Final Results

Informa PLC 14 March 2007 Informa plc Preliminary Results for Year End 31 December 2006 RAPID GROWTH - POWERED ORGANICALLY Financial Highlights â€¢ Revenue up 42% to over Â£1 billion â€¢ Adjusted operating profit3 49% higher at Â£219 million â€¢ Total dividend increases 40% â€¢ Strong trading across all three divisions (Academic & Scientific, Professional and Commercial) and all three business streams (Publishing, Performance Improvement (PI)and Events) â€¢ Return on IIR acquisition exceeds cost of capital â€¢ Adjusted operating margin rises above 21% â€¢ Cash conversion more than 100% of adjusted operating profit â€¢ Confident of 2007 outlook 2006 2005 Increase Organic(1) Proforma(2) Â£m Â£m % % % Revenue 1,039.1 729.3 42 8 13 Operating profit 128.3 91.4 40 Adjusted(3) operating profit 219.1 147.3 49 13 22 Profit before tax 86.5 61.0 42 Adjusted(3) profit before tax 178.1 115.4 54 Profit for period 67.8 10.8 528 Adjusted(4) profit for period 132.1 86.5 53 Basic earnings per share (p) 16.0 2.8 471 Diluted earnings per share (p) 15.9 2.8 468 Adjusted(4) diluted earnings per share (p) 31.1 22.2 40 Dividend per share (p) 12.2 8.7 40 Cash conversion(5) 103% 113% 1. Adjusted for material acquisitions and effects of changes in foreign currency exchange rates. This excludes the results of IIR for both 2005 and 2006. 2. Proforma results include IIR Holdings Limited (acquired 6 July 2005) as if it were part of the Informa Group from 1 January 2005. 3. Excludes restructuring and reorganisation costs of Â£7.2m (2005: Â£8.3m), intangible asset amortisation of Â£83.1m (2005: Â£47.6m) and goodwill impairment of Â£0.5m (2005: Â£nil). 4. Excludes restructuring and reorganisation costs of Â£7.2m (2005: Â£8.3m), intangible asset amortisation of Â£83.1m (2005: Â£47.6m), goodwill impairment of Â£0.5m (2005: Â£nil) and related tax of Â£27.3m (2005: tax credit Â£21.4m). 5. Adjusted cash generated by operations (note 10) divided by adjusted operating profit. For further enquiries: Informa plc Peter Rigby, Chief Executive Tel: 020 7017 5000 David Gilbertson, Managing Director Tony Foye, Finance Director Susanna Kempe, Chief Marketing Officer Maitland William Clutterbuck Tel: 020 7379 5151 Emma Burdett Chairman's Statement 'Informa has demonstrated repeatedly that we are good at M&A. But of the many pleasing aspects of 2006 I am most satisfied by our underlying growth rate. On a proforma basis revenue increased by 13% and adjusted operating profit by 22%. This proves without doubt that we have built a strong engine for organic growth.' Richard Hooper Over the last two years Informa has been transformed. Starting with the merger with Taylor & Francis in 2004, followed by the acquisition of IIR in 2005, Informa is now four times the size that it was three years ago. In 2006, we produced over 2,800 new book titles, 2,000+ subscription products and 10,000+ events. Our marketing database has over 20 million contacts. The IIR acquisition has broadened our geographical reach, particularly in North America which now represents over 38% of our revenue. We have over 7,500 employees and offices in 43 countries. In last year's report I said that across our 150+ business units we were building an ever more integrated Group underpinned by common goals and shared values that guide us in our interactions with our customers and each other. I think we have achieved that integration. For Peter Rigby, our CEO, and David Gilbertson, our MD, to have integrated three businesses of similar size over the course of two years is an achievement few can rival. We now have a well balanced portfolio of revenue streams. Publishing, Performance Improvement (PI) and Events all display strong qualities individually. Publishing in Informa is inherently a high margin business with limited cyclical exposure. PI is a durable income stream hedged over many market sectors including both private and public sector. It has high client retention rates and enjoys strong relationships with most of the Fortune 100 companies and many of the multi-national blue-chips. Events is our fastest growth capturer. It is readily scalable. Our best practice blue prints and 20 million strong marketing database mean that we can move quickly when we identify market opportunities. Taken together we believe these three distinctive revenue streams put us in the enviable position of allowing us to capture growth quickly when economic conditions are strong but will also demonstrate superior defensive qualities during tougher economic periods. It was this confidence in the strength of the business and our independent future that led us to reject the unsolicited bid approach we received from private equity interests in November. As we move ambitiously into 2007, I believe that we have the portfolio, the people and the passion to produce another strong set of results. I would like to take this opportunity to thank everyone within Informa for their dedication, hard work and commitment in creating this success. This will be my last statement as your Chairman. After full consultation with our major shareholders, I am delighted to announce the appointment of Peter Rigby as my successor as Chairman, with David Gilbertson becoming Chief Executive effective from 15 May 2007. In deciding to request that Peter take up the role of Chairman, a step the Board recognises runs counter to the recommendations of the Combined Code, we considered the complexity of the Group's global operations, the need for management stability at the top of the Group following three years of fundamental changes and the long-term and proven partnership of Peter and David since 1998. The Board has also resolved to make certain governance changes which include annual re-election of all directors from this year's AGM and the enhancement of the role of Senior Independent Director, Derek Mapp. Next year you will see a statement from Derek in the Annual Report. I have been closely associated with Informa since 1998 when I joined LLP as a non-executive director. I have been delighted to be a part of such a wonderful growth story. I wish Peter, David, Tony Foye and the rest of Informa all the best in continuing this sterling work during 2007 and beyond. Richard Hooper 14 March 2007 CEO's and MD's Statement 'We set ourselves an ambitious growth target for 2006. We beat it.' Peter Rigby and David Gilbertson 2006 was our first full year as the new Informa: combining legacy Informa which grew out of IBC and Lloyd's of London Press, Taylor & Francis (the Scientific and Academic publishers) and IIR (the Events and Performance Improvement (PI) experts). We had a very ambitious growth target. And we beat it. Our headline revenue has grown by over 40% and our adjusted operating profits have grown by almost 50%. More telling, in terms of confidence for the future, our proforma revenue increase was 13% and our proforma adjusted operating profit increase was 22%. We believe this is the best measure for the like for like growth achieved in 2006. This growth shows the strength of our core business and the success of our M&A activity. We are not just bigger because of the corporate development we have undertaken; we are stronger, at once more resilient and more dynamic. Informa's broad geographical reach creates a natural resilience, allowing us to pursue growth aggressively in strong markets such as Dubai where we have seen excellent operating profit in 2006, with a 74% increase on prior year; and South Africa which in a turnaround situation grew by over 500%, whilst being more cautious in weaker markets such as Denmark and Poland which were flat on prior year. Our local office structure means that we typically match costs to revenues across geographies mitigating foreign exchange exposure. The impact of currency movement on Informa's 2006 results was minimal, despite the volatility of the dollar. Informa's extended geographical footprint has also enabled us to grow faster as we leverage our winning brands by rolling them out globally. We have taken our top Large Scale Events (the 'must attend' event in a market, which attracts both high delegate numbers and large sponsorship and exhibition revenues) and held regional versions in new territories particularly in Asian markets. We carried out an extensive review of the international opportunities for our market-leading PI businesses and are in the process of significantly expanding their international reach. Royalty revenues from PI franchises grew by 25% in 2006, demonstrating strong international demand for their intellectual property. This success reflects the PI companies' proven ability to improve the performance of client business within specific operational disciplines such as communications, customer experience, leadership, project and programme management and sales. Our strategy is to provide specialist information to niche, targeted communities of interest across multiple media formats. At the heart of all of our businesses and revenue streams is high value, proprietary content. In 2006, our customers paid to receive premium content in books, journals, magazines, newspapers, events, training courses, exhibitions, PI engagements, data feeds, web sites and increasingly through a full range of electronic media. Informa's publishing revenues are resilient. Our subscription revenues of which 90% now flow from digitally delivered content, renew each year at 90+% and enjoy considerable visibility as subscribers pay up to one year in advance. We are not a B2B publisher dependent upon advertising income, indeed just 3% of our revenues in 2006 came from advertising. Our events businesses have benefited from a shift away from traditional advertising spend. As advertisers demand more targeted marketing and more measurable response they are increasingly attracted to sponsoring and exhibiting at events. Consequently, our proforma sponsorship and exhibition revenue grew by 41% in 2006. All our markets saw good growth in 2006. Notably, Telecoms & Media adjusted operating profit grew by 34% and Maritime, Trade & Transport's by 35%. Our newly integrated Life Sciences events businesses grew operating profit by 74%, again demonstrating the benefits of the acquisition synergies. Across Informa, managers and their teams have seized the opportunities presented by our increased scale and format expertise: implementing best practice from around the world; partnering with sister companies to expand their product ranges and customer base; reducing costs through shared back offices. We are proud of the sort of Group Informa is - highly entrepreneurial, profit focused, fast and individual yet strong, robust and responsible. It's a combination that we work hard to nurture because we know it sets us apart from our peers. Chief Executive's and Managing Director's Review Business Streams Publishing Publishing constituted 39% of revenue, Â£409.0m, in 2006. On a proforma basis revenue was up 8% with subscription sales growing by 7%, copy sales by 11% and advertising revenues by 3%. Subscription revenues made up almost 60% of publishing turnover and continue to produce high operating profit margins, fuelled by market leading positions, strong repeat revenues, brand roll-outs and increased yield and opportunity from electronic delivery. Sales to corporates in the commercial, professional and pharmaceutical markets produced approximately 60% of the subscription revenues. In Professional, where legal revenues as a whole grew by 6% and adjusted operating profits by 15%, subscriptions contributed 45% of the divisional expansion. The two main drivers of this growth were bundling formats which created additional value for customers and encouraged take-up of on-line services and sales of multi-user corporate licences with key client firms taking advantage of a greater range of digital services. The launch of Informa Law's on-line service www.ilaw.com was pivotal to these results. Launched in November 2005, i-law brings together the core law report archives and in-depth analysis for the niche markets of shipping, insurance, arbitration, construction and intellectual property law. 2007 will see even greater content depth and functionality, moving it from a research tool to a daily work aid. Similarly in insurance, in 2006 Informa launched the new on-line service, www.idnewscentre.com. This leverages the leading Insurance Day brand and has created the opportunity to build subscription revenues from multi-user corporate licences. It also reduces the historical reliance in this sector on hard copy advertising revenues whilst opening a new opportunity to grow on-line advertising revenues in 2007. In the financial sector Informa's strategy to be the market leader in each of its niche sectors and to produce expert proprietary content and then distribute it through multiple delivery vehicles, can be seen in action across the various businesses. Informa Investment Solutions, the financial data and software provider, successfully completed the integration of the M Solutions business acquired in February 2006. Its PSN investment manager database business and offering is now the market leader, driving increased subscription revenues and key customer usage. Informa Research Services, the US based financial services research business, benefited from the need for quality content by the growth of electronic delivery vehicles. It increased revenues by leveraging the strength of its premium content to re-sell it to on-line portals. In March 2006, iMoneyNet, the publishers of the Money Fund Report, released Money Fund Analyzer, a browser-based analytical tool designed to help US-based mutual fund companies, banks and insurance companies meet their business goals. It provides 24-hour access to iMoneyNet's entire US money market fund database which includes more than 20 years of historical information on hundreds of data points. By the end of 2006, all but a handful of subscribers had upgraded from the desktop software database application to this new product resulting in a 32% sales increase in this area. Academic publishing continues to benefit from electronic capabilities both improving revenues and saving costs. Over 90% of subscriptions to our 1,200+ academic journals are now digitally delivered. Informa launched 60 new journal titles in 2006 and enjoyed revenue increases of circa 8% reflecting content growth and frequency increases in a number of journals, particularly in the humanities and social sciences area. The rise in digital delivery means that new research no longer has to wait for a fixed issue date. On-line updates can be made on a continuous basis adding even greater value and consequently resilience, to the subscriber base and cementing each journal's market leading position. Informa's 200 years' worth of premium journal content is a treasure trove of authoritative research. In 2006 Informa identified the core subject areas with the greatest archive strength and digitised them. The first four of these electronic archives were on Education; Business Management and Economics; Chemistry; and Physics. They have already produced their first million dollars in incremental revenue in 2006, all with limited associated costs, and 2007 sales are going well. Additional sets will be launched in 2007 focused on Mathematics and History of Science; Geography, Urban Planning, Environment and Sport; Behavioural Sciences and Social Work; and Engineering. Academic books' focus on e-commerce continued in 2006 with the launch of www.taylorandfrancis.com in May. Market facing brands such as Routledge, have their own direct domains but use the same applications. All orders are consolidated through one server, dramatically improving the business's ability to promote and track sales. The system is updated daily with automatic new content feeds. It is designed so that products and services from bolt-on acquisitions can be added easily. The new functionality in the site has transformed the customer buying experience. It allows the marketing teams to run and monitor intelligent promotions on-line and has consolidated a rather fragmented web presence into a strong, unified brand. On-line sales revenue since launch has increased by 26% compared with prior year. Increasingly imprints such as Routledge and Garland are adding digital and web support to their academic textbooks. The bestselling Media Student's Book, used at undergraduate, A Level and FE level was released in March 2006 with a supporting website which included course mapping to individual markets, student production film work, student essays and links to other websites. In its first eight months, the new fourth edition sold five times the number of units sold in the same initial period in its previous edition, reflecting both its loyal customer following and the added attractiveness of full colour illustrations and user-friendly digital support. This multi-media trend will continue in 2007 with new launches such as Introduction to Global Politics, a textbook which has a supporting website with lecturers' materials, datasets and updates; Psychology of Physical Activity, supported by a website containing lecturer PowerPoints; and Quantitative Data Analysis in Education, also accompanied by a web site that contains educational information materials to download. Technological advances in printing mean that Informa can now print high quality books on demand at comparable costs to bulk printing. This Print on Demand (POD) capability reduced costs, increased revenue and helped the environment in 2006. Holding 'virtual stock' rejuvenated back lists keeping out of print books on sale. Informa was able to produce even more niche, specialist publications and reduce the incidence of stock write-offs by avoiding the need for large print runs. Further savings were made by preparing the texts for POD in India and then using local print suppliers in the UK and US to avoid shipping costs. POD also reduces Informa's carbon footprint and paper usage. The number of books being printed on demand increased in 2006 to over 9,000. This represents more than 20% of all titles and is being added to at a rate of approximately 300 a month so Informa will enjoy even greater benefits from POD in 2007. Performance Improvement ('PI') PI generated 22% of revenue, Â£225.8m, in 2006. It achieved proforma revenue growth of 11% and adjusted proforma operating profit growth of 12%. The PI businesses, working with corporate and government clients to solve business issues in different operational disciplines, continue to experience strong global demand for their products and services. Their ability to drive better results for their clients using tailored intellectual property based learning programmes, coaching and measurement is generating strong repeat business. Each of the seven brands is performing well. The focus on expanding the US-led PI businesses globally continues to produce promising results with Â£34m, 15% of PI revenues, generated from non-US based operations. The wholly owned non-US businesses grew revenue on a proforma basis by 16% in 2006 outstripping the US growth of 10%. Equally encouraging for further international growth, royalty revenues from franchises grew by 25%. AchieveGlobal (Achieve), one of the larger PI businesses which with 40% of its revenue from outside the US, has more global revenue than any of the other PI businesses. In 2006 Achieve continued to build its international position with the purchase of its Taiwan and Greater China franchise operation. Achieve's world-wide reach means that it can deliver solutions in a variety of methods and languages. Among the many organisations Achieve has worked with internationally is global printer RR Donnelley whose Achieve solution set was delivered to 1,500 new employees through online and classroom programmes in Spanish, Cantonese, Mandarin and English. Achieve also launched new programmes in its Professional Sales portfolio to great success. Over 5,000 individuals worldwide have already been through the new programmes. This significant investment in new intellectual property was recouped within nine months. ESI International (ESI), the Project Management specialists and another of the larger PI businesses, also saw good global growth with proforma operating profit from its non US business increasing 28%. Throughout the year, ESI launched projects aimed at driving additional revenue from its multi-national client base, improving levels of customer service and creating greater collaboration and cooperation within the global account teams. This has resulted in the win of a substantial EMEA account. This leading manufacturer of advanced technology systems for the semiconductor industry is potentially ESI's largest ever EMEA client and will begin to trade in 2007. Similar team work is driving new opportunities in the Middle East. Sales, marketing and system integration projects were launched in July 2006 designed to boost the newly acquired Asia business units. These have enabled ESI to secure new revenues for this region and create operational efficiencies resulting in above plan operating profit for the operations in China, Singapore and Hong Kong. Omega, one of the smaller PI brands, specialising in financial service clients, also produced noteworthy results delivering a 60% increase in proforma operating profit on a 16% jump in global revenue and a nearly 70% increase in average yield per client. Omega clients include the National Australia Bank (NAB), with whom it has had a relationship for 18 years. NAB is rolling out a comprehensive Omega PI solution comprised of sales, sales management and coaching components to more than 1,000 bank managers - in an effort to increase its share of the retail banking market through improved branch and regional management practices. Another key Omega client is Standard Chartered Bank, with whom Omega has worked for more than a decade. Standard Chartered, a global leader in emerging markets, employs Omega's credit skills assessment, training and coaching solutions in over 50 countries across Asia, Africa and Latin America. Each year, more than a 1,000 Standard Chartered Bank employees graduate from Omega programmes. Initially focused on wholesale bank credit applications, the relationship has expanded to encompass the Small and Medium Enterprise sector - a driving force for Standard Chartered's international growth. Similarly, Barclays, who initially targeted 400 staff members for its Credit Skills Development programme, have to date had more than 1,200 participants in Omega's credit and risk management solutions. Events Events generated 39% of revenue in 2006 and saw excellent proforma growth of 19%. The successful integration of IIR; a continued focus on developing Large Scale Events (LSEs), the 'must attend' conferences in each sector which combine strong delegate revenues with high margin sponsorship and exhibition income; and leveraging Informa's global footprint, have all contributed to the strong performance. For example, combining the Informa and IIR events businesses in Australia to create one national business with two market facing brands, drove a 13% increase in proforma revenues and a 21% increase in proforma adjusted operating profit. Average delegates attending IIR branded events in Australia rose by almost 8% as the business took advantage of access to the combined customer and prospect base. Average yield per delegate for the Informa branded events in the country rose by over 9% as they capitalised on the pricing strategy from the IIR model. The accelerated growth opportunities combined with integration synergies to raise margins above 20% in 2006. Much of the margin improvement was achieved through the increased purchasing power of the integrated business and the merger of the back office. Across Informa, a focus on LSEs and a small number of major exhibitions has improved the quality of earnings of the events portfolio. These events have particular resilience through the cycle as they become the prime meeting place for a specific industry or sector. They attract the best speakers; delegates attend and return to them annually because they provide an opportunity to meet the full marketplace and they are a magnet for sponsors and exhibitors who recognise a focused opportunity to engage proven purchasers and wish to demonstrate commitment to the sector. Our largest 200 events contribute more than 40% of our total events turnover. Advantages of scale mean that they enjoy significantly higher margins than our average. They contribute approximately 70% of our events-derived adjusted operating profit. The remainder of the events portfolio while contributing at lower margin, helps ensure we maximise profitable revenue from our structures and cleans and builds our prime asset - our 20 million-strong database. They also allow us to explore and develop the topics that will become tomorrow's leading events. Dubai's Cityscape, which is now the world's largest international property investment & development event, is a notable example of just that process. Started five years ago as a standard conference, in 2006 the show welcomed 35,000 participants from 90 countries and over 500 exhibitors from 55 countries, more than doubling its exhibitor base. Dubai's whole exhibition portfolio performed well. Palme, The Middle East's Professional Sound, Light, Music, Audio Visual and Systems Integration Exhibition, grew exhibitors by almost 50%. Middle East Electricity, the largest power and electricity event in the Middle East, grew its exhibitor base from 764 to 969, a 27% increase. Bride, the wedding show, increased visitor numbers from 11,000 in 2005 to 25,000 in 2006. Ambiente, the gift & homeware exhibition for the new bride and her first home, which is co-located at the Bride Show, demonstrates the success of leveraging existing brands to drive further market penetration. Ambiente grew exhibitor numbers by 52% and visitor numbers by over 100% from 2005 to 2006. IIR USA posted strong results as its focus on LSEs, which have an average gross profit almost eight times that of a standard conference, continued to pay off. In total, proforma adjusted operating profit grew by over 47% and the operating profit margin grew by 7%. Flag ship million dollar plus events included: GAIM, the Hedge Fund industry event; the brand extension GAIM Fund of Funds; CROs, the multi-million dollar clinical development outsourcing conference; NMHCC, the National Managed Health Care Congress; The Market Research event and Front End of Innovation, the only truly comprehensive event focused on all aspects of front end strategy and process. Front End of Innovation is another example of how Informa is building on existing brands. It began as a small, niche conference with just 20 delegates. In 2006 it produced over $1m in revenue. Informa's expanded international footprint has allowed the business to leverage these LSE brands globally. In 2006 IIR USA launched a regional version of its GAIM event in the Cayman Islands, producing over $1m in revenue in its first year. Already in 2007 Front End of Innovation launched successfully in Germany, joining Euro Market Research in the portfolio of strong US brands being profitably replicated overseas. ICBI, (the specialists in financial LSEs) launched an Asian version of SuperReturn, the largest private equity event in the world which attracts around 1,000 delegates each year in Europe. Through rigorous local research, they wrote a programme which attracted over 200 paying delegates. By leveraging existing relationships and quadrupling the Asian based investment in the event they delivered significant sponsorship and exhibition revenues. ICBI is also illustrative of another successful 2006 strategy. In addition to the focus on growing LSEs, Informa built revenue synergies between sister companies. The International Payments Systems event is a case in point. A legacy Informa event it was moved to ICBI, in order to grow it from an annual event to a LSE. Applying the best practice blueprint, delegate revenue rose by 49% and Sponsorship and Exhibition revenue by 59%. Informa's Professional publishing team also produced a highly profitable event supplement, the distance learning team launched a new programme and two of the Performance Improvement businesses exhibited and won new business. Divisions Academic and Scientific Academic and Scientific 2006 2005 Increase Organic Proforma Â£'m Â£'m % % % Revenue STM 178.7 157.0 14 4 8 HSS 116.5 103.5 13 10 13 ----------------- 295.2 260.5 13 6 10 ----------------- Adjusted Operating Profit STM 50.6 41.5 22 10 16 HSS 27.0 24.0 12 9 12 ----------------- 77.6 65.5 18 10 15 ----------------- Adjusted Operating Margin 26.3 25.1 Revenues increased by 13% to Â£295.2m in 2006, driven by an organic increase of 6% and by contributions from acquisitions including a full year from IIR. Adjusted operating profit was 18% higher at Â£77.6m, which included organic growth of 10%. On a proforma basis adjusted operating profits were up 15%. In 2006 IIR contributed Â£18.9m (2005 from date of acquisition: Â£5.9m) to revenue and Â£3.2m (2005 from date of acquisition: Â£0.4m) to adjusted operating profit. On a proforma basis IIR for 2005 recorded turnover of Â£14.2m and adjusted operating profit of Â£2.4m. The adjusted operating margin rose to 26.3% from 25.1%, benefiting from the 7% organic increase in books sales as well as the impact of cost savings and efficiencies associated with the integration of the IIR businesses. The Scientific and Medical business grew organic revenue by 4%. Within it, Informa Healthcare, which targets the medical, bioscience and pharmaceutical sectors, with a full mix of delivery formats including books, journals, magazines and awards, had a particularly strong year, achieving organic revenue growth of 12% and operating profit growth of 8%. The team's ability to leverage brands and provide high quality content across multiple delivery platforms can be seen by its 2006 re-launch of Agrow, the flagship publication providing opinions and analysis for the plant sciences industry. Agrow was re-launched as a comprehensive news service comprising online, magazine, and traditional newsletter formats positioned to complement each other. This new package was designed to meet the diverse requirements of Agrow's readership by developing the newsletter's widely acknowledged high quality editorial across an extended portfolio of offerings. This initiative provided a platform for Agrow to protect its leading market position and drive significant revenue and profit growth with a 48% increase in advertising revenue, 28% increase in subscription yields and a 38% increase in adjusted operating profit. Using digital capabilities to support and transform high value content has been a theme throughout Informa in 2006. Informa Healthcare transformed its written courses from a paper-based product into a fully interactive service. Customer feedback has been positive and the division has already seen a four fold return on its initial investment. It has now transferred these events to the newly strengthened Informa Life Sciences events business so that they can be seamlessly co-marketed with the rest of the events portfolio. The Life Sciences events businesses in both the UK and the US had a strong 2006. Revenue increased on a proforma basis by 12% and operating profit by 74% reflecting the benefits of a successful integration. The IBC and IIR Life Science conference teams in the UK were merged to form a single team 'Informa Life Sciences' in February. The operational changes and new initiatives implemented since the initial merger saved costs, improved productivity and strengthened the business's market position considerably. By comparing working practices across research, marketing, sales and logistics, Informa Life Sciences was able to implement processes that drew from the best practices of each of the teams. The benefits of this exercise have included product specialisation, roll-out of new marketing initiatives, particularly in e-marketing, optimised lead times, increased use of telesales and successful key account sales. The combined effect of this has led to an increase in average delegate numbers of 16% along with 8% more events. Building on this success, Informa Life Sciences has gone on to expand its portfolio by launching new events for markets that have not traditionally been catered for by either of the Life Science events divisions but where Informa already had a strong presence through its publications such as Scrip. These new areas such as veterinary medicines and medical devices provide an exciting blueprint for future brand extensions based on connecting events and publications market presence and expertise. The division also saw excellent revenue growth in Humanities and Social Sciences (HSS) which increased 13% on a proforma basis and 10% organically. Books benefited from an increasing focus on two core aspects of the academic market - 'teaching and learning' books for students, and high-level international research publishing for purchase by university libraries. The top subjects by revenue size were Psychology & Behavioural Science, Education, Politics & International Relations and Media & Communication. In total more than 2,000 new books were published in the year. Significant new launches (new titles and new editions) of text books for students included: Constitutional and Administrative Law; The English Legal System; Media Students Book; Town and Country Planning in the UK; Handbook of Child and Adolescent Clinical Psychology; Theatre Histories: An Introduction; Learning to Teach in the Primary School; Sport, Culture and Society. HSS journals continued to benefit in 2006 from strong content growth. Research investment in the newer disciplines, such as strategic studies, terrorism studies, music, media, sports sciences, environmental studies and diversity, continues to grow enabling us to produce larger and more frequent journals and to win more market share. The renewal rate at over 97% is outperforming the overall journals' rate. The new electronic sales model, offering access to additional titles within a discipline for a two year period, has increased customer yield and is being well received by the academic community. We have always had a strong presence in HSS journals in Europe. The purchase of Lawrence Erlbaum towards the end of the year, with an impressive portfolio of 100 titles particularly in behavioural sciences and education, has given us a firm platform for further expansion into North America in 2007. Professional Professional 2006 2005 Increase Organic Proforma Â£'m Â£'m % % % Turnover Performance Improvement 225.8 106.2 113 - 11 Financial Data Analysis 63.6 60.8 5 -1 5 Finance Insurance Law and Tax 83.3 50.8 64 0 22 ----------------- 372.7 217.8 71 0 12 ----------------- Adjusted Operating Profit Performance Improvement 34.7 17.6 97 - 12 Financial Data Analysis 19.1 17.9 7 2 8 Finance Insurance Law and Tax 22.0 9.9 122 29 38 ----------------- 75.8 45.4 67 10 17 ----------------- Adjusted Operating Margin 20.3 20.9 The Professional division's overall revenue increased by 71% to Â£372.7m and adjusted operating profit rose by 67%, driven by a strong contribution from businesses acquired with IIR, notably Performance Improvement (PI) and the IIR Finance events businesses. IIR businesses, which now account for three quarters of the division's sales, contributed Â£273.6m to revenue and Â£48.6m to adjusted operating profit (2005: Â£122.0m and Â£21.0m respectively post acquisition). On a proforma basis revenue was up 12% and adjusted operating profit increased by 17%. PI in 2006 represented over 60% of the revenue of this division and grew 11% on a proforma basis to Â£225.8m from Â£204.3m in 2005. This full year double digit growth has been consistent throughout 2006, with an equal 11% growth in both halves of the year on a constant currency basis. Solid revenue growth was achieved by six of the seven PI businesses, led by Forum, Omega and Robbins-Gioia. Only Communispond, the smallest of the PI companies accounting for 2% of PI revenue, had a flat performance in 2006. Overall reported PI operating profit grew by 97% with a 12% increase on a proforma basis. Good operational gearing in AchieveGlobal, Forum and Omega led to proforma operating profit growth in excess of 30%. Robbins-Gioia, the programme management specialists with a significant government client base, grew revenue by 13% but as a result of a $4 million investment programme in new solutions development which is expected to generate incremental revenue in 2007, saw a profit decline. The Financial Data Analysis businesses grew reported revenues and operating profit by 5% and 7% respectively and on a proforma basis by 5% and 8% respectively. The challenging market conditions for real-time trading-related information for the banking community which we referred to in the mid-year impacted the performance of the corporate and government bond information business IGM and caused organic revenue to decline slightly. All other businesses within the unit produced good increases. M Solutions acquired in February 2006, which added wealth management solutions to the Informa Investment Solutions product offering, contributed to the overall growth. The Finance, Insurance, Law and Tax (FILT) businesses produced exceptional reported revenue growth of 64% and adjusted operating profit growth of 122% primarily due to a full year of the IIR financial events businesses including the ICBI portfolio. FILT revenues grew by Â£32.5m to Â£83.3m and adjusted operating profit by Â£12.2m to Â£22m; with IIR contributing Â£48.6m to turnover and Â£13.7m to adjusted profit producing proforma growth of 22% in revenue and 38% in operating profit. On an organic basis, legacy Informa FILT revenues were flat. Strong revenue and profit growth of 6% and 22% respectively in the UK Professional legal and insurance division, achieved despite transferring their financial events portfolio to the IIR events team, was offset by a weaker performance from the Dutch publishing unit which specialises in written courses. The stronger UK Professional performance was led by increased legal subscription sales, particularly electronic sales through the new ilaw.com service. In addition, a strong focus on Large Scale Events (LSEs) and increasing event yield, grew legal and insurance events adjusted operating profit by 25%. Financial events particularly under IIR's Tax and Accounting and ICBI brands traded strongly in the period with: good performances from LSEs; international roll-out of existing event brands; leveraging of sister company publishing capabilities to produce show dailies and event supplements; and good cost cutting synergies from the integration of the legacy Informa finance events. Commercial Commercial 2006 2005 Increase Organic Proforma Â£'m Â£'m % % % Revenue Regional events 241.1 143.1 68 13 16 Telecoms & Media 64.7 48.4 34 30 24 Maritime & Commodities 65.4 59.5 10 10 10 ----------------- 371.2 251.0 48 16 16 ----------------- Adjusted Operating Profit Regional events 42.3 18.6 127 14 47 Telecoms & Media 16.1 12.0 34 34 25 Maritime & Commodities 7.3 5.8 26 25 25 ----------------- 65.7 36.5 80 25 38 ----------------- Adjusted Operating Margin 17.7 14.5 The Commercial division, which comprises 75% of Informa's events revenue, increased headline revenue by 48% (Â£120.2m) to Â£371.2m and adjusted operating profit by 80% (Â£29.2m). Organic revenue growth of 16% translated into a 25% improvement in organic adjusted operating profit, again reflecting the cost synergies of the enlarged Group and the benefits from increased yields resulting from the movement towards higher yielding event formats. The division's results benefited from the acquisition of the quadrennial print exhibition IPEX from the trade association PICON which added Â£17.0m to turnover and Â£4.4m to adjusted operating profit. IIR businesses contributed Â£136.9m to the division's revenue and Â£28.1m to its adjusted operating profit (2005: Â£64.6m and Â£10.1m respectively post acquisition). Overall on a proforma basis revenue was up 16% and operating profit 38%. Regional Events grew organically by 13% on a revenue basis and 14% on adjusted operating profit. On a proforma basis revenues increased by 16% which translated into a 47% proforma adjusted profit increase reflecting the good operational gearing of the combined events businesses and the cost synergies achieved through the IIR integration. The IIR Dubai events business which represents almost a third of the regional events profit had a particularly strong year in both exhibition and conferences & training. Dubai's ten strong exhibition portfolio which is led by Arab Health, Cityscape and Middle East Electricity grew its operating profit by 82% on 2005. The conference and training course output reached over 750 events with operating profit 57% higher than last year. The Informa and IIR German businesses which together represent the next biggest component of the Regional Events unit traded strongly in the second half of the year, offsetting the inhibiting impact of the Football World Cup on first half growth, to achieve an adjusted operating profit increase of 11% for the full year. Telecoms and Media saw headline revenue and adjusted operating profit growth of 34%. On an organic basis revenue and adjusted operating profit grew by 30% and 34% respectively. Revenues increased through a focus on growing Large Scale Events as well as capturing market growth with the development of new niche topics such as 3G Long Term Evolution (known as 4G); the rapid repeats of hot topics such as Mobile Search; and the regional roll-out of strong brands within WiMax and IMS to the US, Asia and EMEA where in Middle East Africa in particular Informa is perfectly placed to benefit from the explosive growth in technology. Telecoms Academy, the training division of Informa Telecoms & Media, has also contributed well to the operating profit of the division with good new product development, particularly the Telecoms Mini-MBA and Distance Learning Diploma and Certificate. They too have benefited from the growing Middle East and African markets where their focus on developing sales relationships in these regions has produced an excellent return. The Maritime & Commodities businesses grew reported and organic revenue by 10% and adjusted operating profit by 26%. Maritime had particularly strong operating profit growth of 35%, capturing growth from the strong trading conditions in the international maritime markets and continuing high energy prices. The flagship title Lloyd's List had a strong year boosting both subscription and advertising revenues. Growth in the demand for specialised training in the maritime industry provided the perfect backdrop for programmes run by Lloyd's Maritime Academy at its dedicated training centre in London and via an expanding distance learning syllabus. Combined with conferences in maritime and energy, the Maritime & Transport division held more than 150 events during the year. In exhibitions the highlight was the continued growth in the Terminal Operators Conference (TOC) series which celebrated its 30th anniversary in 2006. Subscription based data services were particularly strong, boosted mid year by the creation of a dedicated portal (www.Lloydsmiu.com) which brought together various data streams / web sites relating to vessels and ownership information. This is tied into our own AIS network and provides the world's largest ship tracking system, currently capturing over 28 million vessel positions a day plus detailed characteristics of over 120,000 vessels and comprehensive information on 163,000 shipping companies. Over 12,000 credit reports on companies in the maritime, transportation and energy markets are available for immediate purchase. Site traffic is 66% higher than the previous sites combined and has beaten all revenue expectations. Commodities also enjoyed high double digit profit growth and is illustrative of Informa's niche market focus. It reflects our ability to identify new and emerging topics quickly and then build on them. Our strategy is to be first to market with a new subject area and then quickly expand the topic through all Informa's delivery formats. Informa identified the rising interest in alternative energy sources as early as 2002 and has been steadily increasing its event and publication output on this subject. In 2006 we produced 11 market leading events on ethanol and biofuels in Europe, the Americas and Asia. In addition, the World Ethanol and Biofuels Report, spawned a whole series of additional products targeted at the global biofuels industry. These include the European Ethanol Prices Report and a weekly Biodiesel Price Report. In 2006 subscribers were also able to access a daily on-line news service, updating them with the latest news and comment throughout the day from all over the world including news direct from Agra conferences. Trading Outlook 2006 was an excellent year. 2007 has started the same way. All three of our business streams have started the year strongly and are trading ahead of last year both in real and constant currency terms. Publishing is performing well and ahead of expectations. Our events and Performance Improvement (PI) businesses continue to enjoy the double digit revenue growth which they achieved in 2006. Publishing Publishing deferred income balances, which reflect subscription revenue received yet to be released to the revenue account, are 7% ahead of those at the same period last year in constant currency terms. This is an important indicator of publishing trading strength. Electronic revenues continue to build as we leverage still more of our premium content on-line. Sales of the new academic electronic archives are progressing well with some $4m of bookings already this year compared with $1m in 2006. Digital developments in our Professional and Commercial divisions also show good promise. Events Events have had a good start to the year. The Large Scale Events (LSEs) already held have outperformed prior year and budget expectations. For example, SuperReturn 2007, the largest private equity conference in the world, celebrated its 10th anniversary in February with the largest event yet, attracting some 1,500 attendees from around the world. Our Dubai business has also carried its excellent 2006 momentum forward into 2007. Its largest event, the healthcare exhibition Arab Health, has just closed significantly ahead of prior year and budget. The regional roll-outs of its second largest event Cityscape to Singapore, China, Abu Dhabi and India were all planned in 2006 and are on course to achieve significant profits in 2007. The 3GSM World Congress in Barcelona in February grew again. Under a new arrangement with the association GSMA, our attributable profit will be similar to last year although bookable revenues will be lower. Performance Improvement Total PI revenues in the first two months of this year are 11% ahead of last year with particularly strong starts from Huthwaite, the sales force effectiveness specialists, which have seen top line growth of 22% and Robbins-Gioia, the programme management experts, which is 18% ahead. International revenues continue to show encouraging expansion. Sales from non-US based operations are 23% higher than this time last year. Acquisitions and disposals Our late 2006 acquisitions Lawrence Erlbaum, the behavioural science publishing business; Citeline, the clinical trails database; and Junction, a specialist event organiser in the field of IPTV, have all begun the year in line with expectations and have already been integrated into the Group. In addition to our encouraging trading momentum, the Group will also benefit from the Â£38.9m cash proceeds, generating a non-trading profit of Â£33.4m, from the disposal of our investment in Blackwell Publishing following its recent sale to John Wiley. Summary We believe that successfully creating organic revenue synergies is a particular strength of Informa. We work very hard at moving successful products around the world, cross marketing across our divisions and encouraging our publishing, events and PI businesses to work together. Our broad product portfolio gives us many opportunities to generate incremental revenues. Our attitude is that all synergistic efforts are important even if we only generate an incremental pound of profit from the initiative. Such synergies, our expertise at leveraging premium content electronically, the inherent quality of the business and the energy, commitment and enthusiasm of our employees underpins the on-going success of Informa. The strength of our underlying trading means that we are confident that we will counter the current weakness of the dollar and achieve our targets for another successful year in 2007. Peter Rigby and David Gilbertson 14 March 2007 Financial Review Informa's revenue in the period was Â£1,039.1m, 42 % higher than 2005, and adjusted operating profit increased by 49% to Â£219.1m. Adjusted operating margins increased to 21.1% from 20.2%. These results reflect the increased scale of the Group following the acquisition of IIR in July 2005 and the superior growth rates and opportunities that have arisen from the combination. Including IIR on a proforma basis revenue growth was 13%. Excluding IIR the legacy Informa business recorded strong organic revenue growth of 8% (2005: 6%). Revenue growth across Informa was accelerated by increasing collaboration between the three divisions of the business which are now bringing their format expertise to bear on a wider range of market opportunities. Adjusted operating profit including IIR on a proforma basis increased 22% and excluding IIR adjusted organic operating profit grew by 13% (2005: 13%). Adjusted operating margins rose to 21.1% (2005: 20.2%) which compares to a proforma margin of 19.5% in 2005. This increase in organic and adjusted operating profits and margins demonstrates the benefits across the Group arising from the combination of the legacy Group with IIR as well as the effects of operational gearing and greater cost efficiency. Recent acquisitions traded strongly and contributed well to the year's results, particularly IIR which has achieved a post tax return on capital employed of 8.4% in its first full year of ownership, exceeding our cost of capital as expected. Other material acquisitions in the period contributed Â£28.4m to turnover and Â£7.5m to adjusted operating profit. Revenue Informa plc for the twelve months ended 31 December 2006 recorded revenue of Â£1,039.1m, up 42% from Â£729.3m in the same period a year earlier. IIR, which was acquired on 6 July 2005, contributed Â£429.3m to revenue and a further Â£28.4m was contributed by other material acquisitions in the period (mainly from IPEX, the quadrennial print exhibition, which contributed Â£17.0m). The translation impact of currency movements on the results was minimal despite some US dollar to sterling exchange rate volatility during the period. Operating Costs Operating profit increased by 40% (Â£36.9m) to Â£128.3m from an operating profit of Â£91.4m in 2005. Overall in support of this revenue growth operating costs increased by 43% (Â£272.9m) with increases in amortisation of intangibles up 74% (Â£36.9m), raw materials up 46% (Â£110.5m) and staff costs up 41% (Â£86.5m). The increase in the year's amortisation of intangibles reflects principally the charge in respect of intangible assets acquired with the IIR acquisition, with the 2005 comparative reflecting only the 6 month period in which IIR was part of the Group. Included in other expenses is Â£7.2m of costs (2005: Â£8.3m) which were incurred in integrating acquisitions during the year including IIR, M Solutions and Lawrence Erlbaum. Further details are given in note 3. Finance Costs Finance costs, which consist principally of interest costs net of interest receivable increased by 26% to Â£45.7m from Â£36.2m. The increase reflects the fact that the Group increased its debt levels in July 2005 to help finance the acquisition of IIR and hence 2005 reflects only six months of this related interest. During the year the Group has continued to use its strong cash flow to invest in selective earnings enhancing acquisitions and to this end a further Â£136.2m was spent and financed from Group debt facilities during 2006. IIR Integration Update As previously reported the integration of IIR has been completed and the combined Group has focused on and benefited from the increased scale and opportunities presented by the enlarged Group. As we had anticipated, we were able to achieve savings relating to the combination of the two businesses of Â£8m. These savings were achieved across all businesses and arose in areas including senior management, marketing, shared services, venue costs, finance and distribution. The cumulative cost of achieving these savings was Â£7.6m incurred over the last 18 months (2005: Â£4.8m) slightly above our budget of Â£7.0m. Details are included within exceptional costs in note 3. Acquisitions As mentioned above the Group spent Â£136.2m during 2006 on acquisitions and related deferred consideration. As well as matching the Group's business criteria and strategy the Group continues to apply its rigorous financial investment criteria which are that acquisitions should pay back their initial investment within seven years, be earnings enhancing in the first full year and associated cash flows must produce a positive Net Present Value within ten years when discounted back at the Group's weighted average cost of capital plus a suitable premium for risk. The Group estimates its current weighted average cost of capital at 8.2% (2005: 7.6%). Disposals Prior to February 2007, the Group held interests in shares in Blackwell Publishing (Holdings) Limited which had been acquired prior to the merger between Informa and Taylor & Francis for Â£5,495,377 in aggregate plus costs. On 2 February 2007, the Group received Â£38,943,000 upon the disposal of these interests. Taxation Across the Group tax has been provided for at an adjusted tax rate of 26.0% (2005: 25.0%). This adjusted tax rate benefits from profit generated in low tax jurisdictions as well as the use of intra Group debt to help finance the acquisition of overseas subsidiaries. The rate has increased slightly this year compared with 2005 inter alia due to the full utilisation of US tax losses and increased profit earned out of the US, our biggest market which has tax rates in excess of 40%. The effective Group tax charge was 21.6% (2005: 82%). The 2005 comparative includes a one write-off of a deferred tax asset that arose on an acquisition made in 2004 and subsequently de-recognised in accordance with IFRS. EPS Compared with 2005 basic EPS was up 471% and diluted EPS was up 468%. Adjusted Results Adjusted operating profit, which is shown in note 4 is calculated after removing certain items not relating to the underlying trading operations of the Group. This adjusted operating profit increased by 49% to Â£219.1m from Â£147.3m. Adjusted profit before tax increased 54% to Â£178.1m from Â£115.4m and adjusted profit for the period increased 53% to Â£132.1m from Â£86.5m. Adjusted Diluted EPS after deducting tax at 26.0% (2005: 25.0%) and minority interests was up 40% to 31.1p from 22.2p, reflecting higher profit after tax offset by a partial dilution from the additional shares issued to help finance the acquisition of IIR. The board believes these adjusted operational figures provide additional information to explain the underlying performance and associated trends of the Group. Further details are given in note 4. Dividend In recognition of the continued good trading prospects, the Board has recommended a final dividend of 8.9p (2005: 6.0p), which together with the interim dividend of 3.3p per share represents a total dividend of 12.2p (2005: 8.7p). This represents an increase of 40% on the 2005 equivalent. The final dividend which is subject to shareholder approval will be payable on 30 May 2007 to ordinary shareholders registered as of the close of business on 27 April 2007. The Board seeks to maintain a dividend payout cover of between 2.5 and 3.0 times adjusted diluted earnings per share. Balance sheet Goodwill increased to Â£1,124.5m from Â£1,123.4m principally with additions from the acquisitions made during the period of Â£59.3m (2005: Â£501.8m) being offset by currency movements. Other intangible assets decreased to Â£921.2m from Â£935.7m due mainly to acquisitions in the period of Â£123.9m (2005: Â£500.9m) offset by the normal amortisation charge which came to Â£86.7m and exchange rate effects on US dollar denominated assets. Included in this category is Â£13.9m in respect of software purchases relating to increased levels of capital expenditure as the Group rolls out its enhanced sales order processing systems and finance systems. Property and Fixed Assets increased to Â£23.1m from Â£22.9m, reflecting additions of Â£9.7m (2005: Â£9.5m) offset by deprecation and exchange effects. Available for sale investments shown under current and non-current assets, increased by Â£29.7m from Â£10.3m to Â£40.0m. The value increased following the acquisition of Blackwell Publishing by John Wiley on 2 February 2007. The Group subsequent to the year end received proceeds of Â£38.9m and will record a profit of Â£33.4m (Â£26.2m after attributable taxation) in its 2007 results in respect of this transaction. Trade and other receivables rose by Â£7.7m principally due to acquisitions in the period. Net debt rose Â£3.0m to Â£738.4m from Â£735.4m compared with 31 December 2005, reflecting inter alia increased operational cash inflows up 36% (Â£58.4m) offset by higher taxation of Â£20.2m, higher capital expenditure including intangible software assets of Â£8.3m, interest payments which increased by Â£9.9m and Â£136.2m spent on acquisitions. In turn due to the structure of the Group's debt which is held in sterling, Euros and US dollars, these net increases are offset by favorable exchange impacts of Â£40.8m. The 2005 cash flow comparative reflects IIR related cash flows from the date of its acquisition on 6 July 2005. Cash conversion (expressed as adjusted cash generated by operations as a percentage of adjusted operating profit, see note 10) was 103% (2005: 113%). The increase in the hedging and translation reserve of Â£60.4m relates to the net currency impact from retranslating assets held in foreign currencies (principally intangible fixed assets and goodwill) offset by the conversion of liabilities (principally loans) also held in those same currencies. Current tax liabilities balances stood at Â£75.2m at the year end up from Â£58.6m reflecting the increased scale of the business. The Group's gross defined pension liabilities disclosed under 'retirement benefit obligations' have reduced by Â£6.5m compared with 31 December 2005 to Â£11.2m due mainly to actuarial gains of Â£6.8m. Deferred income, which represents income receivable in advance, was down Â£6.1m (3.2%) on the same period in 2005 to Â£181.4m from Â£187.4m, reflecting a delayed payment of Â£10m from an academic subscription agent as well as the impact of foreign currency as a large proportion of the deferred income is denominated in US dollars. Tony Foye 14 March 2007 Consolidated Income Statement For the Year Ended 31 December 2006 Year Year ended ended 2006 2005 Notes Â£'000 Â£'000 Continuing operations Revenue 2 1,039,142 729,280 Change in inventories of finished 2,513 3,091 goods and work in progress Raw materials and consumables used (349,930) (239,360) Employee benefit expense (297,248) (210,710) Depreciation expense (9,113) (8,175) Amortisation of intangible fixed (86,656) (49,755) assets Impairment of goodwill (515) - Other expenses (169,897) (132,953) --------------------- Operating profit 4 128,296 91,418 Non-operating income and expense - (28) Loss on disposal of available for (812) - sale investment Finance costs 5 (45,654) (36,247) Investment income 5 4,670 5,902 --------------------- Profit before tax 86,500 61,045 Deferred tax on UK restructuring - (35,224) Other tax charge (18,653) (15,054) --------------------- Tax charge 6 (18,653) (50,278) --------------------- Profit for the year from continuing 67,847 10,767 operations --------------------- Discontinued operations Loss for the year from discontinued - (1,885) operations --------------------- Profit for the year 67,847 8,882 --------------------- Attributable to: - Equity holders of the parent 67,368 8,825 - Minority interests 479 57 --------------------- Earnings per share 8 From continuing operations - Basic (p) 15.98 2.76 - Diluted (p) 15.91 2.75 From continuing and discontinued operations - Basic (p) 15.98 2.27 - Diluted (p) 15.91 2.26 Consolidated Statement of Recognised Income and Expense For the Year Ended 31 December 2006 Year Year ended ended 2006 2005 Note Â£'000 Â£'000 Gains on cash flow hedges 4,800 3,373 (Loss)/gain on translation of foreign (62,590) 4,367 operations Actuarial gains/(losses) on defined benefit 6,817 (3,766) pension schemes Tax on items taken directly to equity 6 (8,871) (3,752) Revaluation of available for sale investment 33,390 - --------------------- Net (loss)/income recognised directly in (26,454) 222 equity Transferred to profit or loss on cash flow (2,572) 416 hedges Profit for the year 67,847 8,882 --------------------- Total recognised income and expense for the year 38,821 9,520 --------------------- Attributable to: - Equity holders of the parent 38,342 9,463 - Minority interests 479 57 Change in accounting policy to adopt IAS 32 and IAS 39 Attributable to: - Equity holders of the parent - (5,948) Consolidated Balance Sheet At 31 December 2006 2006 2005 Notes Â£'000 Â£'000 ASSETS Non-current assets Goodwill 1,124,529 1,123,418 Other intangible assets 921,229 935,687 Property and equipment 23,143 22,868 Available for sale investments 1,012 10,279 Deferred tax assets 19,900 13,106 Derivative financial instruments 6,339 - -------------------------- 2,096,152 2,105,358 -------------------------- Current assets Inventory 33,601 31,138 Available for sale investments 38,943 - Trade and other receivables 192,987 185,274 Cash and cash equivalents 19,478 20,654 Derivative financial instruments 1,357 2,425 -------------------------- 286,366 239,491 -------------------------- Non-current assets classified as held 2,247 4,574 -------------------------- Total assets 2,384,765 2,349,423 -------------------------- EQUITY AND LIABILITIES Capital and reserves Called up share capital 9 42,327 42,152 Share premium account 9 501,310 496,826 Reserve for shares to be issued 9 2,803 1,124 Merger reserve 9 496,400 496,400 Other reserve 9 37,398 37,398 ESOP trust shares 9 (3,332) (3,334) Revaluation reserve 9 26,190 - Hedging and translation reserve 9 (59,954) 408 Retained losses 9 (111,742) (145,096) -------------------------- Equity attributable to equity holders 931,400 925,878 of parent Minority interests 589 110 -------------------------- Total equity 931,989 925,988 -------------------------- Non-current liabilities Long-term borrowings 654,841 692,500 Deferred tax liabilities 244,320 240,431 Retirement benefit obligation 11,219 17,729 Provisions 11,769 1,847 Trade and other payables 3,293 4,852 -------------------------- 925,442 957,359 -------------------------- Current liabilities Short-term borrowings 103,033 63,521 Current tax liabilities 75,227 58,620 Provisions 1,558 2,014 Trade and other payables 166,144 154,476 Deferred income 181,372 187,445 -------------------------- 527,334 466,076 -------------------------- Total liabilities 1,452,776 1,423,435 -------------------------- Total equity and liabilities 2,384,765 2,349,423 -------------------------- Consolidated Cash Flow Statement For the Year Ended 31 December 2006 Year Year ended ended 2006 2005 Note Â£'000 Â£'000 Operating activities Cash generated by operations 10 219,358 160,929 Income taxes paid (32,466) (12,231) Interest element of finance lease payments - (1) Interest paid (42,845) (32,921) -------------------------- Net cash from operating activities 144,047 115,776 -------------------------- Investing activities Investment income 4,670 4,708 Proceeds on disposal of property, 2,996 200 equipment and non-current assets classified as held for sale Purchases of intangible software assets (13,936) (5,605) Purchases of property and equipment (9,705) (9,511) Purchases of available for sale investments - (89) Acquisition of subsidiaries and businesses (136,207) (812,787) -------------------------- Net cash used in investing activities (152,182) (823,084) -------------------------- Financing activities Dividends paid (39,160) (27,271) Repayments of borrowings (352,185) (617,287) New bank loans raised 397,514 1,035,914 Repayments of obligations under finance leases (28) (23) Proceeds from the issue of share capital 4,659 316,935 -------------------------- Net cash from financing activities 10,800 708,268 -------------------------- Net increase in cash and cash equivalents 2,665 960 Cash and cash equivalents at beginning of year 16,085 15,125 -------------------------- Cash and cash equivalents at end of year 18,750 16,085 net of overdrafts -------------------------- Notes to the Consolidated Financial Statements For the Year Ended 31 December 2006 1 Basis of Preparation The financial information set out in the preliminary announcement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985, but is derived from those accounts. While the financial information in this preliminary announcement has been prepared in accordance with International Financial Reporting (IFRS), this announcement does not itself contain sufficient information to comply with IFRS. The IFRS accounting policies applied in respect of the current and prior years have previously been disclosed. Statutory accounts for the year ended 31 December 2005 have been delivered to the Registrar of Companies and those for the year ended 31 December 2006 will be delivered following the Company's Annual General Meeting. The statutory accounts for the year ended 31 December 2006 will be despatched to shareholders by 16 April 2007 for approval at the Annual General Meeting on 15 May 2007. The auditors have reported on those accounts - their reports were unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985. 2 Business and Geographical Segments Analysis by market sector Revenue Operating profit 2006 2005 2006 2005 Â£'000 Â£'000 Â£'000 Â£'000 Academic & Scientific Division Scientific, Technical & Medical 178,738 156,992 31,922 26,523 Humanities & Social Sciences 116,511 103,545 15,906 16,425 ------------------------------------------------ 295,249 260,537 47,828 42,948 Professional Division Performance Improvement 225,794 106,179 17,709 5,508 Financial Data Analysis 63,641 60,767 15,823 17,074 Finance, Insurance, Law & Tax 83,287 50,813 12,615 5,085 ------------------------------------------------ 372,722 217,759 46,147 27,667 Commercial Division Regional Events 241,045 143,066 12,525 12,845 Telecoms & Media 64,736 48,441 14,542 2,352 Maritime & Commodities 65,390 59,477 7,254 5,606 ------------------------------------------------ 371,171 250,984 34,321 20,803 ------------------------------------------------ Total from continuing 1,039,142 729,280 128,296 91,418 operations ------------------------------------------------ Adjusted operating profit 2006 2005 Â£'000 Â£'000 Academic & Scientific Division Scientific, Technical & Medical 50,618 41,461 Humanities & Social Sciences 26,936 24,002 ------------------------------------------------ 77,554 65,463 Professional Division Performance Improvement 34,726 17,613 Financial Data Analysis 19,064 17,938 Finance, Insurance Law & Tax 22,012 9,860 ------------------------------------------------ 75,802 45,411 Commercial Division Regional Events 42,280 18,622 Telecoms & Media 16,151 12,011 Maritime & Commodities 7,304 5,822 ------------------------------------------------ 65,735 36,455 ------------------------------------------------ Adjusted operating profit (Note 4) 219,091 147,329 ------------------------------------------------ Geographical segments The following table provides an analysis of the Group's revenue by geographical market, irrespective of the origin of the goods/services: Revenue by geographical market 2006 2005 Â£'000 Â£'000 United Kingdom 193,902 116,225 North America 396,099 277,180 Continental Europe 279,636 211,869 Rest of World 169,505 124,006 ------------------------ 1,039,142 729,280 ------------------------ 3 Restructuring Costs 2006 2005 Â£'000 Â£'000 Board level changes - 1,200 Acquisition 7,203 6,069 integration costs Vacant property - 1,008 ------------------------ 7,203 8,277 ------------------------ In the year ended 31 December 2006, acquisition integration costs comprise reorganisation costs of Â£3,672,000, redundancy costs of Â£2,467,000 and vacant property provisions of Â£1,064,000. These items are included in the other expenses line on the Income Statement except for redundancies which are included in employee benefit expense. Acquisition integration costs of Â£6,069,000 in the year ended 31 December 2005 consist of reorganisation costs of Â£3,436,000, redundancies of Â£2,126,000 and vacant property provisions of Â£507,000. In 2005, there were also costs associated with Board level changes and Â£1,008,000 of vacant property costs which relate to a dormant overseas subsidiary and additional provisions in respect of the 2004 US Books reorganisation. 4 Adjusted Figures - Continuing Operations 2006 2005 Â£'000 Â£'000 Reconciliation of operating profit to adjusted operating profit: Operating profit 128,296 91,418 Adjusting operating profit items Restructuring and re-organisation costs (Note 3) 7,203 8,277 Intangible asset amortisation(1) 83,077 47,634 Impairment of goodwill 515 - ------------------- Adjusting operating profit items 90,795 55,911 ------------------- Adjusted operating profit 219,091 147,329 ------------------- Reconciliation of statutory profit before tax to adjusted profit before tax: Profit before tax 86,500 61,045 Adjusting operating profit items 90,795 55,911 Loss on disposal of available for sale investment 812 - Finance (income) / costs Gain on exchange contract - (3,426) Bank facility fees written off on acquisition of - 1,827 business ------------------- - (1,599) ------------------- Adjusting profit before tax items 91,607 54,312 ------------------- Adjusted profit before tax 178,107 115,357 ------------------- Reconciliation of profit for the year to adjusted profit for the year - from continuing operations: Profit for the year from continuing operations 67,847 10,767 Adjusted profit before tax items 91,607 54,312 Deferred tax adjustment on UK restructuring - 35,224 Attributable tax expense on adjusting items (27,301) (13,802) ------------------- (27,301) 21,422 ------------------- Adjusting profit for the year items 64,306 75,734 ------------------- Adjusted profit for the year from continuing 132,153 86,501 operations ------------------- (1) Excludes software amortisation 5 Finance Costs and Investment Income 2006 2005 Â£'000 Â£'000 Interest on bank overdrafts and loans 43,311 31,728 Fair value gain on interest rate swap previously (842) - recognised in equity Bank loan facility fees expensed on business combination* - 1,827 Finance lease charges - 1 Interest on pension scheme liabilities 3,185 2,691 ------------------ Finance costs 45,654 36,247 ------------------ *In July 2005, bank loan facilities expired on the acquisition of IIR Holdings Limited and the unamortised element of the related fees was written off at that date. 2006 2005 Â£'000 Â£'000 Interest on bank deposits 348 269 Interest on unwinding of discounted loan 58 - Translation gain on foreign currency loan1 1,284 - Gain on exchange contract - 3,426 Return on pension scheme assets 2,820 1,999 Profit on disposal of non-current assets classified as 160 208 held for sale ------------------ Investment income 4,670 5,902 ------------------ 1 The Group has borrowings in Japanese Yen as part of the management of its interest profile. 6 Tax The tax charge comprises: Continuing Discontinued Total operations operations 2006 2005 2006 2005 2006 2005 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Current tax: UK corporation tax 20,555 18,912 - - 20,555 18,912 Foreign tax 22,925 3,449 - 8 22,925 3,457 Adjustments in respect of - 1,414 - - - 1,414 prior years ----------------------------------------------------- 43,480 23,775 - 8 43,480 23,783 ----------------------------------------------------- Deferred tax: Current year (24,827) (8,729) - - (24,827) (8,729) Recognition of deferred - 35,224 - - - 35,224 tax asset ----------------------------------------------------- Total tax on profit on 18,653 50,270 - 8 18,653 50,278 ordinary activities ----------------------------------------------------- Corporation tax is calculated at 30 per cent (2005: 30 per cent) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions. The total charge for the year can be reconciled to the accounting profit as follows: 2006 2005 Â£'000 % Â£'000 % Profit before taxation: Continuing operations 86,500 61,045 Discontinuing operations - (1,885) ------------------------------ 86,500 59,160 ------------------------------ Tax at the UK corporation tax rate of 30% 25,950 30 17,748 30 (2005: 30%) Tax effect of expenses that are not 18,589 21 7,418 12 deductible in determining taxable profit Effect of different tax rates of subsidiaries (10,747) (12) (3,716) (6) operating in other jurisdictions Deferred tax not previously recognised (15,139) (17) (6,396) (11) Deferred tax asset - - 35,224 60 ------------------------------ Tax expense and effective rate for the year 18,653 22 50,278 85 ------------------------------ Of the charge to current tax, Â£nil related to discontinued operations. In 2005, approximately Â£8,000 related to discontinued operations arising in the Regional Events division, which was disposed of during the year. No tax charge or credit arose on the disposal of the relevant subsidiary. In addition to the income tax expense charged to the Income Statement, a tax credit of Â£8,871,000, all of which relates to deferred tax (2005: tax credit of Â£3,752,000 of which Â£3,808,000 related to current tax and Â£(55,000) related to deferred tax), has been recognised in equity during the year. 7 Dividends 2006 2005 Â£'000 Â£'000 Amounts recognised as distributions to equity holders in the year: Final dividend for the year ended 31 December 2004 of 5.33p per share (ex-rights issue 4.76p) - 15,926 Interim dividend for the year ended 31 December 2005 of 2.70p per share (ex-rights issue 2.41p) - 11,345 Final dividend for the year ended 31 December 2005 of 6.00p per share 25,275 - Interim dividend for the year ended 31 December 2006 of 3.3p per share 13,885 - --------------------- 39,160 27,271 --------------------- Proposed final dividend for the year ended 31 December 2006 of 8.90p per share (2005: 6.00p) per share 37,612 25,292 --------------------- Holders of 725,213 (2005: 635,617) ordinary shares of 10p each have waived their rights to receive dividends. 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. 8 Earnings per Share Basic The basic earnings per share calculation is based on a profit attributable to equity shareholders of the parent of Â£67,368,000 (2005 profit: Â£8,825,000). This profit on ordinary activities after taxation is divided by the weighted average number of shares in issue (less those non-vested shares held by employee share ownership trusts) which is 421,619,174 (2005: 388,230,732). 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 423,346,817 (2005: 390,003,685). The table below sets out the adjustment in respect of diluted potential ordinary shares: 2006 2005 Weighted average number of shares 421,619,174 388,230,732 used in basic earnings per share calculation Effect of dilutive share options 1,727,643 1,772,953 Shares potentially to be issued or - - allotted ----------------------------- Weighted average number of shares 423,346,817 390,003,685 used in diluted earnings per share calculation ----------------------------- Adjusted earnings per share The basic and diluted adjusted earnings per share calculations have been made to allow shareholders to gain a further understanding of the trading performance of the Group. It is based on the basic and diluted earnings per share calculations above except that profits are based on continuing operations attributable to equity shareholders and are adjusted for items that are not perceived by management to be part of the underlying trends in the business and the tax effect of those adjusting items as follows: 2006 2005 Â£'000 Â£'000 Profit for the financial year from continuing 67,847 10,767 operations Minority interests (479) (57) Adjusting items net of attributable taxation (Note 4) 64,306 75,734 ------------------- Adjusted profit for the year from continuing 131,674 86,444 operations attributable to equity shareholders ------------------- Earnings per share: From continuing operations - Adjusted basic (p) 31.23 22.27 - Adjusted diluted (p) 31.10 22.16 ------------------- 9 Capital and Reserves Reserve for Hedging Shares ESOP and Retained Share Share to be Merger Other Trust Revaluation Translation Retained Capital Premium Issued Reserve Reserve Shares Reserve Reserve Losses Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 At 1 January 2005 29,946 192,097 1,647 496,400 37,398 (4,731) - (7,748) (119,132) Profit for the period attributable to equity holders of the parent - - - - - - - - 8,825 Actuarial loss on defined benefit pension scheme - - - - - - - - (3,766) Tax on items taken directly to equity - - - - - - - - (3,752) Exchange differences on translation of foreign operations - - - - - - - 4,367 - Increase in fair value of derivatives - - - - - - - 3,373 - Transfer to income - - - - - - - 416 - Issue of share capital (net of Â£7,095,000 transaction costs) 12,030 299,657 - - - - - - - Dividends to shareholder - - - - - - - - (27,271) Share award expense - - 744 - - 1,397 - - - Options exercised 176 - - - - - - - - Premium arising on options exercised during year - 5,072 - - - - - - - Settlement of deferred consideration - - (1,267) - - - - - - ----------------------------------------------------------------------------------- At 1 January 2006 42,152 496,826 1,124 496,400 37,398 (3,334) - 408 (145,096) Profit for the period attributable to equity holders of the parent - - - - - - - - 67,368 Actuarial gain on defined benefit pension scheme - - - - - - - - 6,817 Tax on items taken directly to equity - - - - - - (7,200) - (1,671) Exchange differences on translation of foreign operations - - - - - - - (62,590) - Increase in fair value of derivatives - - - - - - - 4,800 - Transfer to income - - - - - - - (2,572) - Dividends to shareholders - - - - - - - - (39,160) Share award expense - - 1,681 - - - - - - Options exercised 175 - (2) - - 2 - - - Premium arising on options exercised during year - 4,484 - - - - - - - Revaluation of available for sale investment - - - - - - 33,390 - - ----------------------------------------------------------------------------------- At 31 December 2006 42,327 501,310 2,803 496,400 37,398 (3,332) 26,190 (59,954) (111,742) ----------------------------------------------------------------------------------- As at 31 December 2006 the Informa Employee Share Trust held 618,718 (2005: 632,775) ordinary shares in the Company at a cost of Â£3,639,000 (2005: Â£3,641,000) and a market value of Â£3,694,000 (2005: Â£2,744,000). Informa Quest Ltd held 106,495 (2005: 2,842) ordinary shares at a book cost of Â£106,000 (2005: Â£nil) and a market value of Â£636,000 (2005: Â£12,000). These shares have not yet been allocated to individuals and accordingly, dividends on these shares have been waived. At 31 December 2006 the Group held 0.2% (2005: 0.2%) of its own called up share capital. 10 Notes to the Cash Flow Statement 2006 2005 Â£'000 Â£'000 Operating profit - continuing operations 128,296 91,418 Discontinued operations - (1,885) ----------------------- Profit from operations 128,296 89,533 Adjustments for: Depreciation of property and equipment 9,113 8,175 Amortisation of intangible assets 86,656 49,755 Impairment of goodwill 515 - Loss on disposal of property and equipment 23 100 ----------------------- Operating cash flows before movements 224,603 147,563 in working capital Decrease/(increase) in inventories 211 (2,421) Decrease/(increase) in receivables 9,866 (5,637) (Decrease)/increase in payables (15,185) 19,451 Movement in other operating items (137) 1,973 ----------------------- Cash generated by operations 219,358 160,929 ----------------------- Cash and cash equivalents (which are presented as a single class of assets on the face of the Balance Sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less. Adjusted cash generated by operations 2006 2005 Â£'000 Â£'000 Adjusted operating profit (Note 4) 219,091 147,329 ----------------------- Cash generated by operations 219,358 160,929 Restructuring costs (Note 3) 7,203 8,277 ----------------------- Adjusting items on a cash flow basis 226,561 169,206 Accrued in prior year 4,426 2,500 Accrued at year end (5,725) (4,426) ----------------------- Adjusted cash generated by operations 225,262 167,280 ----------------------- 2006 2005 % % Percentage of adjusted operating profit 103 113 converted to adjusted cash generated by operations ----------------------- Analysis of Net Debt At 1 Non-cash Cash Exchange At 31 January items flow movement December 2006 2006 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Cash at bank and in hand 20,654 - (1,176) - 19,478 Overdrafts (4,569) - 3,841 - (728) ------------------------------------------------------ Net cash 16,085 - 2,665 - 18,750 Bank loans due in less than one year (58,659) - (43,601) 205 (102,055) Loan notes due in less than one year (293) - 43 - (250) Bank loans due in more than one year (692,500) (1,167) (1,771) 40,597 (654,841) Finance leases due in less than one year (23) - 15 - (8) Finance leases due in more than one year (20) - 14 - (6) ------------------------------------------------------ (735,410) (1,167) (42,635) 40,802 (738,410) ------------------------------------------------------ This information is provided by RNS The company news service from the London Stock Exchange

Companies

Informa (INF)

Full Archive

UK 100

Latest directors dealings

2 days ago IntegraFin Holding
2 days ago Spirent Communications
2 days ago CRH (CDI)
2 days ago Bezant Resources
2 days ago EJF Investments Ltd NPV

All directors dealings today