Final Results - Year Ended 31 December 1999

Informa Group PLC 20 March 2000 RESULTS FOR THE YEAR TO 31 DECEMBER 1999 FINANCIAL HIGHLIGHTS - Profit before tax, amortisation and exceptional items up 19% to £32.7million (1998: £27.4million further adjusted for MBO interest) - Turnover up 12% to £227.8million (1998: £202.9million) - Operating margin increased to 15.7% (1998: 14.3%) - Telecoms sector operating profits up 42% - £4.8million of annual profits from electronic media - Dividend per share raised to 7p Informa Group's Chairman Peter Rigby commented: 'Informa Group performed strongly in 1999. The creative synergies made possible by the merger of IBC and LLP, combined with the generally good economic conditions in our major markets and the continuing growth of electronic delivery has enabled us to deliver profit growth of 19%.' 'The new year has started encouragingly and trading has been in line with expectations. Our flagship GSM World Congress, held in early February, saw a 31% increase in delegates to over 5,500, and we are looking forward to another good year.' Enquiries: Peter Rigby/David Gilbertson/Jim Wilkinson The Informa Group plc Phone 020 7453 2222 William Clutterbuck/Charlotte Hamilton/Lydia Stewart The Maitland Consultancy Phone 020 7379 5151 EXTRACTS FROM CHAIRMAN'S STATEMENT AND CHIEF EXECUTIVE'S REVIEW GENERAL TRADING 1999 was an exciting and eventful year. Pre-tax profits before exceptional items and goodwill amortisation were £32.7million, an increase of 19% over 1998 (£27.4million further adjusted for MBO interest) on turnover up 12% at £227.8million. Adjusted earnings per share increased from 16.34p to 18.79p. Accordingly we have decided to recommend that a final dividend of 4.67p be paid. Together with the interim dividend of 2.33p paid in November this makes a total of 7p for 1999 (6.6p for IBC shareholders and 5.845p for LLP shareholders in 1998). Particularly encouraging in our results was the 17% organic growth secured in our core business. This reflects the strength of our leading brands in our major markets and the flow through of creative synergies following the merger. Only 2% of our growth came from acquisitions made in the last 12 months and our major 1999 acquisitions came too late in the year to impact the figures. In 1999 we saw an overall group operating margin before exceptional items and goodwill of 15.7%, a rise of 1.4% on the year before. The advance of our younger conference businesses in Brazil, Australia and Continental Europe, all of which are now attaining critical mass, was an important contributor to the year's improvement. We saw robust growth from a number of our regional centres, with Germany showing particular strength. Our Asia businesses, driven from Singapore, also performed very well as the regional economies began to shake off the effect of the economic crisis of the previous year. INTEGRATION PROGRESS Following the merger we intended to create one single company based on market facing lines, rather than two or more divisions dictated by format. As part of that process, we are working towards establishing market facing groups across the company. These will focus on our content and the information needs of our customers in each of our sectors and emphasise product clustering, cross-selling and up-selling. So far we have established a division for Telecoms and Media, our biggest single market and one for our Commodities businesses. During the remainder of this year we will organise all of our businesses in this way. With a market approach, we can seamlessly turn our customers' information requirements into products, be they traditional hard copy publications, conferences, web-based electronic services or bespoke packages. During 1999 we streamlined some of our businesses to achieve operational efficiencies and cost savings. We consolidated our UK based activities, allowing us to take full advantage of efficiencies in business systems, purchasing and distribution. We put together the separate businesses we had in Australia, Asia and Dubai and closed the South African companies, which we felt were unlikely to make a significant contribution to Informa's profits in the foreseeable future. We also disposed of two small non-core businesses - Political Risk Services and Marcus Bohn Associates - to their respective managements. The harnessing of our international network to promote sales of Informa's products is one of the opportunities we have yet to exploit fully. Now the group has a balanced portfolio of events, publications and services, many of which have wide international relevance and appeal, the local market knowledge in our regional offices will offer a cost effective way of expanding our worldwide sales. CORPORATE ACTIVITY Informa Group completed a total of 11 acquisitions for £67million during the year. One highlight was the purchase last Spring of Washington Policy and Analysis which provides high- level energy consultancy to customers such as the Japanese utility companies and the American Gas Association. This fits well with existing publications such as Energy Day and our worldwide conference business. Towards the end of the year we acquired titles from EMAP, Financial Times and Baskerville Communications. These publications and events complement our existing portfolio and bring further leading brands such as Containerisation International, Television Business International and Global Mobile into the group. Going forward we would expect to continue to be acquisitive. Our targets will be international information products within our market sectors with a high level of proprietorial content and high readership retention, where we believe Informa can add value through brand extension. ELECTRONIC MEDIA - 30 new internet information services launched - £12million revenue generated from internet marketing - Transaction and content management system being installed - Internet investment in 2000 around £3million - Agreement reached with IPv6 Forum to promote new internet standard The internet provides a major opportunity for Informa. Of our 100 electronic services, we already have around 50 web-based products of which 30 have been launched in the last year. Our internet products include established password-controlled subscription services such as Lloyd's List and Insurance Day and new sites such as iMoneynet.com for the US banking market and e- searchwireless.com, our on-line telecoms data and analysis product. Our internet investment is currently of the order of £3million per annum and is aimed at delivering added value to our customers and providing a profitable return on investment. Our electronic products currently enjoy a margin of around 24%, some 5% ahead of hard copy publications for which print and physical distribution inevitably represent a significant proportion of overall costs. Increasingly our customers want their information delivered electronically. E-media products and services across all our market sectors accounted for £4.8million profit in 1999 (1998: £4.1million). We expect this part of our business to grow rapidly in the next few years. Excluded from these figures are the fast rising revenues we now receive from internet marketing of our products. These grew five fold to £12million in the year and are also certain to become an increasing part of our revenue mix. Of the on-line orders received last year, some 20% came from customers who were not on our database, reflecting entirely new revenue. Partnership with organisations and associations in the industries we serve is of growing importance in the electronic area. The agreement we have reached with the IPv6 Forum to promote the new internet protocol worldwide is the latest example of such an alliance. In the Telecoms area alone we are working with 35 leading industry bodies. We are currently installing an integrated e-commerce transaction system to allow on-line ordering, payment and product fulfilment and a content management system for internet delivery. This will allow us to deliver existing products electronically and to create new products through merging text and data files. It will also give us the means to allow customers to begin to personalise their information purchases on a pay as you go basis. Our position on product format will remain neutral; we will continue to deliver content in the way the audience want it. For some markets, hard copy will remain the preferred format, in others electronic media are already being fully embraced. PROSPECTS During the year ahead we will benefit from the continuing organic growth in our business and from the acquisitions and portfolio adjustments made last year. As some of our competitors switch out of niche information products, this provides us with opportunities to absorb profitable and well regarded titles. The Informa product is high quality business information. We are content providers, not carriers and the great majority of the content we publish is proprietorial to the group. The demand for original relevant information, presented in a form appropriate to commercial decision making, continues to grow. Because of the unique nature of our content, Informa is well placed to capitalise on the opportunities offered by the internet age. Information can be distributed on-line and with increased functionality, such as the ability to search, to repackage and to display in bespoke form. The new year has started encouragingly and trading has been in line with expectations. Our flagship GSM World Congress in February, saw a 31% increase in delegate attendance and we look forward to another good year. CONSOLIDATED PROFIT & LOSS ACCOUNT Notes 1999 1999 1999 Before Excep- Total excep- tional tional items items (Note 2) £000 £000 £000 ------- --------- -------- Turnover 1 227,773 - 227,773 Operating profit/(loss) 1 35,680 (5,687) 29,993 before goodwill amortisation Goodwill amortisation (2,313) - (2,313) ------- --------- -------- Operating profit/(loss) 33,367 (5,687) 27,680 Disposal of subsidiary 2 - (2,676) (2,676) undertakings and termination of businesses Loss on disposal of fixed 2 - (740) (740) assets Merger expenses - - - ------ -------- -------- Profit/(loss) before 1 33,367 (9,103) 24,264 interest Net interest 2,3 (2,931) (772) (3,703) (payable)/receivable and other similar items ------- -------- -------- Profit/(loss) on ordinary 30,436 (9,875) 20,561 activities before tax Tax on profit/(loss) on (10,880) 1,725 (9,155) ordinary activities ------- -------- -------- Profit/(loss) on ordinary 19,556 (8,150) 11,406 activities after tax ------- -------- -------- Minority interests (40) - (40) ------- -------- -------- Profit/(loss) for the 19,516 (8,150) 11,366 financial year attributable to shareholders Dividends (7,800) - (7,800) ------- -------- -------- Retained profit /(loss) 11,716 (8,150) 3,566 for the financial year ------- -------- -------- Dividends per share Informa 7p IBC - LLP - ------- -------- -------- EARNINGS PER SHARE Earnings per share 4 9.78p (basic) Earnings per share 4 9.64p (diluted) Adjusted basic earnings 4 18.79p per share Notes 1998 1998 1998 Before Excep- Total excep- tional tional items items £000 £000 £000 ------ ------- ------- Turnover 1 202,895 - 202,895 Operating profit/(loss) 1 29,023 (1,674) 27,349 before goodwill amortisation Goodwill amortisation (671) - (671) ------- ------- ------- Operating profit/(loss) 28,352 (1,674) 26,678 Disposal of subsidiary 2 - (1,148) (1,148) undertakings and termination of businesses Loss on disposal of fixed 2 - - - assets Merger expenses - (4,707) (4,707) ------- ------- ------- Profit/(loss) before 1 28,352 (7,529) 20,823 interest Net interest 2,3 (3,536) 377 (3,159) (payable)/receivable and other similar items ------- ------- ------- Profit/(loss) on ordinary 24,816 (7,152) 17,664 activities before tax Tax on profit/(loss) on (8,115) 2,012 (6,103) ordinary activities ------- ------- ------- Profit/(loss) on ordinary 16,701 (5,140) 11,561 activities after tax ------- ------- ------- Minority interests - - - ------- ------- ------- Profit/(loss) for the 16,701 (5,140) 11,561 financial year attributable to shareholders Dividends (7,631) - (7,631) ------- ------- ------- Retained profit /(loss) 9,070 (5,140) 3,930 for the financial year ------- ------- ------- Dividends per share Informa 4.145p IBC 4.1p LLP 1.7p ------- ------- ------- EARNINGS PER SHARE Earnings per share 4 11.26p (basic) Earnings per share 4 11.05p (diluted) Adjusted basic earnings 4 16.34p per share STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES 1999 1998 £000 £000 ------ ------ Profit for the financial year 11,366 11,561 Currency translation differences on 3,377 (2,434) foreign currency net investments ------ ------ Total gains and losses recognised 14,743 9,127 relating to the financial year CONSOLIDATED CASH FLOW STATEMENT Notes 1999 1998 £000 £000 ------ ------ Cash flow from operating activities 5 30,727 29,244 Return on investments and servicing (4,057) (3,607) of finance Taxation (8,970) (5,492) Capital expenditure (8,273) (3,528) Acquisitions & disposals (55,315) (30,721) Merger expenses paid (2,506) (2,201) Equity dividends paid (7,526) (5,132) -------- ------ Cash outflow before financing (55,920) (21,437) Financing 55,987 20,697 -------- -------- Increase/(decrease) in cash in the 67 (740) year -------- -------- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Notes 1999 1998 £000 £000 ------ ------ Increase/(decrease) in cash in the 67 (740) year Cash (inflow)/outflow from (55,268) 46,104 (increase)/decrease in debt financing -------- ------- Change in net debt resulting from (55,201) 45,364 cash flows -------- -------- Reclassification of debt (3,500) - Translation differences 3,060 (1,574) -------- -------- Movements in net debt in the year (55,641) 43,790 Net debt at the start of the year 6 (35,699) (79,489) -------- -------- Net debt at the end of the year 6 (91,340) (35,699) CONSOLIDATED BALANCE SHEET 1999 1998 £000 £000 Fixed assets Intangible assets 98,810 34,380 Tangible assets 13,273 9,053 -------- ------- 112,083 43,433 Current assets Stocks 6,284 6,374 Debtors 45,982 39,361 Cash at bank and in hand 5,096 4,480 -------- ------- 57,362 50,215 Creditors: amounts falling due (106,010) (90,183) within one year --------- -------- Net current liabilities (48,648) (39,968) --------- -------- Total assets less net current 63,435 3,465 liabilities Creditors: amounts falling due (91,119) (40,759) after more than one year Provisions for liabilities and (1,275) (556) charges Minority interests (44) (4) -------- -------- Net liabilities (29,003) (37,854) -------- -------- CAPITAL AND RESERVES Called up share capital 11,696 11,563 Share premium account 65,409 65,296 Capital redemption reserve 12 105 Other reserve 37,398 36,832 Profit & loss account (143,518) (151,650) --------- --------- Deficit on shareholders' funds - (29,003) (37,854) equity --------- --------- NOTES 1. SEGMENTAL ANALYSIS Operating profit in the segmental analysis excludes the amortisation of goodwill and exceptional items. Turnover Operating Profit before profit interest 1999 1998 1999 1998 1999 1998 £000 £000 £000 £000 £000 £000 Analysis by market sector Telecoms, and 47,464 37,078 9,633 6,790 6,724 5,595 Media Maritime, Trade 42,578 38,585 8,967 8,775 6,909 6,938 and Transport Financial and 44,044 43,529 7,044 5,689 5,130 2,889 Insurance Law and Tax 51,573 43,169 6,132 5,313 4,023 3,966 Commodities and 26,502 21,190 2,920 1,807 1,185 1,193 Energy Biomedical and 14,753 14,498 1,103 529 412 122 Pharmaceutical Other 859 4,846 (119) 120 (119) 120 ------- ------- ------ ------ ------ ------ 227,773 202,895 35,680 29,023 24,264 20,823 ------- ------- ------ ------ ------ ------ Interest was incurred centrally and cannot be attributed to individual markets. 2.EXCEPTIONAL ITEMS i. Operating Costs. The £5,687,000 shown as exceptional items in the profit and loss account is in respect of the following: - £2,361,000 relating to office relocations that arose following the merger. - £2,109,000 of employment costs, principally redundancy and compensation for loss of options that arose following the merger. - £1,217,000 costs relating to the integration of the Group companies and harmonisation of the Group's systems following the merger. ii. Disposal of subsidiary undertakings and termination of businesses. During the year, the Group sold its interest in Asia Pacific Papermaker Magazine, Assetrac, PRS and 80% of its interest in Marcus Bohn Associates Limited for a total net cash consideration of £275,000. The Group also closed down operations in South Africa, two of its three French based businesses and terminated one UK based publication. The loss on sales was after charging goodwill previously written off against reserves of £1,189,000 and the write off of £656,000 unamortised goodwill from the balance sheet. A full provision of £224,000 was made against the remaining 20% stake in Marcus Bohn, which is held as a trade investment, and the other costs associated with the closure and rationalisation of businesses totalled £729,000. The net assets disposed of totalled £153,000. iii. Loss on disposal of fixed assets. The £740,000 of merger expenses comprise the loss arising on the disposal and the write off of certain fixed assets and development costs arose following the reorganisation necessitated by the merger. iv. Interest Charge. Included within the £772,000 exceptional net interest payable and other similar items are the costs associated with the termination of LLP and IBC's previous facilities and the establishment of the Group's new interest rate management policy. 3. NET INTEREST (PAYABLE)/RECEIVABLE AND OTHER SIMILAR ITEMS Included within the interest payable figure for the six months to 30 June 1998 and year to 31 December 1998 is £1,945,000 interest relating to the costs of funding LLP before receipt of the net proceeds of the Placing and the employee offer on flotation in April 1998. 4. EARNINGS AND ADJUSTED EARNINGS PER SHARE In order to show results from operating activities on a comparable basis, an adjusted average earnings per share has been calculated which excludes amortisation of goodwill and exceptional items. Also, an adjustment was made to the 1998 earnings per share to eliminate costs of LLP funding which would not have arisen if the company had floated on 1 January 1998 and treat the issue of shares upon flotation as if they had been issued on 1 January 1998. Pursuant to FRS14, this adjustment has been included in the basic EPS, diluted EPS and the adjusted EPS calculation. The effect of this adjustment is detailed below. 1999 1998 £000 £000 Profit for the financial year 11,366 11,561 Net effect of management buyout - 1,342 interest charge ------- ------- Earnings and diluted earnings 11,366 12,903 Adjustments: Amortisation of goodwill 2,313 671 Net effect of exceptional items 8,150 5,140 ------- ------- Adjusted earnings 21,829 18,714 ------- ------- Weighted average number of equity shares - for earnings and adjusted 116,167,982 114,560,618 earnings Effect of dilutive share options 1,728,586 2,229,959 Weighted average number of equity shares - for diluted earnings 117,896,568 116,790,577 ----------- ----------- Earnings per equity share 9.78p 11.26p Diluted earnings per equity share 9.64p 11.05p Adjusted basic earnings per equity 18.79p 16.34p share ----------- ----------- 5. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 1999 1998 £000 £000 ------- ------- Operating profit 27,680 26,678 Amortisation of goodwill 2,313 671 Depreciation charges 3,197 2,755 Loss on sale of tangible fixed assets 4 28 Decrease/(increase) in stocks (998) 89 Increase in debtors (7,902) (7,835) Increase in creditors 5,137 7,523 Other operating items 185 446 ------- ------- Net cash inflow from operating 30,727 29,244 activities ------- ------- 6. ANALYSIS OF NET DEBT At 1 Reclass- Cashflow Exchange At 31 January ification movement December 1999 of debt 1999 £000 £000 £000 £000 £000 Cash at bank 4,480 - 868 (252) 5,096 and in hand Overdrafts - - (801) - (801) Debt due - (2,401) (4,104) - (6,505) within one year Debt due after (40,179) (1,099) (51,164) 3,312 (89,130) one year Total (35,699) (3,500) (55,201) 3,060 (91,340)

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