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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| UBM | LSE:UBM | London | Ordinary Share | JE00BD9WR069 | ORD 11.25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,080.00 | 1,074.00 | 1,076.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jun 2019 to Jun 2024
TIDMUBM
RNS Number : 3662M
UBM PLC
28 July 2017
28 July 2017: for immediate release
Results for the six months ended 30 June 2017
Hot Features
Premium
Events First delivering accelerating organic
growth
-- Group revenue up 18.0% at GBP448.4m (+8.3% at constant currency)
-- Events revenue growth of 2.7% on an adjusted underlying basis(1) (H1 2016: +1.3%)
-- Allworld H1 performance ahead of business case and integration on track
-- Adjusted operating profit(1) up 19.6% to GBP111.7m
-- Increase in adjusted operating profit margin(1) to 24.9% (H1 2016: 24.6%)
-- Adjusted earnings(1) up 23.6% to GBP77.5m
-- Diluted adjusted EPS(1) up 37.3% to 19.5p
-- Free cash flow(1) of GBP141.9m and cash conversion(1) of 160%
-- Long-term funding secured to replace Allworld acquisition financing
-- Net debt(1) at 2.0 times LTM EBITDA(2)
-- Interim dividend of 5.5p per share
Continuing Results only
1 See page 3 and page 44 for definition of non-IFRS metrics
2 proforma for Allworld
Tim Cobbold, CEO of UBM plc said:
"In the first half of the year the focused implementation of the Events First strategy has delivered an acceleration in organic growth and an improved operating margin. The business is well positioned for stronger organic growth and further margin progression in the second half when we run many of our fastest-growing 'major' annual events.
"We saw strong revenue growth in China, India and South East Asia underlining the logic of the Allworld acquisition, where excellent progress is being made with the integration.
"While conscious of global macro-economic and geopolitical uncertainties, we are confident in the quality of our portfolio and the outlook for the year is therefore unchanged. As a result of continuing operational improvement and strong cash flow generation, the full year dividend is likely to grow at a faster rate than in recent years. Ahead of the full year results the Board will review the dividend policy for future years."
Key financial information
Continuing Revenue Adjusted operating
operations profit*
Adjusted
Underlying* underlying* Margin
H1 2017 change change H1 2017 Margin change
GBPm % % GBPm % %pts
Annual 350.8 1.2% 2.7% 105.6 30.1% 0.1%pts
- of which
majors 302.0 2.2% 2.2%
Biennial 29.6 10.0%** 10.0%** 7.7 26.0% 1.2%pts
Events 380.4 1.2% 2.7% 113.3 29.8% 0.1%pts
Online 40.7 (2.7)% 5.8% 6.0 14.7% -1.6%pts
Print 27.3 (19.9)% (12.1)% 2.4 8.8% -7.9%pts
OMS 68.0 (10.4)% (2.1)% 8.4 12.4% -4.0%pts
Corporate
costs (10.0)
Group 448.4 (0.9)% 1.9% 111.7 24.9% 0.3%pts
============== ======== ============ ============== ======== ======= =========
Adjusted EPS* H1 2017 H1 2016 Change
%
Continuing - Diluted(3) 19.5p 14.2p 37.3%
Continuing - Diluted, post
share consolidation basis(4) 19.5p 15.8p 23.4%
Total - Diluted(3) 19.5p 20.2p -3.5%
=============================== ========= ======== =======
* See page 3 and page 44 for definition of non-IFRS metrics
** CAGR compared to 2015 editions
3) Uses weighted average number of shares over the period of 397.4m (H1 2016: 441.3m)
4) Uses post consolidation number of shares of 397.4m for H1 2016
Group IFRS results
H1 2017 H1 2016
GBPm GBPm Change
%
Continuing operations
Revenue 448.4 380.0 18.0%
Operating profit 70.8 70.8 -
% margin 15.8% 18.6%
Profit after tax 47.6 39.9 19.3%
Diluted EPS 10.3p 8.0p 28.8%
Diluted weighted average no.
of shares 397.4m 441.3m
Total Group
Profit after tax 55.4 443.3 -
Diluted EPS 12.3p 99.4p -
Diluted weighted average no.
of shares 397.4m 441.3m
============================== ========= ======== =======
Notes to business and financial review
Unless otherwise stated:
-- Underlying revenue growth measures are adjusted for the effects of acquisitions, disposals, foreign exchange movements and peripatetic and biennial events
-- Adjusted underlying growth measures additionally remove the impact of portfolio rationalisation
-- 'Major' events refer to annual events generating more than GBP1m revenue -- Biennial events occur once every two years
-- Adjusted operating profit excludes amortisation of intangible assets arising on acquisitions, exceptional items and share of taxation on joint ventures and associates
-- Strategic opex relates to Events First strategy implementation
See page 44 for explanation of non-IFRS items.
Contacts
Head of Investor
Relations & investorrelations@ubm.com +44(0) 20 7921
Kate Postans Corporate Communications communications@ubm.com 5023
Caroline
Daniel +44(0) 20 7404
Craig Breheny Brunswick Group ubm@brunswickgroup.com 5959
UBM will host a presentation today at 10.30am at 240 Blackfriars Road, London, SE1 8BF. A live webcast of the results presentation will be made available via UBM's website. To access the webcast please go to www.ubm.com/investor/results-and-reports. A recording of the webcast will also be available on-demand on UBM's website after 4pm.
Notes to Editors
UBM plc is the largest pure-play B2B Events organiser in the world.
In an increasingly digital world, the value of connecting on a meaningful, human level has never been more important. At UBM, our deep knowledge and passion for the industry sectors we serve allow us to create valuable experiences where people can succeed. At our events people build relationships, close deals and grow their businesses.
Our 3,750+ people, based in more than 20 countries, serve more than 50 different industry sectors - from fashion to pharmaceutical ingredients. Our global networks, skilled, passionate people and market-leading events provide exciting opportunities for business people to achieve their ambitions.
For more information, go to www.ubm.com; for UBM corporate news, follow us on Twitter at @UBM.
Forward Looking Statements
This announcement may contain certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans and objectives for the management of future operations of UBM plc ("UBM") and its subsidiaries (the "Group") are not warranted or guaranteed. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although UBM believes that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors, many of which are beyond the control of the Group, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, factors such as: future revenues being lower than expected; increasing competitive pressures in the industry; and/or general economic conditions or conditions affecting the relevant industry, both domestically and internationally, being less favourable than expected. We do not intend to publicly update or revise these projections or other forward-looking statements to reflect events or circumstances after the date hereof, and we do not assume any responsibility for doing so.
This announcement contains inside information for the purpose of Article 7 of Regulation (EU) No 596/2014.
BUSINESS REVIEW
For the six months ended 30 June 2017
Strategic progress
UBM continues to be focused on delivering the Events First strategy, with the objective of becoming the world's leading events business. This set of results show the Group's financial performance is reflecting increasingly the attractive characteristics of the events industry, with good organic growth supported by acquisitions, high margins and strong cash generation.
Group revenues of GBP448.4m increased by 8.3% at constant currency, adjusted operating profits rose by GBP18.3m to GBP111.7m with the operating margin improving by 0.3%pts. Adjusted operating cash flow was strong at GBP179.0m, a conversion of 160%.
The sectoral and geographic spread of the portfolio, combined with its overall scale, provides an inherent breadth and resilience which underpins the revenues and earnings of the business. The distribution of the events through the year is such that the second half of the year, in which we run the many of the fastest growing large events (including our large odd year biennials), produces a stronger revenue growth, operating profit and margin performance than the first half. The current forward bookings and visibility provide confidence in a strong performance in the second half.
One of the two priorities in the business is to accelerate the organic growth of the events portfolio. During the first half the adjusted underlying growth of the Events business increased from 1.3% to 2.7%. We saw strong growth in mainland China, India, South East Asia and Japan, supported by good growth in Continental Europe and this was more than sufficient to offset the market based challenges of 'Fashion' (which was down 3%). The US business was broadly flat in the first half and will grow in the second half when 'Fashion' is proportionately less significant and technology events, notably BlackHat, run. OMS revenues, which now account for only 15.2% of Group revenues and 6.9% of Group operating profits, were down 2.1% on an adjusted underlying basis - a reasonable result given the 12.1% decline in print: the result of delays to drug approvals in the US which adversely affected advertising volumes.
During the first half, in Events, we saw particularly strong growth in the 'Food, Hospitality & Leisure' sector, up 20%, the result of creating opportunities to utilise additional space in Shanghai for two phases of Hotelex and Fine Food. 'Pharma & BioPharm' also grew strongly, up 13% in the first half with the launch of CPhI North America and strong performances at Pharmapack, P-MEC and CPhI China. 'Lifestyle & Brands' grew well, up 7%, as the Malaysian International Furniture Fair performed strongly. 'Jewellery' was down 7%, as the smaller shows continued to struggle; however, the June Hong Kong show exceeded our expectations and we are confident that performance at the September show will be good, marking a turning point in the sector, which is expected to grow for the full year. 'Life Sciences & Healthcare', which is small in the first half, was down 11% but is expected to return to growth in the second half. Overall we expect all sectors, bar 'Fashion', to be growing in the full year. This reinforces the value of our large, sectorally diversified portfolio.
Central to the Events First strategy is a focus on enhancing the quality of the portfolio: organically (through improving performance), inorganically (through acquisition) and by rationalising and disposing of underperforming events.
In January 2017 we completed the Allworld acquisition with the purchase of Arabian Exhibition Management WLL (AEM) in Bahrain and paid the remaining GBP48.4m of the total consideration. Allworld has strengthened our market-leading position in Asia and has secured a leadership position in the high-growth ASEAN region. Allworld has improved the overall growth profile of the Group contributing a portfolio of large, market-leading events with a high level of geographic and sectoral complementarity to the existing UBM portfolio. It is this high degree of complementarity which is the basis for the strong revenue synergies that underpin the rationale for the acquisition. The integration is progressing well with both trading and synergy plans ahead of the business case.
During the year we also acquired two small bolt-on businesses for GBP2.3m. The pipeline for further acquisitions is good with multiple conversations ongoing, although we remain very disciplined with respect to price.
The second of the business' two priorities is to deliver further margin improvement in the Group's operating margin. We have set a medium term goal of 30%, 2.8%pts higher than was delivered in 2016. In the first half we made progress with the margin up 0.3%pts but we expect this to accelerate in H2, with the benefit of good operational gearing from the stronger revenue growth in the second half.
2017 is the final year of the three-year programme to dispose of and/or rationalise smaller, lower-margin, lower-growth events and OMS activities that are not well-aligned to events. In the first half we rationalised 15 events and various US OMS activities which generated GBP5.0m of Events revenue and GBP6.1m of OMS revenue in the H1 2016 comparable period. Additionally, during 2016, we disposed of events and the Electronics business which had contributed GBP5.3m to Events revenues and GBP6.1m to OMS revenue in H1 2016. Further disposal and rationalisation activity is expected in the second half, dependent on the outcome of negotiations. As previously communicated at the preliminary results, for the full year we expect GBP20-25m of disposal and rationalisation activity for Events and cGBP19m for OMS. The rationalisation programme enhances the group operating margin and contributes to group operating profit.
Operationally, Events First implementation continues to progress well. These initiatives deliver improvements in both the organic growth performance of the portfolio and the operational efficiency of the business. During the first half we rolled out the common sales model and supporting CRM platform into Turkey, Hong Kong and Guangzhou. We also made good progress with planning the Americas roll-out of the common sales model, and in planning the implementation of the Marketing Excellence programme, including the related technology, in EMEA. There is already evidence of the new systems and processes delivering more pertinent and timely management information, the first step in better sales and marketing outcomes as well as efficiency improvement
The procurement programme continued to generate savings and secured a further GBP2.0m of annualised savings during the first half to bring total procurement savings to GBP9.0m per annum. We have further developed the Event planning process which is now embedded in our management processes. This has allowed us to improve the performance of a number of underperforming events as well as providing much improved long-term planning and investment decisions.
During the first half strategic expenditure, which includes the costs of portfolio rationalisation, restructuring, strategy implementation and the development of the common Sales, Marketing and Data platforms, was GBP5.6m. Of this GBP3.7m was capital expenditure and GBP1.9m opex (all spent on Events). At the end of H1, the Events First programme has delivered cumulatively total savings of GBP10.9m at an annualized run rate of
GBP15.6m. We are confident of delivering annual savings of GBP20m by the end of 2019.
The Events First strategy has, since its launch at the end of 2014, delivered an Events business with accelerating growth, better operational performance driving improvements in the operating margin and very strong cash generation. This is resulting in strong growth in earnings per share and a strengthened balance sheet.
Outlook
The business is well positioned for stronger organic growth and further margin progression in the second half when we run many of our fastest-growing 'major' annual events. Trading will also benefit from the large biennials which take place in the second half of odd years.
While conscious of global macro-economic and geopolitical uncertainties, we are confident in the quality of our portfolio and the outlook for the year is therefore unchanged.
As a result of continuing improvements in operating performance and strong cash generation, the company expects to grow into its target dividend cover (averaged over the biennial cycle). Consequently, we expect to be able to grow our full year 2017 dividend at a faster rate than in recent years.
During the second half of the year the Board will review the future dividend policy for the company, looking at the dividend relative to future earnings, whilst being mindful of the biennial cycle, economic cycle and foreign exchange. At the full year results the dividend policy will be updated, if the board determines that this is appropriate.
Events
H1 H1 2016 Adjusted underlying*
2017 Underlying*
GBPm GBPm change % change %
Annual Events revenue
North America 186.8 157.9 (1.3) (0.1)
China (Mainland & HK) 73.9 67.0 5.9 7.1
Emerging Markets 54.4 32.0 1.9 2.7
UK 15.7 19.6 (4.0) (0.9)
Continental Europe 7.1 9.7 (11.3) 4.8
RoW 12.9 7.7 29.0 29.0
350.8 293.9 1.2 2.7
Biennial Events revenue 29.6 12.8
Total Events revenue 380.4 306.7 1.2 2.7
========================= ====== ======== =========== ====================
Total Events revenue was GBP380.4m (H1 2016: GBP306.7m), benefiting from an FX tailwind of GBP30.1m and revenue from the acquisitions (which generated GBP30.7m of annual event revenues in H1 2016 prior to acquisition). During the period we rationalised events which had contributed GBP5.0m of Annual Event revenues in H1 2016 and the results also exclude events we disposed of in 2016, which had contributed GBP5.3m of revenues to H1 2016. Adjusted underlying* revenue from Annual Events, which excludes the impact of portfolio rationalisation, grew 2.7% in H1 2017. Unless otherwise stated, all commentary below relates to adjusted underlying* revenue.
The growth of the events portfolio improved significantly during the first half, with the benefit of improved growth performance from the portfolio (particularly in Asia), a small number of new launches and a small contribution from Allworld more than offsetting a weaker 'Fashion' performance in North America. To combat the softness in this sector we are investing in initiatives to improve our market penetration, to expand into adjacencies and to make the events "must-attend" for visitors by improving the educational and experiential content at the shows.
We saw strong performances in our 'Food, Hospitality & Leisure', 'Pharma & BioPharm' and 'Lifestyle & Brand' sectors, where curation of our events enabled us to capitalise on the long-term opportunities in these sectors . This was partially offset by the 'Fashion' performance and the refresh of InteropITX as a smaller more focused event. Our 'Jewellery' events in H1, which are relatively smaller in scale compared to the September event, declined 7% although the June event performed better than expected.
H1 2017 - Annual Events Revenue ------------------------------------ ---- Food, Hospitality & Leisure 11% ------------------------------------ ---- Pharma & BioPharm 11% ------------------------------------ ---- Lifestyle & Brand 7% ------------------------------------ ---- Advanced Manufacturing 13% ------------------------------------ ---- Transport & Logistics 2% ------------------------------------ ---- Business Services & Infrastructure 6% ------------------------------------ ---- Technology 14% ------------------------------------ ---- Resources 1% ------------------------------------ ---- Fashion 24% ------------------------------------ ---- Jewellery 7% ------------------------------------ ---- Lifesciences & Healthcare 4% +2.7% Adj Underlying ------------------------------------ ----
In H1 2017, North America accounted for 53% of Annual Events revenue (H1 2016: 54%), China (inc HK) accounted for 21% (H1 2016: 23%) and Emerging Markets accounted for 16% (H1 2016: 11%). This weighting differs to the full year when the proportion of 2016 Annual Events revenue were 43%, 30% and 11% respectively.
H1 2017 - Annual Events Revenue ------------------------ -------- North America GBP187m ------------------------ -------- China (Inc HK) GBP74m ------------------------ -------- Emerging Markets GBP54m ------------------------ -------- UK GBP16m ------------------------ -------- Continental Europe GBP7m ------------------------ -------- RoW GBP13m ------------------------ -------- +2.7% Adj Underlying ------------------------ --------
During H1 North American revenue was down 0.1%. Good performances in the 'Pharma & BioPharm', 'Advanced Manufacturing' and 'Transport & Logistics' sectors were more than offset by the impact of 'Fashion' and InteropITX.
China (inc HK) revenue grew 7.1% in H1, with particularly strong growth in the 'Food, Hospitality & Leisure' and 'Pharma & BioPharm' sectors, where the healthy sector growth plus the decision to run Hotelex/FineFood in two phases resulted in faster growth. This strong growth was moderated slightly by the softness in 'Jewellery', albeit the performance was ahead of expectations.
Emerging Markets revenue grew 2.7%, principally driven by strong growth in South East Asia, which was more than sufficient to offset the weakness in the much smaller businesses in Turkey and Brazil.
Revenues in the UK fell 0.9% influenced in the main by IFSEC which was slightly down on last year. In Continental Europe revenue rose 4.8% while the Rest of World events rose 29%, principally reflecting the successful launch of IFF Magic Japan.
Biennial Events contributed GBP29.6m of revenue (H1 2016: GBP12.8m) reflecting the inclusion of GBP17.9m of revenue from Allworld biennial events, notably HOFEX and Food & Hotel Indonesia. The existing UBM biennial portfolio has changed over the last two years with GBP4.0m of biennial revenue moving to H2 or being rationalised. The remaining portfolio showed 10.0% CAGR over their 2015 editions.
H1 2017 H1 2016
Events GBPm GBPm
Annual - adjusted operating profit* 105.6 88.0
Annual - adjusted operating profit margin* 30.1% 30.0%
Biennial - adjusted operating profit* 7.7 3.2
Biennial - adjusted operating profit margin* 26.0% 24.8%
Total adjusted operating profit* 113.3 91.2
Total adjusted operating profit margin* 29.8% 29.7%
============================================== ======== ========
Adjusted operating profit* was GBP113.3m, up from GBP91.2m in H1 2016. The Annual Events adjusted operating margin* was 30.1% (H1 2016: 30.0%). During the period there was good margin progression with Events First initiatives delivering improvements through the stronger organic growth, procurement savings and the benefits from rationalising and discontinuing events. This was largely offset by the decline in the 'Fashion' portfolio and investment in the visitor experience, coupled with the impact of the new launches and some lower-margin acquired events.
The Total Events adjusted operating margin* was 29.8% (H1 2016: 29.7%) benefiting from the higher Annual Events margin and from higher-margin H1 biennial shows (following inclusion of the Allworld biennials).
Other Marketing Services (OMS)
H1 H1 2016 Adjusted underlying*
2017 Underlying*
GBPm GBPm change % change %
OMS - Online 40.7 42.9 (2.7) 5.8
OMS - Print 27.3 30.4 (19.9) (12.1)
Total OMS revenue 68.0 73.3 (10.4) (2.1)
Adjusted operating profit* 8.4 12.1
Total adjusted operating profit margin* 12.4% 16.4%
----------------------------------------- ------ -------- ----------- ---------------------
OMS revenue declined by 2.1% on an adjusted underlying basis. In Q4 2016 we restructured the non-aligned US activities thus rationalising GBP6.1m of OMS revenue which had featured in the H1 2016 comparative. We also disposed of a further GBP6.1m of H1 2016 revenues through the Electronics disposal in July 2016. The remaining online activities showed good adjusted underlying growth of 5.8% although this was more than offset by the 12.1% decline in the print activities. Print revenues, which represented 6% of Group revenues in the first half, were affected by uncertainties over healthcare reform in the US which are impacting the level of drug approvals.
Adjusted operating profit* was GBP8.4m (H1 2016: GBP12.1m), representing an operating margin* of 12.4% (H1 2016: 16.4%.) This reduction in the margin was principally driven by the decline in print revenues and challenges in adjusting the cost base in the short-term. We expect the margin to partially recover in the second half of the year.
FINANCIAL REVIEW
For the six months ended 30 June 2017
SUMMARY INCOME STATEMENT
Adjusting
Adjusted items IFRS Adjusted Adjusting IFRS
results* H1 results results* items results
H1 2017 2017 H1 2017 H1 2016 H1 2016 H1 2016
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ---------- ---------- --------- ---------- ---------- ---------
Continuing
Revenue 448.4 - 448.4 380.0 - 380.0
------------------------- ---------- ---------- --------- ---------- ---------- ---------
Operating profit 111.7 (40.9) 70.8 93.4 (22.6) 70.8
Net financing expense (11.7) 2.8 (8.9) (13.3) (5.7) (19.0)
------------------------- ---------- ---------- --------- ---------- ---------- ---------
Profit before tax 100.0 (38.1) 61.9 80.1 (28.3) 51.8
Tax charge (16.0) 1.7 (14.3) (12.8) 0.9 (11.9)
------------------------- ---------- ---------- --------- ---------- ---------- ---------
Profit for the period
continuing 84.0 (36.4) 47.6 67.3 (27.4) 39.9
Discontinued operations
Discontinued operations
profit after tax - - - 26.3 - 26.3
Profit on disposal - 7.8 7.8 - 377.1 377.1
------------------------- ---------- ---------- --------- ---------- ---------- ---------
Profit for the period
total Group 84.0 (28.6) 55.4 93.6 349.7 443.3
Minority interest (6.5) - (6.5) (4.6) - (4.6)
------------------------- ---------- ---------- --------- ---------- ---------- ---------
Adjusted earnings 77.5 (28.6) 48.9 89.0 349.7 438.7
Earnings per share
(pence)
Continuing operations
- basic 19.7 (9.3) 10.4 14.3 (6.2) 8.1
Continuing operations - diluted 19.5 (9.2) 10.3 14.2 (6.2) 8.0 Total Group - basic 19.7 (7.3) 12.4 20.4 80.0 100.4 Total Group - diluted 19.5 (7.2) 12.3 20.2 79.2 99.4 Weighted average no. shares (m) 393.2 - 393.2 437.2 - 437.2 Fully diluted weighted average no. shares (m) 397.4 - 397.4 441.3 - 441.3 ------------------------- ---------- ---------- --------- ---------- ---------- ---------
All non-IFRS measures are noted with a '*' and additional information on these measures is set out on page 44
Revenue
Revenue
---------------------------- -------
GBPm
---------------------------- -------
2016 Jun reported 380.0
---------------------------- -------
Acquisitions and disposals 41.1
---------------------------- -------
Product rationalisation (11.1)
---------------------------- -------
Phasing 0.8
---------------------------- -------
Annual events 6.7
---------------------------- -------
OMS (1.3)
---------------------------- -------
Biennial events (3.4)
---------------------------- -------
FX 35.6
---------------------------- -------
2017 Jun reported 448.4
---------------------------- -------
** CAGR on a like for like basis versus 2015
Revenue in H1 2017 was GBP448.4m, up 18.0% (H1 2016: GBP380.0m) due to growth in the annual events portfolio, a positive contribution from acquisitions (including Allworld and BJI, net of the disposal of Electronics and Ecobuild) and favourable FX movements. This was partially offset by product rationalisation. On an adjusted underlying basis, revenue grew 1.9% with 2.7% growth in Events and 2.1% decline in OMS.
Adjusted operating profit*
Adjusted operating
profit*
---------------------------- ------
GBPm
---------------------------- ------
2016 Jun reported 93.4
---------------------------- ------
Acquisitions and disposals 13.6
---------------------------- ------
Strategic opex / corporate
operations (0.3)
---------------------------- ------
Phasing 0.1
---------------------------- ------
Annual events 2.3
---------------------------- ------
OMS (3.4)
---------------------------- ------
Biennial Events (3.8)
---------------------------- ------
FX 9.8
---------------------------- ------
2017 Jun reported 111.7
---------------------------- ------
Adjusted operating profit* rose by 19.6% to GBP111.7m (H1 2016: GBP93.4m) reflecting the contribution from acquisitions and favourable FX. The adjusted operating profit* for Annual Events rose 20% to GBP105.6m reflecting the positive impact of FX, acquisitions, product rationalisation, synergies and procurement initiatives.
The adjusted operating margin* grew to 24.9% (H1 2016: 24.6%) given the stronger Annual and Biennial Events margin, in part thanks to the inclusion of Allworld events coupled with the benefits of Events First initiatives.
On a reported basis, operating profit of GBP70.8m was level with 2016 (H1 2016: GBP70.8m) owing to the above 19.6% increase in adjusted operating profit*, offset by a higher acquisition amortisation charge and acquisition-related costs.
Diluted adjusted EPS*
Diluted adjusted EPS*
----------------------- ------
pence
----------------------- ------
2016 14.2
----------------------- ------
Share consolidation 1.6
----------------------- ------
Operating profit 2.3
----------------------- ------
Net interest 0.5
----------------------- ------
Minority interests (0.5)
----------------------- ------
FX 1.4
----------------------- ------
2017 19.5
----------------------- ------
Diluted adjusted EPS* increased by 37.3% to 19.5p (H1 2016: 14.2p) reflecting the earnings growth in the period and the FX tailwind. The share consolidation in 2016 added 1.6p of benefit during the period.
On a reported basis, diluted EPS from continuing operations of 10.3p increased 28.8% (H1 2016: 8.0p) reflecting the increase in the adjusted measure (see above), partially offset by higher charges from adjusting items (amortisation, acquisition-related costs).
Corporate operations and strategic operating expense
GBPm H1 2017 H1 2016 ------------------------------- -------- -------- Recurring corporate costs 9.3 9.8 Pension administration and service cost 0.4 0.3 Non-cash share-based payments 1.4 1.5 Income from equity-accounted investments (1.1) (1.0) Total 10.0 10.6 Non-recurring Light Reading income - (0.7) Total corporate costs 10.0 9.9 ------------------------------- -------- --------
Corporate costs before non-recurring items were down 5.7% at GBP10.0m (H1 2016: 10.6m).
GBPm H1 2017 H1 2016 ------------------------------ -------- -------- Strategic operating expenses 1.9 1.7 Strategic capital expenses 3.7 2.0 ------------------------------ -------- --------
Strategic operating and capital expenses relate to the implementation of our Events First strategy. Strategic opex in the period of GBP1.9m included costs relating to the continued roll-out of the common sales model plus the CRM and marketing platform development (H1 2016: GBP1.7m). Strategic capital expenditure of GBP3.7m was invested in CRM platform development during the period.
Income statement adjusting items
The following table provides a summary of the income statement adjustments that have been excluded from the adjusted operating profit* of GBP111.7m.
GBPm H1 2017 H1 2016
---------------------------------------- -------- --------
Amortisation - intangible assets
on acquisition (33.2) (19.4)
Tax on share of profits from
JVs and Associates (0.3) (0.4)
Exceptional items
Advanstar and BJI integration
costs (5.3) (3.6)
Allworld integration costs (0.7) -
Acquisition costs and earnout
changes (1.4) (0.9)
Disposals
* Investments and associates - 2.2
* Non-core businesses - (0.5)
Total exceptional items (7.4) (2.8)
Total income statement adjustments (40.9) (22.6)
---------------------------------------- -------- --------
Amortisation on intangible assets increased due to the 2016 acquisitions of Allworld Exhibitions, CMI and BJI.
Advanstar and BJI integration costs of GBP2.8m and GBP2.5m respectively related to operations integration into the Americas business and alignment and migration of processes. Total costs incurred to date amount to GBP19.6m for Advanstar and GBP5.7m for BJI. Final costs are expected to be incurred during 2017, to bring total integration costs to $33m for Advanstar and $10m for BJI.
Initial Allworld integration costs of GBP0.7m have been incurred. Total integration costs of $20m are expected to be incurred over the next two to three years.
Total acquisition costs of GBP1.2m have been expensed as exceptional items and relate mainly to due diligence and professional fees paid to various advisors. Of these, GBP1.1m relate to the acquisition of Allworld Exhibitions (in addition to GBP4.7m recognised in 2016). A charge of GBP0.2m (H1 2016: GBPnil) has been recognised for changes in earnout estimates relating to acquisitions from prior years.
Net financing expense
The net financing expense of GBP11.7m (H1 2016: GBP13.3m) represents interest payments on our bond, the Bridge financing (until June), US Private Placement Loan Notes (from June), the RCF and pension interest, net of interest receipts on cash holdings. The net expense for the period is lower than in the prior year primarily due to interest on the temporary Bridge facility used to fund the Allworld acquisition being lower than interest on the GBP250m sterling bond which was repaid in November 2016.
As indicated at the time of the Allworld acquisition, the Bridge facility was replaced with new long-term debt towards the end of the period. See page 18 for more detail.
Discontinued operations
The PR Newswire (PRN) disposal completed on 16 June 2016 and a gain on disposal was reported in 2016. In the period to 30 June 2017, the Group has recognised an additional GBP7.8m gain on disposal of PRN primarily due to the release of expired provisions for warranties and indemnities recognised in accordance with specific clauses in the sale agreement.
Part of the consideration received in respect of the sale of PRN to Cision, a business controlled by GTCR Canyon Holdings (Cayman), L.P, in 2016 was Class A Limited Partnership Units ("partnership units"). These partnership units had a par value of $40m and an interest coupon of 8% and were valued at GBP26.8m on the balance sheet at 31 December 2016. GTCR Canyon Holdings (Cayman) LP, who recently changed their name to Canyon Holdings (Cayman) LP ("Canyon"), are the ultimate parent company of the combined Cision and PRN business. On 29 June 2017, Cision merged with Capitol Acquisition Holding Company Ltd, who is listed on the New York Stock Exchange. As a result of the merger, Canyon owns 68% of the ordinary shares of the listed entity, which is now called Cision Ltd. (CISN). Our partnership units in Canyon, were valued at $43.4m on 30 June 2017. The investment continues to be reported as an available-for-sale asset on the balance sheet, with movements in fair value taken to other comprehensive income.
TAX
Current tax
The tax charge on continuing adjusted operating profit* was GBP16.0m (H1 2016: GBP12.8m), representing an effective rate of taxation* for the period of 16.0% (H1 2016: 16.0%). A bridge showing the main factors affecting the rate is shown below:
Tax
----------------------------- ------
%
----------------------------- ------
UK tax rate 19.3
----------------------------- ------
Higher tax rate on overseas
earnings 9.0
----------------------------- ------
Tax at statutory rates 28.3
----------------------------- ------
US goodwill amortisation (6.8)
----------------------------- ------
Effect of intragroup
financing (7.5)
----------------------------- ------
Other adjustments 2.2
----------------------------- ------
Deferred tax and provisions (0.2)
----------------------------- ------
2017 Adjusted tax rate 16.0
----------------------------- ------
A breakdown of the main geographies in which we pay tax is as follows:
Cash tax paid H1 2017
GBPm
------------------------ --------
United States 0.4
Europe 6.4
China 1.4
Other Emerging Markets 5.6
Rest of World 1.8
--------
Total 15.6
------------------------ --------
CASH FLOW
Conversion of adjusted operating profit* into cash
The ability to turn our profits into cash is a key focus for management as it provides the funds to invest in the business. We track this using the cash conversion* measure which expresses our adjusted cash generated from operations* as a percentage of adjusted operating profit*. Cash conversion* varies with our biennial cycle and event phasing.
GBPm H1 2017 H1 2016 --------------------------------- -------- -------- Adjusted operating profit* 111.7 121.5 Depreciation 8.6 8.4 Capital expenditure (5.1) (7.6) Movement in working capital and other non-operating items 63.8 16.4 Adjusted cash generated from operations* 179.0 138.7 Cash conversion* 160% 114% --------------------------------- -------- --------
Cash conversion* at 160% (H1 2016: 114%) increased principally due to strong cash in flows ahead of the large biennial events running in H2 2017.
Capital expenditure for the period was GBP5.1m (H1 2016: GBP7.6m) and GBP3.7m of this expenditure related to strategic spend on our new CRM platform. The level of capital expenditure is expected to increase in the second half of the year.
Free cash flow
Free cash flow* was GBP141.9m (H1 2016: GBP81.6m).
GBPm H1 2017 H1 2016 ------------------------------ -------- -------- Adjusted cash generated from operations* 179.0 138.7 Non-operating items (6.0) (15.5) Payments against provisions (3.9) (8.6) Pension deficit payments (1.7) (11.5) Interest paid (9.9) (8.8) Tax paid (15.6) (12.7) Free cash flow* 141.9 81.6 ------------------------------ -------- --------
Free cash flow* in H1 2017 has benefited from positive working capital in the first half of a biennial up year, and a lower level of spend on non-operating items (namely the PRN disposal expenses) and provisions, offset in part by higher interest and tax paid.
Free cash flow
------------------------------ --------
GBPm
------------------------------ --------
31 Dec 2016 Net Debt 596.8
------------------------------ --------
Adjusted cash generated from
operations (179.0)
------------------------------ --------
Non-operating items 6.0
------------------------------ --------
Provisions & pensions 5.6
------------------------------ --------
Interest & tax 25.5
------------------------------ --------
Dividends & share purchases 72.3
------------------------------ --------
Net acquisitions 52.7
------------------------------ --------
FX/Fair value (31.9)
------------------------------ --------
30 Jun 2017 Net Debt 548.0
------------------------------ --------
We generated adjusted cash from operations* of GBP179.0m whilst free cash flow* was GBP141.9m. Dividend payments and purchases of shares totalled GBP72.3m.
We spent GBP45.9m (net of cash acquired) on the acquisitions of Arabian Exhibition Management WLL (AEM), the Bahrain business of Allworld Exhibitions which completed in January 2017, Marmara, in February 2017, and AMA Research, in April 2017. We also made payments for contingent and deferred consideration for acquisitions made in prior years totalling GBP5.6m plus acquisition costs of GBP1.2m.
Reconciliation of IFRS to adjusted cash generated from operations
GBPm H1 2017 H1 2016
-------------------------------- -------- --------
Adjusted cash generated from
operations* 179.0 138.7
Capital expenditure 5.1 7.6
Payments against provisions (3.9) (8.6)
Pension deficit payments (1.7) (11.5)
Other adjustments (7.2) (15.5)
-------- --------
Cash generated from operations
(IFRS) 171.3 110.7
-------------------------------- -------- --------
CAPITAL STRUCTURE
Net debt
Our net debt at 30 June 2017 was GBP548.0m representing 2.0 times EBITDA on a proforma basis.
Our Financial Policy is to target a leverage ratio of between 1.5-2.0 times net debt/EBITDA which provides flexibility for biennial cycles, capacity to invest in bolt-on acquisitions, and is consistent with investment grade metrics. There is flexibility to move outside of the corridor (up to 2.5 times and down to 1.0 times), specifically due to M&A activity, with the intention of returning into the corridor within 12-18 months. We continue to maintain investment grade ratings from each of Moody's and Standard & Poor's.
Pro forma Pro forma
GBPm H1 2017(6) H1 2017 H1 2016(7)
--------------------------- ------------ ---------- ------------
Cash (116.9) (116.9) (241.0)
Borrowings and associated
derivatives 664.9 664.9 529.7
------------ ---------- ------------
Net debt*(5) 548.0 548.0 288.7
EBITDA* 269.0 261.7 234.0
Net debt to EBITDA 2.0 times 2.1 times
ratio* 1.2 times
--------------------------- ------------ ---------- ------------
(5) Includes fair value adjustments
(6) Includes Allworld on a last twelve months basis
(7) H1 2016 reflects last 12 months of continuing operations EBITDA only and adjusts for GBP244m special dividend payment made in July 2016
Debt facilities
Our funding strategy is to maintain a balance between continuity of funding and flexibility through the use of capital markets, bank loans and overdrafts.
During the period, to replace the $365m Bridge Facility (which was put in place in December 2016 to fund the Allworld acquisition), $370m of US Private Placement Loan Notes were issued on 15 June 2017 in three tranches: $45m of 5-year notes, $175m of 7-year notes and $150m of 10-year notes.
At 30 June 2017, we had drawn GBP111.9m from the revolving credit facility, leaving an unutilised commitment of GBP288.1m available. Our debt facilities and maturities as of 30 June 2017 are summarised below:
Post
Margin Fair value Swap
GBPm Facility Drawn Undrawn Maturity % hedges rate
------------------ --------- ------ -------- --------- --------- ----------- ------
$45m US
PP - tranche Jun LIBOR
A 34.7 34.7 - 22 + 1.65% 3.08%
================== ========= ====== ======== ========= ========= =========== ======
Floating
rate swap
$175m US for $78m
PP- tranche Jun 4.45% US LIBOR
B 134.8 134.8 - 24 fixed + 2.09% 4.15%
================== ========= ====== ======== ========= ========= =========== ======
$150m US
PP- tranche Jun 4.68%
C 115.5 115.5 - 27 fixed 4.68%
------------------ --------- ------ -------- --------- --------- ----------- ------
Floating
rate swap
$350m fixed for $100m
rate Dollar Nov 5.75% US LIBOR
bond 269.5 269.5 - 20 fixed + 2.66% 5.11%
------------------ --------- ------ -------- --------- --------- ----------- ------
GBP400m
revolving Apr LIBOR
credit facility 400.0 111.9 288.1 22 + 0.6% 1.30%
------------------ --------- ------ -------- --------- --------- ----------- ------
Total 954.5 666.4 288.1 4.10%
------------------ --------- ------ -------- --------- --------- ----------- ------
RELATED PARTY TRANSACTIONS
Details of related party transactions in the 6 months ended 30 June 2017 are disclosed in Note 19.
FOREIGN CURRENCY
The Group closely monitors its exposure to foreign currencies, and seeks to match revenue and costs when possible. The revolving credit facility may be drawn in currencies other than Pounds Sterling. We also hold cash and cash equivalents in Pounds Sterling, the Renminbi and US Dollars and other currencies closely linked to the US Dollar. Given our large and diverse customer base, there are no significant concentrations of credit risk.
The following table outlines the currency profile of our revenues and adjusted operating profit* for H1 2017:
Year on
Adjusted Average exchange year FX
Revenue operating rate movement
profit*
GBPm GBPm H1 2017 H1 2016 %
------------------- -------- ----------- --------- -------- ----------
US Dollar(8) 253.4 86.2 1.26 1.41 -10.64%
Hong Kong
Dollar(8) 29.1 7.9 9.98 10.62 -6.03%
Renminbi(8) 48.8 15.6 8.80 9.09 -3.19%
UK Pound Sterling 32.1 (11.6) 1.00 1.00 -
Euro 6.9 (5.1) 1.18 1.28 -7.81%
Indian Rupee 4.7 (0.8) 82.93 94.48 -12.22%
Singapore
Dollar 23.3 8.9 1.78 1.91 -6.81%
Japanese Yen 15.8 5.3 140.65 160.53 -12.38%
Brazilian
Real 11.3 3.6 4.22 5.14 -17.90%
Other 23.0 1.7 - - -
Total 448.4 111.7
------------------- -------- ----------- --------- -------- ----------
(8) $ or quasi-$ pegged
During the period approximately 74% of UBM's revenues and 98% of UBM's adjusted operating profit* were generated in US Dollars or quasi Dollar-pegged currencies, which has benefited the Group's reported financials given FX movements during the year. In H1 2017, the FX tailwind added GBP35.6m to revenue and GBP9.8m to adjusted operating profit*.
The income statement exposure to foreign exchange risk is shown for our most important foreign currency exposures in the sensitivity analysis below, based on 2016 operations:
Effect on
Average Effect adjusted
exchange Currency on revenue operating
rate in value rises/ + / - profit*(9)
2016 falls by GBPm + / - GBPm
----------- ---------- -------------- ------------ ------------
US Dollar 1.35 1% 4.0 1.2
HK Dollar 10.15 1% 1.1 0.5
Renminbi 8.85 1% 1.1 0.3
Euro 1.15 1% 0.6 0.3
----------- ---------- -------------- ------------ ------------
(9) The actual impact of currency on Group profit may be different to that implied due to the timing of profit receipts, with financials translated on a monthly basis using the average for that month
DIVIDS
We have a progressive dividend policy, which targets two times cover through economic and biennial cycles. The Board has declared an interim dividend of 5.5p (2016: 5.4p) in line with the policy of the interim dividend per share representing 33% of prior year's final dividend per share.
As a result of continuing improvements in operating performance and strong cash generation, the company expects to grow into its target dividend cover (averaged over the biennial cycle). Consequently, we expect to be able to grow our full year 2017 dividend at a faster rate than in recent years.
During the second half of the year the Board will review the future dividend policy for the company, looking at the dividend relative to future earnings, whilst being mindful of the biennial cycle, economic cycle and foreign exchange. At the full year results the dividend policy will be updated if the board determines that this is appropriate.
Key dates for the payment of the interim dividend are:
Ex-dividend date: 7 September 2017
Dividend Record date: 8 September 2017
Dividend Payment date: 12 October 2017
GOING CONCERN
After making enquiries, the Directors have a reasonable expectation that UBM has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. In reaching this conclusion, the Directors have had due regard to the following:
-- After taking account of available cash resources and committed bank facilities, none of UBM's borrowings fall due within the next 12 months that require refinancing from resources not already available.
-- The cash generated from operations, committed facilities and UBM's ability to access debt capital markets, taken together, provide confidence that UBM will be able to meet its obligations as they fall due.
APPOINTMENT OF NEW EXTERNAL AUDITOR
Following the completion of a comprehensive and competitive tender process the Board of UBM intends to appoint KPMG LLP as its external auditor. The appointment will be effective for the 31 December 2018 year-end and is subject to shareholder approval at the next AGM, due to be held in May 2018.
EY has been the Group auditor since 2002 and the Board would like to thank them for their contribution and dedication over the years. The Board look forward to a constructive and professional relationship with KPMG in the future.
Summary of principal risks
Macro-economic slowdown and/or exchange rate fluctuations
- A slowdown in the macro-economic environment or changes to the geopolitical environment could adversely impact the Company's revenue, as exhibitor advertising, attendee, sponsorship and other discretionary revenue may decline. As an international business UBM is sensitive to this risk.
- Foreign exchange rate fluctuations, particularly the US Dollar and UK Sterling, could adversely affect our reported earnings and the strength of our balance sheet.
Acquisition
- Acquisitions are an important part of our strategy. Acquisitions may not deliver their expected returns. Integration issues or failure to realise operating benefits or synergies may also impact the expected returns.
Specific country risk and emerging market exposure
- The geopolitical environment remains dynamic and our business operates in many geographies, particularly Emerging Markets such as Turkey, which may present logistical and management challenges due to different business cultures, languages or unfavourable changes in applicable law or compliance requirements.
- Expansion through joint ventures reduces logistical and management issues but can create governance and control challenges.
Factors and incidents affecting our ability to stage an event
- A disaster or natural catastrophe, terrorism, political instability or disease could affect people's willingness to attend our events, which could have an adverse effect on our revenues.
- UBM utilises some of the largest global venues available creating the possibility of concentration risk where few or no alternatives exists.
- A major incident at a venue during an event may give rise to significant contractual liabilities.
Changes in our business environment
- We cannot predict all the changes and impacts that may affect the competitiveness of the business, such as changes in customer behaviour, or technological innovations which would increase competition or make some products or services less relevant. Social media platforms, search engines and other online technologies could all pose a competitive threat to our businesses, as could changes in legislation or compliance requirements where we operate.
- Similarly, additional venue capacity is introducing competition as well as enhancing opportunities for growth.
Technological risk: data breach and cyber security
- The increasing threat from unauthorised access to our systems by external parties could lead to reputational damage and regulatory action.
- As part of its strategy, UBM has continued to invest in the technology platforms of the business. Having completed a system enhancement for UBM EMEA, progress has been made with UBM Americas and UBM Asia. Failure to deliver these projects effectively could lead to increased costs, delays or erosion of UBM's competitive position.
- System failure could have a significant impact on our business. The collapse of the Cloud on which various products and systems are hosted could have negative consequences for our operational activity.
Access to capital
- With the changing macro-environment and currency changes the availability or cost of financing may affect our acquisition strategy.
People recruitment and retention
- Changes in the operating model and competitive external landscape could see an increase in staff turnover.
Interim consolidated income statement
for the six months ended 30 June 2017
Before Exceptional Before Exceptional
exceptional items exceptional items
items 30 Total items 30 Total
30 June June 30 June 30 June June 30 June
2017 2017 2017 2016 2016 2016
Unaudited Unaudited
Notes GBPm GBPm GBPm GBPm GBPm GBPm
------ ------------------------ ------------- ------------ ------------ ------------- ------------ ------------
Continuing operations
4 Revenue 448.4 - 448.4 380.0 - 380.0
Other operating income 3.7 - 3.7 3.2 - 3.2
Operating expenses (341.7) - (341.7) (291.6) - (291.6)
Exceptional operating
5 items - (7.4) (7.4) - (2.8) (2.8)
Amortisation of
intangible
assets arising on
acquisitions (33.2) - (33.2) (19.4) - (19.4)
Share of post-tax
results
from joint ventures
and associates 1.0 - 1.0 1.4 - 1.4
Group operating profit
from continuing
operations 78.2 (7.4) 70.8 73.6 (2.8) 70.8
------ ------------------------ ------------- ------------ ------------ ------------- ------------ ------------
6 Financing income 1.0 3.8 4.8 1.0 - 1.0
6 Financing expense (13.7) - (13.7) (15.5) (4.5) (20.0)
------ ------------------------ ------------- ------------ ------------ ------------- ------------ ------------
Net financing expense (12.7) 3.8 (8.9) (14.5) (4.5) (19.0)
------ ------------------------ ------------- ------------ ------------ ------------- ------------ ------------
Profit before tax from
continuing operations 65.5 (3.6) 61.9 59.1 (7.3) 51.8
Tax (11.8) (2.5) (14.3) (10.0) (1.9) (11.9)
Profit for the period
from continuing
operations 53.7 (6.1) 47.6 49.1 (9.2) 39.9
------ ------------------------ ------------- ------------ ------------ ------------- ------------ ------------
Discontinued operations
Profit for the period
from discontinued
16 operations - 7.8 7.8 26.3 377.1 403.4
Profit for the period 53.7 1.7 55.4 75.4 367.9 443.3
------ ------------------------ ------------- ------------ ------------ ------------- ------------ ------------
Attributable to:
Owners of the parent
entity 48.9 438.7
Non-controlling
interests 6.5 4.6
------ ------------------------ ------------- ------------ ------------ ------------- ------------ ------------
55.4 443.3
------ ------------------------ ------------- ------------ ------------ ------------- ------------ ------------
Earnings per share pence pence
Continuing operations
7 - basic 10.4 8.1
Continuing operations
7 - diluted 10.3 8.0
Profit for the period
7 - basic 12.4 100.4
Profit for the period
7 - diluted 12.3 99.4
------ ------------------------ ------------- ------------ ------------ ------------- ------------ ------------
GBPm GBPm
Group operating profit
from continuing
operations 70.8 70.8
Exceptional operating
5 items 7.4 2.8
Amortisation of
intangible
assets arising on
acquisitions 33.2 19.4
Share of tax on profit
in joint ventures and
associates 0.3 0.4
============ ============
Continuing adjusted
4 operating profit(*) 111.7 93.4
Discontinued adjusted
16 operating profit - 28.1
============ ============
Group adjusted
operating
4 profit(*) 111.7 121.5
------ ------------------------ ------------- ------------ ------------ ------------- ------------ ------------
Dividends GBPm GBPm
Final dividend of 16.6p
8 (2016: 16.3p) 65.3 71.8
Special dividend of
8 GBPnil (2016: 55.3p) - 243.7
Proposed interim
dividend
8 of 5.5p (2016: 5.4p) 21.6 21.2
------ ------------------------ ------------- ------------ ------------ ------------- ------------ ------------
(*) Adjusted Group operating profit represents Group operating profit excluding amortisation of intangible assets arising on acquisitions, exceptional items and share of tax on profit in joint ventures and associates
Consolidated income statement
for the year ended 31 December 2016
Before
exceptional Exceptional
items items Total
31 December 31 December 31 December
2016 2016 2016
Audited
Notes GBPm GBPm GBPm
------ -------------------------------------- ------------- ------------- -------------
Continuing operations
4 Revenue 863.0 - 863.0
Other operating income 6.9 - 6.9
Operating expenses (637.5) - (637.5)
5 Exceptional operating items - (45.5) (45.5)
Amortisation of intangible assets
arising on acquisitions (45.1) - (45.1)
Share of post-tax results from
joint ventures and associates 1.9 9.0 10.9
Group operating profit from
continuing operations 189.2 (36.5) 152.7
------ -------------------------------------- ------------- ------------- -------------
6 Financing income 3.1 - 3.1
6 Financing expense (28.6) (7.1) (35.7)
------ -------------------------------------- ------------- ------------- -------------
Net financing expense (25.5) (7.1) (32.6)
------ -------------------------------------- ------------- ------------- -------------
Profit before tax from continuing
operations 163.7 (43.6) 120.1
Tax (8.6) (14.2) (22.8)
Profit for the year from continuing
operations 155.1 (57.8) 97.3
------ -------------------------------------- ------------- ------------- -------------
Discontinued operations
Profit for the year from discontinued
operations 26.3 380.9 407.2
------ -------------------------------------- ------------- ------------- -------------
Profit for the year 181.4 323.1 504.5
------ -------------------------------------- ------------- ------------- -------------
Attributable to:
Owners of the parent entity 491.5
Non-controlling interests 13.0
------ -------------------------------------- ------------- ------------- -------------
504.5
------ -------------------------------------- ------------- ------------- -------------
Earnings per share pence
7 Continuing operations - basic 20.3
7 Continuing operations - diluted 20.1
7 Profit for the year - basic 118.5
7 Profit for the year - diluted 117.3
------ -------------------------------------- ------------- ------------- -------------
GBPm
Group operating profit from
continuing operations 152.7
5 Exceptional operating items 36.5
Amortisation of intangible assets
arising on acquisitions 45.1
Share of tax on profit in joint
ventures and associates 0.5
Continuing adjusted operating
4 profit(*) 234.8
=============
Discontinued adjusted operating
profit 28.1
=============
4 Group adjusted operating profit(*) 262.9
------ -------------------------------------- ------------- ------------- -------------
GBPm
Dividends
8 Final dividend for 2015 of 16.3p 71.8
8 Special dividend of 55.3p 243.7
8 Interim dividend of 5.4p 21.2
8 Proposed final dividend of 16.6p 65.2
------ -------------------------------------- ------------- ------------- -------------
(*) Adjusted Group operating profit represents Group operating profit excluding amortisation of intangible assets arising on acquisitions, exceptional items and share of tax on profit in joint ventures and associates
Interim consolidated statement of comprehensive income
for the six months ended 30 June 2017
Six
Six months months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
Notes GBPm GBPm GBPm
-------- ---------------------------------- ------------ ------------- -------------
Profit for the period 55.4 443.3 504.5
Other comprehensive income
Other comprehensive income
to be reclassified to profit
or loss in subsequent periods
Currency translation differences
13 on foreign operations - Group (76.3) 117.6 203.9
13 Net investment hedge 34.4 (35.8) (39.0)
13 Available-for-sale investment 7.9 - 1.7
Reclassification adjustment
for foreign operations in
the period - 32.6 32.6
Income tax relating to components - -
of other comprehensive income -
------------ ------------- ---------------
(34.0) 114.4 199.2
Currency translation differences
on foreign operations - joint
ventures and associates - 0.4 (0.3)
(34.0) 114.8 198.9
Other comprehensive income
not to be reclassified to
profit or loss in subsequent
periods
Remeasurement of defined benefit
obligation 5.7 (24.8) (43.9)
Irrecoverable element of pension
surplus 0.1 (0.3) (0.1)
Income tax relating to components - -
of other comprehensive income -
------------ ------------- ---------------
5.8 (25.1) (44.0)
Remeasurement of defined benefit
obligation of associates (0.7) (0.7) (0.9)
5.1 (25.8) (44.9)
Other comprehensive (loss)/income
for the period, net of tax (28.9) 89.0 154.0
-------- ---------------------------------- ------------ ------------- ---------------
Total comprehensive income
for the period, net of tax 26.5 532.3 658.5
-------- ---------------------------------- ------------ ------------- ---------------
Attributable to:
Owners of the parent entity 21.9 523.1 639.1
Non-controlling interests 4.6 9.2 19.4
-------- ---------------------------------- ------------ ------------- ---------------
26.5 532.3 658.5
-------- ---------------------------------- ------------ ------------- ---------------
Interim consolidated statement of financial position
at 30 June 2017
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Restated
Notes GBPm GBPm GBPm
------ ------------------------------------- ------------- ------------- ------------
Assets
Non-current assets
9 Goodwill 1,579.2 1,330.7 1,623.6
9 Intangible assets 541.7 415.3 578.8
9 Property, plant and equipment 37.1 42.2 40.6
Investments in joint ventures
and associates 16.8 20.5 16.5
Available-for-sale investments 33.4 23.4 26.8
Trade and other receivables 2.3 4.1 1.7
Derivative financial instruments 5.1 9.2 5.4
17 Retirement benefit surplus 4.7 5.3 4.9
Deferred tax asset 21.9 19.8 26.8
------ ------------------------------------- ------------- ------------- ------------
2,242.2 1,870.5 2,325.1
------ ------------------------------------- ------------- ------------- ------------
Current assets
Trade and other receivables 262.2 248.2 228.9
10 Cash and cash equivalents 116.9 483.6 84.8
Vendor loan note - 4.6 -
Derivative financial instruments - 1.7 0.2
Assets of disposal group classified - 18.3 -
as held for sale
------ ------------------------------------- ------------- ------------- ------------
379.1 756.4 313.9
------ ------------------------------------- ------------- ------------- ------------
Total assets 2,621.3 2,626.9 2,639.0
------ ------------------------------------- ------------- ------------- ------------
Liabilities
Current liabilities
Current tax liabilities 55.9 65.0 60.9
Trade and other payables 597.6 785.8 521.9
Provisions 7.9 19.8 21.4
10 Borrowings 3.1 252.1 0.5
Derivative financial instruments 6.2 24.0 3.1
Liabilities associated with - 6.7 -
assets of disposal group classified
as held for sale
670.7 1,153.4 607.8
------ ------------------------------------- ------------- ------------- ------------
Non-current liabilities
Deferred tax liabilities 30.1 8.4 33.3
Trade and other payables 5.4 14.2 9.2
Provisions 10.0 6.2 8.5
10 Borrowings 666.9 268.3 686.5
Derivative financial instruments 5.4 11.9 12.7
17 Retirement benefit obligation 50.2 44.1 55.5
768.0 353.1 805.7
------ ------------------------------------- ------------- ------------- ------------
Total liabilities 1,438.7 1,506.5 1,413.5
------ ------------------------------------- ------------- ------------- ------------
Equity attributable to owners
of the parent entity
12 Share capital 44.3 44.3 44.3
Share premium 535.7 534.7 535.3
13 Other reserves (442.2) (500.7) (410.9)
Retained earnings 1,015.1 1,020.3 1,029.5
Put options over non-controlling
interests (7.8) (8.1) (7.8)
------ ------------------------------------- ------------- ------------- ------------
Total equity attributable to
owners of the parent entity 1,145.1 1,090.5 1,190.4
Non-controlling interests 37.5 29.9 35.1
------ ------------------------------------- ------------- ------------- ------------
Total equity 1,182.6 1,120.4 1,225.5
------ ------------------------------------- ------------- ------------- ------------
Total equity and liabilities 2,621.3 2,626.9 2,639.0
------ ------------------------------------- ------------- ------------- ------------
Interim consolidated statement of changes in equity
for the six months ended 30 June 2017
Total
equity
attributable
Put to
options owners
over of
Share Share Other Retained non-controlling parent Non-controlling Total
capital premium reserves earnings interests entity interests equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------ ---------------- -------- -------- --------- --------- ---------------- ------------- ---------------- --------
At 1 January
2017 44.3 535.3 (410.9) 1,029.5 (7.8) 1,190.4 35.1 1,225.5
====== ================ ======== ======== ========= ========= ================ ============= ================ ========
Profit for the
period - - - 48.9 - 48.9 6.5 55.4
Other
comprehensive
(loss)/income - - (32.1) 5.1 - (27.0) (1.9) (28.9)
------ ---------------- -------- -------- --------- --------- ---------------- ------------- ---------------- --------
Total
comprehensive
(loss)/income
for
the period - - (32.1) 54.0 - 21.9 4.6 26.5
Equity
8 dividends - - - (65.3) - (65.3) - (65.3)
Non-controlling
interest
dividends - - - - - - (2.2) (2.2)
Issued in
respect
of share option
schemes and
other
entitlements - 0.4 - - - 0.4 - 0.4
Share-based
payments - - - 2.9 - 2.9 - 2.9
Shares awarded
13 by ESOP - - 11.5 (11.5) - - - -
Own shares
purchased
13 by the Company - - (10.7) 5.5 - (5.2) - (5.2)
------ ---------------- -------- -------- --------- --------- ---------------- ------------- ---------------- --------
At 30 June 2017
(unaudited) 44.3 535.7 (442.2) 1,015.1 (7.8) 1,145.1 37.5 1,182.6
------ ---------------- -------- -------- --------- --------- ---------------- ------------- ---------------- --------
At 1 January
2016 44.3 534.7 (605.3) 927.6 (17.5) 883.8 30.3 914.1
====== ================ ======== ======== ========= ========= ================ ============= ================ ========
Profit for the
period - - - 438.7 - 438.7 4.6 443.3
Other
comprehensive
income/(loss) - - 110.2 (25.8) - 84.4 4.6 89.0
------ ---------------- -------- -------- --------- --------- ---------------- ------------- ---------------- --------
Total
comprehensive
income for the
period - - 110.2 412.9 - 523.1 9.2 532.3
Equity
8 dividends - - - (315.5) - (315.5) - (315.5)
Non-controlling
interest
dividends - - - - - - (6.3) (6.3)
Acquisition of
non-controlling
interests - - - (6.1) 9.4 3.3 (3.3) -
Share-based
payments - - - 2.9 - 2.9 - 2.9
Shares awarded
13 by ESOP - - 8.8 (8.8) - - - -
Own shares
purchased
13 by the Company - - (14.4) 7.3 - (7.1) - (7.1)
At 30 June 2016
(unaudited) 44.3 534.7 (500.7) 1,020.3 (8.1) 1,090.5 29.9 1,120.4
------ ---------------- -------- -------- --------- --------- ---------------- ------------- ---------------- --------
At 1 January
2016 44.3 534.7 (605.3) 927.6 (17.5) 883.8 30.3 914.1
------ ---------------- -------- -------- --------- --------- ---------------- ------------- ---------------- --------
Profit for the
year - - - 491.5 - 491.5 13.0 504.5
Other
comprehensive
income/(loss) - - 192.5 (44.9) - 147.6 6.4 154.0
------ ---------------- -------- -------- --------- --------- ---------------- ------------- ---------------- --------
Total
comprehensive
income for the
year - - 192.5 446.6 - 639.1 19.4 658.5
Equity
8 dividends - - - (336.7) - (336.7) - (336.7)
Non-controlling
interest
dividends - - - - - - (12.2) (12.2)
Non-controlling
interest
arising
on business
combinations - - - - - - 1.5 1.5
Acquisition of
non-controlling
interests - - - (5.8) 9.7 3.9 (3.9) -
Issued in
respect
of share option
schemes and
other
entitlements - 0.6 - - - 0.6 - 0.6
Share-based
payments - - - 6.1 - 6.1 - 6.1
Shares awarded
by ESOP - - 26.3 (26.3) - - - -
Own shares
purchased
by the Company - - (24.4) 18.0 - (6.4) - (6.4)
------ ---------------- -------- -------- --------- --------- ---------------- ------------- ---------------- --------
At 31 December
2016 44.3 535.3 (410.9) 1,029.5 (7.8) 1,190.4 35.1 1,225.5
------ ---------------- -------- -------- --------- --------- ---------------- ------------- ---------------- --------
Interim consolidated statement of cash flows
for the six months ended 30 June 2017
Six Six
months months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
Notes GBPm GBPm GBPm
------ ---------------------------------------------- ----------- ----------- -------------
Cash flows from operating activities
Profit for the period from continuing
operations 47.6 39.9 97.3
Profit for the period from discontinued
operations 7.8 403.4 407.2
------ ---------------------------------------------- ----------- ----------- -------------
Profit for the period 55.4 443.3 504.5
Add back:
Exceptional operating items from continuing
operations (excluding fair value adjustments
below) 7.2 2.8 36.1
Fair value adjustments to contingent
consideration 0.2 - 0.4
Exceptional items relating to discontinued
operations (7.8) (377.1) (382.0)
Tax 14.3 13.7 25.7
Amortisation of acquired intangible
9 assets 33.2 19.4 45.1
Amortisation of website development 4.7 4.4 9.5
9 costs and internally generated software
Depreciation 3.9 4.0 8.0
Share of results from joint ventures
and associates (after tax) (1.0) (1.6) (2.1)
6 Net financing expense 8.9 19.0 32.6
Other non-cash items (including disposal
gain/loss and pension settlement gain) 2.9 2.6 -
------ ---------------------------------------------- ----------- ----------- -------------
121.9 130.5 277.8
Payments against provisions (3.9) (8.6) (11.9)
Pension deficit contributions (1.7) (11.5) (13.3)
(Increase)/decrease in trade and other
receivables (41.0) (6.2) 32.1
Increase/(decrease) in trade and other
payables 96.0 6.5 (89.9)
------ ---------------------------------------------- ----------- ----------- -------------
Cash generated from operations 171.3 110.7 194.8
Interest and finance income received 0.7 0.9 1.8
Interest and finance costs paid (10.6) (9.7) (27.0)
Tax paid (15.6) (12.7) (39.1)
Dividends received from joint ventures
and associates - - 0.5
------ ---------------------------------------------- ----------- ----------- -------------
Net cash flows from operating activities 145.8 89.2 131.0
------ ---------------------------------------------- ----------- ----------- -------------
Net cash flows from operating activities
- continuing 145.8 68.3 110.1
Net cash flows from operating activities
- discontinued - 20.9 20.9
Cash flows from investing activities
Purchase of property, plant and equipment (1.1) (4.3) (5.4)
Expenditure on intangible assets (4.0) (3.3) (6.3)
Acquisition of interests in subsidiaries, (51.5) (56.4) (416.2)
14 net of cash acquired
Proceeds from sale of investments,
joint ventures and associates - 2.1 17.0
Proceeds from sale of businesses, net
of cash disposed - 530.1 545.8
Proceeds from repayment of vendor loan
note - - 8.7
Net cash flows from investing activities (56.6) 468.2 143.6
------ ---------------------------------------------- ----------- ----------- -------------
Net cash flows from investing activities
- continuing (56.6) 472.1 147.5
Net cash flows from investing activities
- discontinued - (3.9) (3.9)
Cash flows from financing activities
Proceeds from the issuance of ordinary
share capital 0.4 - 0.6
Acquisition of non-controlling interests - (5.0) (5.8)
8 Dividends paid to shareholders (65.3) (71.8) (336.7)
Dividends paid to non-controlling interests (2.2) (6.3) (12.2)
Investment in own shares - ESOP (5.2) (7.1) (6.4)
10 Proceeds from borrowings 283.5 - 324.7
10 Repayment of borrowings (269.7) (76.8) (250.0)
Net cash flows from financing activities (58.5) (167.0) (285.8)
------ ---------------------------------------------- ----------- ----------- -------------
Net cash flows from financing activities
- continuing (58.5) (140.1) (258.9)
Net cash flows from financing activities
- discontinued - (26.9) (26.9)
Net increase in cash and cash equivalents 30.7 390.4 (11.2)
10 Net foreign exchange difference (1.2) 11.4 12.6
Cash and cash equivalents at beginning
10 of period (including held for sale) 84.3 82.9 82.9
Cash and cash equivalents classified - (1.1) -
as held for sale
------ ---------------------------------------------- ----------- ----------- -------------
Cash and cash equivalents at end of
10 period (including bank overdraft) 113.8 483.6 84.3
------ ---------------------------------------------- ----------- ----------- -------------
Notes to the interim consolidated financial statements
for the six months ended 30 June 2017
1. General information
UBM plc is a company incorporated in Jersey under the Companies (Jersey) Law 1991. The address of the registered office is Ogier House, The Esplanade, St. Helier, JE4 9WG, Jersey. UBM plc is tax resident in the United Kingdom. The nature of the Group's operations and its principal activities are detailed in Note 4.
The interim condensed consolidated financial statements of the Group for the six months ended 30 June 2017 were authorised for issue by the Board of directors on 27 July 2017. The interim condensed consolidated financial statements are unaudited but have been reviewed by the auditors as set out in their report.
2. Basis of preparation
The interim condensed consolidated financial statements for the six months ended 30 June 2017 have been prepared in accordance with IAS 34 'Interim financial reporting' and the Disclosure and Transparency Rules of the Financial Conduct Authority.
The interim condensed consolidated financial statements do not constitute the Group's statutory financial statements. The Group's most recent statutory financial statements, which comprise the Annual Report and Accounts for the year ended 31 December 2016, were approved by the directors on 21 February 2017 and have been filed with the Jersey Registrar of Companies. The auditors have reported on those financial statements and have given an unqualified report which does not contain a statement under Article 113B(3) or Article 113B(6) of the Companies (Jersey) Law 1991. These interim condensed consolidated financial statements should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2016, which were prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB).
Comparative information
The comparative information in the consolidated statement of financial position for the year ended 31 December 2016 has been restated for acquisition accounting adjustments in relation to the Allworld Exhibitions acquisition in accordance with IFRS 3 'Business Combinations' (2008). The updated fair value of net assets acquired remains preliminary at 30 June 2017. Refer to Note 14 for details.
Going concern
The directors of UBM plc, having made appropriate enquiries, consider that adequate resources exist for the business to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the financial information for the six months ended 30 June 2017.
3. Accounting policies and estimates
The accounting policies, significant judgements made by management and key sources of estimation adopted in the preparation of the interim condensed consolidated financial statements for the six months ended 30 June 2017 are consistent with those used in the preparation of the Group's Annual Report and Accounts for the year ended 31 December 2016, except for the adoption of the following new and amended IFRSs. The new and amended IFRS adopted do not have a material impact on the consolidated financial statements of the Group:
-- Amendments to IAS 12: Recognition of Deferred Tax Asset -- Amendments to IAS 7: Disclosure Initiative
-- Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The judgements made in the process of applying the Group's accounting policies that have the most significant effect on amounts recognised in the financial statements relate to:
-- Unrecognised deferred tax assets
-- The identification of cash generating units and assumptions used in the impairment testing of goodwill
-- The measurement of retirement benefit obligations -- The identification of intangible assets acquired in business combinations
The key areas of estimation uncertainty at the reporting date that could have a material effect on the carrying amounts of assets and liabilities within the next six months relate to:
-- Current tax liabilities -- Forecast cash flows used in annual impairment testing of goodwill -- Provisions, including warranty provisions
4. Segment information
Operating segments
The Group considers that operating segments presented on a products and services basis are the most appropriate way to present the performance of the Group. This is consistent with the internal reporting provided to the Group Chief Executive Officer and the Group Chief Financial Officer, together the chief operating decision maker (CODM), and reflects the way in which resources are allocated.
The CODM considers there to be three operating segments:
-- Events which provide face to face interaction in the form of exhibitions, trade shows, conferences and other live events;
-- Marketing Services - Online which provide website sponsorships and banner advertising as well as online directory and data products; and
-- Marketing Services - Print which publishes magazines and trade press to specialist markets.
Marketing Services - Online and Marketing Services - Print have been aggregated to form one reportable segment 'Other Marketing Services'. The products are similar with shared revenue characteristics (subscriptions, advertising and directories) and the production of material is the same, only the delivery method differs as online or printed. The two operating segments have similar economic characteristics and meet the aggregation criteria defined in IFRS 8 'Operating segments'.
The PR Newswire businesses which were disposed in June 2016 comprised the previously reported PR Newswire operating segment and have been reported as discontinued operations as at 31 December 2016 and 30 June 2016.
Segment measures
The CODM assesses the performance of the operating segments and the allocation of resources using revenue and adjusted operating profit. Adjusted operating profit is IFRS operating profit excluding amortisation of intangible assets arising on acquisitions, exceptional items and share of tax on results of joint ventures and associates.
Financing income/expense and tax are not allocated to operating segments and are reported to the CODM only in aggregate.
Segment assets and liabilities are not reported to the CODM.
Transactions between segments are measured on the basis of prices that would apply to third-party transactions.
Six months ended 30 June 2017
Other
Marketing Corporate
Events Services Costs Total
GBPm GBPm GBPm GBPm
------------------------------------------------------------------------ -------- ----------- ----------- --------
Revenue
Total segment revenue 380.4 68.0 - 448.4
Intersegment revenue - - - -
------------------------------------------------------------------------ -------- ----------- ----------- --------
External revenue 380.4 68.0 - 448.4
------------------------------------------------------------------------ -------- ----------- ----------- --------
Result
Depreciation and amortisation of website development costs and
internally generated software (7.0) (1.2) (0.4) (8.6)
Share of pre-tax results from joint ventures and associates 0.2 - 1.1 1.3 Segment adjusted operating profit 113.3 8.4 (10.0) 111.7 ------------------------------------------------------------------------ -------- ----------- ----------- -------- Amortisation of intangible assets arising on acquisitions (33.2) Exceptional operating items - continuing (7.4) Share of tax on profit in joint ventures and associates (0.3) ------------------------------------------------------------------------ -------- ----------- ----------- -------- Group operating profit 70.8 Net financing expense (12.7) Exceptional items relating to net financing expense 3.8 ------------------------------------------------------------------------ -------- ----------- ----------- -------- Profit before tax from continuing operations 61.9 Tax (14.3) Exceptional operating items - discontinued 7.8 Profit for the period 55.4 ------------------------------------------------------------------------ -------- ----------- ----------- --------
Corporate Costs were offset by internal cost recoveries, and share of pre-tax results from joint ventures and associates. These income items are not attributable to any of the Group's reported segments.
Six months ended 30 June 2016
Other PR Newswire
Marketing Corporate Continuing discontinued
Events Services Costs total operations Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
Revenue
Total segment revenue 307.2 73.3 - 380.5 103.2 483.7
Intersegment revenue (0.5) - - (0.5) (0.2) (0.7)
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
External revenue 306.7 73.3 - 380.0 103.0 483.0
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
Result
Depreciation and amortisation of website
development costs and internally generated
software (6.2) (1.5) (0.7) (8.4) - (8.4)
Share of pre-tax results from joint ventures
and associates 0.8 - 1.0 1.8 0.2 2.0
Segment adjusted operating profit 91.2 12.1 (9.9) 93.4 28.1 121.5
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
Amortisation of intangible assets arising on
acquisitions (19.4) - (19.4)
Exceptional operating items (2.8) 377.1 374.3
Share of tax on profit in joint ventures and
associates (0.4) - (0.4)
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
Group operating profit 70.8 405.2 476.0
Net financing expense (14.5) - (14.5)
Exceptional items relating to net financing expense (4.5) - (4.5)
--------------------------------------------------------- ---------- ---------- ----------- ------------- -------
Profit before tax 51.8 405.2 457.0
Tax (11.9) (1.8) (13.7)
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
Profit for the period 39.9 403.4 443.3
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
Year ended 31 December 2016
Other PR Newswire
Marketing Corporate Continuing discontinued
Events Services Costs total operations Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
Revenue
Total segment revenue 712.6 151.4 - 864.0 103.2 967.2
Intersegment revenue (1.0) - - (1.0) (0.2) (1.2)
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
External revenue 711.6 151.4 - 863.0 103.0 966.0
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
Result
Depreciation and amortisation of website
development costs and internally generated
software (13.9) (2.9) (0.7) (17.5) - (17.5)
Share of pre-tax results from joint ventures
and associates 0.2 - 2.2 2.4 0.2 2.6
Segment adjusted operating profit 229.1 24.1 (18.4) 234.8 28.1 262.9
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
Amortisation of intangible assets arising on
acquisitions (45.1) - (45.1)
Exceptional operating items (36.5) 382.0 345.5
Share of tax on profit in joint ventures and
associates (0.5) - (0.5)
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
Group operating profit 152.7 410.1 562.8
Net financing expense (25.5) - (25.5)
Exceptional items relating to net financing expense (7.1) - (7.1)
--------------------------------------------------------- ---------- ---------- ----------- ------------- -------
Profit before tax 120.1 410.1 530.2
Exceptional tax items (14.2) (1.1) (15.3)
Tax (8.6) (1.8) (10.4)
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
Profit for the year 97.3 407.2 504.5
------------------------------------------------ ------- ---------- ---------- ----------- ------------- -------
Within Corporate Costs non-recurring credits of GBP5.7m included one-off pension credits of GBP5.0m and GBP0.7m income from a disposed associate.
Geographic information
Revenue is allocated to countries based on the location where the products and services are provided. Non-current assets are allocated to countries based on the location of the businesses to which the assets relate.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Continuing revenue GBPm GBPm GBPm
------------------------------ ----------- ----------- -------------
United Kingdom 31.1 37.6 69.0
Foreign countries
============================== =========== =========== =============
United States and Canada 235.5 212.2 404.7
Continental Europe 9.0 10.0 66.6
China (including Hong Kong) 86.0 73.4 218.6
Emerging markets* 71.0 35.1 83.6
Rest of the world 15.8 11.7 20.5
============================== =========== =========== =============
417.3 342.4 794.0
External revenue 448.4 380.0 863.0
------------------------------ ----------- ----------- -------------
* Emerging markets comprise the non-G10 countries - most notably for the Group: Brazil, India, Indonesia, Malaysia, Mexico, Singapore, Thailand and Turkey.
There are no revenues derived from a single external customer which are significant.
30 June 30 June 31 December
2017 2016 2016
Non-current assets GBPm GBPm GBPm
------------------------------ -------- -------- ------------
United Kingdom 333.1 354.3 300.5
Foreign countries
============================== ======== ======== ============
United States and Canada 1,346.3 1,362.8 1,470.7
Continental Europe 12.5 12.1 12.5
China (Including Hong Kong) 132.5 28.9 115.4
Emerging markets* 338.6 70.2 382.3
Rest of the world 45.2 3.8 4.9
============================== ======== ======== ============
1,875.1 1,477.8 1,985.8
Total non-current assets 2,208.2 1,832.1 2,286.3
------------------------------ -------- -------- ------------
Non-current assets for this purpose consist of goodwill, intangible assets, property, plant and equipment, investments in joint ventures and associates and other fixed asset investments.
5. Exceptional operating items
Certain items are recognised as exceptional items since, due to their nature or infrequency, such presentation is relevant to an understanding of the Group's financial statements. These items are not part of the Group's normal ongoing operations and are excluded from the Group's adjusted operating profit measure. They typically relate to costs associated with acquisitions, gains or losses on disposal of investments, material restructuring costs and impairment. Exceptional items are considered individually and assessed each reporting period.
Advanstar and Business Journals Inc (BJI) integration costs
Advanstar and BJI integration costs of GBP2.8m and GBP2.5m, respectively, were incurred in the period relating to operations integration into the Americas business, alignment and migration of processes and termination of venue contracts. The final costs are expected to be incurred during 2017, with total costs for the integration expected to be $33m for Advanstar and $10m for BJI.
Allworld integration costs
Integration costs of GBP0.7m have been incurred during the period and primarily relate to professional and consultancy fees in preparation for the operations and finance integrations. Total integration costs of $20m are expected to be incurred over the next two to three years.
Acquisition costs
Total acquisition costs of GBP1.2m have been expensed as exceptional items and relate mainly to due diligence and professional fees paid to various advisors. Of these, GBP1.1m relate to the acquisition of Allworld Exhibitions.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
(Charged)/credited to continuing 2017 2016 2016
operating profit GBPm GBPm GBPm
------------------------------------- ----------- ------------- -------------
Advanstar integration costs (2.8) (2.2) (8.1)
Business Journals Inc integration
costs (2.5) (1.4) (3.2)
Allworld integration costs (0.7) - -
Acquisition costs on Allworld
Exhibitions (1.1) - (4.7)
Acquisition costs on other
business combinations (0.1) (0.9) (2.0)
Changes in estimates of contingent
consideration (0.2) - (0.4)
------------------------------------- ----------- ------------- -------------
Exceptional items relating
to acquisitions (7.4) (4.5) (18.4)
Gain on disposal of investments
and associate - 2.2 11.2
Loss on disposal of Ecobuild - - (35.1)
Disposal of non-core businesses - (0.5) 9.2
------------------------------------- ----------- ------------- -------------
Exceptional items relating
to disposal of investments - 1.7 (14.7)
Impairment of goodwill and
intangible assets - - (3.4)
Impairment charge - - (3.4)
Total charged to continuing
operating profit (7.4) (2.8) (36.5)
------------------------------------- ----------- ------------- -------------
6. Net financing expense
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBPm GBPm GBPm
Financing expense
====================================== =========== =========== =============
Borrowings and loans (11.7) (13.8) (27.5)
Total interest expense for
financial liabilities not
classified at fair value through
profit or loss (11.7) (13.8) (27.5)
Pension schemes net finance
expense (Note 17) (0.7) (0.4) (0.6)
Ineffective portion on fair
value hedges (0.6) (0.2) -
Foreign exchange loss on forward
contracts (0.4) (0.8) -
Other fair value movements (0.3) (0.3) (0.5)
-------------------------------------- ----------- ----------- -------------
Financing expense before exceptional
items (13.7) (15.5) (28.6)
Exceptional financing expense
Fair value movement on put
options over non-controlling
interests - (4.5) (7.1)
Total financing expense (13.7) (20.0) (35.7)
-------------------------------------- ----------- ----------- -------------
Financing income
====================================== =========== =========== =============
Cash and cash equivalents 0.7 0.6 1.5
Vendor Loan Note - 0.3 0.3
====================================== =========== =========== =============
Total interest income 0.7 0.9 1.8
Ineffective portion on fair
value hedges 0.3 0.1 1.1
Foreign exchange gain on forward
contract - - 0.2
====================================== =========== =========== =============
Financing income before exceptional
items 1.0 1.0 3.1
Exceptional financing income
Fair value movement on put 3.8 - -
options over non-controlling
interests
Total financing income 4.8 1.0 3.1
-------------------------------------- ----------- ----------- -------------
Net financing expense (8.9) (19.0) (32.6)
-------------------------------------- ----------- ----------- -------------
7. Earnings per share
Basic earnings per share is calculated by dividing net profit for the period attributable to owners of the parent entity by the weighted average number of ordinary shares outstanding during the period.
Adjusted basic earnings per share excludes amortisation of intangible assets arising on acquisitions, movements on deferred tax balances recognised as a consequence of acquisition of intangibles, exceptional items and net financing expense adjustments.
The weighted average number of shares used in the calculation of earnings per share for the year ended 31 December 2016 reflects the share consolidation on 27 June 2016 of eight for every nine shares owned. In accordance with IAS 33, the prior period weighted average number of shares has not been restated as the share consolidation was coupled with the payment of the special dividend (Note 8), which had the overall effect of a share repurchase at fair value.
Diluted earnings per share is calculated by dividing net profit for the period attributable to owners of the parent entity by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. The impact of dilutive securities in the six months ended 30 June 2017 would be to increase weighted average shares by 4.2 million shares (six months ended 30 June 2016: 4.1 million shares; year ended 31 December 2016: 4.3 million shares).
The weighted average number of shares excludes ordinary shares held by the Employee Share Ownership Plan (the ESOP).
Six months Six months Year ended
ended ended
30 June 2017 30 June 31 December
2016 2016
Continuing operations Earnings Earnings Earnings
per per per
Earnings share Earnings share Earnings share
GBPm pence GBPm pence GBPm pence
----------------------------- ---------- --------- ---------- --------- ---------- ---------
Adjusted operating
profit 111.7 93.4 234.8
Net interest expense (11.0) (12.9) (25.7)
Pension schemes finance
expense (0.7) (0.4) (0.6)
----------------------------- ---------- --------- ---------- --------- ---------- ---------
Adjusted profit before
tax 100.0 80.1 208.5
Adjusted tax (16.0) (12.8) (29.2)
Non-controlling interests (6.5) (4.6) (13.0)
Adjusted earnings
per share 77.5 19.7 62.7 14.3 166.3 40.1
Adjustments
Amortisation of intangible
assets arising on
acquisitions (33.2) (8.5) (19.4) (4.4) (45.1) (10.9)
Net deferred tax movement
on intangible assets 3.9 1.0 2.4 0.5 20.1 4.8
Exceptional items (7.4) (1.9) (2.8) (0.6) (36.5) (8.8)
Exceptional deferred
tax charge (2.5) (0.6) (1.9) (0.4) (14.2) (3.4)
Net financing expense
adjustments 2.8 0.7 (5.7) (1.3) (6.3) (1.5)
----------------------------- ---------- --------- ---------- --------- ---------- ---------
Basic earnings per
share 41.1 10.4 35.3 8.1 84.3 20.3
Options - (0.1) - (0.1) - (0.2)
Diluted earnings per
share 41.1 10.3 35.3 8.0 84.3 20.1
----------------------------- ---------- --------- ---------- --------- ---------- ---------
Adjusted earnings
per share (as above) 77.5 19.7 62.7 14.3 166.3 40.1
Options - (0.2) - (0.1) - (0.4)
Diluted adjusted earnings
per share 77.5 19.5 62.7 14.2 166.3 39.7
----------------------------- ---------- --------- ---------- --------- ---------- ---------
Six months
ended Six months Year ended
30 June ended 31 December
2017 30 June 2016 2016
Total Group Earnings Earnings Earnings
per per per
Earnings share Earnings share Earnings share
GBPm pence GBPm pence GBPm pence
----------------------------- ---------- --------- ---------- --------- ---------- ---------
Adjusted operating
profit 111.7 121.5 262.9
Net interest expense (11.0) (12.9) (25.7)
Pension schemes finance
expense (0.7) (0.4) (0.6)
----------------------------- ---------- --------- ---------- --------- ---------- ---------
Adjusted profit before
tax 100.0 108.2 236.6
Adjusted Tax (16.0) (14.6) (31.0)
Non-controlling interests (6.5) (4.6) (13.0)
Adjusted earnings
per share 77.5 19.7 89.0 20.4 192.6 46.4
Adjustments
Amortisation of intangible
assets arising on
acquisitions (33.2) (8.5) (19.4) (4.4) (45.1) (10.9)
Net deferred tax movement
on intangible assets 3.9 1.0 2.4 0.5 20.1 4.8
Exceptional items 0.4 0.1 374.3 85.6 344.4 83.1
Exceptional deferred
tax charge (2.5) (0.6) (1.9) (0.4) (14.2) (3.4)
Net financing expense
adjustments 2.8 0.7 (5.7) (1.3) (6.3) (1.5)
----------------------------- ---------- --------- ---------- --------- ---------- ---------
Basic earnings per
share 48.9 12.4 438.7 100.4 491.5 118.5
Dilution
Options - (0.1) - (1.0) - (1.2)
Diluted earnings per
share 48.9 12.3 438.7 99.4 491.5 117.3
----------------------------- ---------- --------- ---------- --------- ---------- ---------
Adjusted earnings
per share (as above) 77.5 19.7 89.0 20.4 192.6 46.4
Options - (0.2) - (0.2) - (0.5)
Diluted adjusted earnings
per share 77.5 19.5 89.0 20.2 192.6 45.9
----------------------------- ---------- --------- ---------- --------- ---------- ---------
8. Dividends
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBPm GBPm GBPm
-------------------------------- ----------- ----------- -------------
Declared and paid during the
period
Equity dividends on ordinary
shares
Final dividend for 2015 of
16.3p - 71.8 71.8
Special dividend for 2016 of
55.3p - - 243.7
Interim dividend for 2016 of
5.4p - - 21.2
Final dividend for 2016 of
16.6p 65.3 - -
Declared, not paid during the
period
Equity dividends on ordinary
shares
Special dividend for 2016 of
55.3p - 243.7 -
65.3 315.5 336.7
-------------------------------- ----------- ----------- -------------
Proposed (not recognised as
a liability at the end of the
period)
Equity dividends on ordinary
shares
Interim dividend for 2016 of
5.4p - 21.2 -
Final dividend for 2016 of
16.6p - - 65.2
Interim dividend for 2017 of
5.5p 21.6 - -
-------------------------------- ----------- ----------- -------------
9. Property, plant and equipment, intangible assets and goodwill
Movements during the period in property, plant and equipment, intangible assets and goodwill were:
Six months ended 30 June 2017
Property,
plant
and Intangible
equipment Goodwill assets Total
GBPm GBPm GBPm GBPm
------------------------------- ----------- ------------- ----------- -------------
Net book value at 1 January
(restated) 40.6 1,623.6 578.8 2,243.0
Acquired with subsidiaries
(Note 14) - 24.3 24.6 48.9
Additions 1.1 - 4.0 5.1
Disposals - - (0.2) (0.2)
Depreciation and amortisation (3.9) - (37.9) (41.8)
Currency translation (0.7) (68.7) (27.6) (97.0)
------------------------------- ----------- ------------- ----------- -------------
Net book value at 30 June
2017 37.1 1,579.2 541.7 2,158.0
------------------------------- ----------- ------------- ----------- -------------
Following the completion of the preliminary purchase price allocation for Allworld Exhibitions, the useful economic life of certain Allworld brands was estimated to be 25 years. Accordingly, the existing Group policy for brands has been updated from a range of five to 15 years, to be five to 25 years.
Capital expenditure contracted for but not provided in the financial statements amounts to GBP0.7m (30 June 2016: GBPnil; 31 December 2016: GBP0.4m).
Six months ended 30 June 2016
Property,
plant
and Intangible
equipment Goodwill assets Total
GBPm GBPm GBPm GBPm
------------------------------- ----------- ------------- ----------- -------------
Net book value at 1 January 40.4 1,286.0 371.3 1,697.7
Acquired with subsidiaries - 38.4 24.7 63.1
Additions 4.3 - 3.3 7.6
Disposal of subsidiaries - (94.7) - (94.7)
Classified as held for
sale (0.3) (8.7) - (9.0)
Depreciation and amortisation (4.0) - (23.8) (27.8)
Currency translation 1.8 109.7 39.8 151.3
------------------------------- ----------- ------------- ----------- -------------
Net book value at 30 June
2016 42.2 1,330.7 415.3 1,788.2
------------------------------- ----------- ------------- ----------- -------------
10. Movement in net debt
1 January Non-cash Currency 30 June
Cash
2017 items flow translation 2017
GBPm GBPm GBPm GBPm GBPm
----------------------------- --------- -------- ------- ------------ --------
Cash and cash equivalents 84.8 - 33.3 (1.2) 116.9
Bank overdrafts (0.5) - (2.6) - (3.1)
----------------------------- --------- -------- ------- ------------ --------
Net cash 84.3 - 30.7 (1.2) 113.8
Bank loans due in
more than one year (401.8) - 269.7 20.2 (111.9)
Bonds due in more
than one year (284.7) 0.1 - 14.1 (270.5)
Private Placement
Loan Notes due in
more than one year - (1.0) (283.5) - (284.5)
----------------------------- --------- -------- ------- ------------ --------
Borrowings (686.5) (0.9) (13.8) 34.3 (666.9)
Derivative assets
associated with borrowings 5.4 - - (0.3) 5.1
Net debt (596.8) (0.9) 16.9 32.8 (548.0)
----------------------------- --------- -------- ------- ------------ --------
The undrawn portion available under committed lending facilities at 30 June 2017 is GBP288.1m (30 June 2016: GBP400.0m).
1 January Non-cash Currency 30 June
Cash
2016 items flow translation 2016
GBPm GBPm GBPm GBPm GBPm
----------------------------- ---------- -------- ----- ------------ --------
Cash and cash equivalents
(including held for
sale) 84.8 - 388.5 11.4 484.7
Bank overdrafts (1.9) - 1.9 - -
----------------------------- ---------- -------- ----- ------------ --------
Net cash 82.9 - 390.4 11.4 484.7
Bonds due in less
than one year (254.0) 1.9 - - (252.1)
Bank loans due in
more than one year (74.0) - 76.8 (2.8) -
Bonds due in more
than one year (239.5) (2.2) - (26.6) (268.3)
----------------------------- ---------- -------- ----- ------------ --------
Borrowings (567.5) (0.3) 76.8 (29.4) (520.4)
Derivative assets
associated with borrowings 10.0 0.1 - 0.8 10.9
Derivative liabilities
associated with borrowings (10.3) (0.7) - (9.2) (20.2)
----------------------------- ---------- -------- ----- ------------ --------
Net debt (484.9) (0.9) 467.2 (26.4) (45.0)
----------------------------- ---------- -------- ----- ------------ --------
$370m US Private Placement Loan Notes
To replace the $365m Bridge Facility, $370m US Private Placement Loan Notes were issued on 15 June 2017 in three tranches: $45m of 5 year notes with a floating rate coupon of US LIBOR plus 1.65%, $175m of 7 year notes with a fixed rate coupon of 4.45% and $150m of 10 year notes with a fixed rate coupon of 4.68%. Interest is paid semi-annually in arrears.
The Group entered into a 7 year interest rate swap for $78m, whereby it receives a fixed rate of 4.45% and pays a floating rate of US LIBOR plus 2.09% semi-annually in arrears, commencing 15 June 2017.
$365m Bridge Facility due 2018
The Group entered into a $365m Bridge Facility agreement in December 2016 to part fund the acquisition of Allworld Exhibitions. The bridge was fully drawn and incurred interest at US LIBOR plus 0.7% until 19 June 2017 when the Group repaid the facility in full from the US Private Placement Loan Note proceeds. The facility was cancelled on 19 June 2017.
GBP400m Syndicated Revolving Credit Facility due 2022
On 7 April 2017, the Group extended the term of the variable rate multi-currency facility by one year to mature on 22 April 2022.
11. Financial instruments
Fair values of financial assets and financial liabilities
Valuation techniques use observable market data where it is available and rely as little as possible on entity specific estimates.
The fair values of interest rate swaps and forward exchange contracts are measured using discounted cash flows. Future cash flows are based on forward interest/exchange rates (from observable yield curves/forward exchange rates at the end of the reporting period) and contract interest/forward rates, discounted at a rate that reflects the credit risk of the counterparties.
The fair value portion of the $350m 5.75% dollar bonds due 2020 and the $370m US Private Placement Loan Notes have been measured at the present value of future cash flows discounted using market rates of interest.
Part of the consideration received in respect of the sale of PRN in 2016 was Class A Limited Partnership Units ("partnership units") in GTCR Canyon Holdings (Canyon), L.P, ("Canyon"), the parent of the PRN purchaser, Cision. These partnership units had a par value of $40m and an interest coupon of 8%. On 29 June 2017, Cision merged with Capitol Acquisition Holding Company Ltd, who is listed on the New York Stock Exchange. As a result of the merger, Canyon owns 68% of the ordinary shares of the listed entity, now called Cision Ltd. The partnership units in Canyon are now valued at $43.4m representing the par value and accrued interest to 29 June 2017. The investment continues to be reported as an available-for-sale asset on the balance sheet. The partnership units are measured at fair value based on the quoted share price of Cision Ltd, with movements in fair value taken to Other comprehensive income.
The fair values of put options over non-controlling interests (including exercise price) and contingent and deferred consideration on acquisitions are measured using discounted cash flows models with inputs derived from the projected financial performance in relation to the specific criteria for each acquisition, as no observable market data is available. The changes in estimates of put options over non-controlling interests are reported within exceptional financing income or expense. The fair values are most sensitive to the projected financial performance of each acquisition; management makes a best estimate of these projections at each financial reporting date and regularly assesses a range of reasonably possible alternatives for those inputs and determines their impact on the total fair value. An increase of 20% to the projected financial performance used in the put option measurements would increase the aggregate liability by GBP3.1m. The fair value of the contingent and deferred consideration on acquisitions is not significantly sensitive to a reasonable change in the forecast performance. The potential undiscounted amount for all future payments that the Group could be required to make under the contingent consideration arrangements for all acquisitions is GBP13.6m.
Carrying Fair
amount value
GBPm GBPm
Financial assets at fair value through
profit or loss
Interest rate swaps 5.1 5.1
Available-for-sale financial assets
Partnership units 33.4 33.4
38.5 38.5
-------------------------------------------- ---------- ----------
Financial liabilities at amortised
cost
$350m 5.75% dollar bonds due 2020 (190.7) (199.2)
$370m Private Placement Loan Notes (223.8) (250.2)
Financial liabilities at fair value
through profit or loss
$350m 5.75% dollar bonds due 2020 (79.8) (83.3)
$370m US Private Placement Loan Notes (60.7) (67.9)
Forward exchange contracts (0.2) (0.2)
Put options over non-controlling interests (11.4) (11.4)
Contingent and deferred consideration
on acquisitions (9.2) (9.2)
(575.8) (621.4)
-------------------------------------------- ---------- ----------
The fair values of all other financial assets and liabilities do not differ from their carrying amounts.
Fair value hierarchy
The fair value measurements at the reporting date are classified according to the significance of the inputs used in making the measurements. The level in the hierarchy within which the fair value is categorised is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (e.g. prices) or indirectly (e.g. derived from prices).
Level 3: inputs for the assets or liabilities that are not based on observable market data.
For financial assets and financial liabilities that are recognised at fair value in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period or the date when an event or change in circumstances caused the transfer.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
At 30 June 2017, the Group held the following classes of financial instruments measured at fair value:
30 June Level Level Level
2017 1 2 3
GBPm GBPm GBPm GBPm
---------------------------------- ------- ----- -------- -------
Financial assets at fair
value through profit or
loss
Interest rate swaps - hedged 3.1 - 3.1 -
Interest rate swaps - not
hedged 2.0 - 2.0 -
Available-for-sale financial
assets
Partnership units 33.4 - 33.4 -
Financial liabilities at
amortised cost
$350m 5.75% dollar bonds
due 2020 (199.2) - (199.2) -
$370m Private Placement
Loan Notes (250.2) - (250.2) -
Financial liabilities at
fair value through profit
or loss
$350m 5.75% dollar bonds
due 2020 (83.3) - (83.3) -
$370m Private Placement
Loan Notes (67.9) - (67.9) -
Interest rate swaps - hedged - - - -
Forward exchange contracts (0.2) (0.2)
Put options over non-controlling
interests (11.4) - - (11.4)
Contingent and deferred
consideration acquisitions (9.2) - - (9.2)
---------------------------------- ------- ----- -------- -------
The fair value measurement of the Partnership units at Level 2 is a transfer from the Level 3 valuation of the former preferred equity instrument, following the public merger detailed above. During the six months ended 30 June 2017 there were no transfers between Level 1 and Level 2 fair value measurements, and no other transfers into or out of Level 3 measurements.
Reconciliation of recurring level 3 fair value measurements:
Put options Contingent
over non- and deferred
controlling consideration
interests on acquisitions
30 June 30 June
2017 2017
GBPm GBPm
At 1 January (15.8) (15.0)
Acquisitions - (0.3)
Consideration paid - 5.6
Changes in estimates (income statement) 3.8 (0.2)
Currency translation 0.6 0.7
At 30 June (11.4) (9.2)
----------------------------------------- ----------- ---------------
12. Share capital
30 June 30 June 31 December
2017 2016 2016
Authorised GBPm GBPm GBPm
---------------------------------------- -------- ------------- -------------
1,081,888,657 ordinary shares
of 11.25p each 121.7 121.7 121.7
---------------------------------------- -------- ------------- -------------
Ordinary Ordinary
shares shares
Issued and fully paid Number GBPm
---------------------------------------- -------- ------------- -------------
At 1 January 2016 442,977,538 44.3
Issued in respect of share
option schemes and other entitlements
prior to the share consolidation 5 -
Share consolidation (49,219,727) -
---------------------------------------- -------- ------------- -------------
At 30 June 2016 393,757,816 44.3
Issued in respect of share
option schemes and other entitlements
after the share consolidation 151,042 -
At 31 December 2016 393,908,858 44.3
Issued in respect of share -
option schemes and other entitlements 109,098
At 30 June 2017 394,017,956 44.3
---------------------------------------- -------- ------------- -------------
Company share schemes
As at 30 June 2017, the ESOP Trust holds 0.7m ordinary shares (30 June 2016: 1.8m ordinary shares; 31 December 2016: 0.8m ordinary shares).
13. Other reserves
Foreign
currency Total
Merger translation ESOP Available-for-sale Other other
reserve reserve reserve reserve reserves reserves
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- --------- ------------- --------- ------------------- ---------- ----------
At 1 January 2017 (732.2) 200.2 (5.9) 1.7 125.3 (410.9)
Total comprehensive
income for the period* - (40.0) - 7.9 - (32.1)
Shares awarded by
ESOP - - 11.5 - - 11.5
Own shares purchased
by the Company - - (10.7) - - (10.7)
At 30 June 2017 (732.2) 160.2 (5.1) 9.6 125.3 (442.2)
--------------------------- --------- ------------- --------- ------------------- ---------- ----------
At 1 January 2016 (732.2) 9.4 (7.8) - 125.3 (605.3)
Total comprehensive
income for the period** - 110.2 - - - 110.2
Shares awarded by
ESOP - - 8.8 - - 8.8
Own shares purchased
by the Company - - (14.4) - - (14.4)
--------------------------- --------- ------------- --------- ------------------- ---------- ----------
At 30 June 2016 (732.2) 119.6 (13.4) - 125.3 (500.7)
--------------------------- --------- ------------- --------- ------------------- ---------- ----------
At 1 January 2016 (732.2) 9.4 (7.8) - 125.3 (605.3)
Total comprehensive
income for the period*** - 190.8 - 1.7 - 192.5
Shares awarded by
ESOP - - 26.3 - - 26.3
Own shares purchased
by the Company - - (24.4) - - (24.4)
--------------------------- --------- ------------- --------- ------------------- ---------- ----------
At 31 December 2016 (732.2) 200.2 (5.9) 1.7 125.3 (410.9)
--------------------------- --------- ------------- --------- ------------------- ---------- ----------
* The amount included in the foreign currency translation reserve for the period ended 30 June 2017 represents the currency translation difference on foreign operations on Group subsidiaries of GBP(74.4)m (excluding GBP(1.9)m relating to non-controlling interests), on net investment hedges of GBP34.4m, and GBPnil relating to joint ventures and associates and on the reclassification adjustment for foreign operations in the period.
** The amount included in the foreign currency translation reserve for the period ended 30 June 2016 represents the currency translation difference on foreign operations on Group subsidiaries of GBP113.0m (excluding GBP4.6m relating to non-controlling interests), on net investment hedges of GBP(35.8)m, on joint ventures and associates of GBP0.4m and on the reclassification adjustment for foreign operations in the period of GBP32.6m.
*** The amount included in the foreign currency translation reserve for 2016 represents the currency translation difference on foreign operations on Group subsidiaries of GBP197.5m (excluding GBP6.4m relating to non-controlling interests), on net investment hedges of GBP(39.0)m, on joint ventures and associates of GBP(0.3)m and on the reclassification adjustment for foreign operations in period of GBP32.6m, relating to disposals.
Merger reserve
The merger reserve is used to record entries in relation to certain reorganisations that took place in previous accounting periods. The majority of the balance in the reserve relates to the capital reorganisation that took place in 2008 which created a new holding company which is UK-listed, incorporated in Jersey and with its tax residence in the Republic of Ireland. The return of the Company's tax residency to the United Kingdom in 2012 had no impact on these balances.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also used to record the effect of hedging net investments of foreign operations.
ESOP reserve
The ESOP reserve records ordinary shares held by the ESOP Trust to satisfy future share awards. The shares are recorded at cost. In the six months ended 30 June 2017, 1,444,342 ordinary shares were purchased by the ESOP (six months ended 30 June 2016: 2,400,000; year ended 31 December 2016: 3,787,951).
Available-for-sale reserve
The available-for-sale reserve is used to record fair value movements in available-for-sale investments.
14. Acquisitions
The Group has completed three acquisitions in the six months ended 30 June 2017. Details of the acquisitions made by the Group in the prior year are available in the Annual Report and Accounts for the year ended 31 December 2016.
On 13 January 2017, the Group acquired 100% of Arabian Exhibition Management WLL (AEM) for cash consideration of GBP48.4m. AEM is the Bahrain business of Allworld Exhibitions. The majority of the Allworld Exhibitions acquisition completed on 19 December 2016 and was reported as an acquisition in 2016. AEM was subject to separate close conditions which were met on 13 January 2017.
On 2 February 2017, the Group acquired 100% of the LED & Lighting Exhibition, the LED Conference, LED Awards, the Electricity Exhibition and the Electronic Components Exhibition from Marmara Tanitim Fuarcilik Organizasyon Reklam ve Ticaret A.S ("Marmara") for initial cash consideration of GBP0.7m and contingent consideration of GBP0.2m payable within one year. The LED exhibition runs annually in September.
On 3 April 2017, the Group acquired 100% of AMA Research Limited (AMA) for initial consideration of GBP1.3m and GBP0.1m deferred consideration. AMA is a trusted provider of market research, data and bespoke reports to the UK construction section and will significantly strengthen Barbour ABI's market research proposition. The acquisition complements the Group's marketing services online segment.
The figures reported below for AEM, Marmara and AMA have been disclosed on a provisional basis.
The fair value of the identifiable assets and liabilities acquired in respect of acquisitions in 2017 was:
AEM Other
30 June acquisitions All acquisitions
2017 30 June 30 June
2017 2017
GBPm GBPm GBPm
---------------------------------- --------------- -------------- -----------------
Intangible assets 23.7 0.9 24.6
Cash and cash equivalents 4.2 0.3 4.5
Trade and other receivables 2.4 0.1 2.5
Total assets 30.3 1.3 31.6
Trade and other payables (4.9) (0.2) (5.1)
Deferred tax liability - (0.1) (0.1)
Total liabilities (4.9) (0.3) (5.2)
---------------------------------- --------------- -------------- -----------------
Identifiable net assets acquired 25.4 1.0 26.4
Goodwill arising on acquisition 23.0 1.3 24.3
48.4 2.3 50.7
---------------------------------- --------------- -------------- -----------------
Trade and other receivables acquired have been measured at fair value which is the gross contractual amounts receivable. All amounts recognised are expected to be collected. The goodwill of GBP24.3m recognised relates to certain intangible assets that cannot be individually separated. These include items such as customer loyalty, market share, skilled workforce and synergies expected to arise after the acquisition completion. The goodwill arising is expected to be deductible for tax purposes.
Acquisition performance
From the dates of acquisition to 30 June 2017, the acquisitions completed in 2017 contributed GBP2.1m to adjusted operating profit and GBP4.6m to revenue of the Group. If the acquisitions had taken place at the beginning of 2017, the acquisitions would have contributed GBP2.2m to adjusted operating profit and GBP4.9m to revenue of the Group.
Cash flow effect of acquisitions
The aggregate cash flow effect of the acquisitions was as follows:
AEM Other
30 June acquisitions All acquisitions
2017 30 June 30 June
2017 2017
GBPm GBPm GBPm
--------------------------------------- --------- -------------- -----------------
Net cash acquired with subsidiaries (4.2) (0.3) (4.5)
Cash paid to acquire subsidiaries 48.4 2.0 50.4
Net cash outflow on 2017 acquisitions 44.2 1.7 45.9
Payment of contingent and
deferred consideration on
prior year acquisitions (Note
11) - 5.6 5.6
Total cash outflow on acquisitions 44.2 7.3 51.5
--------------------------------------- --------- -------------- -----------------
None of the contingent and deferred consideration payments are individually material.
Allworld Purchase Price Allocation
On 19 December 2016, the Group acquired Allworld Exhibitions which was reported on a preliminary basis at 31 December 2016 and subsequently in accordance with IFRS 3 the purchase price allocation has been revised. Below are the updated preliminary values recognised as a restatement at 31 December 2016:
Allworld
GBPm
------------------------------------------ ---------
Intangible assets arising on acquisition 168.8
Property, plant and equipment 0.4
Trade and other receivables 11.9
Cash and cash equivalents 28.9
210.0
------------------------------------------ ---------
Trade and other payables 23.5
Provisions 0.5
Current tax liability 6.3
Deferred tax liability 27.5
57.8
------------------------------------------ ---------
Identifiable net assets 152.2
Goodwill arising on acquisition 227.5
379.7
------------------------------------------ ---------
The impact of the restatement of the 31 December 2016 values is to increase intangible assets, property plant and equipment, provisions and deferred tax liability by GBP23.0m, GBP0.2m, GBP0.5m and GBP2.4m respectively with a corresponding decrease in goodwill, trade and other receivables, deferred tax asset, trade and other payables and current tax liability of GBP20.9m, GBP0.8m, GBP0.4m, GBP0.8m and GBP1.0m respectively.
15. Disposals
On 15 May 2017, the Group disposed of their 100% owned subsidiary UBM Index Trade Fairs Private Limited (Index) for consideration of GBP1,000. The net assets disposed were impaired to their recoverable amount at 31 December 2016, resulting in no gain or loss on disposal. Index was not classified as a discontinued operation and the disposal had an immaterial effect on the Group's assets and liabilities.
16. Discontinued operations
The Group classified the disposed PR Newswire business as discontinued operations during 2016. In the period to 30 June 2017, the Group has recognised an additional GBP7.8m gain on disposal of PR Newswire primarily due to the release of warranties and indemnities recognised in accordance with specific clauses in the sale agreement. This gain has been recognised as an exceptional item for discontinued operations in the six months ended 30 June 2017. The gain has a 2.0 pence impact on basic and diluted earnings per share and no cash flow effect.
17. Retirement benefit obligations
The Group operates funded defined benefit and defined contribution pension schemes in the UK and overseas. The most recent actuarial valuations were carried out during 2014 and updated to 30 June 2017 for accounting purposes by qualified actuaries.
The amounts recognised in the income statement were as follows:
Six months Six months
ended ended
30 June 30 June
2017 2016
GBPm GBPm
------------------------ ----------- -----------
Current service cost - 0.3
Administration cost 0.4 0.4
Curtailment gain - (0.3)
Interest cost (Note 6) 0.7 0.4
Total pension expense 1.1 0.8
------------------------ ----------- -----------
The amounts recognised in the balance sheet were as follows:
30 June 30 June 31 December
2017 2016 2016
GBPm GBPm GBPm
---------------------------------- -------- -------- ------------
Fair value of plan assets 534.8 536.0 547.5
Present value of defined benefit
obligations (577.7) (572.0) (595.4)
Irrecoverable element of pension
surplus (2.6) (2.8) (2.7)
Net deficit in the statement of
financial position (45.5) (38.8) (50.6)
---------------------------------- -------- -------- ------------
Retirement benefit surplus 4.7 5.3 4.9
Retirement benefit obligation (50.2) (44.1) (55.5)
---------------------------------- -------- -------- ------------
Net deficit in the statement of
financial position (45.5) (38.8) (50.6)
---------------------------------- -------- -------- ------------
18. Share-based payments
The Group's management awards share options and shares with performance conditions to directors and employees, from time to time, on a discretionary basis. During the six months ended 30 June 2017, the Group awarded 1,355,035 (six months ended 30 June 2016: 1,589,914; year ended 31 December 2016: 1,617,737) shares under the Group's share incentive plans.
19. Related party transactions
Transactions with related parties are made at arm's length. Outstanding balances at the end of the period are unsecured and settlement occurs in cash. There are no bad debt provisions for related party balances as at 30 June 2017 (30 June 2016: GBPnil; 31 December 2016: GBPnil), and no related party transactions have been written off during the period. Unless otherwise stated above, there are no amounts owed by or due to related parties by the Group at 30 June 2017.
The Group entered into the following transactions with related parties during the period:
Balances Balances Balances
(owed (owed (owed
by)/ by)/ by)/
due due due
to to to
the the the
Group Value Group Value Group Value
at of at of at of
30 June transactions 30 June transactions 31 December Transactions
Related Nature
party and of 2017 H1 2017 2016 H1 2016 2016 FY 2016
relationship transactions GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ---------------- ---------- -------------- --------- ------------- ------------ -------------
GML Exhibitions Dividend
(Thailand) income,
Co Limited advances
- Joint and management
Venture fees - - - - - -(1)
----------------- ---------------- ---------- -------------- --------- ------------- ------------ -------------
Guzhen Lighting
Expo Company Dividend
Limited income
- Joint and marketing
Venture expenses - - - - -(2) 0.5
----------------- ---------------- ---------- -------------- --------- ------------- ------------ -------------
Vendor
loan note
Light Reading and
LLC - Joint transitional
Venture services - - 8.7 0.2 - -
----------------- ---------------- ---------- -------------- --------- ------------- ------------ -------------
(1) The Group received a dividend of GBP52,000 from GML Exhibitions (Thailand) Co Limited.
(2) The Group was owed GBP7,000 by Guzhen Lighting Expo Company Limited.
Explanation of non-IFRS measures
Financial How we define it Why we use it
Measure
Underlying Underlying measures are Underlying growth
revenue and adjusted for the effects rates provide insight
underlying of acquisitions, disposals, into the organic growth
operating foreign exchange movements, of the business
profit phasing and peripatetic
and biennial events
=================== =============================================== ================================================
Adjusted operating Operating profit excluding Provides insight into
profit amortisation of intangible ongoing profit generation,
assets arising on acquisitions, individually and relative
exceptional items and share to other companies
of taxation on joint ventures
and associates
=================== =============================================== ================================================
Margin Adjusted operating profit
expressed as a percentage
of revenue
=================== =============================================== ================================================
EBITDA Earnings before interest, Measure of earnings
tax, depreciation, amortization and cash generative
and exceptional items capacity
=================== =============================================== ================================================
Adjusted profit Profit before tax before Facilitates performance
before tax amortisation of intangible evaluation, individually
assets on acquisitions, and relative to other
exceptional items, share companies
of taxation on profit from
joint ventures and associates
and net financing expense
adjustments
=================== =============================================== ================================================
Adjusted earnings Adjusted earnings includes
and EPS share of taxation on profit
from joint ventures and
associates and non-controlling
interest expense but excludes
movements on deferred tax
balances recognised as a
consequence of acquisition
intangibles. Adjusted diluted
EPS includes the impact
of share options
=================== =============================================== ================================================
Net debt Net debt is current and Measure of indebtedness
noncurrent borrowings and - includes benefit
derivatives associated with of current cash available
debt instruments, less cash to pay down debt
and cash equivalents
=================== =============================================== ================================================
Net debt to Net debt divided by EBITDA. Commonly used measure
EBITDA Includes an annualised EBITDA of financial leverage
Net debt to figure for interim reporting
LTM EBITDA
=================== =============================================== ================================================
Free cash Net cash provided by operating Measure of cash available
flow activities after meeting to repay debt, pay
obligations for interest, dividends and invest
tax and capital expenditures. in acquisitions after
capital expenditure
=================== =============================================== ================================================
Adjusted operating Adjusted to exclude non-operating Provides an understanding
cash flow movements in working-capital, of our operating cash
such as expenditure against flows
reorganisation and restructuring
provisions.
=================== =============================================== ================================================
Cash conversion Cash conversion is the ratio
of adjusted cash generated
from operations to adjusted
operating profit
=================== =============================================== ================================================
Consideration Consideration includes initial Provides a measure
consideration (net of cash of total consideration
acquired), the latest estimate for businesses acquired
of expected contingent consideration
and deferred consideration
=================== =============================================== ================================================
Effective The effective tax rate on adjusted profit Provides a more comparable basis to analyse our
tax rate before tax reflects the tax rate excluding tax rate
movements
on deferred tax balances recognised as a
consequence of acquisition intangibles.
===================
Statement of directors' responsibilities
The Directors listed below (being all the Directors of UBM plc) confirm that to the best of their knowledge these interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board, and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
-- an indication of important events that have occurred during the six months ended 30 June 2017 and their impact on the interim condensed consolidated financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- material related party transactions in the six months ended 30 June 2017 and any material changes in the related party transactions described in the last annual report.
Signed on behalf of the Board by
Marina Wyatt
Chief Financial Officer
27 July 2017
UBM plc Board of Directors:
Executive Directors:
Tim Cobbold (Group Chief Executive)
Marina Wyatt (Chief Financial Officer)
Non-executive Directors:
Dame Helen Alexander (Chairman)
Greg Lock (Senior Independent Director)
John McConnell
Mary McDowell
Terry Neill
Trynka Shineman
Warren Finegold
David Wei
Independent review report to UBM plc
for the six months ended 30 June 2017
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the Interim consolidated income statement, Consolidated income statement, Interim consolidated statement of comprehensive income, Interim consolidated statement of financial position, Interim consolidated statement of changes in equity, Interim consolidated statement of cash flows and related explanatory notes 1 to 19. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2 of the condensed set of financial statements, the annual financial statements of the group are prepared in accordance with IFRSs as issued by the International Accounting Standards Board (IASB). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as issued by the IASB.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as issued by the IASB and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
27 July 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKODNOBKDOOB
(END) Dow Jones Newswires
July 28, 2017 02:00 ET (06:00 GMT)
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