)
Profit after tax
attributable to
discontinued operations 3.5 0.3 3.8 15.9 3.8 19.7
Profit from disposal of 235.8 30.5 266.3 - - 18.9
discontinued operations
Attributable tax expense - - - - - -
Net profit attributable to
discontinued operations 239.3 30.8 270.1 15.9 3.8 38.6
Earnings per share for
discontinued operations
Basic 89.3 p 11.5 p
Diluted 78.0 p 10.0 p
In December 2004, UBM agreed a settlement of £32 million from
Granada in respect of outstanding items relating to the 2000 disposals of the
television assets. The additional profit on disposal taken in 2004 represents
this settlement, after deduction of interest, costs, and the offset of
recorded receivables. This amount was received in January 2005.
Exchange &
Mart and
Auto
NOP Exchange Total
At date of At date of At date of
disposal disposal disposal
£m
Goodwill 94.9 6.3 101.2
Property, plant and equipment 6.6 1.7 8.3
Trade and other receivables 53.1 - 53.1
Inventories 23.4 - 23.4
Cash and cash equivalents - - -
178.0 8.0 186.0
Trade and other payables 60.4 - 60.4
Provisions 0.6 - 0.6
61.0 - 61.0
Net assets attributable to discontinued operations 117.0 8.0 125.0
15. Post balance sheet events
On 11 January 2006, UBM also announced that it acquired the events assets of
MediaLive International, Inc. for a cash consideration of US$65 million. The
transaction adds more than 20 IT and telecoms-related events in the US, Japan,
and Europe.
On 11 January 2006, UBM announced it has acquired Shorecliff Communications
LLC, a US events business, for a cash consideration of US$12.3 million.
Shorecliff's four principal events focus on the high growth technology markets
of radio frequency identification, broadband services, wireless infrastructure
and telecoms television/internet protocol television.
Notes to the consolidated financial statements at 31 December 2005
16. First-time adoption of International Financial Reporting and Accounting
Standards
In the current year, the Group has adopted International Financial and
Reporting Standards for the first time.
The Group has applied IFRS 1 First Time Adoption of International Financial
Reporting and Accounting Standards to provide a starting point for reporting
under International Financial Reporting and Accounting Standards. The date of
transition to International Financial Reporting and Accounting Standards was
selected as 1 January 2004 and all comparative information in these financial
statements has been restated to reflect the Group's adoption of International
Financial Reporting and Accounting Standards.
The adoption of International Financial Reporting and Accounting Standards has
resulted in changes to the Group's accounting policies, as stated in note 2.
Reconciliation of equity at 1 January 2004
As reported Effect of Reported
under transition under
UK GAAP to IFRS IFRS
Footnote £m £m £m
Assets
Non-current assets
Goodwill 14 430.8 0.7 431.5
Intangible assets - - -
Property, plant and equipment 54.5 - 54.5
Investments accounted for using the 4,14 11.4 45.8 57.2
equity method
Other investments 4,9 168.9 (36.8) 132.1
Deferred tax assets - - -
665.6 9.7 675.3
Current assets
Inventories 5,12 20.4 (8.8) 11.6
Trade and other receivables 4,12,14 158.5 112.9 271.4
Cash and cash equivalents 9,14 611.1 (112.7) 498.4
790.0 (8.6) 781.4
Non-current assets classified as held - - -
for sale
Total assets 1,455.6 1.1 1,456.7
Current liabilities
Borrowings 241.6 - 241.6
Convertible bond 221.1 - 221.1
Trade and other payables 8,10,14 305.4 (15.3) 290.1
Current tax liabilities 308.5 - 308.5
1,076.6 (15.3) 1,061.3
Non-current liabilities
Borrowings 101.9 - 101.9
Convertible bond - - -
Retirement benefit obligation 6 83.9 0.9 84.8
Deferred tax liabilities - - -
Trade and other payables 5.4 - 5.4
Provisions 63.1 - 63.1
254.3 0.9 255.2
Total liabilities 1,330.9 (14.4) 1,316.5
Shareholders' equity
Ordinary shares 84.5 - 84.5
Share premium 309.4 - 309.4
Other reserves 191.4 - 191.4
Retained earnings 5,6,8,10 (461.6) 15.2 (446.4)
Minority interest 14 1.0 0.3 1.3
Total equity 124.7 15.5 140.2
Total liabilities and equity 1,455.6 1.1 1,456.7
Notes to the consolidated financial statements at 31 December 2005
16. First-time adoption of International Financial Reporting and Accounting
Standards (continued)
Reconciliation of equity at 31 December 2004
The effect of the changes to the Group's accounting policies on the equity of
the Group at the date of the last financial statements presented under
previous GAAP, 31 December 2004, was as follows.
As reported Effect of Reported
under transition under
UK GAAP to IFRS IFRS
Footnote £m £m £m
Assets
Non-current assets
Goodwill 2,14 495.8 88.0 583.8
Intangible assets 2 - 50.4 50.4
Property, plant and equipment 50.1 (5.1) 45.0
Investments accounted for using the 4,14 10.7 43.5 54.2
equity method
Other investments 4,9 146.8 (98.9) 47.9
703.4 77.9 781.3
Current assets
Inventories 5,12 22.8 (7.9) 14.9
Trade and other receivables 4,12 198.0 108.1 306.1
Cash and cash equivalents 9 378.8 (39.4) 339.4
599.6 60.8 660.4
Non-current assets classified as held 13 - 5.1 5.1
for sale
Total assets 1,303.0 143.8 1,446.8
Current liabilities
Borrowings 142.8 - 142.8
Trade and other payables 8,10,14 317.3 (21.9) 295.4
Current tax liabilities 208.0 - 208.0
668.1 (21.9) 646.2
Non-current liabilities
Borrowings 96.1 - 96.1
Convertible bond 208.7 - 208.7
Retirement benefit obligation 6 95.2 0.8 96.0
Deferred tax liabilities - - -
Trade and other payables 4.6 - 4.6
Provisions 48.6 - 48.6
Deferred tax liabilities 7 1.4 15.4 16.8
454.6 16.2 470.8
Total liabilities 1,122.7 (5.7) 1,117.0
Shareholders' equity
Ordinary shares 84.5 - 84.5
Share premium 310.8 - 310.8
Other reserves 11 187.3 2.1 189.4
Retained earnings 1,2,3,4,5,6,8,10,11 (404.5) 147.0 (257.5)
Minority interest 14 2.2 0.4 2.6
Total equity 180.3 149.5 329.8
Total liabilities and equity 1,303.0 143.8 1,446.8
Notes to the consolidated financial statements at 31 December 2005
16. First-time adoption of International Financial Reporting and Accounting
Standards (continued)
Reconciliation of profit or loss for year ending 31 December 2004
The changes in accounting policies had the following effect on the profit
reported for the year ended 31 December 2004.
As reported Effect of Reclassification Reported
under transition to discontinued under
UK GAAP to IFRS operations IFRS
Footnote £m £m £m £m
Continuing operations
Revenue 12,14 809.6 5.9 (258.2) 557.3
Other operating income 9.1 - - 9.1
Operating expenses 1,2,3,5,12,14 (822.1) 115.3 233.0 (473.8)
Income from investments 4 6.0 (0.8) - 5.2
Share of profit from associates 4,14 3.7 2.3 - 6.0
and joint ventures
Operating profit 6.3 122.7 (25.2) 103.8
Additional profit on prior year 18.9 - - 18.9
disposals
Amounts written off investments (11.7) - - (11.7)
Net interest income 12.5 - (0.1) 12.4
Financing costs - pension (3.4) - - (3.4)
schemes
Profit before tax 22.6 122.7 (25.3) 120.0
Tax expense 4,7 (30.8) 2.1 5.6 (23.1)
Exceptional taxation credit 121.0 - - 121.0
Profit for the year from 112.8 124.8 (19.7) 217.9
continuing operations
Discontinued operations
Profit for the year from - - 19.7 19.7
discontinued operations
Net profit/(loss) for the year 112.8 124.8 - 237.6
Attributable to:
Equity shareholders - ordinary 1,2,3,4,5,7,12 110.9 124.5 - 235.4
Equity shareholders - B shares 0.4 - - 0.4
Minority interests 14 1.5 0.3 - 1.8
112.8 124.8 - 237.6
Notes to the IFRS adjustments
1. Goodwill
Under IFRS 3, goodwill on acquisitions is no longer amortised, but is held at
its UK GAAP carrying value at the transition date and is then subject to an
annual impairment review. No impairment was identified as at 1 January 2004 or
as at 31 December 2004 following our review. An adjustment of £126.0 million
was made to the income statement to reflect the reversal of amortisation under
UK GAAP during 2004. Of the £126.0 million adjustment, £124.5 million
increased the carrying value of goodwill on the balance sheet, and the £1.5
million of amortisation relating to goodwill in joint ventures increased the
carrying value of investments accounted for using the equity method on the
balance sheet.
2. Intangible assets
IFRS 3 requires separable intangible assets that are acquired as part of a
business acquisition to be identified separately from goodwill. These assets
are amortised over their useful lives. United has taken advantage of the
transition exemption which allows the identification of intangible assets to
be applied only to those acquisitions which have taken place since the
transition date.
The adjustment made represents the £53.5 million of intangible assets acquired
as part of the CMPMedica acquisition, transferring this amount from goodwill
to intangible assets. Amortisation of £3.1 million has been charged on these
intangible assets during 2004.
Notes to the consolidated financial statements at 31 December 2005
16. First-time adoption of International Financial Reporting and Accounting
Standards (continued)
3. Share-based payments
Under IFRS 2, the fair value of share options and other share-based payments
is recognised as an expense through the profit and loss account over the
expected period through to the expected date of exercise. The Standard
requires recognition of the fair value of all share-based payments granted
from November 2002 onwards. In determining the impact on the profit and loss
account for 2004, the cost of £4.0 million as calculated under IFRS 2 has been
partially offset by the reversal of the £2.5 million charge made in respect of
the group's incentive plans under UK GAAP, leaving a net adjustment of £1.5
million.
4. Investments accounted for using equity method
Certain investments, which have been accounted for by the Group as fixed asset
investments under UK GAAP since 2001, will be equity accounted under IAS 28.
IAS 28 defines an associate based on the ability to exert significant
influence, in contrast to UK GAAP where the influence has actually to be
exerted.
Due to the change in treatment for certain investments, a reclassification of
£151.3 million was made to Other investments' at transition date to
reclassify amounts relating to investments that are now equity accounted under
IAS 28. This amount was reclassified to Investments accounted for using the
equity method', and Trade and other receivables', for £46.4 million and
£104.9 million respectively. This adjustment groups long-term loans with the
historical cost of investment in accordance with IAS 28. The UK GAAP carrying
value of these investments becomes deemed cost on transition under IFRS, and
classifies short-term loans separately in receivables. The net share of profit
in these associates of £2.5 million was also recorded an as adjustment in
2004, which increases the carrying value of the investment on the balance
sheet at 31 December 2004.
For equity accounted investments, IAS 28 requires the share of post tax profit
or loss to be shown in a separate line on the face of the income statement,
compared to UK GAAP, which recognises the share of pre tax profit or loss and
the share of taxation separately. An adjustment of £1.2 million was made on
the income statement, to transfer the share of tax for investments equity
accounted under UK GAAP, from the taxation line to the share of profit from
associates and joint ventures line on the face of the income statement.
5. Work in progress valuation
Under UK GAAP, it is acceptable for the valuation of work in progress to
include attributable overheads. Under IAS 11, the valuation of work in
progress is restricted to direct costs incurred. An adjustment of £1.3 million
was made on transition, to transfer the attributable overheads included in the
work in progress balance as at 1 January 2004 to retained earnings. A further
adjustment of £0.4 million was made at 31 December 2004, to transfer the
attributable overheads at year-end to operating expenses in the income
statement.
6. Pension liability
There are differences between the methodologies for the valuation of pension
scheme assets under IAS 19 compared to FRS 17; under IAS 19, equity
investments are valued on a bid value basis, whereas FRS 17 uses the mid-point
valuation. The adjustment of £0.9 million was made to the transition balance
sheet at 1 January 2004, to recognise the additional pension costs under the
IAS 19 valuation on transition compared to the FRS 17 valuation under UK GAAP.
An adjustment of £0.1 million was also made as at 31 December 2004, to reduce
the retired benefit obligation liability as at 31 December 2004 to recognise
the difference in the 2004 pension charge.
7. Deferred Taxation
Under IAS 12, a deferred tax liability is recognised on the difference between
the balance sheet amount of intangible assets acquired as part of the Group's
2004 acquisitions and the tax base of the intangible assets. Goodwill is
grossed up by an equivalent amount and there is therefore no adjustment to net
assets on recognition.
The adjustment of £15.4 million was made in 2004, to recognise a deferred tax
liability on the intangible assets acquired as part of the CMPMedica
acquisition and gross up goodwill accordingly. £0.9 million of the deferred
tax liability was then released to the profit or loss, for the tax effect on
the amortisation of the CMPMedica intangible assets in 2004.
8. Dividend creditor not accrued under IFRS
Under IAS 37, the liability for dividends is not recognised until a formal
obligation arises. As a result, the final dividend in 2004 of £28.1 million
that was accrued under UK GAAP has been reversed under IFRS.
Notes to the consolidated financial statements at 31 December 2005
16. First-time adoption of International Financial Reporting and Accounting
Standards (continued)
9. Cash and cash equivalents
Under IAS 1, cash comprises cash on hand and demand deposits with banks or
other financial institutions. This is the same as UK GAAP.
However, under IFRS the cash balance also includes amounts for cash
equivalents'. Cash equivalents are short-term liquid investments, and IFRS
defines that cash equivalents are normally held for the purpose of meeting
short-term commitments rather than investment purposes, and normally have a
maturity date less than 3 months. UK GAAP does not recognise the concept of
cash equivalents', or the requirement for a maturity date of less than 3
months.
As at 1 January 2004 and as at 31 December 2004, adjustments of £114.5 million
and £42.0 million respectively, were made to reclassify the credit link notes
with maturities greater than 3 months at the acquisition date from cash and
cash equivalents to other investments.
10. Holiday pay accrual
Under IAS 19, all accumulating employee compensated absences that are unused
at the balance sheet date must be recognised as a liability. There is no
similar requirement under UK GAAP. An adjustment of £1.8 million was made at
the transition date to recognise the holiday pay obligation at 1 January 2004,
and a further £1.3 million was recognised on the acquisition of CMPMedica, to
recognise the holiday pay obligations at the acquisition date. This adjustment
increased the CMPMedica goodwill on acquisition. An accrual of £3.1 million
was held at 31 December 2004.
11. Translation of foreign operations
Under IAS 21, the assets and liabilities of foreign operations are translated
at the closing rate at the balance sheet date, and the income and expenses for
each income statement are translated at the average rate for the period. The
resulting exchange differences must be recognised as a separate component of
equity, until disposal of the foreign operation when the accumulated exchange
differences will be recognised in profit or loss when the gain or loss on
disposal is recognised. This is different from UK GAAP, where all exchange
differences are taken directly to retained earnings.
An adjustment of £3.1 million was made at 31 December 2004, to reclassify the
translation differences for foreign operations from retained earnings to other
reserves. An adjustment was also made to recognise the translation difference
on the deferred tax liability recognised for the CMPMedica acquisition of £1.0
million. This translation difference increased the deferred tax liability and
reduced the total translation differences in other reserves.
12. Recognition of revenue on market research contracts
Under IAS 11, the stage of completion method must be adopted for the
recognition of revenue and expenditure on contracts where the outcome of the
contract can be estimated reliably.
The adjustments of £7.5 million and £7.0 million as at 1 January 2004 and 31
December 2004 respectively relate to the revenue and corresponding expenditure
to be recognised in the profit or loss on short-term market research
contracts.
13. Non-current assets classified as held for sale
The group adopted IFRS 5 early, from 1 January 2004.
Under IFRS 5, if the sale of a non-current asset is highly probable within one
year from the balance sheet date, and the asset is available for immediate
sale in its present condition, then it must be classified as held for sale.
There is no requirement for this type of reclassification under UK GAAP.
The adjustment relates to a property with a carrying value of £5.1 million as
at 31 December 2004 that is expected to be sold within the next 12 months.
14. Consolidation of investment equity accounted under UK GAAP
Under UK GAAP, control is defined as the ability to direct the financial and
operating policies of an entity with the view to gaining economic benefits
from activities. Under IAS 27, control is presumed to exist when the parent
owns more than half of the voting power of an entity, unless there are
exceptional circumstances to demonstrate that control does not exist.
An adjustment has been made to consolidate one of the group's subsidiaries,
which was treated as an equity accounted investment under UK GAAP.
Notes to the consolidated financial statements at 31 December 2005
16. First-time adoption of International Financial Reporting and Accounting
Standards (continued)
Explanation of material adjustments to the cash flow statement for 2004
Due to the reclassification of credit link notes with a maturity date of
greater than 3 months at 31 December 2004, from cash and cash equivalents' to
other investments', the movement in these credit link notes is now shown in
the cash flow statement under investing activites.
There are no other material differences between the cash flow statement
presented under IFRSs and the cash flow statement presented under UK GAAP.
Financial Instruments
The effect of the changes to the Group's accounting policies on the equity of
the Group at 1 January 2005 was as follows:
As restated Effect of
under IFRS adoption of IFRS
31 December IAS 32 and 1 January
2004 2005
IAS 39
Footnote £m £m £m
Assets
Non-current assets
Goodwill 583.8 - 583.8
Intangible assets 50.4 - 50.4
Property, plant and equipment 45.0 - 45.0
Investments accounted for using the 54.2 - 54.2
equity method
Other investments 47.9 - 47.9
781.3 - 781.3
Current assets
Inventories 14.9 - 14.9
Trade and other receivables 306.1 - 306.1
Derivative financial assets a - 5.2 5.2
Cash and cash equivalents 339.4 - 339.4
660.4 5.2 665.6
Non-current assets classified as held 5.1 - 5.1
for sale
Total assets 1,446.8 5.2 1,452.0
Current liabilities
Borrowings 142.8 - 142.8
Convertible bond - - -
Trade and other payables 503.4 - 503.4
646.2 - 646.2
Non-current liabilities
Borrowings b 96.1 5.1 101.2
Convertible bond c 208.7 (9.9) 198.8
Retirement benefit obligation 96.0 - 96.0
Trade and other payables 4.6 - 4.6
Provisions 48.6 - 48.6
Derivative financial liabilities d - 51.0 51.0
Deferred tax liabilities 16.8 - 16.8
470.8 46.2 517.0
Total liabilities 1,117.0 46.2 1,163.2
Shareholders' equity
Share capital 84.5 - 84.5
Share premium 310.8 - 310.8
Other reserves 189.4 - 189.4
Retained earnings e (257.5) (41.0) (298.5)
Total shareholders' equity 327.2 (41.0) 286.2
Minority interests 2.6 - 2.6
Total equity 329.8 (41.0) 288.8
Total equity and liabilities 1,446.8 5.2 1,452.0
Notes to the consolidated financial statements at 31 December 2005
16. First-time adoption of International Financial Reporting and Accounting
Standards (continued)
Financial instruments
The Group adopted IAS 32 Financial Instruments: Disclosure and Presentation
and IAS 39 Financial Instruments: Recognition and Measurement on 1 January
2005 and undertook the exemption not to restate its comparative information
for IAS 32 and IAS 39.
The following notes explain the adjustments made at 1 January 2005 to the
Group's balance sheet at 31 December 2004 to reflect the adoption of IAS 32
and IAS 39.
Adjustment to recognise listed investments at fair value. Under UK GAAP, these
investments were recorded at cost.
£m
(a) Derivative financial assets - non-current
Recognition of interest rate swaps 5.1
Recognition of derivative financial assets at fair value 0.1
Total adjustment to derivative financial assets 5.2
£m
(b) Borrowings
Recognition of interest rate swaps 5.1
Total adjustment to borrowings 5.1
Separation of the convertible bond into the debt component (fair valued on
transition) and embedded derivative component (measured at fair value through
profit and loss). Under UK GAAP, the bond was recorded as a liability at fair
value.
£m
(c) Convertible bond
Separation of embedded derivative component (9.9)
Total adjustment to convertible bond (9.9)
Recognition of fair values of derivative financial liabilities. These were not
recognised under UK GAAP.
£m
(d) Derivative financial liabilities - non-current
Recognition of swaps at fair value on transition 2.9
Recognition of the derivative component of the convertible bond at 48.1
fair value
Total adjustment to derivative financial liabilities 51.0
(e) The cumulative effect of all of the above adjustments has resulted in an
increase in retained earnings at 1 January 2005 of £41.0 million.
ENDS
