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