Unaudited Results for period ended 30 June 2016

Released : 29-Jul-2016 07:00

RNS Number : 5913F
UBM PLC
29 July 2016
 

 

 

 

29 July 2016: for immediate release

 

Unaudited Results for the period ended 30 June 2016

 

Strategic progress and performance on track


 

·      PR Newswire (PRN) disposal completed - £490m net cash proceeds

                ·      £243.7m special dividend paid to shareholders on 8 July

·      Continued progress with execution of Events First strategy:

·      Invested £61.4m in acquisitions and announced disposal of Electronics Media portfolio

·      £10.2m of portfolio rationalisation

·      Operational initiatives driving performance improvement

·      Continuing revenue up 8.0% at £380.0m - benefiting from 6.5% currency tailwind

·      Continuing revenue up 1.0% on an adjusted underlying basis*, comprising:

·      Events revenue growth of 1.3%

·      Other Marketing Services (OMS) revenue down 0.4%

·      Continuing adjusted operating profit* up 24.5% to £93.4m

·      Continuing adjusted operating profit margin* +3.3%pts to 24.6%. (Pre strategic opex +2.4%pts)

·      Free cash flow* of £81.6m and cash conversion* of 114%

·      Net debt* (adjusted for special dividend payment on 8 July) at 1.2 times EBITDA*

·      Continuing diluted adjusted EPS* up 31.5% to 14.2p

·      Interim dividend declared of 5.4 pence per share

·      Full year trading outlook unchanged

 

*See page 3 and page 39 for definition of non-IFRS metrics 

 

 

Tim Cobbold, CEO of UBM plc said:

 

"The sale of PRN was the final major step in the transformation of UBM into a focused events business, following which more than 80% of revenues are now generated from Events. Going forward UBM's performance will increasingly reflect the attractive characteristics of the events industry, and we continue to see high-quality acquisition opportunities to strengthen further the portfolio.

 

"Our performance in the first half was in line with our expectations and the business is well-positioned for a strong second half. Good progress continues to be made in the execution of the Events First strategy.

 

"With more than 80% of the Group's revenues generated in the US and Emerging Markets and less than 10% from the UK we expect little direct impact from Brexit and a benefit from the stronger dollar. 

 

"Our trading outlook for the year remains unchanged, with further FX benefits expected."  

 

 

Key financial information (unaudited)

 


Revenue



Adjusted operating profit*


H1 2016

£m

Underlying change* %

Adj. underlying

change* %



H1 2016
£m

Margin

%

Margin
change %pt

Continuing operations








Annual

293.9

(1.7)%

1.3%



88.0

30.0%

+0.4%pts

- of which majors*

251.6

0.3%

0.3%



 

 

-

Biennial

12.8

 

 



3.2

24.8%

+22.4%pts

Events

306.7

(1.7)%

1.3%



91.2

29.7%

+1.3%pts

 

 

 

 



 

 

 

Online

42.9

1.4%

3.5%



7.0

16.3%

+17.5%pt

Print

30.4

(9.1)%

(5.2)%



5.1

16.7%

-2.0%pts

OMS

73.3

(3.4)%

(0.4)%



12.1

16.4%

+8.8%pts

Corporate costs

 

 

 



(9.9)

 

 

Group

380.0

(2.0)%

1.0%



93.4

24.6%

+3.3%pts

 

Adjusted EPS* (p)

 H1 2016

H1 2015

Change %

Continuing - Diluted1

14.2p

10.8p

31.5%

Continuing - Diluted, pro forma2

15.8p



Total - Diluted1

20.2p

15.8p

27.8%

         *      See page 3 and page 39 for definition of non-IFRS metrics 

1)     Uses weighted average number of shares over the period of 441m (H1 2015: 446m)

2)     Uses post consolidation number of shares of 396m for 2016

 

Group IFRS results (unaudited)

 

 

 H1 2016

H1 2015


 

£m

£m

Change %

Continuing operations




Revenue

380.0

351.8

8.0%



 

 

Operating profit

70.8

49.2

43.9%

% margin

18.6%

14.0%

 



 

 

Profit after tax

39.9

25.8

54.7%





Diluted EPS (p)

8.0p

4.9p

63.3%

Diluted weighted average no of shares (m)

441.3m

445.8m






Total Group

 

 

 

Profit after tax

443.3

47.6

-

 

 

 

 

Diluted EPS (p)

99.4p

9.7p

-

Diluted weighted average no of shares (m)

441.3m

445.8m

 

 

 

Notes to business and financial review

Unless otherwise stated:

·      Underlying revenue growth measures are adjusted for the effects of acquisitions, disposals, foreign exchange movements, phasing and peripatetic and biennial events

·      Adjusted underlying growth measures additionally remove the impact of portfolio rationalisation

·      Major events refer to events generating more than £1m 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 execution 

 

See page 39 for explanation of non-IFRS items.

 

Contacts

Kate Postans

Head of Investor Relations & Corporate Communications

investorrelations@ubm.com communications@ubm.com

+44(0) 20 7921 5023

Jon Coles
Andy Rivett-Carnac
Craig Breheny

Brunswick Group

ubm@brunswickgroup.com

+44(0) 20 7404 5959

 

UBM will host a presentation today at 10.30am at the London Stock Exchange, 10 Paternoster Square, EC4M 7LS.  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.  A recording of the webcast will also be available on demand from UBM's website after 4pm (BST).

 

Notes to Editors

UBM plc is a leading global B2B events organiser. Running over 350 events per year, UBM is the largest listed pure-play exhibitions organiser globally and the largest independent organiser in the US and China.  We help businesses do business, bringing the world's buyers and sellers together at events, online and in print. Our 3,500 staff in more than 20 countries are organised into specialist teams which serve commercial and professional communities, helping them to do business, and their markets to work effectively and efficiently.  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.

 

END

 

 

BUSINESS REVIEW
For the six months ended 30 June 2016

 

Strategic progress

 

UBM is focused on delivering its Events First strategy, with the objective of becoming the world's leading events business. As a result the Group's financial performance will increasingly reflect the attractive characteristics of the events industry: good organic growth dynamics supported by acquisitions, high margins and strong cash generation. Central to the strategy is the quality of the portfolio. 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 completion of the sale of PRN in June 2016 leaves the proportion of the business derived from events at 82% on an annualised basis. This proportion will increase further in the future as more events-focused acquisitions are made and the alignment of OMS activities to the events portfolio increases.

 

On 8 July, following the completion of the PRN disposal, UBM returned £243.7m to shareholders via a special dividend, and retained the remaining cash proceeds to invest in accretive, bolt-on acquisitions. We continue to see high-quality opportunities and UBM will remain disciplined over which deals to execute. The company's commitment to its target leverage corridor of 1.5x-2x net debt to EBITDA is unchanged. 

 

During the first half UBM acquired two US events businesses, Business Journals Inc (BJI) and Content Marketing Institute (CMI), and announced the disposal of the Electronics Media portfolio, which was not well-aligned to Events. BJI, a producer of fashion trade shows in New York and Las Vegas, was acquired in April for $69m and CMI was purchased in June for an initial consideration of $17.6m (with an additional earn-out subject to meeting profit targets over the next two years). In 2015 these two businesses generated Event revenues of $38.8m and $10.3m of well-aligned OMS revenue. The sale of the Electronics Media portfolio, for a cash consideration of $23.5m (H1 2016: £5.9m revenue; FY 2015: £9.5m) is expected to complete in the third quarter.

 

Recent acquisitions are performing well. Advanstar continues to generate returns ahead of the acquisition case. Constant currency Event revenues in the first half grew by 5.0%, driven by the additional space at Mandalay Bay in Las Vegas, and OMS delivered a robust performance with revenue down marginally by 0.7%. Integration synergies are now forecast to be c.$15m by the end of 2016, ahead of the original target of $10m by the end of 2017. Hospitalar in Brazil, acquired in May 2015, ran for the first time under UBM ownership in May 2016 and also performed ahead of the acquisition business plan.

 

In addition to enhancing the portfolio through acquisitions, further progress has been made in reshaping the portfolio organically by rationalising the tail of smaller events and aligning OMS properties to the events portfolio. During the period, 35 events which had generated revenues of £8.2m in the prior period, and OMS activities which had generated revenues of £2.0m in H1 2015, were discontinued. This Events First rationalisation programme will continue through 2016 and conclude by the end of 2017.

 

Operationally, Events First implementation remains the priority and the focus. The roll-out of a common sales model and supporting CRM platform is well underway in EMEA, where approximately 60% of revenues will be operating under the new sales regime by the end of the year. The preparation phase has begun in Asia and the Americas.  The utilisation of Orbit and Touchplan, both of which improve the onsite rebooking experience, is increasing and the value based pricing process has begun at MAGIC. Good progress has been made on the procurement programme with aggregate annual savings of £4.9m secured (including synergies).  Savings under this programme are now expected to be £6m p.a. by the end of 2017. Event plans are becoming a key mechanism for the ongoing operational management of the business and have significantly improved the three year planning process for the Group. New long-term incentives, which incorporate organic revenue growth based targets alongside profitability targets, have been implemented at the event leadership level and for senior divisional management.

 

The Events First strategy anticipated an investment of £30-35m (Opex and Capex) generating total annual savings of £10m p.a. building from 2016.  To date investments of £11.3m (Strategic Opex £9.3m and Capex £2.0m) have delivered total annual savings worth approximately £6.6m p.a.

 

During the first half the Group strengthened the senior management team with Scott Schulman joining as CEO of UBM Americas (with Simon Foster returning to run UBM EMEA), John Petevinos joining as Group Strategy Director and Simon Hollins joining as Group CIO.

 

Outlook

 

The trading outlook for the full year remains unchanged:  The Board expects continued good growth (excluding the impact of biennials and ongoing portfolio rationalisation).  It also expects further margin progress although this will be offset by the even-year biennial effect. 

 

With more than 80% of the Group's revenues generated in the US and Emerging Markets and less than 10% from the UK the Board expects little direct impact from Brexit although it remains conscious of the global macroeconomic uncertainty. 

 

The reported results are also expected to benefit from the stronger dollar. 

 

Events

 

 

H1 2016

H1 2015

Underlying

Adj. underlying

 

£m

£m

change* %

change* %

Annual Events revenue





North America

157.9

143.0

(0.5)%

0.0%

Emerging Markets

99.0

87.2

1.2%

3.9%

UK

19.6

26.6

(20.0)%

(2.9)%

Continental Europe

9.7

9.5

(5.2)%

0.9%

RoW

7.7

6.3

9.7%

9.7%

 

293.9

272.6

(1.7)%

1.3%

Biennial Events revenue

12.8

12.5

 

 

Total Events revenue

306.7

285.1

(1.7)%

1.3%

 

Total Events revenue was £306.7m (H1 2015: £285.1m), benefiting from an FX tailwind of £20.1m and £9.2m of incremental revenue from the Hospitalar and BJI acquisitions, which did not contribute in H1 2015.  Adjusted underlying revenue from Annual Events, which also excludes the impact of portfolio rationalisation, rose 1.3%.  During the period £8.2m of Event revenues were rationalised and £2.1m (net) of Event revenues have moved into H2.  Unless otherwise stated, all commentary below relates to adjusted underlying revenue.

 

Biennial Events contributed £12.8m of revenue in the first half (H1 2015: £12.5m). Revenues were up 9.2% on an underlying basis compared with 2014, reflecting strong performances at Sea Japan and PTXi.

 

The Events portfolio as a whole continued to be strengthened during the period through acquisition and portfolio rationalisation and UBM's geographic and sectoral diversity continues to provide resilience to the overall performance.  During the first half the Major events grew 0.3%, with good performances at the larger events (top 20 +2.5%) offset by specific weakness at Interop, Ecobuild and European Gem and Jewellery.

 

In H1 2016, North America accounted for 54% of Annual Events revenue (2015: 52%) and Emerging Markets, as a whole, accounted for 34% (2015: 32%).

 

North American revenue was flat, with good performances at large events such as the Game Developers Conference, Enterprise Connect, MAGICWeek and MD&M West offset by a greater than expected decline at Interop.  Advanstar shows grew by 5.0%, driven by the expansion of space at Mandalay Bay and strong growth in areas such as sourcing and footwear more than offsetting weakness in womenswear.  

 

Emerging Markets revenue grew 3.9% with strong growth in mainland China events, including CPhI China, Hotelex and Fine Foods, offsetting softness at Malaysia International Furniture, the Hong Kong based APLF and a slight decline at the June Hong Kong Jewellery & Gem Fair.  Hospitalar performed well and grew 0.9% despite the tough economic backdrop.

 

Revenues in the UK fell 2.9%, principally driven by the anticipated weakness at Ecobuild and IFSEC (which experiences heightened competition in even years when a competitor's European biennial show also runs).  In Continental Europe revenue rose 0.9% with growth at Pharmapack and Medtech offsetting softness at Jewellery & Gem Fair - EuropeRest of World events grew well, notably CPhI Japan.

 

 

H1 2016

H1 2015

 

 

£m

£m

 

Annual Events adjusted operating profit

88.0

80.8

 

Annual Events adjusted operating profit margin

30.0%

29.6%

 

Annual Events adjusted operating profit margin (pre strategic opex)

30.5%

30.6%

 





Biennial Events adjusted operating profit

3.2

0.3

 

Biennial Events adjusted operating profit margin

24.8%

2.4%

 





Adjusted operating profit

91.2

81.1

 

Total adjusted operating profit margin

29.7%

28.5%

 

Strategic opex

(1.7)

(2.7)

 

Total adjusted operating profit margin (pre strategic opex)

30.3%

29.4%

 

 

Adjusted operating profit was £91.2m (H1 2015: £81.1m) benefiting from an FX tailwind.  The Total Events adjusted operating margin was 29.7% (H1 2015: 28.5%) principally reflecting a stronger biennial contribution and slightly lower strategic opex.  

 

The Annual Events margin was 30.0% (H1 2015: 29.6%) reflecting the slightly lower level of strategic opex (H1 2016: £1.7m vs H1 2015: £2.7m). Before strategic opex, the underlying Annual Events margin was broadly flat.  The Biennial margin was 24.8% (H1 2015: 2.4%) reflecting the portfolio of larger, higher-margin biennials in the first half of even years.

 

Other Marketing Services (OMS)

 

OMS revenue fell by 0.4% on an adjusted underlying basis. In the period we rationalised £2.0m of OMS activities, largely print, and announced the disposal of the Electronics Media business which contributed £5.9m of revenue in H1 2016.

 

Adjusted operating profit was £12.1m (H1 2015: £5.1m), representing an operating margin of 16.4% (H1 2015: 7.6%) driven higher by the positive effect of the rationalisation of lower margin OMS activities and associated cost reductions.  There was no strategic opex related to OMS in the period.

 


H1 2016

H1 2015

Underlying

Adj. underlying


£m

£m

change* %

change* %

OMS - Online

42.9

36.9

1.4%

3.5%

OMS - Print

30.4

29.8

(9.1)%

(5.2)%

Total OMS revenue

73.3

66.7

(3.4)%

(0.4)%

Adjusted operating profit

12.1

5.1



Total adjusted operating profit margin

16.4%

7.6%



Strategic opex

-

(1.8)



Total adjusted operating profit margin (pre strategic opex)

16.4%

10.3%



 

 

PR Newswire (PRN)

 

During the period PRN's reported revenues were £103.0m (H1 2015: £104.2m).  Having completed the disposal of PRN on 16 June this 2016 trading period was 10 working days shorter than the H1 2015 reporting period.  The adjusted operating profit was £28.1m (H1 2015: £23.8m), representing a 27.3% margin (H1 2015: 22.8%).   

 

 

FINANCIAL REVIEW
For the six months ended 30 June 2016

Profit & Loss

 


IFRS measures

As adjusted(b)

Unaudited

H1 2016

H1 2015

Change

H1 2016

H1 2015

Change


£m

£m

%

£m

£m

%

Continuing







Revenue

380.0

351.8

8.0%

380.0

351.8

8.0%

Other operating income

3.2

3.9


3.2

3.9


Operating expenses (excluding (a) line items below)

(281.5)

(268.8)


(281.5)

(268.8)


Strategic opex

(1.7)

(4.6)


(1.7)

(4.6)


Share of results from JVs & associates

1.8

0.6


1.8

0.6


Share of tax on profit in JV & associates (a)

(0.4)

(0.1)


(b)

(b)


Exceptional operating items (a)

(2.8)

(3.1)


(b)

(b)


Impairment charges (a)

0.0

(4.2)


(b)

(b)


EBITDA




101.8

82.9

22.8%

Depreciation (a)

(8.4)

(7.9)


(8.4)

(7.9)


EBITA




93.4

75.0

24.5%

Amortisation - intangible assets arising on acquisition (a)

(19.4)

(18.4)


(b)

(b)


Operating profit

70.8

49.2

43.9%

93.4

75.0

24.5%

Net interest expense and pension interest

(13.3)

(13.3)


(13.3)

(13.3)


Exceptional finance expense

(4.5)

(0.4)


(b)

(b)


Financing expense - other

(1.2)

(0.4)


(b)

(b)


PBT

51.8

35.1

47.6%

80.1

61.7

29.8%

Taxation

(11.9)

(9.3)


(12.8)

(9.4)


PAT from continuing operations

39.9

25.8

54.7%

67.3

52.3

28.7%

Discontinued operations adjusted PAT

26.3

22.3


26.3

22.3


Profit on disposal and adjusting items

377.1

(0.5)


(b)

(b)


Profit for the year

443.3

47.6


93.6

74.6


Non-controlling interests

(4.6)

(4.4)


(4.6)

(4.4)


Attributable profit

438.7

43.2

-

89.0

70.2

26.8%








Earnings per share (pence)







Continuing operations - diluted

8.0

4.9

63.3%

14.2

10.8

31.5%

Total operations - diluted

99.4

9.7

-

20.2

15.8

27.8%

Weighted average no. of shares diluted (million)

441.3

445.8


441.3

445.8


Declared dividend per share (pence)

5.4

5.3


5.4

5.3


 

(a)  Expenses not included within operating expense figure

(b)  All non-IFRS measures and business performance measures have been annotated with a * and additional information on these measures has been provided on page 39

 

 

Revenue - Continuing £m

2015 H1 revenue

 

Acquisitions and disposals

Strategic rationalisation

Phasing

Annual Events

OMS

Biennial events

FX

2016 H1 Revenue

351.8

14.9

(10.2)

(2.1)

3.4

(0.2)

(0.3)

22.7

380.0

 

Continuing reported revenue in H1 2016 was £380.0m, up 8.0% (H1 2015: £351.8m) largely due to favourable FX movement, growth in the annual events portfolio and positive contribution from acquisitions including Hospitalar, BJI and CMI, partially offset by product rationalisation. On an adjusted underlying basis, revenue grew 1.0% with 1.3% growth in Events offset in part by a 0.4% decline in OMS and by the phasing of £2.1m of revenue into H2.

 

Adjusted operating profit - Continuing £m

2015 H1 operating profit

 

Acquisitions and disposals

Strategic opex/corporate operations

Phasing

Annual Events

OMS

Biennial events

FX

2016 H1 operating profit

75.0

3.4

4.2

(1.4)

(1.8)

3.1

2.6

8.3

93.4

 

Continuing adjusted operating profit rose by 24.5% to £93.4m (H1 2015: £75.0m) reflecting favourable FX, a reduced level of strategic opex in H1 compared to the prior period, contribution from acquisitions and the positive Biennial performance. OMS growth was offset by in part by Annual Events and the phasing impact. 

 

The continuing adjusted operating margin grew to 24.6% (H1 2015: 21.3%) with the benefit of FX, lower strategic opex, higher margin even-year H1 biennials and stronger OMS profitability offset in part by a slightly lower Annual Events margin.

 

Diluted adjusted EPS - Continuing p

2015 H1 EPS

 

Operating profit

Net interest expense

Pension finance capital

Tax

Share option dilution

Number of shares

FX

2016 H1 EPS

10.8

2.3

(0.1)

0.1

(0.8)

(0.1)

0.2

1.8

14.2

1 Adjustments for IFRS results include exceptional operating items, share of tax on profit in joint ventures and associates and amortisation of intangible assets arising on acquisitions

 

Continuing diluted adjusted EPS increased by 31.5% to 14.2p (2015: 10.8p) reflecting the earnings growth in the period, the increased tax rate and the FX tailwind. The share consolidation, completed on 27 June, created only a small increase in EPS during the first half due to its minor impact on the weighted average number of shares for the period.

 

Corporate operations and strategic operating expense

 


H1 2016

£m

H1 2015

£m

Corporate costs

9.8

9.6

Strategic operating expense - corporate

-

0.1

Pension administration and service cost

0.3

0.7

Non-cash share-based payments

1.5

1.2

Income from equity-accounted investments

(1.7)

(0.4)

Total corporate costs

9.9

11.2

 

Corporate costs for the first half were broadly flat at £9.8m (H1 2015: £9.6m). Total corporate costs were down 11.6% at £9.9m (H1 2015: £11.2m) due to the share of profit from equity accounted investments, primarily Light Reading which returned to profit in H1. On 13 July the 33% holding in Light Reading was divested.

 


H1 2016

£m

H1 2015

£m

Strategic operating expenses

1.7

4.6

Strategic capital expenditure

2.0

-

 

Strategic operating expenses in the period of £1.7m were incurred in the Events segment and relate to the investments made in the CRM platform being implemented in EMEA. This was lower than H1 2015 when redundancy and disposal costs were incurred in rationalising OMS activities.  Strategic capital expenditure of £2.0m was invested in the CRM platform development during the period.

 

Discontinued operations

 

The PRN disposal completed on 16 June 2016 and accordingly the adjusted operating profit, for the period to 15 June, of £28.1m has been disclosed as discontinued operations in the income statement.

 

An exceptional gain of £377.1m has been recorded which includes the PRN profit on disposal of £385.3m net of disposal costs of £38.9m, a loss on the deal contingent forward contract of £20.4m and the recycling of historic FX movements from reserves of £32.6m (refer to note 16). An exceptional charge of £8.2m has been recognised for the settlement agreed in April 2016 in relation to the Axio legal case, net of specific provisions, recoveries and legal costs.

Income statement adjustments and exceptional items from continuing operations

The following table provides a summary of the income statement adjustments that have been excluded from the continuing adjusted operating profit of £93.4m. The total charge to continuing operating profit for adjustments and exceptional items was £22.6m (2015: £25.8m) principally comprising amortisation of acquired intangible assets of £19.4m (2015: £18.4m).

 


H1 2016

£m

H1 2015

£m

Amortisation - intangible assets arising on acquisition

19.4

18.4

Tax on share of profits from JVs and Associates

0.4

0.1

Exceptional items



-     Advanstar and BJI integration costs

3.6

1.8

-     Changes in estimates of contingent consideration

-

0.3

-     Acquisition costs

0.9

1.0

-     Impairment charge

-

4.2

-     Gain on disposal of investment

(2.2)

-

-     Disposal of non-core businesses

0.5

-

Total exceptional items

2.8

7.3




Total income statement adjustments

22.6

25.8

Acquisition exceptional items

·      Advanstar integration costs of £2.2m were incurred in the period and related primarily to the finance system integration. These costs will continue to be incurred over the next 12 months, as part of the estimated $33m of total integration costs. BJI integration costs in the period of £1.4m primarily related to the exit of venue contracts. We anticipate total BJI integration costs of $10m will be incurred during 2016.

·      Acquisition costs in the period relate to professional fees for the BJI and CMI acquisitions.

 

Gain on disposal of investment

An income of £2.2m from a former associate investment which had been previously impaired was received in the period.

Interest and financing expense

Net interest expense of £13.3m (2015: £13.3m) represents interest payments on UBM's bonds and bank loans, net of interest receipts on cash holdings and vendor loan notes.

The net expense for the period reflects interest charges on bonds and bank loans of £13.8m (2015:13.9m) whilst lower interest received on loan notes following repayment in 2015 of the Delta loan note was offset by a reduced pension scheme finance expense. The exceptional finance expense of £4.5m (2015: £0.4m) relates to fair value movements on minority put-options.

Tax

 

UBM's effective rate of taxation on the continuing adjusted operating profit for the period was 16% (H1 2015: 12.7%). A bridge showing the main factors affecting our effective tax rate is shown below:

 

Tax rate %

UK tax rate

 

Higher tax rate on overseas earnings

Tax at statutory rates

US Goodwill amortisation

Effects of intragroup financing

Other adjustments

2016 adjusted tax rate

20.0

11.6

31.6

(8.2)

(9.8)

2.4

16.0

 

The total cash paid in the period in respect of corporate income taxes was £12.7m. This has been paid in the following jurisdictions:

 

£m

H1 2016

Netherlands

3.6

United States

1.6

Canada

1.3

China

1.3

Japan

1.0

Other Emerging Markets

3.4

Other

0.5


12.7

 

 

Foreign Currency

 

The following table outlines the currency profile of our continuing revenues and adjusted operating profits for H1 2016: 

 


Revenue %

Adjusted operating profit* %

Average exchange rates

Year on year FX movement %

H1 2016

H1 2015

US Dollar*

55.6

74.9

1.4118

1.5272

7.6%

Hong Kong Dollar*

8.0

9.1

10.6202

11.8405

10.3%

Renminbi*

11.6

15.5

9.0898

9.4820

4.1%

UK Pound Sterling

10.8

(7.3)

1.0000

1.0000

-

Euro

1.7

(3.7)

1.2844

1.3777

6.8%

Indian Rupee

0.7

(1.8)

94.4766

95.6651

1.2%

Japanese Yen

3.1

4.7

160.5319

183.3848

12.5%

Brazilian Real

2.5

4.1

5.1408

4.5437

(13.1)%

Other

6.0

4.5

-

-

-

Total

100.0

100.0




* $ or quasi-$ pegged

 

Approximately 70% of UBM's full year continuing revenues are generated in US Dollars or quasi Dollar-pegged currencies, which has benefited the Group's reported financials given FX movements during the period.  During the first half the FX tailwind added £22.7m to continuing revenue and £8.3m to continuing adjusted operating profit.  Had the 30 June rates ($US1.33, HK$10.3, CNY8.83, €1.20) persisted throughout the entire period the total FX benefit in H1 would have been approximately £37m to continuing revenues and £11m to continuing adjusted operating profit.

 

Had the 30 June 2016 rates (above) applied for H2 2015, this would have added approximately £50m to H2 continuing revenue and £18m to H2 continuing 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 2015 operations:

 


Average exchange rate in 2015

Currency value rises/ falls by

Effect on revenue

+ / - £m

Effect on adjusted operating profit*

+ / - £m

US Dollar

1.5302

1%

3.5

1.0

Hong Kong Dollar

11.8616

1%

1.1

0.5

Renminbi

9.6206

1%

0.9

0.3

Euro

1.3854

1%

0.6

0.3

 *  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

 

 

Cash flow £m

31 Dec 2015 Net Debt

 

Adjusted cash generated from operations

Operating cash adjustments

Interest & tax

Capex

Dividends, NCI & treasury stock

Acquisitions

Disposal proceeds

FX/Fair value

30 Jun

2016

Net

Debt

484.9

(138.7)

28.0

21.5

7.6

85.2

61.4

(532.2)

27.3

45.0

 

Adjusted cash generated from operations was £138.7m whilst free cash flow* after expenditure on interest, tax and capital expenditure was £81.6m (2015: £128.5m). Cash invested in acquiring BJI, CMI and three non-controlling interests totalled £61.4m and dividend payments and purchase of shares totalled £85.2m. We received £530.1m from the disposal of PR Newswire (£490m after expected transaction costs and the pension contribution included within non-operating cash adjustments) and £2.1m from the disposal of the Janus investment, a legacy French print magazine business. 

 

The IFRS cash generated from operations was £110.7m (2015: £162.6m) reflecting the lower level of biennial working capital inflow in an even year, PRN exceptional disposal costs paid of £15.5m and the £10m one-off pension contribution. The reconciliation of net cash inflow from operating activities to free cash flow is shown below:

 

£m

H1 2016

H1 2015

Adjusted cash generated from operations*

138.7

154.5

Payments against provisions

(8.6)

(4.2)

PRN disposal non-operating cash adjustments

(25.5)

-

Other adjustments

6.1

12.3

Cash generated from operations (IFRS)

110.7

162.6

Dividends from JVs and associates

  -

3.4

Net interest paid

(8.8)

(10.4)

Taxation paid

(12.7)

(8.1)

Capital expenditure (including intangibles)

(7.6)

(19.0)

Free cash flow

81.6

128.5

Acquisitions

(61.4)

(33.9)

Proceeds from disposals

532.2

1.2

Repayment of loan notes

  -

4.6

Advances to JVs, associates and minority partners

  -

0.2

Free cash flow after investment activities

552.4

100.6

Net share issues

  -

0.7

Dividends

(78.1)

(75.5)

Purchase of ESOP shares

(7.1)

(6.2)

Net debt1  as at 30 June 2016

(45.0)

(519.6)

1 Includes fair value adjustments.

 

The cash conversion rate was 114% (2015: 156%). Cash conversion is calculated as follows:

 

£m

H1

2016

H1 2015

Total group adjusted operating profit

121.5   

98.8

Depreciation

8.4

10.8

Capital expenditure (including intangibles)

(7.6)

(19.0)

Movement in working capital (excluding non-operating movements)

15.8

56.3

Associates and JVs pre tax

(2.0)

(0.7)

Dividends from associates and JVs

-

3.4

Other non-cash expenses

2.6

3.7

Proceeds from non-core disposals

-

1.2

Adjusted cash generated from operations*

138.7

154.5

Cash conversion

114%

156%

 

The cash conversion rate was lower than in the prior period due to the less beneficial working capital movement in a down biennial year, partly offset by reduced capex following the completion of project CORE and 240 Blackfriars in early 2015.

 

Capital structure

Debt and liquidity

During the period the syndicated revolving credit facility was extended by one year to April 2021. At 30 June 2016, the facility was undrawn following the receipt of the proceeds of the PRN disposal and because the special dividend payment took place on 8 July 2016. The £250m sterling bond matures in November 2016 and will be redeemed through surplus cash and drawings on the syndicated facility. The debt facilities and maturities are summarised below:

 

£m

Facility

Drawn

Undrawn

Maturity

Margin %

Fair value hedges

£250m fixed rate Sterling bond

250.0

250.0

-

Nov 16

6.5% coupon

Floating rate swap for £150m

GBP LIBOR + 2.9%

$350m fixed rate Dollar bond

263.8

263.8

-

Nov 20

5.75% coupon

Floating rate swap for $100m

US$ LIBOR + 2.65%

£400m syndicated facility

400.0

-

400.0

Apr 21

LIBOR + 0.60%


Total

913.8

513.8

400.0




 

Capital management

To support our Events First strategy, UBM targets a leverage ratio of between 1.5-2.0 times net debt/EBITDA which provides flexibility for biennial cycles, will provide capacity to invest in the business through bolt-on acquisitions, and which is consistent with investment grade metrics. There is flexibility to move outside of the corridor, specifically due to M&A activity, with the intention of transitioning back into the corridor within 12-18 months.

 

Net debt at 30 June 2016 was £45.0m, representing 0.2 times EBITDA.  On a pro forma basis adjusting for the payment of the special dividend which took place on 8 July 2016, net debt was £288.7m, representing 1.2 times EBITDA.

 

£m

Pro forma3 H1 2016

H1 2016

H1 2015

Net debt1

288.7

45.0

519.6

Adjusted EBITDA - LTM2

234.0

234.0

208.1

Net debt to EBITDA ratio

1.2 times

0.2 times

2.5 times

1 Includes fair value adjustments

H1 2016 reflects last 12 months of continuing operations EBITDA only.  H1 2015 reflects last 12 months of Total Group EBITDA (NB. Advanstar was acquired at the end of 2014.) 

3 Including payment of special dividend of £243.7m on 8 July 2016 which accompanies the sale of PR Newswire and share consolidation.

 

Pensions

UBM operates a number of defined benefit and defined contribution schemes, based primarily in the UK. The most recent actuarial funding valuations for the majority of the UK schemes were carried out during 2014 and updated to 30 June 2016 using the projected unit credit method. At 30 June 2016, the aggregate deficit under IAS 19 was £38.8m, an increase of £14.1m compared to the deficit of £24.7m at 31 December 2015.  This was due to changes in actuarial assumptions, partially offset by improved asset returns and the one-off £10.0m pension contribution agreed with the Trustees in relation to the PRN disposal. The pension interest expense of £0.4m (2015: £0.9m) is due to the lower net deficit at 31 December 2015 compared to 31 December 2014.

 

Related party transactions

Details of related party transactions in the 6 months ended 30 June 2016 are disclosed in Note 20.

 

Return on average capital employed

 

The return on average capital employed measure has been reviewed during the period and an updated definition has been adopted from 1 January 2016 in line with market definitions. ROACE is defined as post tax adjusted operating profit over average shareholders' funds plus net debt. The shareholders' funds plus net debt will be adjusted for impairment charges going forwards.

 

As at

Pro forma

H1 2016

H1 2016

FY 2015

H1 2015

Post tax adjusted operating profit LTM (£m)

186.9

236.6

217.6

168.5

Average capital employed (£m)

1,211.8

1,253.6

1,391.9

1,020.0

Return on average capital employed (ROACE) (%)

15.4%

18.9%

15.6%

16.5%

 

Dividend

 

Our progressive dividend policy, which targets two times cover through economic and biennial cycles, is unchanged. The Board has declared an interim dividend of 5.4p (2015: 5.3p) in line with the policy of interim dividend per share representing 33% of prior year's final dividend per share. Following the completion of the PRN disposal on 16 June 2016, the share consolidation took place on 27 June 2016 and the special dividend was paid on 8 July 2016. The interim dividend will be paid out on the post share consolidated number of shares of 393.8m. 

 

Key dates for the payment of the dividend are:

Ex-dividend date:                       8 September 2016

Dividend Record date:                 9 September 2016

Dividend Payment date:              11 October 2016

 

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.

 

Summary of principal risks

 

Macro-economic slowdown and/or exchange rate fluctuations

-     A slowdown in the macro-economic environment could adversely impact revenue, as advertising, attendee, sponsorship and other discretionary revenue tends to be cyclical

-     A downturn may also result in slower debt collections, thereby affecting cash flow

-     Foreign exchange rate fluctuations could adversely affect our reported earnings and the strength of our balance sheet

The outcome of the EU Referendum in the UK potentially impacts these risks. It is too early to reach any firm conclusions, whether positive or negative, in nature. An initial assessment has shown there is not expected to be any material adverse impact. The Board will continue to monitor this risk as further information becomes available.

Acquisition

-     Acquisitions are an important part of our strategy - the most notable recently being the Advanstar acquisition. Acquisitions may not provide returns greater than UBM's weighted average cost of capital in their first year. Integration issues or failure to realise operating benefits or synergies may also impact the expected returns from acquisitions

-     More generally, as part of Agile growth it remains our intention to acquire in order to enhance the UBM portfolio

 

Specific country risk and emerging market exposure

-     Our business operates in many geographies, particularly Emerging Markets, 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 challenges or affect our ability to extract rewards from our investment

 

Inability to stage an event or inability of customers to travel to 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

-     Similarly, the business model relies on the availability of venues for hosting events

 

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 (for example: NECC in Shanghai) is introducing competition as well as enhancing opportunities for growth

 

Technological risk: execution and cyber security

-     As part of its strategy, UBM will be investing in the technology platforms of the business, starting with UBM EMEA. 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 reputation

-     Unauthorised access to our systems by external parties could lead to reputational damage and legal action, most notably for PR Newswire which handles potentially price sensitive earning information for certain clients

 

Access to capital

-     Although the rights issue improved our balance sheet flexibility, changes in the availability or cost of financing may affect our acquisition strategy

 

Recruitment and retention

-     Failure to attract and retain excellent people because of the competitive environment would impact on the ability of the organisation to achieve its strategic ambitions

 

 

 

 

 

Interim consolidated income statement

for the six months ended 30 June 2016

 

 

 

Before

exceptional

items

30 June 2016

Exceptional

items

30 June 2016

Total

30 June 2016

Restated

before

exceptional

items

30 June 2015

Restated

exceptional

items

30 June 2015

Restated

total

30 June 2015

 

 

 

 

Unaudited

 

 

Unaudited

Notes

 

£m

£m

£m

£m

£m

£m

 

Continuing operations

 

 

 

 

 

 

4

Revenue

380.0 

380.0 

351.8 

351.8 

 

Other operating income

3.2 

3.2 

3.9 

3.9 

 

Operating expenses

(291.6)

(291.6)

(281.3)

(281.3)

5

Exceptional operating items

(2.8)

(2.8)

(7.3)

(7.3)

 

Amortisation of intangible assets arising on acquisitions

(19.4)

(19.4)

(18.4)

(18.4)

 

Share of results from joint ventures and associates (after tax)

1.4 

1.4 

0.5 

0.5 

 

Group operating profit from continuing operations

73.6 

(2.8)

70.8 

56.5 

(7.3)

49.2 

 

 

 

 

 

 

 

 

6

Financing income

1.0 

1.0 

1.8 

1.8 

6

Financing expense

(15.5)

(4.5)

(20.0)

(15.5)

(0.4)

(15.9)

 

Net financing expense

(14.5)

(4.5)

(19.0)

(13.7)

(0.4)

(14.1)

 

Profit before tax from continuing operations

59.1 

(7.3)

51.8 

42.8 

(7.7)

35.1 

 

 

 

 

 

 

 

 

 

Tax

(10.0)

(1.9)

(11.9)

(8.9)

(0.4)

(9.3)

 

 

 

 

 

 

 

 

 

Profit for the period from continuing operations

49.1 

(9.2)

39.9 

33.9 

(8.1)

25.8 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

 

17

Profit for the period from discontinued operations

26.3 

377.1 

403.4 

22.3 

(0.5)

21.8 

 

Profit for the period

75.4 

367.9 

443.3 

56.2 

(8.6)

47.6 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

Owners of the parent entity

 

 

438.7 

 

 

43.2 

 

Non-controlling interests

 

 

4.6 

 

 

4.4 

 

 

 

 

443.3 

 

 

47.6 

 

 

 

 

 

 

 

 

 

Earnings per share (pence)

 

 

 

 

 

 

7

Continuing operations - basic

 

 

8.1p 

 

 

4.9p 

7

Continuing operations - diluted

 

 

8.0p 

 

 

4.9p 

7

Profit for the period - basic

 

 

100.4p 

 

 

9.8p 

7

Profit for the period - diluted

 

 

99.4p 

 

 

9.7p 

 

 

 

 

 

 

 

 

 

 

 

 

£m

 

 

£m

 

Group operating profit from continuing operations

 

 

70.8 

 

 

49.2 

5

Exceptional operating items

 

 

2.8 

 

 

7.3 

 

Amortisation of intangible assets arising on acquisitions

 

 

19.4 

 

 

18.4 

 

Share of tax on profit in joint ventures and associates

 

 

0.4 

 

 

0.1 

4

Continuing adjusted operating profit*

 

 

93.4 

 

 

75.0 

17

Discontinued adjusted operating profit

 

 

28.1 

 

 

23.8 

4

Group adjusted operating profit*

 

 

121.5 

 

 

98.8 

 

 

 

 

 

 

 

 

 

 

 

 

£m

 

 

£m

 

Dividends

 

 

 

 

 

 

8

Final dividend of 16.3p (2015: 16.0p)

 

 

71.8 

 

 

70.8 

8

Special dividend of 55.3p (2015: nil)

 

 

243.7 

 

 

8

Proposed interim dividend of 5.4p (2015: 5.3p)

 

 

21.2 

 

 

23.4 

 

*  Adjusted Group operating profit represents Group operating profit excluding amortisation of intangible assets arising on acquisitions, exceptional items and share of taxation on profit in joint ventures and associates

 

 

 

Consolidated income statement

for the year ended 31 December 2015

 

 

 

Before

exceptional

items

31 December 2015

Exceptional

items

31 December 2015

Total

31 December 2015

 

 

 

 

Audited

Notes

 

£m

£m

£m

 

Continuing operations

 

 

 

4

Revenue

769.9 

769.9 

 

Other operating income

6.6 

6.6 

 

Operating expenses

(581.0)

(581.0)

5

Exceptional operating items

(12.0)

(12.0)

 

Amortisation of intangible assets arising on acquisitions

(37.9)

(37.9)

 

Share of results from joint ventures and associates (after tax)

1.2 

(2.1)

(0.9)

 

Group operating profit from continuing operations

158.8 

(14.1)

144.7 

 

 

 

 

 

6

Financing income

2.9 

1.1 

4.0 

6

Financing expense

(29.1)

(29.1)

 

Net financing expense

(26.2)

1.1 

(25.1)

 

Profit before tax from continuing operations

132.6 

(13.0)

119.6 

 

 




 

Tax

(23.3)

(4.0)

(27.3)

 

 

 

 

 

 

Profit for the year from continuing operations

109.3 

(17.0)

92.3 

 

 

 

 

 

 

Discontinued operations




17

Profit for the year from discontinued operations

44.7 

(29.3)

15.4 

 

Profit for the year

154.0 

(46.3)

107.7 

 

 

 

 

 

 

Attributable to:

 

 

 

 

Owners of the parent entity

 

 

96.6 

 

Non-controlling interests

 

 

11.1 

 

 

 

 

107.7 

 

 

 

 


 

Earnings per share (pence)

 

 


7

Continuing operations - basic

 

 

18.3p 

7

Continuing operations - diluted

 

 

18.2p 

7

Profit for the year - basic

 

 

21.8p 

7

Profit for the year - diluted

 

 

21.7p 

 

 

 

 


 

 

 

 

£m

 

Group operating profit from continuing operations

 

 

144.7 

5

Exceptional operating items

 

 

14.1 

 

Amortisation of intangible assets arising on acquisitions

 

 

37.9 

 

Share of tax on profit in joint ventures and associates

 

 

0.4 

4

Continuing adjusted operating profit*

 

 

197.1 

17

Discontinued adjusted operating profit

 

 

48.4 

4

Group adjusted operating profit*

 

 

245.5 

 

 

 

 


 

 

 

 

£m

 

Dividends

 

 


8

Interim dividend of 5.3p

 

 

23.4 

8

Proposed final dividend of 16.3p

 

 

71.8 

 

*  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 2016

 

 

Notes

 

 

Six months

 ended

30 June

2016

Unaudited

£m

   Six months

 ended

30 June

2015

Unaudited

£m

Year

 ended

31 December

2015

Audited

£m

 

 

 

 

 

 

Profit for the period

443.3 

47.6 

107.7 

 

 

 

 


 

Other comprehensive income/(loss)

 

 


 

 

 

 


 

Other comprehensive income to be reclassified to profit or loss in subsequent periods

 

 


13

Currency translation differences on foreign operations - Group

117.6 

(13.6)

59.9 

13

Net investment hedge

(35.8)

5.6 

(17.5)

 

Currency translation differences on foreign operations - joint ventures and associates

0.4 

(0.3)

0.3 

16

Reclassification adjustment for foreign operations in the period

32.6 

(2.0)

(2.0)

 

 

 

 


 

Income tax relating to components of other comprehensive income

- 

 

 

114.8 

(10.3)

40.7 

 

 

 

 


 

Other comprehensive income not to be reclassified to profit or loss in subsequent periods

 

 


 

Remeasurement of defined benefit obligation

(24.8)

14.1 

27.6 

 

Irrecoverable element of pension surplus

(0.3)

(0.1)

 

Remeasurement of defined benefit obligation of associates

(0.7)

(0.3)

(0.8)

 

 

 

 


 

Income tax relating to components of other comprehensive income

- 

 

 

(25.8)

13.8 

26.7 

 

 

 

 


 

Other comprehensive income for the period, net of tax

89.0 

3.5 

67.4 

 

 

 

 


 

Total comprehensive income for the period, net of tax

532.3 

51.1 

175.1 

 

 

 

 


 

Attributable to:

 

 


 

Owners of the parent entity

523.1 

48.5 

164.4 

 

Non-controlling interests

9.2 

2.6 

10.7 

 

 

532.3 

51.1 

175.1 

 

 

 

Interim consolidated statement of financial position

at 30 June 2016

 

Notes

 

 

30 June

2016

Unaudited

£m

30 June

2015

Unaudited

£m

31 December

2015

Audited

£m

 

Assets

 

 

 

 

Non-current assets

 

 

 

9

Goodwill

1,330.7 

1,234.5 

1,195.3 

9

Intangible assets

415.3 

373.2 

371.3 

9

Property, plant and equipment

42.2 

54.6 

40.4 

 

Investments in joint ventures and associates

20.5 

21.0 

20.2 

16

Other fixed asset investments

23.4 

- 

 

Vendor loan note

4.1 

27.6 

5.5 

 

Derivative financial assets

9.2 

11.8 

6.4 

18

Retirement benefit surplus

5.3 

4.3 

4.6 

 

Deferred tax asset

19.8 

4.8 

18.2 

 

 

1,870.5 

1,731.8 

1,661.9 

 

Current assets

 

 


 

Trade and other receivables

248.2 

277.9 

219.4 

10

Cash and cash equivalents

483.6 

114.3 

76.5 

 

Vendor loan note

4.6 

2.3 

 

Derivative financial assets

1.7 

3.6 

17

Assets classified as held for sale

18.3 

166.3 

 

 

756.4 

392.2 

468.1 

 

 

 

 


 

Total assets

2,626.9 

2,124.0 

2,130.0 

 

 

 

 


 

Liabilities

 

 


 

Current liabilities

 

 


 

Current tax liabilities

65.0 

46.3 

56.4 

 

Trade and other payables

785.8 

530.4 

418.8 

 

Provisions

19.8 

7.0 

11.6 

10

Borrowings

252.1 

1.2 

255.9 

 

Derivative financial liabilities

24.0 

8.0 

17.0 

17

Liabilities associated with assets classified as held for sale

6.7 

79.1 

 

 

1,153.4 

592.9 

838.8 

 

Non-current liabilities

 

 


 

Deferred tax liabilities

8.4 

3.9 

7.4 

 

Trade and other payables

14.2 

1.3 

12.9 

 

Provisions

6.2 

9.0 

7.3 

10

Borrowings

268.3 

639.4 

313.5 

 

Derivative financial liabilities

11.9 

12.4 

6.7 

18

Retirement benefit obligation

44.1 

42.9 

29.3 

 

 

353.1 

708.9 

377.1 

 

Total liabilities

1,506.5 

1,301.8 

1,215.9 

 

 

 

 


 

Equity attributable to owners of the parent entity

 

 


12

Share capital

44.3 

44.3 

44.3 

 

Share premium

534.7 

534.2 

534.7 

13

Other reserves

(500.7)

(649.8)

(605.3)

 

Retained earnings

1,020.3 

883.8 

927.6 

 

Put options over non-controlling interests

(8.1)

(17.5)

(17.5)

 

Total equity attributable to owners of the parent entity

1,090.5 

795.0 

883.8 

 

Non-controlling interests

29.9 

27.2 

30.3 

 

Total equity

1,120.4 

822.2 

914.1 

 

 

 

 


 

Total equity and liabilities

2,626.9 

2,124.0 

2,130.0                  

 

 

 

Interim consolidated statement of changes in equity

for the six months ended 30 June 2016

 

Notes

 

Share

capital

£m

Share

premium

£m

Other

reserves

£m

Retained

earnings

£m

Put options over non-controlling interests

£m

Total equity attributable to owners of parent entity

£m

Non-controlling

interests

£m

Total

equity

£m

 

 

 

 

 

 

 

 

 

 

 

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 

8

Equity 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 

13

Shares awarded by ESOP

8.8 

(8.8)

13

Own shares purchased 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 2015

44.3 

533.5 

(640.1)

900.0 

(17.5)

820.2 

26.6 

846.8 

 

Profit for the period

43.2 

43.2 

4.4 

47.6 

 

Other comprehensive (loss)/income

(8.5)

13.8 

5.3 

(1.8)

3.5 

 

Total comprehensive (loss)/income for the period

(8.5)

57.0 

48.5 

2.6 

51.1 

8

Equity dividends

(70.8)

(70.8)

(70.8)

 

Non-controlling interest dividends

(4.7)

(4.7)

 

Non-controlling interest recognised on business combinations

3.0 

3.0 

 

Acquisition of non-controlling interests

0.3 

0.3 

(0.3)

 

Issued in respect of share option schemes and other entitlements

0.7 

0.7 

0.7 

 

Share-based payments

2.3 

2.3 

2.3 

13

Shares awarded by ESOP

14.6 

(14.6)

13

Own shares purchased by the Company

(15.8)

9.6 

(6.2)

(6.2)

 

At 30 June 2015 (unaudited)

44.3 

534.2 

(649.8)

883.8 

(17.5)

795.0 

27.2 

822.2 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2015

44.3 

533.5 

(640.1)

900.0 

(17.5)

820.2 

26.6 

846.8 

 

Profit for the year

96.6 

96.6 

11.1

107.7 

 

Other comprehensive income/(loss)

41.1 

26.7 

67.8 

(0.4)

67.4 

 

Total comprehensive income for the year

41.1 

123.3 

164.4 

10.7

175.1 

8

Equity dividends

(94.2)

(94.2)

(94.2)

 

Non-controlling interest dividends

(9.6)

(9.6)

 

Non-controlling interest arising on business combinations

2.9 

2.9 

 

Acquisition of non-controlling interests

0.3 

0.3 

(0.3)

 

Issued in respect of share option schemes and other entitlements

1.2 

1.2 

1.2 

 

Share-based payments

4.0 

4.0 

4.0 

13

Shares awarded by ESOP

17.1 

(17.1)

- 

13

Own shares purchased by the Company

(23.4)

11.3 

(12.1)

(12.1)

 

At 31 December 2015

44.3 

534.7 

(605.3)

927.6 

(17.5)

883.8 

30.3 

914.1 

 

 

 

Interim consolidated statement of cash flows

for the six months ended 30 June 2016

 

Notes

 

Six months

 ended

30 June

2016

Unaudited

£m

Six months

 ended

30 June

2015

Unaudited

£m

Year

 ended

31 December

2015

Audited

£m

 

Cash flows from operating activities

 

 

 

 

Profit for the period from continuing operations

39.9 

25.8 

92.3 

 

Profit for the period from discontinued operations

403.4 

21.8 

15.4 

 

Profit for the period

443.3 

47.6 

107.7 

 

Add back:

 

 


 

Exceptional items (excluding fair value adjustments below)

2.8 

7.0 

13.9 

17

Exceptional items from discontinued operations

(377.1)

29.3 

 

Fair value adjustments of contingent consideration

0.3 

0.2 

 

Tax

13.7 

10.8 

30.0 

 

Amortisation of intangible assets

19.4 

18.9 

38.9 

 

Amortisation of website development costs

4.4 

5.7 

14.7 

 

Depreciation

4.0 

5.1 

10.0 

 

Share of results from joint ventures and associates (after tax)

(1.6)

(0.6)

(1.5)

6

Financing income

(1.0)

(1.8)

(4.0)

6

Financing expense

20.0 

15.9 

29.1 

 

Other non-cash items

2.6 

3.7 

5.4 

 

 

130.5 

112.6 

273.7 

 

Payments against provisions

(8.6)

(4.2)

(7.8)

 

Pension deficit contributions

(11.5)

(2.1)

(3.1)

 

(Increase) in trade and other receivables

(6.2)

(11.6)

20.3 

 

Increase in trade and other payables

6.5 

67.9 

(11.2)

 

Cash generated from operations

110.7 

162.6 

271.9 

 

Interest and finance income received

0.9 

0.9 

5.8 

 

Interest and finance costs paid

(9.7)

(11.3)

(27.1)

 

Tax paid

(12.7)

(8.1)

(31.0)

 

Dividends received from joint ventures and associates

3.4 

5.5 

 

Net cash flows from operating activities

89.2 

147.5 

225.1 

 

Net cash flows from operating activities - continuing

68.3 

128.8 

194.2 

 

Net cash flows from operating activities - discontinued

20.9 

18.7 

30.9 

 

 

 

 


 

Cash flows from investing activities

 

 


14

Acquisition of interests in subsidiaries, net of cash acquired

(56.4)

(33.9)

(34.7)

16

Proceeds from sale of businesses, net of cash disposed

530.1 

1.2 

0.9 

16

Proceeds from sale of investments

2.1 

 

Proceeds from repayment of vendor loan note

4.6 

21.8 

 

Purchase of property, plant and equipment

(4.3)

(8.4)

(13.9)

 

Expenditure on intangible assets

(3.3)

(10.6)

(14.4)

 

Advances to joint ventures and associates

0.2 

- 

 

Net cash flows from investing activities

468.2 

(46.9)

(40.3)

 

Net cash flows from investing activities - continuing

472.1 

(43.5)

(35.6)

 

Net cash flows from investing activities - discontinued

(3.9)

(3.4)

(4.7)

 

 

 

 


 

Cash flows from financing activities

 

 


 

Proceeds from the issuance of ordinary share capital

0.7 

1.2 

15

Acquisition of non-controlling interests

(5.0)

- 

8

Dividends paid to shareholders

(71.8)

(70.8)

(94.2)

 

Dividends paid to non-controlling interests

(6.3)

(4.7)

(9.6)

 

Net movement in ESOP shares

(7.1)

(6.2)

(12.1)

10

(Decrease)/increase in borrowings

(76.8)

23.8

(62.6)

 

Net cash flows from financing activities

(167.0)

(57.2)

(177.3)

 

Net cash flows from financing activities - continuing

(140.1)

(42.0)

(150.9) 

 

Net cash flows from financing activities - discontinued

(26.9)

(15.2)

(26.4) 

 

 

 

 


 

Net increase in cash and cash equivalents

390.4 

43.4 

7.5 

 

 

 

 


 

Net foreign exchange difference

11.4 

(3.4)

2.3 

10

Cash and cash equivalents at beginning of period (including held for sale)

82.9 

73.1 

73.1 

 

Cash and cash equivalents classified as held for sale

(1.1)

(8.3)

10

Cash and cash equivalents at end of period (including bank overdraft)

483.6 

113.1 

74.6 

 

 

 

Notes to the interim consolidated financial statements

for the six months ended 30 June 2016

 

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 2016 were authorised for issue by the Board of directors on 28 July 2016.  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 2016 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 2015, were approved by the directors on 24 February 2016 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 2015, which were prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB). 

 

Discontinued operations

The sale of the PR Newswire businesses (PR Newswire) to Cision, a business controlled by GTCR Canyon Holdings (Cayman), L.P., completed on 16 June 2016 for $841m comprising $810m in cash and $31m of preferred equity (on a fair value basis).  The Group has classified PR Newswire as discontinued for all periods in these interim consolidated financial statements.  As the disposal was announced on 15 December 2015 it was classified as held for sale at 31 December 2015.  The PR Newswire China business is subject to further regulatory clearance and remains held for sale at 30 June 2016.  These businesses constituted the entire PR Newswire operating segment.

 

Comparative information

The comparative information in the income statement and associated notes for the six months ended 30 June 2015 has been restated for the impact of the PR Newswire discontinued operations.  In line with the requirements of IFRS 5 'Non-current assets held for sale and discontinued operations', the statement of financial position has not been restated.

 

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 2016. 

 

 

3.  Accounting policies and estimates

 

The accounting policies, significant judgments 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 2016 are consistent with those used in the preparation of the Group's Annual Report and Accounts for the year ended 31 December 2015, as listed below.

 

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

·      Put options over non-controlling interests

 

 

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 four 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;

·      Marketing Services - Print which publishes magazines and trade press to specialist markets; and

·      PR Newswire which provides communications products and services to professionals working in marketing, public relations, corporate communications or investor relations roles - distributing messages, identifying target audiences and monitoring the impact.

 

As detailed in Section 2, the PR Newswire businesses which comprise the PR Newswire operating segment have been reported as discontinued operations for the six months ended 30 June 2016.  This represents the entire PR Newswire operating segment.

 

Marketing Services - Online and Marketing Services - Print have been aggregated to form one reportable segment 'Other Marketing Services'.  The two operating segments have similar economic characteristics and meet the aggregation criteria defined in IFRS 8 'Operating segments'.

 

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. 

 

Finance 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 2016



Other







marketing

Corporate

Continuing

Discontinued



Events

services

costs

total

operations

Total


£m

£m

£m

£m

£m

£m

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 (including amortisation of website development costs)

(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 

Financing income




1.0 

1.0 

Financing expense




(15.5)

(15.5)

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 

 

Total corporate costs for the period ended 30 June 2016 are net of a share of pre tax results from joint ventures and associates of £1.0m (period ended 30 June 2015: £0.5m, year ended 31 December 2015: £1.3m). These income items are not attributable to any of the Group's reported segments.  

 

Six months ended 30 June 2015 (restated)



Other







Marketing

Corporate

Continuing

Discontinued



Events

Services

costs

total

operations

Total


£m

£m

£m

£m

£m

£m

Revenue







Total segment revenue

285.5 

66.7 

352.2 

104.6 

456.8 

Intersegment revenue

(0.4)

(0.4)

(0.4)

(0.8)

External revenue

285.1 

66.7 

351.8 

104.2 

456.0 


 

 

 


 

 

Result

 

 

 


 

 

Depreciation (including amortisation of website development costs)

(5.9)

(1.3)

(0.7)

(7.9)

(2.9)

(10.8)

Share of pre-tax results from joint ventures and associates

0.1 

0.5 

0.6 

0.1 

0.7 

Segment adjusted operating profit

81.1 

5.1 

(11.2)

75.0 

23.8 

98.8 

Amortisation of intangible assets arising on acquisitions



(18.4)

(0.5)

(18.9)

Exceptional operating items



(7.3)

(7.3)

Share of tax on profit in joint ventures and associates




(0.1)

(0.1)

Group operating profit



49.2 

23.3 

72.5 

Financing income




1.8 

1.8 

Financing expense




(15.5)

(15.5)

Exceptional items relating to net financing expense



(0.4)

(0.4)

Profit before tax



35.1 

23.3 

58.4 

Tax




(9.3)

(1.5)

(10.8)

Profit for the period




25.8 

21.8 

47.6 

 

Year ended 31 December 2015



Other







Marketing

Corporate

Continuing

Discontinued



Events

Services

costs

total

operations

Total


£m

£m

£m

£m

£m

£m

Revenue







Total segment revenue

635.0 

139.3 

- 

774.3 

205.4 

979.7 

Intersegment revenue

(4.4)

- 

- 

(4.4)

(0.7)

(5.1)

External revenue

630.6 

139.3 

- 

769.9 

204.7 

974.6 








Result







Depreciation (including amortisation of website development costs)

(13.9)

(3.0)

(1.1)

(18.0)

(6.7)

(24.7)

Share of pre-tax results from joint ventures and associates

0.3 

- 

1.3 

1.6 

0.3 

1.9 

Segment adjusted operating profit

202.5 

17.7 

(23.1)

197.1 

48.4 

245.5 

Amortisation of intangible assets arising on acquisitions



(37.9)

(1.0)

(38.9)

Exceptional operating items



(14.1)

(29.3)

(43.4)

Share of tax on profit in joint ventures and associates




(0.4)

- 

(0.4)

Group operating profit



144.7 

18.1 

162.8 

Financing income




2.9 

- 

2.9 

Financing expense




(29.1)

- 

(29.1)

Exceptional items relating to net financing expense



1.1 

- 

1.1 

Profit before tax



119.6 

18.1 

137.7 

Tax




(27.3)

(2.7)

(30.0)

Profit for the period




92.3 

15.4 

107.7 

 

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.

Continuing revenue

Six months
ended
30 June
2016
£m

Restated

six months
ended
30 June
2015
£m

Year
ended
31 December
2015
£m

United Kingdom

37.6 

42.0 

72.5 

Foreign countries

 

 


United States and Canada

212.2 

190.9 

345.6 

Europe

10.0 

11.7 

61.7 

China

73.4 

66.5 

195.7 

Other emerging markets*

35.1 

32.3 

79.7 

Rest of the world

11.7 

8.4 

14.7 

 

342.4 

309.8 

697.4 

External revenue

380.0 

351.8 

769.9 

* Emerging markets comprise the non-G10 countries - most notably for the Group: Mainland China, Hong Kong, Brazil, India, Turkey, Malaysia, Indonesia, Mexico, Singapore and Thailand.

 

There are no revenues derived from a single external customer which are significant.

 

Non-current assets

30 June
2016
£m

30 June
2015
£m

31 December
2015
£m

United Kingdom

354.3 

317.5 

357.4 

Foreign countries

 

 


United States and Canada

1,362.8 

1,197.4 

1,100.3 

Europe

12.1 

18.1 

10.9 

China

28.9 

21.1 

36.4 

Other emerging markets*

70.2 

123.0 

116.2 

Rest of the world

3.8 

6.2 

6.0 

 

1,477.8 

1,365.8 

1,269.8 

Total non-current assets

1,832.1 

1,683.3 

1,627.2 

 

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.

 

(Charged)/credited to continuing operating profit

Six months
ended
30 June
2016
£m

 

Six months
ended
30 June
2015
£m

Year
ended
31 December
2015
£m

Advanstar integration costs

(2.2)

(1.8)

(8.7)

Acquisition costs on Advanstar

- 

(0.5)

(0.6)

Business Journals Inc integration costs

(1.4)

- 

Acquisition costs on other business combinations

(0.9)

(0.5)

(0.6)

Changes in estimates of contingent consideration

- 

(0.3)

(0.2)

Exceptional items relating to acquisitions

(4.5)

(3.1)

(10.1)

 

 

 


Gain on joint venture previously impaired

- 

2.1 

Exceptional items in share of results from joint ventures and associates

- 

2.1 

 

 

 


Gain on disposal of investment

2.2 

Disposal of non-core businesses

(0.5)

Exceptional items relating to disposal of investments

1.7 

 

 

 


Impairment of goodwill and intangible assets

- 

(1.9)

Impairment of joint ventures and associates

- 

(4.2)

(4.2)

Impairment charge

- 

(4.2)

(6.1)

 

 

 


Total charged to continuing operating profit

(2.8)

(7.3)

(14.1)

 

 

Advanstar integration costs

The integration costs have been incurred as planned within the $33m total integration plan announced on completion of the acquisition.  Costs during the period relate primarily to the finance system integration to the global Oracle system.  Costs will continue into early 2017 as the plan is completed.

 

Business Journals Inc (BJI) integration costs

The costs associated with the integration of BJI are estimated to be $10m in total to be incurred mostly during 2016.  The costs are predominantly in respect of venue contracts and system integration.

 

Acquisition costs on other business combinations

Acquisition costs of £0.9m have been expensed as exceptional items.  These relate mainly to due diligence and professional fees incurred for the acquisitions of BJI and Content Marketing Institute (Note 14).

 

Exceptionals relating to disposal of investments

The Group received £2.1m from the sale of Janus SAS, a French business which the Group exited five years ago, retaining a 9.5% investment.  The gain on disposal of £2.2m has been reported as exceptional income as the investment value and associate vendor loan note were impaired in 2013. 

 

Costs of £0.5m have been incurred in the period in relation to the announced disposal of the Group's electronics media portfolio.  Further details are provided in Note 17.

 

 

6.  Net financing expense

 

 

Six months

 ended

30 June

2016

£m

Six months

 ended

30 June

2015

£m

Year

 ended

31 December

2015

£m

 

 

 

 

 

 

 

 

Financing expense

 

 

 

Borrowings and loans

(13.8)

(13.7)

(26.9)

Other

(0.2)

- 

Total interest expense for financial liabilities not classified at fair value through profit or loss

(13.8)

(13.9)

(26.9)

Pension schemes net finance expense (Note 18)

(0.4)

(0.9)

(1.7)

Net loss on financial instruments at fair value through profit or loss

(0.2)

Foreign exchange loss on forward contracts

(0.8)

(0.1)

Other fair value movements

(0.3)

(0.2)

(0.4)

Recycling of capitalised arrangement fees

(0.5)

Financing expense before exceptional items

(15.5)

(15.5)

(29.1)

 

 

 


Exceptional financing expense

 


Fair value movement on put options over non-controlling interests

(4.5)

(0.4)

 

 


Total financing expense

(20.0) 

(15.9) 

(29.1)

 

 

 


Financing income

 

 


Cash and cash equivalents

0.6 

0.8 

1.0 

Vendor Loan Note

0.3 

0.7 

1.6 

Total interest income

0.9 

1.5 

2.6 

Net gain on financial instruments at fair value through profit or loss

0.1 

0.3 

- 

Ineffective portion on fair value hedges

0.3 

Financing income before exceptional items

1.0 

1.8 

2.9 

 

 


Exceptional financing income

 


Fair value movement on put options over non-controlling interests

1.1 

 

 

 


Total financing income

1.0 

1.8 

4.0 

 

 

 


Net financing expense

(19.0)

(14.1)

(25.1)

 

 

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 reflects the share consolidation on 27 June 2016 of eight for every nine shares owned, detailed in Note 12: period ended 30 June 2016: 437.2 million (period ended 30 June 2015: 442.4 million; year ended 31 December 2015: 442.5 million).  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).

 

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 2016 would be to increase weighted average shares by 4.1 million shares (six months ended 30 June 2015: 3.4 million shares; year ended 31 December 2015: 3.0 million shares).

 

The weighted average number of shares excludes ordinary shares held by the Employee Share Ownership Plan (the ESOP).

 

 

Six months ended

 

Six months ended

 

Year ended

 

 

30 June 2016

30 June 2015

31 December 2015

Continuing operations

 

Earnings

 

Earnings

 

Earnings

 

Earnings

per share

Earnings

per share

Earnings

per share

 

£m

pence

£m

pence

£m

pence

Adjusted operating profit

93.4 

 

75.0 

 

197.1 

 

Net interest expense

(12.9)

 

(12.4)

 

(24.3)

 

Pension schemes finance expense

(0.4)

 

(0.9)

 

(1.7)

 

Adjusted profit before tax

80.1 

 

61.7 

 

171.1 

 

Tax

(12.8)

 

(9.4)

 

(25.2)

 

Non-controlling interests

(4.6)

 

(4.4)

 

(11.1)

 

Adjusted earnings per share

62.7 

14.3 

47.9 

10.9 

134.8 

30.5 

Adjustments

 

 

 

 



Amortisation of intangible assets arising on acquisitions

(19.4)

(4.4)

(18.4)

(4.2)

(37.9)

(8.6)

Net deferred tax movement on intangible assets

2.4 

0.5 

0.4 

0.1 

1.5 

0.3 

Exceptional items

(2.8)

(0.6)

(7.3)

(1.6)

(14.1)

(3.2)

Exceptional deferred tax (charge)

(1.9)

(0.4)

(0.4)

(0.1)

(4.0)

(0.9)

Net financing expense - other

(5.7)

(1.3)

(0.8)

(0.2)

0.9 

0.2 

Basic earnings per share

35.3 

8.1 

21.4 

4.9 

81.2 

18.3 

Dilution

 

 

 

 



Options

(0.1)

- 

(0.1)

Diluted earnings per share

35.3 

8.0 

21.4 

4.9 

81.2 

18.2 

 

 

 

 

 



Adjusted earnings per share (as above)

62.7 

14.3 

47.9 

10.9 

134.8 

30.5 

Options

(0.1)

(0.1)

- 

(0.2)

Diluted adjusted earnings per share

62.7 

14.2 

47.9 

10.8 

134.8 

30.3 

 

 

Six months ended

30 June 2016

Six months ended

30 June 2015

Year ended

31 December 2015

Total Group

 

Earnings

 

Earnings

 

Earnings

 

Earnings

per share

Earnings

per share

Earnings

per share

 

£m

pence

£m

pence

£m

pence

Adjusted operating profit

121.5 

 

98.8 

 

245.5 

 

Net interest expense

(12.9)

 

(12.4)

 

(24.3)

 

Pension schemes finance expense

(0.4)

 

(0.9)

 

(1.7)

 

Adjusted profit before tax

108.2 

 

85.5 

 

219.5 

 

Tax

(14.6)

 

(10.9)

 

(27.9)

 

Non-controlling interests

(4.6)

 

(4.4)

 

(11.1)

 

Adjusted earnings per share

89.0 

20.4 

70.2 

15.9 

180.5 

40.8 

Adjustments

 

 

 

 



Amortisation of intangible assets arising on acquisitions

(19.4)

(4.4)

(18.9)

(4.3)

(38.9)

(8.8)

Net deferred tax movement on intangible assets

2.4 

0.5 

0.4 

0.1 

1.5 

0.3 

Exceptional items

374.3 

85.6 

(7.3)

(1.6)

(43.4)

(9.8)

Exceptional deferred tax (charge)

(1.9)

(0.4)

(0.4)

(0.1)

(4.0)

(0.9)

Net financing expense - other

(5.7)

(1.3)

(0.8)

(0.2)

0.9 

0.2 

Basic earnings per share

438.7 

100.4 

43.2 

9.8 

96.6 

21.8 

Dilution

 

 

 

 



Options

(1.0)

(0.1)

- 

(0.1)

Diluted earnings per share

438.7 

99.4 

43.2 

9.7 

96.6 

21.7 

 

 

 

 

 



Adjusted earnings per share (as above)

89.0 

20.4 

70.2 

15.9 

180.5 

40.8 

Options

(0.2)

(0.1)

- 

(0.3)

Diluted adjusted earnings per share

89.0 

20.2 

70.2 

15.8 

180.5 

40.5 

 

 

8.  Dividends

 

 

Six months

 ended

30 June

2016

£m

Six months

 ended

30 June

2015

£m

Year

 ended

31 December

2015

£m

Declared and paid during the period

 

 

 

Equity dividends on ordinary shares

 

 

 

Final dividend for 2014 of 16.0p

70.8 

70.8 

Interim dividend for 2015 of 5.3p

23.4 

Final dividend for 2015 of 16.3p

71.8 

Declared, not paid during the period

 

 

 

Equity dividends on ordinary shares

 

 

 

Special dividend of 55.3p

243.7 

 

315.5 

70.8 

94.2 

 

 

 

 

Proposed (not recognised as a liability at the end of the period)

 

 

 

Equity dividends on ordinary shares

 

 

 

Interim dividend for 2015 of 5.3p

23.4 

Final dividend for 2015 of 16.3p

71.8 

Interim dividend for 2016 of 5.4p

21.2 

 

 

9.  Property, plant and equipment, intangible assets and goodwill

 

Movements during the period in property, plant and equipment and intangible assets were:

 

 

Six months

 ended

30 June

2016

£m

Six months

 ended

30 June

2015

£m

Year

 ended

31 December

2015

£m

Net book value at 1 January

439.2 

439.2 

Acquired with subsidiaries

24.7 

2.2 

15.0 

Additions

7.6 

19.1 

21.4 

Intangible asset construction in progress

6.9 

Disposals

(0.4)

(3.0)

Disposal of subsidiaries

(0.9)

(1.0)

Classified as held for sale (Note 17)

(0.3)

(17.5)

Depreciation and amortisation

(27.8)

(29.7)

(63.6)

Currency translation

41.6 

(1.7)

14.3 

Net book value at 30 June/31 December

457.5 

427.8 

411.7 

 

Capital expenditure contracted for but not provided in the financial statements amounts to £nil (30 June 2015: £1.5m; 31 December 2015: £1.1m).

 

There has been no impairment losses on goodwill during the period, there has been a currency translation movement of £109.7m.  Goodwill arising on acquisitions is disclosed in Note 14 and goodwill on disposal of PR Newswire is disclosed in Note 16.

 

 

10.  Movement in net debt

 

 

1 January

Non-cash

 

Currency

30 June

 

2016

items

Cash flow

translation

2016

 

£m

£m

£m

£m

£m

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)

 

The undrawn portion available under committed lending facilities at 30 June 2016 is £400m (30 June 2015: £240.5m; 31 December 2015: £326.0m).  On 12 April 2016 the term of the £400m syndicated revolving credit facility was extended by one year to 22 April 2021.

 

 

1 January

Non-cash

 

Currency

30 June

 

2015

items

Cash flow

translation

2015

 

£m

£m

£m

£m

£m

Cash and cash equivalents (including held for sale)

74.4 

43.3 

(3.4)

114.3 

Bank overdrafts

(1.3)

0.1 

(1.2)

Net cash

73.1 

43.4 

(3.4)

113.1 

 


 

 

 

 

Bank loans due in more than one year

(135.5)

(0.7)

(23.8)

0.4 

(159.6)

Bonds due in more than one year

(483.6)

1.9 

1.9 

(479.8)

Borrowings

(619.1)

1.2 

(23.8)

2.3 

(639.4)

 


 

 

 

 

Derivative assets associated with borrowings

14.0 

(2.2)

11.8 

Derivative liabilities associated with borrowings

(6.0)

0.9 

(5.1)

Net debt

(538.0)

(1.0)

19.6 

(0.2)

(519.6)

 


1 January

Non-cash


Currency

31 December


2015

items

Cash flow

translation

2015


£m

£m

£m

£m

£m

Cash and cash equivalents (including held for sale)

74.4 

8.1 

2.3 

84.8 

Bank overdrafts

(1.3)

(0.6)

(1.9)

Net cash

73.1 

7.5 

2.3 

82.9 







Bonds due in less than one year

(254.0)

(254.0)

Bank loans due in more than one year

(135.5)

62.6 

(1.1)

(74.0)

Bonds due in more than one year

(483.6)

257.3 

(13.2)

(239.5)

Borrowings

(619.1)

3.3 

62.6 

(14.3)

(567.5)







Derivative assets associated with borrowings

14.0 

(4.4)

0.4 

10.0 

Derivative liabilities associated with borrowings

(6.0)

0.1 

(4.4)

(10.3)

Net debt

(538.0)

(1.0)

70.1 

(16.0)

(484.9)

 

 

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 £250m 6.5% sterling bonds due 2016 and the $350m 5.75% dollar bonds due 2020 has been measured at the present value of future cash flows discounted using market rates of interest. 

 

The fair value of the preferred equity has been measured at the present value of future cash flows discounted as a risk adjusted rate using market inputs.

 

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 expense.  The changes in estimates of contingent and deferred consideration on acquisitions are reported within exceptional operating items.  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 £3.4m.  The fair value of the contingent and deferred consideration on acquisitions is not significantly sensitive to a reasonable change in the forecast performance. 

 

 

Carrying

Fair

 

amount

value

 

£m

£m

Financial assets at fair value through profit or loss

 

 

Interest rate swaps

10.9 

10.9 

Available for sale financial assets

 

 

Preferred equity

23.4 

23.4 

 

34.3 

34.3 

 

 

 

Financial liabilities at amortised cost

 

 

£250m 6.5% sterling bonds due 2016

(99.9)

(101.0)

$350m 5.75% dollar bonds due 2020

(186.2)

(198.5)

Financial liabilities at fair value through profit or loss

 

 

£250m 6.5% sterling bonds due 2016

(152.2)

(153.8)

$350m 5.75% dollar bonds due 2020

(82.1)

(87.5)

Interest rate swaps

(0.6)

(0.6)

Forward exchange contracts

(20.4)

(20.4)

Put options over non-controlling interests

(14.9)

(14.9)

Contingent and deferred consideration on acquisitions

(6.4)

(6.4)

 

(562.7)

(583.1)

 

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.

 

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 2016, the Group held the following classes of financial instruments measured at fair value. 

 

 

30 June 2016

Level 1

Level 2

Level 3

 

£m

£m

£m

£m

Financial assets at fair value through profit or loss

 

 

 

 

Interest rate swaps - hedged

7.8 

7.8 

Interest rate swaps - not hedged

3.1 

3.1 

Available for sale financial assets

 

 

 

 

Preferred equity

23.4 

23.4 

 

 

 

 

 

Financial liabilities at amortised cost

 

 

 

 

£250m 6.5% sterling bonds due 2016

(99.3)

(99.3)

$350m 5.75% dollar bonds due 2020

(198.5)

(198.5)

Financial liabilities at fair value through profit or loss

 

 

 

£250m 6.5% sterling bonds due 2016

(155.5)

(155.5)

$350m 5.75% dollar bonds due 2020

(87.5)

(87.5)

Interest rate swaps - hedged

(0.6)

(0.6)

Forward exchange contracts - hedged

(19.6)

(19.6)

Forward exchange contracts - not hedged

(0.8)

(0.8)

Put options over non-controlling interests

(14.9)

(14.9)

Contingent and deferred consideration acquisitions

(6.4)

(6.4)

 

During the six months ended 30 June 2016 there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 measurements.  There were no movements in Level 3 measurements reported in other comprehensive income. 

 

Reconciliation of recurring level 3 fair value measurements:

 

 

Put options

Contingent

 

 

over non-

and deferred

 

 

controlling

consideration

 

Preferred equity

interests

on acquisitions

 

30 June 2016

30 June 2016

30 June 2016

 

£m

£m

£m

At 1 January

(13.4)

(0.8)

Acquisitions

(5.7)

Additions

21.9 

Consideration paid

5.0 

0.8 

Changes in estimates (income statement)

(4.5)

Currency translation

1.5 

(2.0)

(0.7)

At 30 June

23.4 

(14.9)

(6.4)

 

 

12.  Share capital

 


30 June

2016

30 June

2015

 31 December

2015

Authorised

£m

£m

£m

1,081,888,658 ordinary shares of 11.25p each (30 June 2015 and 31 December 2015: 1,217,124,740 ordinary shares of 10p each)

121.7 

121.7 

121.7 

 



Ordinary

Ordinary



Shares

shares

Issued and fully paid


Number

£m

At 1 January 2015


442,652,520 

44.3 

Issued in respect of share option schemes and other entitlements


189,566 

At 30 June 2015


442,842,086 

44.3 

Issued in respect of share option schemes and other entitlements


135,452 

At 31 December 2015


442,977,538 

44.3 

Issued in respect of share option schemes and other entitlements


5 

- 

Share consolidation


(49,219,727)

- 

At 30 June 2016


393,757,816 

44.3 

 

On 27 June 2016, in conjunction with the special dividend of 55.3p per share, a share consolidation was carried out to convert nine existing ordinary shares with a nominal value of 10p each to eight new ordinary shares with a nominal value of 11.25p each. The share consolidation converted the 442,997,543 existing issued and fully paid ordinary shares into 393,757,816 new issued and fully paid ordinary shares.

 

Company share schemes

 

As at 30 June 2016, the ESOP Trust holds 1.8m ordinary shares (30 June 2015: 0.5m ordinary shares; 31 December 2015: 1.5m ordinary shares).

 

 

13.  Other reserves

 

 

Merger reserve

Foreign currency translation reserve

ESOP reserve

Other reserve

Total other reserves

 

£m

£m

£m

£m

£m

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 2015

(732.2)

(31.7)

(1.5)

125.3 

(640.1)

Total comprehensive income for the period**

(8.5)

(8.5)

Shares awarded by ESOP

14.6 

14.6 

Own shares purchased by the Company

(15.8)

(15.8)

At 30 June 2015

(732.2)

(40.2)

(2.7)

125.3 

(649.8)

 

 

 

 

 

 

At 1 January 2015

(732.2)

(31.7)

(1.5)

125.3 

(640.1)

Total comprehensive income for the period***

41.1 

41.1 

Shares awarded by ESOP

17.1 

17.1 

Own shares purchased by the Company

(23.4)

(23.4)

At 31 December 2015

(732.2)

9.4 

(7.8)

125.3 

(605.3)

 

* 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 £113.0m (excluding £4.6m relating to non-controlling interests), on net investment hedges of £(35.8)m, on joint ventures and associates of £0.4m and on the reclassification adjustment for foreign operations in the period of £32.6m.

 

** The amount included in the foreign currency translation reserve for the period ended 30 June 2015 represents the currency translation difference on foreign operations on Group subsidiaries of £(11.8)m (excluding £(1.8)m relating to non-controlling interests), on net investment hedges of £5.6m, on joint ventures and associates of £(0.3)m and on the reclassification adjustment for foreign operations in the period of £(2.0)m.

 

*** The amount included in the foreign currency translation reserve for 2015 represents the currency translation difference on foreign operations of Group subsidiaries of £60.3m (excluding £(0.4)m relating to non-controlling interests), on net investment hedges of £(17.5)m, on joint ventures and associates of £0.3m and a reclassification adjustment for foreign operations in period of £(2.0)m.

 

 

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 on 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 has 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 2016, 2,400,000 ordinary shares were purchased by the ESOP (six months ended 30 June 2015: 2,864,749; year ended 31 December 2015: 4,364,749).

 

 

14.  Acquisitions

 

The Group has completed two acquisitions of Events businesses in the six months ended 30 June 2016.  These acquisitions continue the Group's strategy of expansion through acquisition of Events. 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 2015. 

 

On 21 April 2016, the Group completed the acquisition of 100% of Business Journals Inc. (BJI), a producer of fashion trade shows in New York and Las Vegas, for cash consideration of £48.8m. BJI serves the men's apparel and women's apparel and accessories markets under the following leading tradeshow brands: AccessoriesTheShow, EDIT, FAME, Moda, MRket and Stitch. These shows run multiple times a year and in some cases are located in the same venues as UBM shows. BJI also operates several websites and publications serving the fashion sector.

 

On 31 May 2016, the Group acquired 100% of Content Marketing Institute (CMI) for initial consideration of £10.5m, deferred consideration of £0.9m and contingent consideration of up to £11.6m payable over the next two years. CMI produces Content Marketing World, the leading event in the content marketing sector. CMI also produces a number of supporting conferences and websites that serve the content marketing community.

 

The figures reported below for BJI and CMI have been disclosed on a provisional basis.

 

The fair value of the identifiable assets and liabilities acquired in respect of acquisitions in 2016 was:

 

 

 

Other

All

 

BJI

acquisitions

acquisitions

 

30 June 2016

30 June 2016

30 June 2016

 

£m

£m

£m

Intangible assets

18.6 

6.1 

24.7 

Cash and cash equivalents

3.7 

3.7 

Trade and other receivables

3.0 

0.8 

3.8 

Total assets

25.3 

6.9 

32.2 

Trade and other payables

(4.2)

(1.4)

(5.6)

Total liabilities

(4.2)

(1.4)

(5.6)

Identifiable net assets acquired

21.1 

5.5 

26.6 

Goodwill arising on acquisition

27.7 

10.7 

38.4 

 

48.8 

16.2 

65.0 

 

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 £38.4m 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.

 

The goodwill of £27.7m arising from the acquisition of BJI relates to the following factors:

·      BJI is a well-established player in the US market for fashion trade shows, allowing UBM to benefit from expected growth in this sector

·      The acquisition is highly complementary to UBM's existing fashion tradeshow portfolio, providing UBM with scope to generate material synergies in areas such as event operations, property and cross-marketing opportunities

·      Revenue synergies from New York venue optimisation where UBM can combine BJI-controlled space which is under-utilised with UBM's existing space during key market periods to optimise the marketplace for customers, drive operational efficiency, and maximise revenue

·      Cost synergies from combining show management structures, scale efficiencies an overhead cost reductions.

 

Acquisition performance

 

From the dates of acquisition to 30 June 2016, the acquisitions completed in 2016 contributed £0.2m to operating profit and £3.3m to revenue of the Group.  If the acquisitions had taken place at the beginning of 2016, the acquisitions would have contributed £2.6m to operating profit and £16.5m to revenue of the Group.

 

Cash flow effect of acquisitions

 

The aggregate cash flow effect of the acquisitions was as follows:

 

 

BJI

30 June 2016

Other

acquisitions

30 June 2016

All acquisitions

30 June 2016

 

 

£m

£m

£m

Net cash acquired with subsidiaries

 

(3.7)

(3.7)

Cash paid to acquire subsidiaries

 

48.8 

10.5 

59.3 

Net cash outflow on 2016 acquisitions

 

45.1 

10.5 

55.6 

Payment of contingent consideration on prior year acquisitions

 

 

 

0.8 

Total cash outflow on acquisitions

 

 

 

56.4 

 

None of the deferred consideration payments are individually material.

 

Contingent and deferred consideration

 

The potential undiscounted amount for all future payments that the Group could be required to make under the contingent consideration arrangements for 2016 acquisitions is £12.7m (maximum remaining for 2015 is £0.4m).  The contingent consideration for each acquisition made during the period is based on the terms set out in the relevant purchase agreements.  The movement in the contingent and deferred consideration payable during the period is disclosed in Note 11.

 

 

15.  Equity Transactions

 

On 29 February 2016, the Group acquired the remaining 25% minority shareholding of Sienna Interlink for total cash consideration of £2.3m. This equity purchase brings the Group's total shareholding in Sienna Interlink to 100%.

 

On 9 June 2016, the Group acquired the remaining 25% minority shareholding of Intermodal Organizacao de Eventos S.A. Ltda and UBM Brazil Feiras e Eventos Ltda for total cash consideration of £2.7m. This equity purchase brings the Group's total shareholding in Intermodal Organizacao de Eventos S.A. and UBM Brazil Feiras e Eventos Ltda to 100%.

 

 

 

 

30 June 2016

 

 

 

£m

Cash paid

 


5.0 

Put option liability

 


(5.0)

Carrying amount of non-controlling interest at acquisition date

 


3.3 

Recognised in equity

 


3.3 

 

 

16.  Disposals

 

As disclosed in Note 2, the Group disposed of its PR Newswire businesses on 16 June 2016 for cash consideration of $810m and preferred equity of $40m, measured at $31m on a fair value basis. 

 

The preferred equity constitutes 400,000 Class A limited partnership units in the purchaser parent with a par value of $40m and interest coupon of 8%.  The preferred equity is reported within 'Other fixed asset investments' and in accordance with IAS 39 is categorised as an available for sale financial asset measured at fair value.  Changes in the fair value at subsequent measurement periods are recognised in other comprehensive income.  The preferred equity is valued in accordance with Group's accounting policy on financial instruments as outlined in Note 11.  The interest income is calculated on a compound basis and will only be recognised in the income statement when the right to receive the payment is established: on recoupment following an exit event.

 

The following table sets out the aggregate effect of the disposal on the Group's assets and liabilities:

 

 

 

PR Newswire

30 June

2016

 

 

Goodwill

 

 

94.7 

Intangible assets

 

 

6.6 

Property, plant and equipment

 

 

12.9 

Deferred tax asset

 

 

1.6 

Investments in joint ventures and associates

 

 

2.1 

Trade and other receivables

 

 

44.9 

Cash and cash equivalents

 

 

1.6 

Total assets

 

 

164.4 

Trade and other payables

 

 

(48.2)

Total liabilities

 

 

(48.2)

Identifiable net assets

 

 

116.2 

Costs associated with disposal

 

 

38.9 

Loss on deal contingent forward

 

 

20.4 

Cumulative exchange loss reclassified to profit and loss following disposal

 

 

32.6 

Profit on disposal

 

 

385.3 

Consideration received

 

 

593.4 

Less preferred equity

 

 

(21.9)

Translation difference using deal contingent forward

 

 

(41.4)

Net cash inflow

 

 

530.1 

 

In addition to the above, the Group disposed of its 9.5% investment in Janus SAS for consideration of £2.1m on 22 April 2016.  A profit of £2.2m has been recognised within 'Exceptional operating items'.

 

 

17.  Discontinued operations and assets held for sale

 

As disclosed in Note 2, the Group has classified the disposed PR Newswire businesses as discontinued operations. Details of the disposed assets and liabilities and the calculation of profit on disposal are disclosed in Note 16. 

 

The results of the discontinued operations which have been included in the consolidated income statement were as follows:

 

 

PR Newswire

PR Newswire

PR Newswire

 

30 June

2016

30 June

2015

31 December 2015

 

£m

£m

£m

Revenue

103.0 

104.2 

204.7 

Other operating income

0.1 

0.1 

Operating expenses

(75.2)

(80.5)

(156.7)

Share of results from joint ventures and associates

0.2 

0.1 

0.3 

Adjusted operating profit from discontinued operations

28.1 

23.8 

48.4 

Amortisation of intangible assets arising on acquisitions

(0.5)

(1.0)

Exceptional items

385.3 

(29.3)

Operating profit from discontinued operations

413.4 

23.3 

18.1 

Tax

(1.8)

(1.5)

(2.7)

Profit for the year from discontinued operations

411.6 

21.8 

15.4 

 

 

 

 

Earnings per share for discontinued operations

 

 

 

Basic

92.3p

4.9p

3.5p

Diluted

91.4p

4.8p

3.5p

 

 

 

 

Net cash flows attributable to discontinued operations

 

 

 

Net cash from operating activities

20.9 

18.7 

30.9 

Net cash from investing activities

(3.9)

(3.4)

(4.7)

Net cash from financing activities

(26.9)

(15.2)

(26.4)

Net cash flows attributable to discontinued operations

(9.9)

(0.1)

(0.2)

 

The PR Newswire exceptional item is the profit on disposal of £385.3m which includes:

·      £38.9m of disposal costs for services incurred relating to the disposal.  The costs include broker fees, management transaction bonuses, legal advice and warranties and indemnities recognised in accordance with specific clauses in the sale agreement.

·      £20.4m foreign exchange loss on the fair value measurement of a deal contingent forward used to fix the US dollar proceeds into sterling is in addition to a £21.0m loss recognised in 2015. Consistent with the accounting treatment adopted for a similar instrument taken out for the Advanstar acquisition, hedge accounting has not been applied. 

 

The Delta exceptional item is a charge of £8.2m for the settlement of the Axio legal dispute after specific provisions, recoveries and legal costs.

 

The total net exceptional credit for discontinued operations is £377.1m.

 

Assets held for sale measured at the lower of their carrying amounts and fair value less costs to sell

 

The PRN China business remains subject to regulatory clearance and continues to be classified as held for sale at 30 June 2016.

 

On 3 June 2016, the Group announced the disposal of the electronics media portfolio for $23.5m (£17.7m).  The portfolio comprises the US and Asian versions of EE Times, EDN, ESM, Embedded, EBN, Tech Online and Datasheets.com.  The sale is subject to customary closing conditions and regulatory clearance in China, expected in Q3 2016.  The Electronics business does not represent a separate major business line as prescribed by IFRS 5 and as such has not been presented as a discontinued operation.  As the assets will be recovered through sale rather than ongoing use, they have been presented in the 30 June 2016 financial statements as held for sale.

 

 

PRN China

Electronics

Total

 

30 June

30 June

30 June

 

2016

2016

2016

 

£m

£m

£m

Goodwill

8.7 

8.7 

Property, plant and equipment

0.2 

0.1 

0.3 

Trade and other receivables

5.8 

2.4 

8.2 

Cash and cash equivalents

1.1 

1.1 

Assets classified as held for sale

7.1 

11.2 

18.3 

Trade and other payables

(5.3)

(1.4)

(6.7)

Liabilities associated with assets classified as held for sale

(5.3)

(1.4)

(6.7)

Net assets classified as held for sale

1.8 

9.8 

11.6 

 

 

18.  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 2016 for accounting purposes by independent qualified actuaries.

 

The amounts recognised in the income statement were as follows:

 

Six months

ended

30 June

2016

Six months

ended

30 June

2015

Year

ended

31 December

2015

 

£m

£m

£m

Current service cost

0.3 

0.2 

0.5 

Administration cost

0.4 

0.5 

0.9 

Curtailment gain

(0.3)

Interest cost (Note 6)

0.4 

0.9 

1.7 

Total pension expense

0.8 

1.6 

3.1 

 

The amounts recognised in the balance sheet were as follows:

 

30 June

2016

30 June

2015

31 December 2015

 

£m

£m

£m

Fair value of plan assets

536.0 

488.7 

481.3 

Present value of defined benefit obligations

(572.0)

(525.0)

(503.5)

Irrecoverable element of pension surplus

(2.8)

(2.3)

(2.5)

Net deficit in the statement of financial position

(38.8)

(38.6)

(24.7)

 

 

 


Retirement benefit surplus

5.3 

4.3 

4.6 

Retirement benefit obligation

(44.1)

(42.9)

(29.3)

Net deficit in the statement of financial position

(38.8)

(38.6)

(24.7)

 

 

19.  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 2016, the Group awarded 1,589,914 (six months ended 30 June 2015: 3;846,179; year ended 31 December 2015: 4,631,565) shares under the Group's share incentive plans.

 

 

20.  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 2016 (30 June 2015; £nil; 31 December 2015: £nil), 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 2016.

 

The Group entered into the following transactions with related parties during the period:

 

 

 

Balances

 

Balances

 

Balances

 

 

 

(owed by)/

 

(owed by)/

 

(owed by)/

 

 

 

due to

 

due to

 

due to

 

 

 

the Group at

Value of

the Group at

Value of

the Group at

Value of

 

 

30 June

transactions

30 June

transactions

31 December

transactions

Related party and

Nature of

2016

H1 2016

2015

H1 2015

2015

FY 2015

relationship

transactions

£m

£m

£m

£m

£m

£m

Guangzhou Beauty Fair - Joint Venture

Commission and management fees

2.1 

The Channel Company - Client

Management fees

0.1 

Light Reading LLC - Associate

Transitional services and financing

8.7 

0.2 

0.2 

7.8 

0.3 

 

 

21.  Events after the balance sheet date

 

On 8 July 2016 UBM paid shareholders a special dividend of 55.3p per share as a return of capital from completion of the PR Newswire disposal in association with the 8 for 9 consolidation of UBM's ordinary shares as approved by shareholders.

 

On 13 July 2016 the Light Reading business was sold.  The Group's equity interest was recouped and the associated loan note including accrued interest of $11.5m was recovered.  The anticipated gain on disposal is $10m.

 

 

 

Explanation of non-IFRS measures

 

Financial Measure

How we define it

Why we use it

 

 

 

Underlying revenue and underlying operating profit

Underlying measures are adjusted for the effects of acquisitions, disposals, foreign exchange movements, phasing and peripatetic and biennial events

Underlying growth rates provide insight into the organic growth of the business

 

 

 

 

 

 

Adjusted operating profit

Operating profit excluding amortisation of intangible assets arising on acquisitions, exceptional items and share of taxation on joint ventures and associates

Provides insight into ongoing profit generation, individually and relative to other companies

 

 

 

 

Margin

Adjusted operating profit expressed as a percentage of revenue

 

 

 

 

 

 

EBITDA

Earnings before interest, tax, depreciation, amortization and exceptional items

Measure of earnings and cash generative capacity

 

 

 

 

 

 

Adjusted profit before tax

Profit before tax before amortisation of intangible assets on acquisitions, exceptional items, share of taxation on profit from joint ventures and associates and net financing expense adjustments

Facilitates performance evaluation, individually and relative to other companies

 

 

 

 

Adjusted EPS

Adjusted basic EPS includes share of taxation on profit from joint ventures and associates 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 noncurrent borrowings and derivatives associated with debt instruments, less cash and cash equivalents

Measure of indebtedness - includes benefit of current cash available to pay down debt

 

 

 

 

 

 

Net debt to EBITDA

Net debt to LTM EBITDA

Net debt divided by EBITDA.  Includes an annualised EBITDA figure for interim reporting

Commonly used measure of financial leverage

 

 

 

 

 

 

Free cash flow

Net cash provided by operating activities after meeting obligations for interest, tax and capital expenditures.

Measure of cash available to repay debt, pay dividends and invest in acquisitions after capital expenditure

 

 

 

 

 

 

Adjusted operating cash flow

Adjusted to exclude non-operating movements in working-capital, such as expenditure against reorganisation and restructuring provisions.

Provides an understanding of our operating cash flows

 

 

 

 

Cash conversion

Cash conversion is the ratio of adjusted cash generated from operations to adjusted operating profit

 

 

 

 

 

 

Return on investment

Adjusted post tax incremental operating profit divided by the cost of acquisition calculated on a constant currency, biennial adjusted pro forma basis, as if the business had been owned throughout the year

To assess returns on acquisitions relative to our cost of capital.  The measure was amended during 2015 to adjust for foreign exchange movements and incorporate the incremental operating result of the acquisition. This aligned the measure to our acquisition assessment criteria

 

 

 

 

 

 

Estimated total consideration

Estimated total consideration includes initial consideration (net of cash acquired), the latest estimate of expected contingent consideration and deferred consideration

Provides a measure of total consideration for businesses acquired

 

 

 

 

 

 

Return on average capital employed (ROACE)

ROACE is post tax adjusted operating profit over average shareholders' funds plus net debt. Shareholders' funds is adjusted for cumulative impairment charges from 1 January 2016

Provides a measure of the efficiency of our capital investment

 

 

 

 

 

 

Effective tax rate

The effective tax rate on adjusted profit before tax reflects the tax rate excluding movements on deferred tax balances recognised as a consequence of acquisition intangibles.

Provides a more comparable basis to analyse our tax rate

 

 


 

 

 

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 2016 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 2016 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

28 July 2016

 

UBM plc Board of Directors:

 

Executive Directors:

Tim Cobbold (Group Chief Executive)

Marina Wyatt (Chief Financial Officer)

 

Non-executive Directors:

Dame Helen Alexander (Chairman)

Dr Alan Gillespie CBE (Senior Independent Director)

Pradeep Kar

Greg Lock

John McConnell

Mary McDowell

Terry Neill

Trynka Shineman (appointed 1 March 2016)         

 

 

 

Independent review report to UBM plc

 

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 2016 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 the related explanatory notes 1 to 21. 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 the group accounting policies, the annual financial statements of the group are prepared in accordance with IFRS 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 2016 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

28 July 2016

 

 

 


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