Interim Results

Informa Group PLC 08 September 2003 Informa Group plc Interim results for the Six Months to June 30 2003 Financial and operating highlights â€¢Turnover Â£135.6 million (2002 : Â£151.5 million) â€¢Profit before tax 4% lower at Â£9.7 million â€¢Adjusted profit before tax* 6% lower at Â£15.2 million (2002: Â£16.2million) â€¢Operating margins maintained at 9% â€¢Adjusted operating margins* maintained at 13% â€¢EPS unchanged at 3.92 pence â€¢Adjusted EPS* 5% lower at 8.29 pence (2002: 8.70 pence) â€¢Dividend unchanged at 2.66 pence â€¢Subscriptions remain strong and now account for 33% of Group revenue â€¢Electronically delivered products now account for 35% of Group operating profit* * Before goodwill amortisation and prior year exceptional items Peter Rigby, Chairman of Informa Group PLC commented: "We are pleased to report results which again demonstrate the resilience of our business during a period in which trading conditions were made more challenging by the conflict in Iraq and the SARS outbreak. These factors led us to defer a number of events into the second half of the year. However, our major events performed well and our subscription publications and services remained strong. "In line with our strategy of acquiring value-added subscription services we have today announced the acquisition of MMS, an electronic real-time fixed income and foreign exchange information business, which we believe will produce attractive returns for our shareholders once fully integrated with our existing operations. Subscription businesses currently account for 33% of Group revenues and around 43% of Group operating profit (pre goodwill amortisation and exceptional costs). We see considerable growth opportunities both organically and through acquisition in this area, with subscription revenues becoming the dominant revenue stream for the business as we go forward. "The period from the beginning of September to mid-December is an extremely busy one for the Group. Our subscription revenues are predictable and we remain confident of booking delegate and advertising revenues given our strong programme of publications and events. While we believe that a cautious economic improvement may be underway there is no consistent upturn in our markets. Accordingly, our near-term goal continues to be to manage our profitability and cash generation carefully, so that the business is in the best possible shape to take advantage of a recovery when it eventually takes hold." For further information, please contact: Catherine Lees/Zoe Sanders, Bell Pottinger Financial 020 7861 3877/3887 Results Revenue at Â£135.6m was 10% below last year (Â£151.5m). Operating profits before goodwill amortisation and exceptional items at Â£18.2m were 9% below last year (Â£20.1m). With lower debt levels and interest rates, the interest charge of Â£3.0m is 23% lower than last year. As a result, profit before tax (before goodwill amortisation and exceptional items) was just 6% lower at Â£15.2m (Â£16.2m). Adjusted earnings per share were 5% lower at 8.29 pence (2002: 8.70 pence) and we will be paying an unchanged interim dividend of 2.66 pence per share (2002: 2.66 pence) on 10 November 2003 to shareholders on the register on 10 October 2003. Overview Trading conditions in the first half of 2003 were made more challenging by the war with Iraq and the SARS epidemic in Asia. We adjusted our forward programme to move a number of events originally scheduled for the first half of the year into the second half. These deferrals accounted for around a quarter of the year-on-year revenue reduction seen in the first six months. Of the remaining reduction in revenue, about two thirds was due to product closures made in prior periods. Underlying revenue declined by only 2% on a like for like basis. Continuing attention to cost control enabled us to protect profitability in the period despite the lower revenues and our operating margin at 13% is slightly ahead of the first half of last year and 2002 as a whole. Our subscription businesses, which now account for 33% of revenues and around 43% of operating profit, continue to perform strongly. We see considerable growth opportunities, both organically and through acquisition, in this area and expect subscription revenues to become the dominant revenue stream for the business as we go forward. The negative effect of currency translation on group operating profit was only Â£95,000 with gains from the Euro being matched by losses on the US dollar. The Group remained highly cash generative with an operating profit into cash conversion rate of 100% (excluding exceptional cash flows). Group debt at the half year was Â£22m lower at Â£97m than at the same stage last year (Â£119m). Highlights Telecoms and Media The annual 3GSM conference held in Cannes in February was again very successful. Although delegate numbers fell some 20% compared with the 2002 event, overall attendance including exhibition visitors rose and with higher sponsorship and exhibition sales and strict cost control the event was as profitable as last year. We already have high advanced sales of exhibition space for the 2004 event but it is clear that the industry is now concentrating on this major event at the expense of a number of smaller ones. Accordingly we have reduced our conference output in this area and in 2003 we will only produce some 176 mobile telecommunications events compared with a peak of 450 in 2000. The other major telecommunications event in the first half of the year, Bluetooth, was held in Amsterdam in June. We again achieved good sponsorship revenues and a similar overall attendance figure to last year. We have a further Bluetooth event this year in the United States on which advanced sales are good, however the planned new Asian event scheduled for Tokyo in December has recently been postponed. We now expect it to take place in the second half of 2004. In 2004 we expect the three Bluetooth events will be migrated from a narrow focus on Bluetooth technology to a wider coverage of the evolving WI-FI wireless connectivity market. Life Sciences The Life Sciences results were affected by the start up costs of our two major new publication launches Bioprocess International and Preclinica. These two new magazines appear successfully to have filled gaps in the market and have been well received both in terms of readership and advertising support. Both are in line with launch expectations. Finance and Insurance Our Finance division continues to be underpinned by strong performances from our U.S. electronic data and information subscription businesses. However appetite for conferences has declined with the increased pressure on the financial service sector. We have radically reduced the number of financial events we offer especially in the United States and the UK and reduced costs accordingly. The net effect is to leave us with smaller, profitable teams running niche financial events linked to our publishing brands. We plan to expand our offerings aggressively when the financial services sector recovery strengthens. The acquisition of MMS, discussed below, is part of this process. Maritime, Trade and Transport Our Maritime, Trade and Transport division showed 198% profit growth in the period. This was partly due to the presence this year of the biennial Cruise+Ferry show that was held in London in May. Although again successful, this show which relies on exhibition and sponsorship revenues did less well than in 2001 reflecting current lower levels of new vessel building activity in the luxury passengership sector. Over 42% of the Group's advertising revenue resides in the Maritime area and it is this revenue stream which has been under the most pressure. Legal and Tax Our Legal publishing business continued to trade strongly. This largely subscription based publishing operation, which is aimed at professionals in legal and tax disciplines, enjoys high renewal rates (typically in excess of the overall group average of 80%) and runs alongside a smaller events business which addresses the needs of the legal market, particularly in relation to continuing professional education requirements. Commodities and Energy The commodities sector also proved resilient reflecting a solid performance on the commodities information side led by Agra Europe. Results here include the success of the Russian Coal event and the annual Glasgow Fishing Exhibition which performed well despite the difficulties experienced by the UK Fishing Industry. Agra Europe publishes 98 titles that address the requirements of the international commodities market. Most of these publications are subscription based and are delivered either in hard copy or electronically. They have very high renewal rates and good margins because of their niche characteristics. The Russian 'Coal Forecasting' event held in Moscow in April in association with the leading coal industry publishers, The McCloskey Group, follows up on related events in Australia and Europe. This was highly successful and will be repeated next year. We are currently discussing with our partners how we might grow this portfolio further. The energy business was hit in the first half by the instability caused by the Iraq war which resulted in the cancellation of a number of our planned Middle-Eastern events. However, a strong second half programme, which has a major focus on Russia, should result in a much improved performance. More positively, our annual German Energy event run in association with Handelsblatt newspaper was our most successful yet with higher sponsorship and delegate numbers than in prior years. This event which is held in Berlin each January already has good repeat bookings for 2004. International Events Business Our non-UK domestic conference businesses have reflected regional economic trends. Although Asia only represented 1% of Group revenues it has been hard hit by SARS with few events possible as both delegates and speakers refused to travel to and within the region. This was particularly true of China where we had been enjoying considerable success. The background remains somewhat volatile, but we still expect that the region will bounce back in the second half and be profitable for the year as a whole, though below the levels enjoyed in 2002. In Europe, a lack of growth and a number of public service disputes have affected our conference business somewhat, especially in Holland, Sweden and France. Germany, which is our biggest European conference business has traded well despite the more difficult economic conditions and is performing in line with last year. We have monitored costs closely throughout, reducing headcount according to levels of activity, particularly in Holland which has suffered due to political instability. As part of the cost reduction process, we consolidated our Austrian operations into our German office. Our businesses in Australia and Brazil traded well in the first half of 2003, perhaps slightly cocooned from the uncertainties elsewhere and are producing results above the levels seen in 2002. Expomedia We announced our joint venture arrangement with Expomedia Group plc earlier in the year. Its goal is to develop the Russian conference market and the first major event, Wireless Russia, was held in Moscow in June. The event was supported by the State Telecommunications Ministry and was very successful with Â£175,000 sponsorship revenue and 350 attendees. We have further events planned with Expomedia on transport, energy, commodities and finance and are investigating further opportunities both in Russia and other countries where they have a strong presence. Strategy Informa is a business information group delivering high value content to clients worldwide using a broad range of media formats. Increasingly, the trend of our business is to provide information through subscription products both in electronic and hard copy format. These brands accounted for 33% of revenue in the first half of 2003 and around 43% of Group operating profit. We continue to look for growth opportunities within our major market sectors both organically (by the launch of new products) but also through relevant acquisitions, particularly of subscription-based products. More recently, with delegate and advertising revenues under pressure, we have needed to control and reduce costs to maintain our margins. This is an ongoing process and we will continue to review products and processes critically. In line with our strategy, we have today announced the acquisition of MMS for $37m. This business which provides information to the international capital markets will be combined with MCM - a similar business which we acquired in 2001. We expect to spend an additional US$10m over the next six months on integrating the operations. Although MMS was breaking-even on an annualised basis we expect it to produce a return comfortably in excess of the group's cost of capital post integration. Outlook July and August are quiet trading months except for our flagship Annual Drug Discovery technology event that has just been held in Boston. Reflecting the tighter market conditions now prevailing in the pharmaceutical research and development arena, delegate numbers fell below last year though overall visitor numbers were in line and sponsorship and exhibition income also met last years levels. Exhibition re-bookings for 2004 were encouragingly high and are in line with this time last year. The period from the beginning of September to mid-December is an extremely busy one for the Group. While our subscription revenues are predictable we still have to book delegate and advertising revenues though we remain confident of this given a strong programme of publications and events. While we believe that a cautious economic improvement maybe underway there is no consistent upturn in our markets. Accordingly, our near-term goal continues to be to manage our profitability and cash generation carefully, so that the business is in the best possible shape to take advantage of a recovery when it eventually takes hold. Consolidated profit and loss account For the period ended 30 June 2003 2003 2002 2002 2002 2002 Half Year Half year 31 31 31 December December December unaudited unaudited Before exceptional Total exceptional items items (note 3) -------- ------- -------- -------- -------- note Â£000 Â£000 Â£000 Â£000 Â£000 -------- ------- -------- -------- -------- Turnover 2 135,599 151,464 283,442 - 283,442 -------- ------- -------- -------- -------- Operating profit before goodwill amortisation 2 18,213 20,084 37,255 (6,454) 30,801 Goodwill amortisation (5,558) (5,551) (10,992) - (10,992) -------- ------- -------- -------- -------- Operating profit 12,655 14,533 26,263 (6,454) 19,809 Loss on disposal of subsidiary undertaking 3 - (525) - (525) (525) -------- ------- -------- -------- -------- Profit on ordinary activities before interest 2 12,655 14,008 26,263 (6,979) 19,284 Net interest payable (2,984) (3,884) (7,200) - (7,200) -------- ------- -------- -------- -------- Profit on ordinary activities before tax 9,671 10,124 19,063 (6,979) 12,084 Tax on profit on ordinary activities 4 (4,645) (5,159) (9,167) 1,909 (7,258) -------- ------- -------- -------- -------- Profit on ordinary activities after tax 5,026 4,965 9,896 (5,070) 4,826 Minority interests - equity (28) 24 (59) -------- ------- -------- -------- -------- Profit for the financial period attributable to shareholders 4,998 4,989 4,767 Equity dividends paid and proposed (3,349) (3,412) (9,692) -------- ------- -------- -------- -------- Profit / (loss) for the financial period 1,649 1,577 (4,925) -------- ------- -------- -------- -------- Dividends per share 2.66p 2.66p 7.60p -------- ------- -------- -------- -------- Earnings per share Earnings per share (basic) 5 3.92p 3.92p 3.74p Earnings per share (diluted) 5 3.92p 3.92p 3.74p Adjusted basic earnings per share 5 8.29p 8.70p 16.36p -------- ------- -------- -------- -------- All results derive from continuing operations. Consolidated statement of total recognised gains and losses For the period ended 30 June 2003 2003 2002 2002 Half year Half year Total unaudited unaudited Â£000 Â£000 Â£000 --------- --------- --------- Profit for the financial period 4,998 4,989 4,767 Currency translation differences on foreign currency net investments and borrowings 117 (254) (3,809) --------- --------- --------- Total gains and losses recognised relating to the period 5,115 4,735 958 --------- --------- --------- Consolidated balance sheet At 30 June 2003 2003 2002 2002 30 June 30 June 31 December unaudited unaudited note Â£000 Â£000 Â£000 -------- -------- ---------- Fixed assets Intangible assets 156,449 169,825 159,639 Tangible assets 21,243 27,888 23,080 Investments 6,894 4,462 4,788 -------- -------- ---------- 184,586 202,175 187,507 Current assets Stocks and work in progress 5,899 9,911 6,212 Debtors 53,523 54,168 51,734 Cash at bank and in hand 1,383 2,155 5,195 -------- -------- ---------- 60,805 66,234 63,141 Creditors: amounts falling due within one year (112,700) (109,507) (117,876) -------- -------- ---------- Net current liabilities (51,895) (43,273) (54,735) -------- -------- ---------- Total assets less current liabilities 132,691 158,902 132,772 Creditors: amounts falling due after more than one year (97,327) (120,253) (99,143) Provisions for liabilities and charges (6,903) (2,143) (7,028) Minority interests (331) (187) (334) -------- -------- ---------- Net assets 28,130 36,319 26,267 -------- -------- ---------- Capital and reserves Called up share capital 12,829 12,818 12,824 Share premium account 123,195 123,103 123,103 Special reserve 1 2 1 Other reserve 37,398 37,398 37,398 Profit and loss account (145,293) (137,002) (147,059) -------- -------- ---------- Surplus on shareholders' funds - equity 8 28,130 36,319 26,267 -------- -------- ---------- Consolidated cash flow statement For the period ended 30 June 2003 2003 2002 2002 30 June 30 June 31 December unaudited unaudited note Â£000 Â£000 Â£000 --------- --------- --------- Cash inflow from operating activities 6 15,706 19,017 46,510 Return on investments and servicing of finance (3,533) (3,813) (6,492) Taxation (1,499) (1,014) (1,667) Capital expenditure (1,260) (2,981) (2,123) Acquisitions and disposals (2,202) (3,746) (4,576) Equity dividends paid (6,294) (6,289) (9,674) --------- --------- --------- Cash inflow before financing 918 1,174 21,978 Financing (3,217) (7) (19,027) --------- --------- --------- (Decrease)/ increase in cash in the period (2,299) 1,167 2,951 --------- --------- --------- Reconciliation of net cash flow to movement in net debt For the period ended 30 June 2003 2003 2002 2002 30 June 30 June 31 December unaudited unaudited note Â£000 Â£000 Â£000 --------- --------- --------- (Decrease)/ increase in cash in the period (2,299) 1,167 2,951 Cash outflow from decrease in debt financing 3,315 764 19,798 --------- --------- --------- Change in net debt resulting from cash flows 1,016 1,931 22,749 Reclassification of debt (114) - - Translation differences (1,980) (1,777) 554 --------- --------- --------- Movement in net debt in the period (1,078) 154 23,303 Net debt at the start of the period 7 (95,529) (118,832) (118,832) --------- --------- --------- Net debt at the end of the period 7 (96,607) (118,678) (95,529) --------- --------- --------- Notes 1. Basis of preparation The financial statements for the six months ended 30 June 2003, which are unaudited, have been prepared on the basis of the accounting policies set out in our 2002 Annual Report. 2. Segmental analysis Underlying operating profit in the segmental analysis excludes the amortisation of goodwill and exceptional items. Turnover Underlying operating profit / (loss) -------------------- -------------------- Analysis by market sector 2003 2002 2002 2003 2002 2002 30 June 30 June Total 30 June 30 June Total unaudited unaudited unaudited unaudited Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 -------- -------- -------- -------- -------- -------- Finance and Insurance 35,052 39,717 79,442 5,224 5,838 12,135 Telecoms and Media 29,513 34,677 52,575 7,187 7,879 9,301 Law and Tax 19,608 25,148 45,097 2,171 2,587 4,737 Maritime, Trade and Transport 22,535 22,595 46,705 1,084 364 2,379 Life Sciences 13,118 13,240 27,492 1,119 2,061 5,308 Commodities and Energy 14,957 15,550 31,226 1,742 1,707 3,615 Other 816 537 905 (314) (352) (220) -------- -------- -------- -------- -------- -------- 135,599 151,464 283,442 18,213 20,084 37,255 -------- -------- -------- -------- -------- -------- Profit / (loss) before interest Analysis by market sector 2003 2002 2002 30 June 30 June Total unaudited unaudited Â£000 Â£000 Â£000 -------- -------- -------- Finance and Insurance 3,422 3,661 7,098 Telecoms and Media 6,324 7,115 5,968 Law and Tax 1,301 1,590 1,877 Maritime, Trade and Transport 413 (301) (582) Life Sciences 632 1,529 3,565 Commodities and Energy 877 766 1,636 Other (314) (352) (278) -------- -------- -------- 12,655 14,008 19,284 -------- -------- -------- Notes continued 3. Exceptional items The 2002 exceptional items relate to: (1) Operating costs The Â£6,454,000 shown within operating costs is in respect of the following: a. an estimate for future costs on properties not used by the group from 1 January 2003 onwards (Â£4,173,000); b. redundancy costs relating to restructuring of the senior operating board (Â£2,281,000). (2) Loss on disposal of subsidiary undertaking This represents the expected net cost arising on the closure of a Dutch subsidiary. 4. Taxation The underlying worldwide operating tax rate for the Group, after removing the effect of goodwill amortisation and exceptional items, is 31% (2002 half year: 31%). However, due to goodwill amortisation and the exceptional items, the effective worldwide tax rate is 48% (2002 half year: 50%). The effective tax rate has been calculated by reference to the projected charge for the full year. 2003 2002 2002 Half year Half year Total unaudited unaudited Â£000 Â£000 Â£000 --------- --------- --------- United Kingdom corporation tax 915 828 1,514 Overseas tax 2,565 2,770 5,046 --------- --------- --------- Current tax 3,480 3,598 6,560 Deferred tax 1,165 1,561 698 --------- --------- --------- 4,645 5,159 7,258 --------- --------- --------- 5. Earnings and adjusted earnings per share In order to show results from operating activities on a comparable basis, an adjusted earnings per share has been calculated which excludes amortisation of goodwill and exceptional items. 2003 2002 2002 Half year Half year Total unaudited unaudited Â£000 Â£000 Â£000 --------- --------- --------- Profit for the financial period 4,998 4,989 4,767 Adjustments: Amortisation of goodwill 5,558 5,551 10,992 Exceptional item - 525 5,070 --------- --------- --------- Adjusted earnings 10,556 11,065 20,829 --------- --------- --------- Weighted average number of equity shares - for basic and adjusted earnings 127,404,421 127,226,241 127,294,855 Effect of dilutive share options 54,347 181,772 4,888 --------- --------- --------- Weighted average number of equity shares - for diluted earnings 127,458,768 127,408,013 127,299,743 --------- --------- --------- Earnings per equity share 3.92p 3.92p 3.74p Diluted earnings per equity share 3.92p 3.92p 3.74p Adjusted earnings per equity share 8.29p 8.70p 16.36p --------- --------- --------- Notes continued 6. Reconciliation of operating profit to net cash inflow from operating profits 2003 2002 2002 Half year Half year Total unaudited unaudited Â£000 Â£000 Â£000 --------- --------- --------- Operating profit 12,655 14,533 19,809 Depreciation charges 3,287 3,651 7,357 Amortisation of goodwill 5,558 5,551 10,992 Profit on sale of tangible fixed assets (10) (8) (23) Decrease/ (increase) in stocks 612 (3,493) 219 (Increase)/ decrease in debtors (1,880) 6,139 10,393 Decrease in creditors (4,494) (7,630) (2,457) Other operating items (22) 274 220 --------- --------- --------- Net cash inflow from operating activities 15,706 19,017 46,510 --------- --------- --------- Included in net cash inflow from operating activities are payments of Â£2,549,000 (2002 half year: Â£nil) relating to prior period exceptional costs. Excluding these costs the operating cash inflow is Â£18,255,000. 7. Analysis of changes in net debt Non cash Exchange At 1 Reclassification Cash flow movements movement At 30 June January unaudited unaudited unaudited unaudited unaudited Â£000 Â£000 Â£000 Â£000 Â£000 -------- --------- -------- -------- -------- -------- Cash at bank and in hand 5,195 - (3,946) - 134 1,383 Overdrafts (2,062) - 1,647 - (26) (441) -------- --------- -------- -------- -------- -------- 3,133 - (2,299) - 108 942 Bank loans due in less than one year (374) - (626) - - (1,000) Finance leases due in less than one year - (55) 39 (24) - (40) Bank loans due after one year (98,288) - 3,902 - (2,088) (96,474) Finance leases due in more than one year - (59) - 24 - (35) -------- --------- -------- -------- -------- -------- Total (95,529) (114) 1,016 - (1,980) (96,607) -------- --------- -------- -------- -------- -------- 8. Reconciliation of movements in shareholders' funds 2003 2002 2002 Half year Half year Total unaudited unaudited Â£000 Â£000 Â£000 -------- -------- -------- Profit for the period 4,998 4,989 4,767 Dividends (3,349) (3,412) (9,692) Other recognised gains/(losses) relating to the period 117 (254) (3,809) New Capital subscribed in Informa 97 800 805 -------- -------- -------- Net additions to shareholders' funds 1,863 2,123 (7,929) Opening shareholders' funds 26,267 34,196 34,196 -------- -------- -------- Closing shareholders' funds 28,130 36,319 26,267 -------- -------- -------- This information is provided by RNS The company news service from the London Stock Exchange

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