Final Results - Year Ended 31 December 1999
Informa Group PLC
20 March 2000
RESULTS FOR THE YEAR TO 31 DECEMBER 1999
FINANCIAL HIGHLIGHTS
- Profit before tax, amortisation and exceptional items up 19%
to £32.7million (1998: £27.4million further adjusted for MBO
interest)
- Turnover up 12% to £227.8million (1998: £202.9million)
- Operating margin increased to 15.7% (1998: 14.3%)
- Telecoms sector operating profits up 42%
- £4.8million of annual profits from electronic media
- Dividend per share raised to 7p
Informa Group's Chairman Peter Rigby commented:
'Informa Group performed strongly in 1999. The creative
synergies made possible by the merger of IBC and LLP, combined
with the generally good economic conditions in our major markets
and the continuing growth of electronic delivery has enabled us
to deliver profit growth of 19%.'
'The new year has started encouragingly and trading has been in
line with expectations. Our flagship GSM World Congress, held
in early February, saw a 31% increase in delegates to over
5,500, and we are looking forward to another good year.'
Enquiries:
Peter Rigby/David Gilbertson/Jim Wilkinson
The Informa Group plc
Phone 020 7453 2222
William Clutterbuck/Charlotte Hamilton/Lydia Stewart
The Maitland Consultancy
Phone 020 7379 5151
EXTRACTS FROM CHAIRMAN'S STATEMENT AND CHIEF EXECUTIVE'S REVIEW
GENERAL TRADING
1999 was an exciting and eventful year. Pre-tax profits before
exceptional items and goodwill amortisation were £32.7million,
an increase of 19% over 1998 (£27.4million further adjusted for
MBO interest) on turnover up 12% at £227.8million. Adjusted
earnings per share increased from 16.34p to 18.79p. Accordingly
we have decided to recommend that a final dividend of 4.67p be
paid. Together with the interim dividend of 2.33p paid in
November this makes a total of 7p for 1999 (6.6p for IBC
shareholders and 5.845p for LLP shareholders in 1998).
Particularly encouraging in our results was the 17% organic
growth secured in our core business. This reflects the strength
of our leading brands in our major markets and the flow through
of creative synergies following the merger. Only 2% of our
growth came from acquisitions made in the last 12 months and our
major 1999 acquisitions came too late in the year to impact the
figures.
In 1999 we saw an overall group operating margin before
exceptional items and goodwill of 15.7%, a rise of 1.4% on the
year before. The advance of our younger conference businesses
in Brazil, Australia and Continental Europe, all of which are
now attaining critical mass, was an important contributor to the
year's improvement.
We saw robust growth from a number of our regional centres, with
Germany showing particular strength. Our Asia businesses,
driven from Singapore, also performed very well as the regional
economies began to shake off the effect of the economic crisis
of the previous year.
INTEGRATION PROGRESS
Following the merger we intended to create one single company
based on market facing lines, rather than two or more divisions
dictated by format. As part of that process, we are working
towards establishing market facing groups across the company.
These will focus on our content and the information needs of our
customers in each of our sectors and emphasise product
clustering, cross-selling and up-selling.
So far we have established a division for Telecoms and Media,
our biggest single market and one for our Commodities
businesses. During the remainder of this year we will organise
all of our businesses in this way. With a market approach, we
can seamlessly turn our customers' information requirements into
products, be they traditional hard copy publications,
conferences, web-based electronic services or bespoke packages.
During 1999 we streamlined some of our businesses to achieve
operational efficiencies and cost savings. We consolidated our
UK based activities, allowing us to take full advantage of
efficiencies in business systems, purchasing and distribution.
We put together the separate businesses we had in Australia,
Asia and Dubai and closed the South African companies, which we
felt were unlikely to make a significant contribution to
Informa's profits in the foreseeable future. We also disposed of
two small non-core businesses - Political Risk Services and
Marcus Bohn Associates - to their respective managements.
The harnessing of our international network to promote sales of
Informa's products is one of the opportunities we have yet to
exploit fully. Now the group has a balanced portfolio of
events, publications and services, many of which have wide
international relevance and appeal, the local market knowledge
in our regional offices will offer a cost effective way of
expanding our worldwide sales.
CORPORATE ACTIVITY
Informa Group completed a total of 11 acquisitions for
£67million during the year. One highlight was the purchase last
Spring of Washington Policy and Analysis which provides high-
level energy consultancy to customers such as the Japanese
utility companies and the American Gas Association. This fits
well with existing publications such as Energy Day and our
worldwide conference business.
Towards the end of the year we acquired titles from EMAP,
Financial Times and Baskerville Communications. These
publications and events complement our existing portfolio and
bring further leading brands such as Containerisation
International, Television Business International and Global
Mobile into the group.
Going forward we would expect to continue to be acquisitive.
Our targets will be international information products within
our market sectors with a high level of proprietorial content
and high readership retention, where we believe Informa can add
value through brand extension.
ELECTRONIC MEDIA
- 30 new internet information services launched
- £12million revenue generated from internet marketing
- Transaction and content management system being installed
- Internet investment in 2000 around £3million
- Agreement reached with IPv6 Forum to promote new internet
standard
The internet provides a major opportunity for Informa. Of our
100 electronic services, we already have around 50 web-based
products of which 30 have been launched in the last year. Our
internet products include established password-controlled
subscription services such as Lloyd's List and Insurance Day and
new sites such as iMoneynet.com for the US banking market and e-
searchwireless.com, our on-line telecoms data and analysis
product.
Our internet investment is currently of the order of £3million
per annum and is aimed at delivering added value to our
customers and providing a profitable return on investment. Our
electronic products currently enjoy a margin of around 24%, some
5% ahead of hard copy publications for which print and physical
distribution inevitably represent a significant proportion of
overall costs.
Increasingly our customers want their information delivered
electronically. E-media products and services across all our
market sectors accounted for £4.8million profit in 1999 (1998:
£4.1million). We expect this part of our business to grow
rapidly in the next few years.
Excluded from these figures are the fast rising revenues we now
receive from internet marketing of our products. These grew
five fold to £12million in the year and are also certain to
become an increasing part of our revenue mix. Of the on-line
orders received last year, some 20% came from customers who were
not on our database, reflecting entirely new revenue.
Partnership with organisations and associations in the
industries we serve is of growing importance in the electronic
area. The agreement we have reached with the IPv6 Forum to
promote the new internet protocol worldwide is the latest
example of such an alliance. In the Telecoms area alone we are
working with 35 leading industry bodies.
We are currently installing an integrated e-commerce transaction
system to allow on-line ordering, payment and product fulfilment
and a content management system for internet delivery. This
will allow us to deliver existing products electronically and to
create new products through merging text and data files. It will
also give us the means to allow customers to begin to
personalise their information purchases on a pay as you go
basis.
Our position on product format will remain neutral; we will
continue to deliver content in the way the audience want it.
For some markets, hard copy will remain the preferred format, in
others electronic media are already being fully embraced.
PROSPECTS
During the year ahead we will benefit from the continuing
organic growth in our business and from the acquisitions and
portfolio adjustments made last year. As some of our competitors
switch out of niche information products, this provides us with
opportunities to absorb profitable and well regarded titles.
The Informa product is high quality business information. We
are content providers, not carriers and the great majority of
the content we publish is proprietorial to the group. The demand
for original relevant information, presented in a form
appropriate to commercial decision making, continues to grow.
Because of the unique nature of our content, Informa is well
placed to capitalise on the opportunities offered by the
internet age. Information can be distributed on-line and with
increased functionality, such as the ability to search, to
repackage and to display in bespoke form.
The new year has started encouragingly and trading has been in
line with expectations. Our flagship GSM World Congress in
February, saw a 31% increase in delegate attendance and we look
forward to another good year.
CONSOLIDATED PROFIT & LOSS ACCOUNT
Notes 1999 1999 1999
Before Excep- Total
excep- tional
tional items
items (Note 2)
£000 £000 £000
------- --------- --------
Turnover 1 227,773 - 227,773
Operating profit/(loss) 1 35,680 (5,687) 29,993
before goodwill
amortisation
Goodwill amortisation (2,313) - (2,313)
------- --------- --------
Operating profit/(loss) 33,367 (5,687) 27,680
Disposal of subsidiary 2 - (2,676) (2,676)
undertakings and
termination of businesses
Loss on disposal of fixed 2 - (740) (740)
assets
Merger expenses - - -
------ -------- --------
Profit/(loss) before 1 33,367 (9,103) 24,264
interest
Net interest 2,3 (2,931) (772) (3,703)
(payable)/receivable and
other similar items
------- -------- --------
Profit/(loss) on ordinary 30,436 (9,875) 20,561
activities before tax
Tax on profit/(loss) on (10,880) 1,725 (9,155)
ordinary activities
------- -------- --------
Profit/(loss) on ordinary 19,556 (8,150) 11,406
activities after tax
------- -------- --------
Minority interests (40) - (40)
------- -------- --------
Profit/(loss) for the 19,516 (8,150) 11,366
financial year
attributable to
shareholders
Dividends (7,800) - (7,800)
------- -------- --------
Retained profit /(loss) 11,716 (8,150) 3,566
for the financial year
------- -------- --------
Dividends per share
Informa 7p
IBC -
LLP -
------- -------- --------
EARNINGS PER SHARE
Earnings per share 4 9.78p
(basic)
Earnings per share 4 9.64p
(diluted)
Adjusted basic earnings 4 18.79p
per share
Notes 1998 1998 1998
Before Excep- Total
excep- tional
tional items
items
£000 £000 £000
------ ------- -------
Turnover 1 202,895 - 202,895
Operating profit/(loss) 1 29,023 (1,674) 27,349
before goodwill
amortisation
Goodwill amortisation (671) - (671)
------- ------- -------
Operating profit/(loss) 28,352 (1,674) 26,678
Disposal of subsidiary 2 - (1,148) (1,148)
undertakings and
termination of businesses
Loss on disposal of fixed 2 - - -
assets
Merger expenses - (4,707) (4,707)
------- ------- -------
Profit/(loss) before 1 28,352 (7,529) 20,823
interest
Net interest 2,3 (3,536) 377 (3,159)
(payable)/receivable and
other similar items
------- ------- -------
Profit/(loss) on ordinary 24,816 (7,152) 17,664
activities before tax
Tax on profit/(loss) on (8,115) 2,012 (6,103)
ordinary activities
------- ------- -------
Profit/(loss) on ordinary 16,701 (5,140) 11,561
activities after tax
------- ------- -------
Minority interests - - -
------- ------- -------
Profit/(loss) for the 16,701 (5,140) 11,561
financial year
attributable to
shareholders
Dividends (7,631) - (7,631)
------- ------- -------
Retained profit /(loss) 9,070 (5,140) 3,930
for the financial year
------- ------- -------
Dividends per share
Informa 4.145p
IBC 4.1p
LLP 1.7p
------- ------- -------
EARNINGS PER SHARE
Earnings per share 4 11.26p
(basic)
Earnings per share 4 11.05p
(diluted)
Adjusted basic earnings 4 16.34p
per share
STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES
1999 1998
£000 £000
------ ------
Profit for the financial year 11,366 11,561
Currency translation differences on 3,377 (2,434)
foreign currency net investments
------ ------
Total gains and losses recognised 14,743 9,127
relating to the financial year
CONSOLIDATED CASH FLOW STATEMENT
Notes 1999 1998
£000 £000
------ ------
Cash flow from operating activities 5 30,727 29,244
Return on investments and servicing (4,057) (3,607)
of finance
Taxation (8,970) (5,492)
Capital expenditure (8,273) (3,528)
Acquisitions & disposals (55,315) (30,721)
Merger expenses paid (2,506) (2,201)
Equity dividends paid (7,526) (5,132)
-------- ------
Cash outflow before financing (55,920) (21,437)
Financing 55,987 20,697
-------- --------
Increase/(decrease) in cash in the 67 (740)
year
-------- --------
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Notes 1999 1998
£000 £000
------ ------
Increase/(decrease) in cash in the 67 (740)
year
Cash (inflow)/outflow from (55,268) 46,104
(increase)/decrease in debt
financing
-------- -------
Change in net debt resulting from (55,201) 45,364
cash flows
-------- --------
Reclassification of debt (3,500) -
Translation differences 3,060 (1,574)
-------- --------
Movements in net debt in the year (55,641) 43,790
Net debt at the start of the year 6 (35,699) (79,489)
-------- --------
Net debt at the end of the year 6 (91,340) (35,699)
CONSOLIDATED BALANCE SHEET
1999 1998
£000 £000
Fixed assets
Intangible assets 98,810 34,380
Tangible assets 13,273 9,053
-------- -------
112,083 43,433
Current assets
Stocks 6,284 6,374
Debtors 45,982 39,361
Cash at bank and in hand 5,096 4,480
-------- -------
57,362 50,215
Creditors: amounts falling due (106,010) (90,183)
within one year
--------- --------
Net current liabilities (48,648) (39,968)
--------- --------
Total assets less net current 63,435 3,465
liabilities
Creditors: amounts falling due (91,119) (40,759)
after more than one year
Provisions for liabilities and (1,275) (556)
charges
Minority interests (44) (4)
-------- --------
Net liabilities (29,003) (37,854)
-------- --------
CAPITAL AND RESERVES
Called up share capital 11,696 11,563
Share premium account 65,409 65,296
Capital redemption reserve 12 105
Other reserve 37,398 36,832
Profit & loss account (143,518) (151,650)
--------- ---------
Deficit on shareholders' funds - (29,003) (37,854)
equity
--------- ---------
NOTES
1. SEGMENTAL ANALYSIS
Operating profit in the segmental analysis excludes the
amortisation of goodwill and exceptional items.
Turnover Operating Profit before
profit interest
1999 1998 1999 1998 1999 1998
£000 £000 £000 £000 £000 £000
Analysis by market
sector
Telecoms, and 47,464 37,078 9,633 6,790 6,724 5,595
Media
Maritime, Trade 42,578 38,585 8,967 8,775 6,909 6,938
and Transport
Financial and 44,044 43,529 7,044 5,689 5,130 2,889
Insurance
Law and Tax 51,573 43,169 6,132 5,313 4,023 3,966
Commodities and 26,502 21,190 2,920 1,807 1,185 1,193
Energy
Biomedical and 14,753 14,498 1,103 529 412 122
Pharmaceutical
Other 859 4,846 (119) 120 (119) 120
------- ------- ------ ------ ------ ------
227,773 202,895 35,680 29,023 24,264 20,823
------- ------- ------ ------ ------ ------
Interest was incurred centrally and cannot be attributed to
individual markets.
2.EXCEPTIONAL ITEMS
i. Operating Costs.
The £5,687,000 shown as exceptional items in the profit and loss
account is in respect of the following:
- £2,361,000 relating to office relocations that arose following
the merger.
- £2,109,000 of employment costs, principally redundancy and
compensation for loss of options that arose following the
merger.
- £1,217,000 costs relating to the integration of the Group
companies and harmonisation of the Group's systems following the
merger.
ii. Disposal of subsidiary undertakings and termination of
businesses.
During the year, the Group sold its interest in Asia Pacific
Papermaker Magazine, Assetrac, PRS and 80% of its interest in
Marcus Bohn Associates Limited for a total net cash
consideration of £275,000. The Group also closed down operations
in South Africa, two of its three French based businesses and
terminated one UK based publication.
The loss on sales was after charging goodwill previously written
off against reserves of £1,189,000 and the write off of £656,000
unamortised goodwill from the balance sheet. A full provision of
£224,000 was made against the remaining 20% stake in Marcus
Bohn, which is held as a trade investment, and the other costs
associated with the closure and rationalisation of businesses
totalled £729,000. The net assets disposed of totalled £153,000.
iii. Loss on disposal of fixed assets.
The £740,000 of merger expenses comprise the loss arising on the
disposal and the write off of certain fixed assets and
development costs arose following the reorganisation
necessitated by the merger.
iv. Interest Charge.
Included within the £772,000 exceptional net interest payable
and other similar items are the costs associated with the
termination of LLP and IBC's previous facilities and the
establishment of the Group's new interest rate management
policy.
3. NET INTEREST (PAYABLE)/RECEIVABLE AND OTHER SIMILAR ITEMS
Included within the interest payable figure for the six months
to 30 June 1998 and year to 31 December 1998 is £1,945,000
interest relating to the costs of funding LLP before receipt of
the net proceeds of the Placing and the employee offer on
flotation in April 1998.
4. EARNINGS AND ADJUSTED EARNINGS PER SHARE
In order to show results from operating activities on a
comparable basis, an adjusted average earnings per share has
been calculated which excludes amortisation of goodwill and
exceptional items. Also, an adjustment was made to the 1998
earnings per share to eliminate costs of LLP funding which would
not have arisen if the company had floated on 1 January 1998 and
treat the issue of shares upon flotation as if they had been
issued on 1 January 1998. Pursuant to FRS14, this adjustment
has been included in the basic EPS, diluted EPS and the adjusted
EPS calculation. The effect of this adjustment is detailed
below.
1999 1998
£000 £000
Profit for the financial year 11,366 11,561
Net effect of management buyout - 1,342
interest charge
------- -------
Earnings and diluted earnings 11,366 12,903
Adjustments:
Amortisation of goodwill 2,313 671
Net effect of exceptional items 8,150 5,140
------- -------
Adjusted earnings 21,829 18,714
------- -------
Weighted average number of equity
shares
- for earnings and adjusted 116,167,982 114,560,618
earnings
Effect of dilutive share options 1,728,586 2,229,959
Weighted average number of equity
shares
- for diluted earnings 117,896,568 116,790,577
----------- -----------
Earnings per equity share 9.78p 11.26p
Diluted earnings per equity share 9.64p 11.05p
Adjusted basic earnings per equity 18.79p 16.34p
share
----------- -----------
5. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
1999 1998
£000 £000
------- -------
Operating profit 27,680 26,678
Amortisation of goodwill 2,313 671
Depreciation charges 3,197 2,755
Loss on sale of tangible fixed assets 4
28
Decrease/(increase) in stocks (998)
89
Increase in debtors (7,902) (7,835)
Increase in creditors 5,137 7,523
Other operating items 185 446
------- -------
Net cash inflow from operating 30,727 29,244
activities
------- -------
6. ANALYSIS OF NET DEBT
At 1 Reclass- Cashflow Exchange At 31
January ification movement December
1999 of debt 1999
£000 £000 £000 £000 £000
Cash at bank 4,480 - 868 (252) 5,096
and in hand
Overdrafts - - (801) - (801)
Debt due - (2,401) (4,104) - (6,505)
within one
year
Debt due after (40,179) (1,099) (51,164) 3,312 (89,130)
one year
Total (35,699) (3,500) (55,201) 3,060 (91,340)
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