Interim Results

Informa Group PLC 09 September 2002 Monday 9 September Informa Group plc Interim Results for the Six Months To 30 June 2002 Business Review - First half profit before tax, exceptional items and amortisation of goodwill 28% lower at £16.2m on turnover down 15% to £151m. - Turnover, profit and margin all strongly ahead of second half 2002 - Resilient performance from major events - Subscription revenue grew by 3% and represents nearly one-third of total revenue - Profit growth in Finance and Insurance and Life Sciences - Dividend unchanged at 2.66pence per share Informa Group's Chairman Peter Rigby commented: 'The first half of 2002 has seen a stabilisation in market conditions with a significant recovery in profits and operating profit margin since the second half of 2001. We continue to manage our cost base closely, as well as ensuring we exploit our brands to their full potential. The Board remains confident about Informa's future and believe that the Group is ideally positioned to benefit from any recovery in our markets.' Enquiries Peter Rigby/David Gilbertson/Jim Wilkinson 020 7017 4302 Informa Group plc Fiona Piper 020 7379 5151 The Maitland Consultancy Results Turnover at £151million was 15% below the comparable period last year (£179million) while operating profits before goodwill amortisation were 24% below at £20.1million (2001: £26.6million). However, vigorous and ongoing management of costs ensured there was only a modest decline in the operating margin from 14.8% to 13.3%. Profit before tax (excluding goodwill amortisation and exceptional items) was 28% lower at £16.2million (2001: £22.6m). These figures are considerably ahead of the second half of 2001 which saw turnover of £144million, and a profit before tax (excluding goodwill amortisation and loss on disposal of a subsidiary) of £7.5million. The first half 2002 figures do include the results of the important 3GSM event, but even excluding this there is an underlying margin recovery and significant profit growth compared with the second half of 2001. Adjusted earnings per share were 31% lower at 8.70pence (2001:12.62 pence) and we will be paying an interim dividend of 2.66pence per share (2001:2.66 pence) on 11 November 2002 to shareholders on the register on 11 October 2002. Operational Review i. Overview Against a difficult trading background it has been important to manage our cost base proactively to counter the effects of reductions in some of our revenue streams. This is an ongoing process and since the beginning of 2001 we have reduced our total workforce by 20% on a like for like basis, at a cost of £6.4million. This measure, along with a number of other cost saving initiatives, is saving us in excess of £20million a year. Subscriptions, our most resilient revenue stream accounting for 31% of total group sales, grew by 3%. However, compared with the first half of 2001 advertising, sponsorship, exhibition and delegate revenues are down a combined 24%. Although advertising income only accounts for 12% of total Group revenue the slowdown in advertising spend has affected our Maritime business in particular, which traditionally derives more than a third of its revenues from advertising. Tight cost control and some product mergers and rationalisations have helped offset, but not fully compensated for, the reduction in advertising income. We continue to address this portfolio actively to ensure that we maintain proper levels of investment in those market-leading products that we expect to rebound strongly and quickly in an advertising upturn. At the same time we continue to take action to merge, suspend or close titles we judge can only prosper in strong market conditions. Our Life Sciences and Finance and Insurance areas grew by 29% and 7% respectively compared with the first half last year and we have seen profit growth in most of our business sectors compared with the second half of 2001. ii. Highlights The 3GSM Conference held in February, which is the Group's largest event and the rallying point for the mobile phone industry, maintained its profits despite a decline in delegate numbers. This was as a result of continuing growth in sponsorship and exhibition income from the event and effective cost control. Encouragingly, pre-booked exhibition space for the 2003 event has already renewed at above 80% of this year's final level to date. The Bluetooth Congress in June saw increased profit over 2001 due to higher exhibition revenue and good cost control more than offsetting lower delegate numbers. Pre-bookings of exhibition space at 84% of this year's level promise another successful event next year. In addition the Bluetooth Special Interest Group has awarded us the contract for the Bluetooth Developers Conference in the United States in December. This first event will be profitable and it also provides us with the opportunity to build a new annual in the United States to complement our European events. Our Life Sciences business, buoyed by the acquisition of BioTechniques last year is performing well. BioTechniques magazine itself has exceeded our revenue and profit expectations and is rapidly expanding its European edition. The conference business has also done well with very successful European events in Drug Discovery, Infotech Pharma and Biochips alongside established US based events. The flagship Drug Discovery Technology conference (which was held in Boston in August) and is the Group's second most profitable event, attracted more than 1,100 delegates and will show profit growth of about 7% over last year. The event has already secured 97% exhibition renewals for 2003. Geographically our conference businesses in the US, France, Sweden and Brazil have all increased profitability in the first half of 2002 although those in Holland, UK and Germany have slowed somewhat as economic slowdown has hit those countries. It is part of our strategy and a real strength to be diversified geographically as well as by market sector and product line. Our Dutch publishing businesses performed extremely well with profit growth of 18%. However our Dutch University training business, O&O, which made £1million in the first half of 2001, was closed as highlighted in our 2001 final results announcement. The closure costs of £0.5million are shown as an exceptional item in the profit and loss account and the ongoing activities of this business have now been transferred to the University of Amsterdam. Whilst we have yet to see much benefit from the Asian recovery we have continued to expand into China largely through conferences. To this end we have entered into a joint venture with the Xinhua Financial Network, which is part of the Xinhua News Agency, to develop finance and banking based conferences and courses for China. The Finance and Insurance division has performed strongly to grow year on year by 7% despite the upheavals in the capital markets. Around 80% of the division's revenues are from subscriptions, the majority of which are electronic. The acquisition of MCM last year is performing in line with expectations and has given us the leading position in fixed income securities commentary and analysis. We have radically improved margins in this business through tight cost control and this has helped the overall division's margin to grow from 13.3% to 14.7%. Subscription renewal rates are, on average, 80% not just in Finance but throughout our business. Since subscription income is around one third of our total revenue this provides a very secure platform for Informa to add on other revenue streams which are more highly operationally geared. The percentage of total revenue the Group derives from electronic publishing is continuing to grow. For this six month period it stands at 19% of total Group turnover compared to 17% for the whole of 2001 and 15% for the equivalent six month period last year. Much of this revenue is subscription based and is renewing at rates even higher than our hard copy subscriptions. iii. New Products It is important for a niche information business like Informa to continue its new product development programme. Fortunately development costs are relatively low especially if we are migrating hard copy to electronic media or developing supplements to existing publications. In Life Sciences, as well as continuing the successful development of the European edition of BioTechniques, we are planning two major new magazine launches in the fields of pre-clinical trial scientific research and biopharmaceutical technology. In Finance & Insurance, we have also just launched Analyser, which is an electronic version of our US insurance company review product, while in Maritime the second half will see the launch of Vigilance, a maritime security product which provides Governments and defence agencies with up to date information on ship movements and trading patterns, ownership and related data. The second half of 2002 will also see a number of new newsletters launched in our Commodities & Energy division. Strategy Our strategy is to be a major supplier of niche business information and to exploit our strong brands in the various market sectors in which we operate. Accordingly we intend to continue to operate over a diverse number of market sectors, using a variety of media and in a number of geographical regions. Through this we intend to continue to develop a business which is broadly based enough to withstand a downturn, but has enough elements which are highly operationally geared such as advertising and delegate revenues which will rebound strongly and prosper in an upturn. We remain committed to ensuring the business produces high levels of product innovation as this is the main driver of organic growth in better times. In addition we will continue to make suitable acquisitions to help us build brand leading market positions. Outlook The last eighteen months have been challenging for media businesses. We have successfully managed our profitability through close cost control alongside which we have done some necessary product rationalisation. Our goal has been to maintain our market leading positions, accepting that this may mean lower margins at this low point in the economic cycle. We are also pleased by the resilience of our subscription publication portfolio and by that of our major events. Whilst there are as yet no real signs of an upturn in the markets we serve, our business has rebounded well from the repercussions of international terrorism which so affected last year's second half. Many of our businesses are highly operationally geared and the potential benefits in an upswing are significant. One extra delegate registration to each of our conferences is worth over £1million in additional profit and more than 50% of each incremental £1 of advertising revenue falls through to the bottom line. With this in mind and in a business which has excellent cash generation characteristics we remain confident about Informa's future and accordingly we are retaining this year's interim dividend at the same level as last year. Consolidated profit and loss account For the period ended 30 June 2002 2002 2001 2001 (As restated) (As restated) Half year Half year Total unaudited unaudited notes £000 £000 £000 Turnover - continuing operations 2 151,464 178,896 322,853 Operating profit before goodwill amortisation Continuing operations 2 20,084 26,558 38,091 Goodwill amortisation (5,551) (4,602) (9,959) Goodwill impairment - - (4,288) (5,551) (4,602) (14,247) Operating profit - continuing operations 14,533 21,956 23,844 Exceptional item 3 (525) - (838) Profit on ordinary activities before interest 2 14,008 21,956 23,006 Net interest payable (3,884) (3,968) (7,977) Profit on ordinary activities before tax 10,124 17,988 15,029 Tax on profit on ordinary activities 4 (5,159) (7,179) (9,838) Profit on ordinary activities after tax 4,965 10,809 5,191 Minority interests - equity 24 142 (96) Profit for the financial period attributable to 4,989 10,951 5,095 shareholders Equity dividends paid and proposed (3,412) (3,886) (10,184) Profit / (loss) for the financial period 1,577 7,065 (5,089) Dividends per share 2.66p 2.66p 7.60p Earnings per share Earnings per share (basic) 5 3.92p 8.89p 4.07p Earnings per share (diluted) 5 3.92p 8.64p 4.03p Adjusted basic earnings per share 5 8.70p 12.62p 16.12p Consolidated statement of total recognised gains and losses For the period ended 30 June 2002 2002 2001 2001 (As restated) (As restated) Half year Half year Total unaudited unaudited £000 £000 £000 Profit for the financial period 4,989 10,951 5,095 Currency translation differences on foreign currency net (254) 2,597 17 investments and borrowings Total gains and losses recognised relating to the period 4,735 13,548 5,112 Consolidated balance sheet At 30 June 2002 2002 2001 2001 (As restated) (As restated) 30 June 31 December 30 June unaudited unaudited £000 £000 £000 Fixed assets Intangible assets 169,825 174,396 188,432 Tangible assets 27,888 28,292 22,123 Investments 4,462 4,109 4,066 202,175 206,797 214,621 Current assets Stocks and work in progress 9,911 6,558 7,212 Debtors 54,168 61,274 71,037 Cash at bank and in hand 2,155 4,102 1,853 66,234 71,934 80,102 Creditors: amounts falling due within one year (109,507) (126,309) (124,802) Net current liabilities (43,273) (54,375) (44,700) Total assets less current liabilities 158,902 152,422 169,921 Creditors: amounts falling due after more than one (120,253) (117,192) (120,261) year Provisions for liabilities and charges (2,143) (828) (686) Minority interests (187) (206) (76) Net assets 36,319 34,196 48,898 Capital and reserves Called up share capital 12,818 12,787 12,785 Share premium account 123,103 122,334 122,304 Special reserve 2 2 2 Other reserve 37,398 37,398 37,398 Profit and loss account (137,002) (138,325) (123,591) Surplus on shareholders' funds - equity 36,319 34,196 48,898 Consolidated cash flow statement For the period ended 30 June 2002 2002 2001 2001 30 June 30 June 31 December unaudited unaudited notes £000 £000 £000 Cash inflow from operating activities 6 19,017 15,745 41,076 Return on investments and servicing of finance (3,813) (3,937) (6,581) Taxation (1,014) (3,728) (11,145) Capital expenditure (2,981) (6,218) (15,489) Acquisitions and disposals (3,746) (58,326) (59,262) Equity dividends paid (6,289) (6,438) (9,825) Cash inflow/(outflow) before financing 1,174 (62,902) (61,226) Financing (7) 62,526 61,454 Increase / (decrease) in cash in the period 1,167 (376) 228 Reconciliation of net cash flow to movement in net debt For the period ended 30 June 2002 2002 2001 2001 30 June 30 June 31 December unaudited unaudited notes £000 £000 £000 Increase / (decrease) in cash in the period 1,167 (376) 228 Cash outflow/(inflow) from decrease/(increase) in 764 (9,774) (8,393) debt financing Change in net debt resulting from cash flows 1,931 (10,150) (8,165) Translation differences (1,777) 673 714 Movement in net debt in the period 154 (9,477) (7,451) Net debt at the start of the period 7 (118,832) (111,381) (111,381) Net debt at the end of the period 7 (118,678) (120,858) (118,832) Notes 1. Basis of preparation The financial statements for the six months ended 30 June 2002, which are unaudited, have been prepared on the basis of the accounting policies set out in our 2001 Annual Report, except that FRS 19 'Deferred Tax' has been adopted. The effect of this change in accounting policy is disclosed in note 4. 2. Segmental analysis Underlying operating profit in the segmental analysis excludes the amortisation of goodwill. Turnover Underlying operating profit / (loss) Analysis by market sector 2002 2001 2001 2002 2001 2001 30 June 30 June Total 30 June 30 June Total unaudited unaudited £000 unaudited unaudited £000 £000 £000 £000 £000 Finance and Insurance 39,717 41,202 82,621 5,838 5,478 10,347 Telecoms and Media 34,677 50,882 73,866 7,879 10,320 10,910 Law and Tax 25,148 29,210 54,328 2,587 3,900 5,283 Maritime, Trade and 22,595 28,609 52,484 364 3,447 4,531 Transport Life Sciences 13,240 12,383 26,515 2,061 1,595 3,846 Commodities and Energy 15,550 15,616 31,880 1,707 2,250 3,717 Other 537 994 1,159 (352) (432) (543) 151,464 178,896 322,853 20,084 26,558 38,091 Profit / (loss) before interest Analysis by market sector 2002 2001 2001 30 June 30 June Total unaudited unaudited £000 £000 £000 Finance and Insurance 3,661 3,813 6,487 Telecoms and Media 7,115 9,753 7,458 Law and Tax 1,590 3,314 2,744 Maritime, Trade and Transport (301) 2,624 2,079 Life Sciences 1,529 1,143 2,607 Commodities and Energy 766 1,763 2,227 Other (352) (454) (596) 14,008 21,956 23,006 3. Exceptional item The exceptional item represents the expected net cost arising on the closure of a Dutch subsidiary. The 2001 exceptional item represents the loss on disposal of a subsidiary undertaking for amounts due from the purchaser of a subsidiary sold in 2000 which are unlikely to be received. 4. Taxation The underlying worldwide operating tax rate for the Group, after removing the effect of goodwill amortisation and exceptional items, is 31% (2001 half year restated: 32%). However, due to goodwill amortisation and the exceptional item, together with the impact of FRS 19, the effective worldwide tax rate is 50% (2001 half year restated: 40%). 2002 2001 2001 (As restated) (As restated) Half year Half year Total unaudited unaudited £000 £000 £000 United Kingdom corporation tax 828 3,805 5,346 Overseas tax 2,770 3,198 4,139 Current tax 3,598 7,003 9,485 Deferred tax 1,561 176 353 5,159 7,179 9,838 Adoption of FRS 19 has required a change in the method of accounting for deferred tax. As a result the comparative figure for tax on profit on ordinary activities has increased by £176,000 for the six months to 30 June 2001 and £353,000 in the year to 31 December 2001. This is primarily a result of providing for deferred tax on consolidation adjustments. The impact of adopting FRS 19 on the results for the six months to 30 June 2002 is an increase in the tax charge of £1,561,000. 5. Earnings and adjusted earnings per share In order to show results from operating activities on a comparable basis, an adjusted earnings per share has been calculated which excludes amortisation of goodwill and exceptional items. 2002 2001 2001 (As restated) (As restated) Half year Half year Total unaudited unaudited £000 £000 £000 Profit for the financial period 4,989 10,951 5,095 Adjustments: Amortisation of goodwill 5,551 4,602 14,247 Exceptional item 525 - 838 Adjusted earnings 11,065 15,553 20,180 Weighted average number of equity shares 127,226,241 123,212,504 125,174,819 - for basic and adjusted earnings Effect of dilutive share options 181,772 3,562,413 1,110,519 Weighted average number of equity shares 127,408,013 126,774,917 126,285,338 - for diluted earnings Earnings per equity share 3.92p 8.89p 4.07p Diluted earnings per equity share 3.92p 8.64p 4.03p Adjusted earnings per equity share 8.70p 12.62p 16.12p 6. Reconciliation of operating profit to net cash inflow from operating profits 2002 2001 2001 Half year Half year Total unaudited unaudited £000 £000 £000 Operating profit 14,533 21,956 23,844 Depreciation charges 3,651 2,916 5,798 Amortisation of goodwill 5,551 4,602 14,247 (Profit) / Loss on sale of tangible fixed assets (8) 10 17 (Increase) / decrease in stocks (3,493) 507 1,197 Decrease / (increase) in debtors 6,139 7,079 16,336 (Decrease) / increase in creditors (7,630) (21,049) (20,279) Other operating items 274 (276) (84) Net cash inflow from operating activities 19,017 15,745 41,076 7. Analysis of changes in net debt Cash flow Exchange At 30 June At 1 January unaudited movement unaudited £000 £000 unaudited £000 £000 Cash at bank and in hand 4,102 (1,768) (179) 2,155 Overdrafts (3,815) 2,935 - (880) 287 1,167 (179) 1,275 Bank loans due in less than one year (2,500) 1,750 - (750) Loan notes due in less than one year (438) 438 - - Bank loans due after one year (116,181) (1,424) (1,598) (119,203) Total (118,832) 1,931 (1,777) (118,678) This information is provided by RNS The company news service from the London Stock Exchange KPABKDNCK

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