Interim Results
T&F Informa PLC
08 September 2004
8 September 2004
T&F Informa plc
ACQUISITIONS AND ORGANIC GROWTH DRIVE TURNOVER AND PROFITS
MERGER INTEGRATION WELL ADVANCED
6 months to 6 months Growth at
30 June to 30 June Reported Constant
2004 2003 Growth Currency
Turnover £246.3m £209.5m +18% +21%
Normalised Operating Profit1 £46.6m £36.0m +29% +38%
Operating Profit £27.0m £24.1m +12%
Normalised Pre-tax
Profit2 £38.0m £31.7m +20%
Profit Before Tax £0.2m £19.8m -
Normalised Diluted
Earnings Per Share2 9.2 8.2 +12%
Diluted (Loss)/Earnings
Per Share (2.4) 3.9 -
1 Excludes goodwill amortisation of £17.6m (2003: £9.8m) and exceptional items
of £2.0m (2003: £2.1m)
2 Excludes goodwill amortisation of £17.6m (2003: £9.8m), exceptional items of
£2.0m (2003: £2.1m) , merger costs of £15.7m and bank facility fees expensed on
merger of £2.4m
• Businesses acquired in 2003 and 2004 performing ahead of expectations
• Merger integration well advanced
Revenue synergies quantified - £9m in 2005
Greater cost savings identified - 2005 expectations nearly doubled to £9m
• Enlarged Group provides platform to drive further profitable growth
• Balanced product portfolio ideally positioned for recovery in key markets
• Good momentum into second half of 2004
Commenting on the Group's performance and prospects, David Smith, Chairman of T&
F Informa said:
'This was a strong performance during what was a busy period of integrating
acquisitions and the merger. It confirms both the strength of the Group's
portfolio of businesses and its staff as well as the rationale for the creation
of T&F Informa. We are also well placed for the rest of the year and into 2005.
'Although the merger is just four months old, we have already established new
revenue streams of £9 million for next year and nearly doubled our expectations
for cost savings. Central to this is the excellent cultural fit of the
integration teams as they seek to exploit new opportunities within the enlarged
Group. There is good momentum in the business and we look forward to 2005.'
Enquiries:
T&F Informa plc Tel: 020 7017 5000
David Smith, Chairman
Peter Rigby, Chief Executive
David Gilbertson, Managing Director
Tony Foye, Finance Director
Financial Dynamics Tel: 020 7831 3113
Tim Spratt / Charles Palmer
Chairman's Statement
Introduction
T&F Informa has had a good first six months of 2004 with turnover up 18% to
£246.3m from £209.5m and Normalised Operating Profit (operating profit before
goodwill amortisation and exceptional items) up 29% to £46.6m from £36.0m.
Normalised Pre-tax Profit (profit before tax, goodwill amortisation, exceptional
items, merger costs and bank loan facility fees expensed on merger) rose 20% to
£38.0m (2003: £31.7m). Normalised Diluted Earnings Per Share rose 12% to 9.2p
(2003: 8.2p) per ordinary share.
These results were achieved despite the adverse effects of exchange rate
movements, which reduced sales by approximately £7.3m and operating profits by
approximately £3.1m compared with the first half of 2003. The adverse currency
impact is predominantly due to the weakness in the US Dollar as around half of
the Group's turnover is US Dollar denominated.
All three divisions, Academic & Scientific, Professional, and Commercial, have
performed strongly during the period, combining solid organic growth with good
contributions from the acquisitions made during the previous 18 months. The
Group has seen an improvement in trading conditions in a number of its market
sectors with particularly pleasing results from the Scientific, Technical and
Medical (STM), Maritime and Finance information businesses.
STM has seen the successful integration of the CRC Press, PJB and Marcel Dekker
acquisitions; the Maritime business has done well in a period of higher freight
rates and oil prices while the Finance information business has performed
strongly as markets recover and the benefits of the MMS acquisition have come
through.
The merger of Taylor & Francis Group plc and Informa Group plc was completed on
10 May 2004. This is therefore the first set of results for T&F Informa as a
combined group. The integration of the two businesses is progressing well and
in the period since the completion of the merger we have brought the central
management of the two businesses together and have confirmed and begun to take
advantage of the significant revenue and cost benefits which the merger brings.
Our detailed analysis has revealed more opportunities and potential synergies
than we had originally anticipated. These include among others a strengthened
publishing programme and 80 new events planned for 2005.
Financial results
The results covered by this review were produced under merger accounting
principles which combine the results of the Taylor & Francis and Informa groups
as if both groups had always been merged. On 1 January 2005 the combined Group
will be required to adopt International Accounting Standards which will
necessitate further material changes to both the bases and format of reports to
shareholders. More information will be provided with the Group's full year 2004
results early in 2005.
Turnover grew by 18% to £246.3m (2003: £209.5m) despite adverse exchange rate
movements which had the effect of reducing turnover by 3% (£7.3m) compared to
2003. The Marcel Dekker acquisition was completed on 2 January 2004 and
contributed £11.6m to first half turnover.
Normalised Operating Profit was £46.6m in the first six months, up 29% over 2003
(£36.0m). Excluding the adverse effect of exchange rate movements of £3.1m,
operating profit growth was 38%. Underlying profit growth, excluding the effect
of acquisitions and exchange rate movements, was approximately 8%.
The Normalised Operating Margin was 18.9%, compared to 17.2% in the first half
2003, reflecting continuing cost control, improving attendances at conferences
and the successful integration of acquisitions.
Operating profit after exceptional items and goodwill amortisation increased by
12% to £27.0m (2003: £24.1m).
Exceptional items
Exceptional costs of £2.0m (2003: £2.1m) were incurred in the period, primarily
in relation to the integration of recent acquisitions as well as initial costs
incurred in respect of the planned relocation, in September, of the Academic &
Scientific division's UK book publishing operations from London to Oxford. We
anticipate spending a further £6m in exceptional costs during the second half of
2004 on completing the UK book publishing relocation, integrating the remaining
acquisitions and establishing a new centralised Academic & Scientific division
warehousing and distribution facility in the US. We also expect to spend a
further £2m in generating the merger synergies discussed below.
Merger related costs
Merger costs of £15.7m represent professional and other fees incurred to effect
the merger between Taylor & Francis Group plc and Informa Group plc which became
effective on 10 May 2004.
Interest
Net interest expense for the first six months of 2004 was £8.6m, an increase of
£4.3m compared to 2003 (£4.3m), as a result of increased debt used to fund
recent acquisitions.
In connection with the merger both groups' existing loan facilities were
terminated and replaced by a new five-year, £440m syndicated bank loan facility,
necessitating the expensing to interest payable of £2.4m in bank loan facility
fees associated with the terminated facilities.
Profit before taxation
Normalised Pre-tax Profit increased by 20%, to £38.0m (2003: £31.7m). Profit
before tax (but after goodwill amortisation, exceptional items, merger costs and
bank loan facility fees expensed on merger) was £0.2m (2003: £19.8m).
Taxation
Across the Group tax has been provided at an underlying rate of 27% (2003: 29%),
which is the rate expected for the whole of 2004. The effective tax rate is
influenced by goodwill amortisation, which in the main does not attract tax
relief, and the partial non-deductibility of certain exceptional items and
merger costs.
EPS
Normalised Diluted Earnings Per Share for the first half increased 12% to 9.18p
per ordinary share compared to 8.19p in the first half of 2003. There was a
basic loss per share of 2.4p for the first half of 2004 (2003: basic earnings
per share of 3.9p).
Dividend
The directors have declared an interim dividend of 2.80p (2003: 2.66p) per
ordinary share, representing an increase of 5% per share. The interim dividend
is payable on 8 November 2004 to ordinary shareholders registered as of the
close of business on 8 October 2004.
Balance sheet
Intangible assets increased by £56.3m, to £539.5m, compared to 31 December 2003.
Of this increase, £81.2m was in respect of the provisional goodwill arising on
the acquisition of the publishing business and assets of Marcel Dekker in
January 2004, offset by ongoing amortisation and exchange rate movements.
Net debt rose £95.0m to £356.2m compared to 31 December 2003 (£261.2m),
primarily reflecting the acquisition in January of Marcel Dekker.
Accruals and deferred income were up £30.1m (25%) compared to June 2003. Within
this increase deferred income relating to the journal publishing business of the
Academic & Scientific division was up 30%, with an organic increase at constant
exchange rates of 11%.
Divisional performance
The following commentary is based on the segmental analysis by class of business
shown in Note 2 to the Interim Statement.
Academic & Scientific
6 months 6 months
2004 2003
£'m £'m
Turnover 111.7 84.6
Normalised Operating Profit 23.8 18.9
Normalised Operating Margin (%) 21.3 22.3
The Academic and Scientific division comprises the Taylor & Francis books and
journals businesses together with the Informa life sciences business, including
PJB Publications. On an ongoing basis this division will be analysed by the key
market segments of STM and Humanities & Social Sciences.
The division's turnover grew by 32% (£27.1m) and Normalised Operating Profit by
26% (£4.9m), largely driven by the acquisitions of PJB, CRC Press and Marcel
Dekker. Underlying sales growth, excluding acquisitions and the effect of
exchange rate movements, was 4%, with the underlying profit growth from
subscriptions and copy sales largely offset by weaknesses in US life sciences
advertising and events.
The STM segment had a good first half overall but was affected by the slowness
in the drug discovery market which particularly affected the advertising revenue
of the Biotechniques publication. Despite this market slowdown, the annual Drug
Discovery Technology event held in Boston during August attracted encouraging
delegate numbers and the event will be replicated for the first time in India
during the second half of 2004. The publication Bio Process International has
also benefited from the large number of biotechnologically derived drugs
approved or in clinical development. PJB is in the process of relocating into
one office from the five in which it currently operates and in the first half of
2004, excluding the effect of adverse exchange rate movements, traded ahead of
the same 2003 period in terms of both revenue and operating profit.
The journals business within STM benefited from the acquisition and integration
of the Dekker journal portfolio, which is performing above expectations. The
STM books publishing business performed well and prospects for the important
second half of the year are good.
The Academic & Scientific division saw good revenue growth from the Humanities &
Social Sciences lists, particularly from the US books division. Journals
benefited from the addition of the Cass list, acquired in July 2003, which has
further growth potential as issues and content build.
Across both the STM and Social Sciences & Humanities sectors renewal rates held
steady, although at the half year there was a slight delay in the publication of
some journal issues compared to the previous first half year.
The book publishing business will in the next six months rationalise its US
books distribution into one warehouse facility, saving costs and increasing
productivity.
There has been much discussion around Open Access publishing which we have been
monitoring carefully. The Group has a number of experimental products of this
type and whilst we are alert to changes in the market model, we have not as yet
seen any significant impact.
Professional
6 months 6 months
2004 2003
£'m £'m
Turnover 44.9 39.0
Normalised Operating Profit 9.8 5.2
Normalised Operating Margin (%) 21.8 13.3
The Professional division comprises the Finance information, Insurance and Law &
Tax business segments. Overall the division's turnover was up 15% (£5.9m) and
Normalised Operating Profit was up 88% (£4.6m). Underlying sales, excluding
acquisitions and the effect of exchange rate movements, fell by 11% reflecting
the elimination of unprofitable products. As a result underlying operating
profits increased by 51%.
Normalised Operating Profit in the Finance information segment, which reflects
the acquisitions in 2003 of MMS and two smaller businesses, Barry Leeds and
NetDecide, was 75% ahead of last year at £8.0m. Almost all this growth was
related to the three acquisitions and masks the adverse effect of exchange rate
movements on this largely US Dollar denominated business. Organic operating
profit was marginally ahead of 2003 in sterling terms despite a 12% decline in
the US Dollar exchange rate.
The MMS acquisition and its subsequent merger with MCM to create the new bond
and foreign exchange information brand Informa Global Markets (IGM) has exceeded
our expectations. The revenue retention of former MMS customers is in excess of
65% which has allowed us also to retain more developmental cost within the
business to ensure we build a strong growth platform for the future, including
the launch of a powerful internet-based suite of new products. The IGM unified
publishing system, which has enabled a significant rationalisation of the cost
base of the combined business, launches later this month. Prospects for the
remainder of the year are positive with demand for our subscription services in
fixed income, bank rates and money management data continuing to be strong.
Other Professional information services profits were well up on last year with
underlying subscription revenue growth in both Insurance and Law & Tax being led
by strong demand for electronically delivered products, masked by the revenue
effect of the elimination of unprofitable products. The key driver of the
segmental improvement, however, was the financial services area with financial
conferences showing 40% higher delegate numbers and a 30% improvement in
sponsorship sales on 2003, reflecting the return to positive trading conditions
in the underlying markets after two years of cutbacks and consolidation. That
recovery has also fed through into improved advertising revenues with
advertising in our Insurance publications some 8% ahead overall, led by a 10%
improvement in the flagship title Insurance Day.
Commercial
6 months 6 months
2004 2003
£'m £'m
Turnover 89.7 85.9
Normalised Operating Profit 13.0 11.9
Normalised Operating Margin (%) 14.5 13.9
The Commercial Division comprises Maritime, Trade & Transport, Telecoms & Media,
Commodities and International Conferences. Turnover was up 4% (£3.8m) and
Normalised Operating Profit up 9% (£1.1m) with acquisitions and exchange rate
movements having a minimal impact on the reported results. Underlying sales,
excluding acquisitions and the effect of exchange rate movements, were flat with
underlying operating profit up by 3%.
The Maritime segment performed strongly in the period, already exceeding the
2003 full year profits. Economic conditions in the maritime trades have picked
up with higher freight rates benefiting the shipping industry at large. This has
been reflected in strong profit rebounds with the leading titles in the
business; Lloyd's List and Lloyd's Loading List, performing particularly well.
Conference and distance learning results were also well ahead in the period with
energy-related themes in particular proving successful against a backdrop of
markedly higher oil prices. In this generally strengthening environment the
division is also benefiting from a programme of close cost control and the
elimination of unprofitable product lines undertaken over the last eighteen
months.
The Telecoms division is also experiencing improving underlying trends with
confidence returning to the mobile sector with the onset of 3G services and
applications. The 3GSM conference in Cannes in February produced profit ahead of
last year though increased royalty payments under a revised agreement with our
event partners exceeded that underlying gain. Under a new agreement with the
telecoms trade association GSMA we are organising an annual Asian version of the
3GSM conference and will hold the first event in Singapore in October. Average
paid attendances at telecoms conferences in the period were significantly higher
than in the prior year period (on a smaller number of events organised) and
event volume is being stepped up in the second half to take advantage of the
firming market conditions. Total delegate registrations at telecoms conferences
to the end of August are some 19% ahead of last year.
International Conferences comprise domestic and regional events held outside the
UK and US and are run from our offices throughout the world benefiting from
group conference themes and formats. The business, which is second half
weighted, saw strong performances in Germany and the Asia Pacific Rim which were
offset by start up losses in Russia, Poland and Hungary and fewer events in
France, Sweden and Brazil.
Merger integration update
Even though the merger was only completed on 10 May, considerable progress has
already been made in securing integration benefits from the combination of
Taylor & Francis and Informa. Initial revenue enhancement expectations have
been reinforced by the work of cross disciplinary integration teams that have
focused on the creation of new publishing and conference product as well as
cross-marketing the existing combined product portfolio. In addition, ongoing
annual cost savings identified to date are expected to be almost twice the £4.6m
indicated at the time of the merger - the full benefits of which will be
substantially realised in 2005.
Revenue synergies
Recurring annual direct merger related revenue synergies of approximately £9m
are expected in 2005, with an average anticipated profit margin of around 20%.
Of this total, half will come from cross marketing of existing products to our
combined customer base. This increased cross marketing will be fully funded by
identified cost savings in the marketing area deriving from improved buying
power and greater capacity utilization of in-house mailing facilities.
We plan to add around 80 new events and distance learning courses in 2005, with
expected first year incremental revenue of some £2.5m. Through our research
with the academic boards of the Group's STM journals and detailed work with the
editors of our major academic publications we have identified a range of
priority areas for new events. These areas include nanotechnology, systems
biology, IT security and forensic science.
In addition, we have opened dialogue with around 30 leading academic societies
to provide event management and marketing services on a fee basis.
New publishing initiatives are expected to contribute revenue of some £2m in
2005. We have identified significant new revenue opportunities in areas such as
bioinformatics, mobile telecoms technology, maritime security and post graduate
education studies and we expect to build these programmes progressively over the
next three to five years.
We are also beginning to identify new advertising revenue opportunities in the
academic and scientific areas.
Cost synergies
Since the completion of the merger we have been able to confirm in detail
operational savings that were not fully transparent at the time of the merger.
As a result, we now expect annual cost savings of some £9m from 2005. In
particular, IT systems and infrastructure have provided significant manpower and
service efficiencies and are expected to deliver £2.6m of savings in 2005.
Office premises rationalisation has been possible in London, Oxford, New York
and Washington resulting in annual savings of some £2.1m in occupancy costs.
Head office savings, margin reductions on bank facilities, staff efficiencies,
lower professional costs and negotiated reductions on print and distribution
costs have also been obtained and are expected to contribute a further £4.5m.
As noted previously, these cost savings will be achieved at an expected one-off
exceptional cost of £2m in 2004.
From a corporate tax perspective we are implementing post-merger tax strategies
which are expected to bring the Group's underlying corporate tax rate down
progressively to below 25% over the next several years. The combined Group's
sustainable underlying tax rate has already been reduced from 28% in 2003 to 27%
in 2004.
Board appointment
We recently announced the appointment of Dr Pamela Kirby, who joined the Board
as a non-executive director with effect from 1 September 2004. Pam brings a
great deal of international business and corporate experience to the Board and
will be a valued addition to the team.
Outlook
T&F Informa has a broad portfolio of high quality information products that it
provides to a number of specialist global markets. The recent merger combines
two different, but complementary, skills sets which will allow the enlarged
Group to grow faster than the component parts and as a result provide real value
for shareholders.
We are already discovering more revenue opportunities than we had originally
anticipated and these will contribute progressively to growth over the next few
years. The opportunity to provide specialist information through a variety of
media formats to a larger customer base offers considerable potential. Allied
to this, the recent acquisitions of CRC Press, Marcel Dekker, MMS and PJB
continue to provide additional revenue enhancement and cost saving
opportunities.
T&F Informa is well placed to grow organically and through selective earnings
enhancing acquisitions at a time where there is evidence that many of the
Group's markets are recovering. As a result, the Board remains confident of a
satisfactory outcome for 2004 and of the Group's prospects for the future, with
the benefits of the merger becoming more apparent in 2005.
These results have been achieved during a period of significant change,
including the ongoing integration of major acquisitions, the rationalisation of
operations and the management of a transforming merger between two major groups.
I would like to take this opportunity to thank the employees of T&F Informa
for their professionalism and enthusiasm in embracing the considerable new
opportunities that the Group now enjoys.
David J Smith
Chairman
7 September 2004
Consolidated Profit & Loss Account
For the six months ended 30 June 2004 - unaudited
2004 2004
6 months 6 months
Before Goodwill
goodwill amortisation
amortisation
and and
exceptional exceptional 2004 2003 2003
operating operating 6 months 6 months 12 months
items items Total Total Total
Note £'000 £'000 £'000 £'000 £'000
Turnover
Continuing operations 234,675 - 234,675 209,521 441,676
Acquisitions 11,598 - 11,598 - -
2 246,273 - 246,273 209,521 441,676
Operating costs before goodwill amortisation 3 (199,653) (2,026) (201,679) (175,599) (373,468)
Goodwill amortisation - (17,624) (17,624) (9,814) (21,310)
Total operating costs (199,653) (19,650) (219,303) (185,413) (394,778)
Operating profit
Continuing operations 44,750 (16,875) 27,875 24,108 46,898
Acquisitions 1,870 (2,775) (905) - -
Total operating profit (a) 2 46,620 (19,650) 26,970 24,108 46,898
Merger costs 3 (15,703) - -
Loss on sale or termination of a business (50) - (3,822)
(15,753) - (3,822)
Net interest payable
Net interest payable (8,591) (4,315) (9,372)
Bank loan facility fees expensed on merger 3 (2,415) - -
(11,006) (4,315) (9,372)
Profit on ordinary activities before tax 211 19,793 33,704
Tax on profit on ordinary activities 4 (7,235) (9,149) (16,543)
(Loss)/profit on ordinary activities after tax (7,024) 10,644 17,161
Minority interests - equity 6 (28) (84)
(Loss)/profit for the financial period (7,018) 10,616 17,077
attributable to
shareholders
Dividends 5 (8,369) (4,708) (15,203)
(Loss)/profit for the financial period (15,387) 5,908 1,874
Earnings/(loss) per ordinary share 6
Diluted (normalised) (p) 9.18 8.19 18.54
Diluted (p) (2.36) 3.89 6.15
Basic (p) (2.36) 3.90 6.18
(a) Operating profit for the 6 months ended 30 June 2003 and year ended 31
December 2003 includes charges for exceptional items of £2,083,000 and
£11,829,000 respectively as detailed in note 3.
Consolidated statement of total recognised gains and losses
6 months 6 months 12 months
2004 2003 2003
£'000 £'000 £'000
(Loss)/profit attributable to shareholders (7,018) 10,616 17,077
Currency translation difference on foreign currency net investments (4,423) (653) (3,802)
Total recognised (losses) and gains in the period (11,441) 9,963 13,275
The Board of Directors has approved this interim report.
Consolidated Balance Sheet
As at 30 June 2004 - unaudited
30 June 30 June 31
December
2004 2003 2003
Note £'000 £'000 £'000
Fixed assets
Intangible assets 539,517 317,167 483,185
Tangible assets 34,575 27,346 33,456
Investments 8,817 3,253 9,957
582,909 347,766 526,598
Current assets
Stocks 42,298 41,007 42,414
Debtors 94,317 91,850 93,792
Cash at bank and in hand 11,124 3,908 23,586
147,739 136,765 159,792
Creditors: amounts falling due within one year
Loans and overdrafts (7,764) (3,645) (6,046)
Creditors (34,181) (27,539) (30,438)
Proposed dividend (8,369) (4,749) (10,233)
Corporation tax (20,268) (25,206) (23,595)
(70,582) (61,139) (70,312)
Net current assets 77,157 75,626 89,480
Total assets less current liabilities 660,066 423,392 616,078
Creditors: amounts falling due after more than one year
Bank loans (353,164) (188,445) (272,344)
Other creditors (461) (5,923)
-
(353,625) (188,445) (278,267)
Provisions for liabilities and charges (9,686) (6,903) (10,903)
Accruals and deferred income (152,252) (122,195) (164,428)
Minority interests (73) (331) (79)
Net assets 144,430 105,518 162,401
Capital and reserves
Called up share capital 29,845 27,408 29,790
Share premium account 184,875 123,195 184,494
Reserve for own shares 1,267 1,267 1,267
Other reserve 37,398 37,399 37,399
Merger reserve 35,944 34,155 34,540
Profit and loss account (144,899) (117,906) (125,089)
Equity shareholders' funds 7 144,430 105,518 162,401
Consolidated Cash Flow Statement
For the six months ended 30 June 2004 - unaudited
6 months 6 months 12 months
2004 2003 2003
Note £'000 £'000 £'000
Net cash inflow from operating activities 8 15,623 18,238 79,065
Returns on investments and servicing of finance
Interest received 1,347 519 1,490
Interest paid (10,417) (5,541) (10,773)
Net cash outflow from returns on investments and (9,070) (5,022) (9,283)
servicing of finance
Taxation
Corporation tax paid (4,694) (2,544) (6,965)
Overseas taxes paid (3,458) (2,857) (6,220)
Tax paid (8,152) (5,401) (13,185)
Capital expenditure and financial investment
Purchase of publishing goodwill (1,159) (841) (3,469)
Tangible fixed assets acquired (3,585) (2,484) (5,689)
Tangible fixed assets sold 229 122 267
Disposal/(purchase) of investments 1,141 (8,810)
-
Net cash outflow from investing activities (3,374) (3,203) (17,701)
Acquisitions and disposals
Purchase of business/subsidiary undertakings (net of cash (88,138) (64,396) (225,854)
and overdrafts acquired)
Disposal of business/subsidiary undertakings - - 1,045
Net cash outflow from acquisitions and disposals (88,138) (64,396) (224,809)
Equity dividends paid (10,207) (8,813) (13,787)
Net cash outflow before use of liquid resources and financing (103,318) (68,597) (199,700)
Management of liquid resources - 11,988 11,988
Financing
Net loans advanced 85,306 49,667 148,482
Proceeds (net) from share issues 1,839 264 52,580
Net cash inflow from financing 87,145 49,931 201,062
(Decrease)/increase in cash 9 (16,173) (6,678) 13,350
Notes to the Unaudited Interim Statements
For the six months ended 30 June 2004
1 Basis of preparation
The interim accounts for the six month period to 30 June 2004 have been prepared
under the basis of merger accounting following the combination of Informa Group
plc and Taylor & Francis Group plc.
The figures for the six months to 30 June 2004 and 30 June 2003 are unaudited.
The comparative figures for the financial year ended 31 December 2003, except
for the adjustments discussed below, have been abridged from the statutory
accounts of Taylor & Francis Group plc which have been reported on by Deloitte
and Touche LLP and Informa Group plc which has been reported on by KPMG Audit
Plc, both of which have been filed with the registrar of companies. The
respective auditors' opinions on those accounts were unqualified and did not
contain statements under section 237(2) or (3) of the Companies Act 1985. The
interim statements do not comprise statutory accounts within the meaning of
section 240 of the Companies Act 1985.
The interim accounts have been prepared using the accounting policies set out
and applied in the 2003 annual report and accounts of Taylor & Francis Group plc
and Informa Group plc, except that the Group has adopted UITF abstract 38 '
Accounting for ESOP Trusts' and has made certain adjustments to achieve
uniformity of accounting policies.
UITF Abstract 38
Shares purchased through Employee Share Option Plan (ESOP) trusts are taken as a
deduction in arriving at shareholders' funds. Previously these were held within
investments. The balance sheets as at 30 June 2003 and 31 December 2003 have
been restated to reflect this change in accounting policy, resulting in a
reduction in shareholders' funds of £3,641,000 as at 30 June 2003 and 31
December 2003. There is no impact on the profit and loss account in the current
or prior period.
Accounting policy alignment
Certain adjustments have been made, and reflected in the results of the Group,
to align the accounting policies previously adopted by Informa Group plc and
Taylor & Francis Group plc. The principal adjustment is to write off previously
deferred costs resulting in a reduction in other debtors of £511,000 and
£1,066,000 at 30 June 2003 and 31 December 2003 respectively, and an increase in
other operating costs before goodwill amortisation of £555,000 for the year
ended 31 December 2003.
2 Segmental analysis
6 months 6 months 12 months
2004 2003 2003
£'000 £'000 £'000
Geographical analysis of turnover by destination
United Kingdom 53,561 45,530 91,135
North America 74,094 66,281 143,030
Western Europe 76,494 67,008 140,955
Rest of the World 42,124 30,702 66,556
246,273 209,521 441,676
Geographical analysis of turnover by origin
United Kingdom 138,681 121,434 240,704
North America 60,349 46,451 114,505
Western Europe 36,797 36,191 71,147
Rest of World 10,446 5,445 15,320
246,273 209,521 441,676
Analysis of turnover by class of business
Academic & Scientific Division
STM 67,500 45,011 106,145
Humanities & Social Sciences 44,177 39,604 91,122
111,677 84,615 197,267
Professional Division
Finance 30,235 20,686 49,130
Insurance, Law & Tax 14,702 18,358 39,570
44,937 39,044 88,700
Commercial Division
Telecoms & Media 25,902 25,911 34,982
Maritime, Trade & Transport 19,272 18,852 37,737
Commodities 9,434 6,288 13,020
International Conferences 35,051 34,811 69,970
89,659 85,862 155,709
246,273 209,521 441,676
Operating profit before goodwill amortisation and exceptional
items by class of business
Academic & Scientific Division
STM 17,217 11,670 27,745
Humanities & Social Sciences 6,556 7,214 18,754
23,773 18,884 46,499
Professional Division
Finance 8,045 4,815 10,251
Insurance, Law & Tax 1,792 424 4,555
9,837 5,239 14,806
Commercial Division
Telecoms & Media 6,953 7,315 7,943
Maritime, Trade & Transport 2,467 660 1,558
Commodities 1,039 737 1,437
International Conferences 2,551 3,170 7,794
13,010 11,882 18,732
46,620 36,005 80,037
3 Exceptional items
6 months 6 months 12 months
2004 2003 2003
£'000 £'000 £'000
Exceptional operating costs 2,026 2,083 11,829
Merger costs 15,703 - -
Loss on sale or termination of a business 50 - 3,822
Bank loan facility fees expensed on merger 2,415 - -
20,194 2,083 15,651
Taxation on exceptional items (2,884) (138) (2,576)
17,310 1,945 13,075
Exceptional operating costs of £2,026,000 in the 6 months ended 30 June 2004
represent the costs of integrating the acquired businesses of Marcel Dekker,
Cass and Swets.
Of the £15,703,000 of merger costs in 2004, £15,443,000 relate to transactional
professional fees and £260,000 to other costs.
There are also £2,415,000 of exceptional interest costs which relate to
expensing prepaid bank loan facility fees on the termination of existing bank
loan facilities in connection with the merger.
Operating costs before goodwill amortisation for the 6 months ended 30 June 2003
and the year ended 31 December 2003 are stated after charging exceptional items
of £2,083,000 and £11,829,000 respectively. In the 6 months ended 30 June 2003
these consist of costs associated with the attempted acquisition of
BertelsmannSpringer and costs of re-organising book publishing operations in the
US. For the year ended 31 December 2003 they also include further costs of
re-organising book publishing operations in the US (£1,705,000 in total), the
write off of bank facility loan fees (£874,000) and business restructuring costs
(£7,669,000). Further details can be found in the relevant statutory accounts.
4 Tax on profit on ordinary activities
6 months 6 months 12 months
2004 2003 2003
£'000 £'000 £'000
United Kingdom corporation tax 1,204 4,226 9,695
Overseas tax 3,906 3,387 4,661
Current tax 5,110 7,613 14,356
Deferred tax 2,125 1,536 2,187
7,235 9,149 16,543
5 Dividends
An interim dividend of 2.8p per share will be paid on 8 November 2004 to
ordinary shareholders registered at the close of business on 8 October 2004.
6 Earnings/(loss) per share
Basic
The basic (loss)/earnings per share calculation is based on a loss on ordinary
activities after taxation of £7,018,000 (2003 profit: £10,616,000 six months and
£17,077,000 twelve months). This loss (2003:profit) on ordinary activities after
taxation is divided by the weighted average number of shares in issue (less
those non-vested shares held by an employee share ownership trust) which is
297,349,000 (2003: 272,101,000 six months and 276,493,000 twelve months).
Diluted
The diluted earnings per share calculation is based on the basic earnings per
share calculation above except that the weighted average number of shares
includes all potentially dilutive options granted by the balance sheet date as
if those options had been exercised on the first day of the accounting period or
the date of the grant, if later, giving a weighted average of 304,084,000 (2003:
273,048,000 six months and 277,604,000 twelve months). In accordance with FRS14
the weighted average number of shares includes the estimated maximum number of
shares payable to the vendors of Routledge Publishing Holdings Limited assuming
that there are no claims for compensation by the Group that will reduce this
deferred consideration and assuming that the Company does not exercise its
option to pay the balance of deferred consideration in cash. The deferred
consideration shares are also assumed for the purposes of this calculation to
have been issued on 1 January 2004 at the closing mid-market share price on 30
June 2004 of £4.04, making 533,000 (2003: 454,000 six months and 423,000 twelve
months) ordinary shares potentially issued.
The table below sets out the adjustment in respect of diluted potential ordinary
shares:
6 months 6 months 12 months
2004 2003 2003
Weighted average number of shares used in basic earnings per 297,349,000 272,101,000 276,493,000
share calculation
Effect of dilutive share options 6,202,000 493,000 688,000
Shares potentially to be issued or allotted 533,000 454,000 423,000
Weighted average number of shares used in diluted earnings per 304,084,000 273,048,000 277,604,000
share calculation
Diluted normalised
The diluted earnings per share (normalised) calculation has been made to allow
shareholders to gain a better understanding of the trading performance of the
Group. It is based on the diluted earnings per share calculation above except
profits are adjusted for goodwill amortisation and the after tax effect of
exceptional items as follows:
6 months 6 months 12 months
2004 2003 2003
£'000 £'000 £'000
(Loss)/profit for the financial period attributable to shareholders (7,018) 10,616 17,077
Goodwill amortisation 17,624 9,814 21,310
Exceptional items after tax (Note 3) 17,310 1,945 13,075
Normalised profit on ordinary activities after taxation 27,916 22,375 51,462
7 Reconciliation of movement in consolidated shareholders' funds
6 months 6 months 12 months
2004 2003 2003
£'000 £'000 £'000
(Loss)/profit for the period attributable to shareholders (7,018) 10,616 17,077
Dividends (8,369) (4,708) (15,203)
Retained (loss)/profit for the period (15,387) 5,908 1,874
Currency translation difference on foreign currency net investments (4,423) (653) (3,802)
Proceeds of new share issues 1,839 264 64,330
Net addition to shareholders' funds (17,971) 5,519 62,402
Opening shareholders' funds 162,401 99,999 99,999
Closing shareholders' funds 144,430 105,518 162,401
Shareholders' funds at 1 January 2003 were £103,640,000 before the prior year
adjustment for the adoption of UITF abstract 38 'Accounting for ESOP trusts' of
£3,641,000 (See note 1).
8 Reconciliation of operating profit to net cash inflow from operating
activities
6 months 6 months 12 months
2004 2003 2003
£'000 £'000 £'000
Operating profit 26,970 24,108 46,898
Merger costs (15,703) - -
Loss on sale or termination of a business (50) - (3,822)
Bank loan facility fees expensed on merger (2,415) - -
Operating profit after exceptional costs 8,802 24,108 43,076
Depreciation and amortisation 22,146 14,059 29,996
Profit on sale of tangible fixed assets (15) (10) (25)
Decrease/(increase) in stocks 2,512 861 (670)
Decrease in debtors 1,777 2,165 4,641
(Decrease)/increase in creditors (19,702) (22,923) 2,073
Other operating items 103 (22) (26)
Net cash inflow from operating activities 15,623 18,238 79,065
Included in net cash inflows from operating activities are payments of
£15,789,000 (June 2003: £4,632,000; December 2003: £9,170,000) relating to
exceptional costs. Excluding these costs the operating cash inflow is
£31,412,000 (June 2003: £22,870,000; December 2003: £88,235,000).
9 Reconciliation of net cash flow to movement in net debt
6 months 6 months 12 months
2004 2003 2003
£'000 £'000 £'000
(Decrease)/increase in cash (16,173) (6,678) 13,350
Increase in bank loans and loan notes (85,306) (49,667) (148,482)
Cash flow from decrease in liquid resources (11,988) (11,988)
-
Change in net debt resulting from cash flows (101,479) (68,333) (147,120)
Foreign exchange translation difference 6,495 1,519 6,515
Non-cash movements (114) (114)
-
Movement in net debt during the period (94,984) (66,928) (140,719)
Opening net debt (261,195) (120,476) (120,476)
Closing net debt (356,179) (187,404) (261,195)
The decrease in liquid resources represents funds withdrawn from deposit
accounts.
10 Analysis of changes in net debt
Non-cash Cash flow Exchange At 30 June
At 1 Jan movements movements 2004
2004
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 23,586 - (12,345) (117) 11,124
Overdrafts (1,845) - (3,828) 34 (5,639)
21,741 - (16,173) (83) 5,485
Bank loans due in less than one year (4,201) - 2,076 - (2,125)
Loan notes due in less than one year (455) (5,876) 17 - (6,314)
Bank loans due after one year (272,344) - (87,398) 6,578 (353,164)
Loan notes due after more than one year (5,876) 5,876 - - -
Other (60) - (1) - (61)
Total (261,195) - (101,479) 6,495 (356,179)
Independent Review Report by KPMG Audit Plc to T&F Informa plc
Introduction
We have been engaged by the company to review the financial information set out
on pages 11 to 18 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the company those matters we are required to state in
this report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules which require that the accounting polices and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual accounts except where they are to be changed in the next annual
accounts in which case any changes, and the reasons for them, are to be
disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly, we do
not express an audit opinion on the financial information.
As this is the first independent review report issued on the group's interim
results, the comparative figures for the period ended 30 June 2003 have not been
subject to the review procedures set out above.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2004.
KPMG Audit Plc
Chartered Accountants
8 Salisbury Square
London
EC4Y 8BB
United Kingdom
7 September 2004
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 1 hour ago Molten Ventures
- 1 hour ago Touchstone Exploration Inc NPV (DI)
- 1 hour ago Team Internet Group plc
- 1 hour ago Ondo Insurtech
- 1 hour ago Wilmington