Good 2013 results after strong H2
Results for the Full Year ended 31 December 2013
* Revenues from continuing operations(1) up 3.2% to £793.9m; organic revenue
growth of 3.7%
* Adjusted operating profit* from continuing operations(1) up 6.3% to £
186.3m; margin of 23.5%
* Continuing fully diluted adjusted EPS up 12.8% to 53.6p
* Total China revenues up 21% to £174.8m from £144.5m with strong annual and
biennial event performance
* Events organic revenue growth of 6.3%; operating profit, up to £148.9m,
margin of 32.2%
* Marketing Services restructured to align with Events and focus on key
communities
* PR Newswire 1.9% underlying growth and 22.6% margin
* £22.7m exceptional charges reflect Marketing Services restructuring and the
implementation of new UBM-wide finance and reporting system
* Final dividend of 20.5p proposed; total 2013 dividend of 27.2p (2012:
26.7p), up 1.9%
* Leverage improved to 2.2x Net Debt/ EBITDA (2012: 2.5x)
David Levin, UBM's Chief Executive Officer, commented:
"2013 was a year of strategic progress and operational achievement for UBM
against a difficult economic backdrop; the company can look forward to 2014
with confidence.
2013's good revenue and profit growth was bolstered by a strong performance
from our biennial events in the second half of the year. PR Newswire had a
solid year in its core business and maintained its strong profitability. We
disposed of our Data Services business and substantially restructured our
Marketing Services activities to focus on the professional communities our
events serve. We end the year with significantly higher quality earnings and
with the business better positioned for structural growth.
Our strategy to develop UBM as an events-led marketing services and
communications business is proving successful. The growing strength of our
Events business -- focused particularly on large events, and our strong
presence in China and other growth markets -- continues to affirm our strategic
choices and to demonstrate live media is an increasingly significant component
of business to business marketing programmes. PR Newswire has retained its
leading, premium position in the online news and content distribution market,
and is well placed to prosper in the emerging world of digital content
marketing.
As I step down after almost nine years as UBM's CEO, I would like to thank my
colleagues from across UBM -- and also past and present members of the Board -
for their kind support and wise advice as we have built the business together."
Financial Summary 2013(1) 2012(1) Change Change Underlying
£m £m % at CC % Change %
Revenue (Continuing) 793.9 769.4 3.2 2.1 3.7
Adjusted operating profit* 186.3 175.3 6.3 5.1 -
(Continuing)
Adjusted operating profit 23.5% 22.8% 0.7%pt - -
margin* (Continuing)
EBITDA (Continuing) 199.5 187.5 6.4 - -
Adjusted PBT* (Continuing) 160.6 146.1 9.9 - -
Diluted adjusted EPS* (pence) 53.6p 47.5p 12.8 - -
(Continuing)
Diluted adjusted EPS* (pence) 54.4p 56.9p (4.4) - -
(Total)
Dividend per share (pence) 27.2p 26.7p 1.9% - -
Cash generated from operations 165.8 189.8 - -
(Total)
Net Debt - -
IFRS Statutory Results 2013(1) 2012(1) Change
£m £m %
Revenue (Continuing) 793.9 769.4 3.2
Operating profit (Continuing) 130.9 148.2 (11.7)
Profit after tax (Continuing) 98.6 116.1 (15.1)
Attributable profit 107.5 (57.8) Nm
Basic EPS (pence) (Continuing) 36.4p 43.3p (15.9)
Basic EPS (pence) (Total) 43.9p (23.6)p Nm
Weighted av. no. of shares (millions) 244.9 244.4
Segmental Summary 2013(1) 2012(1) Change Change Underlying
£m £m % at CC % Change %
Revenue
Events 462.7 427.2 8.3 7.2 6.3
Other Marketing Services 129.4 145.8 -11.2 -12.2 -1.7
PR Newswire 201.8 196.4 2.7 1.9 1.9
Continuing Revenue 793.9 769.4 3.2 2.1 3.7
Adjusted Operating Profit*
Events 148.9 141.7 5.1 3.5
Other Marketing Services 10.2 7.2 41.7 44.4
PR Newswire 45.6 43.5 4.8 3.9
Net Corporate Costs (18.4) (17.1) 7.6 5.2
Continuing Adjusted Operating 186.3 175.3 6.3 5.1
Profit
Adjusted Operating Profit
Margin*
Events 32.2% 33.2% -1.0pt -1.2pt
Other Marketing Services 7.9% 4.9% 3.0pt 3.1pt
PR Newswire 22.6% 22.1% 0.5pt 0.4pt
Continuing Adjusted Operating 23.5% 22.8%(2) 0.7pt 0.7pt
Profit Margin
1. Figures throughout reflect continuing operations unless otherwise stated.
For more detail on discontinued products see discussion in Note 2 on page
28.
2. Reported operating profit margin reported in 2012 was 22.2%.
* UBM uses a range of business performance indicators to help measure its
development against strategic and financial objectives. All non-
IFRS measures are noted with a * and additional information on these measures
is set out on page 18.
Outlook
2014 has opened with our businesses performing in line with our expectations.
We expect underlying growth in constant currency terms to be in line with last
year for our Events and PR Newswire segments. Overall, we expect that UBM's
adjusted operating margin will be better than reported 2012, the previous
biennial `down' year - reflecting in part margin improvement from the
discontinuation of less profitable businesses.
We anticipate the Events segment will continue to grow well in 2014, with
underlying growth in line with 2013. Growth in China - our largest events
market - will continue to contribute importantly to this result. Expansion in
China and other markets will offset continued cyclical pressure on our shows
serving the UK Built Environment, and venue space constraints at a number of
our largest events. We note that 2014 is a "down year" in our biennial cycle.
In addition reported results for the first quarter will reflect phasing
differences caused by a number of events with approximately £10m of revenue
which ran in the first quarter of 2013 running in the second quarter this year.
We will further expand Events through new launches and geo-adapted shows,
continue to invest in exhibitor and visitor experience, and improve health and
safety. Venue constraints will limit physical growth at four of our Top 20
events so our growth becomes more weighted towards smaller shows in new
markets, reducing the average overall margin. Additionally our `even' year
biennials are smaller and less profitable than their `odd' year counterparts.
Our overall Events margin for 2014 is therefore expected to be around 30%.
We expect growth trends for PR Newswire to continue in line with those
experienced in 2013. Growth in US distribution will reflect continued slow
growth in the US premium press release market, and we expect to increase the
share of releases incorporating multimedia elements, and to grow revenue from
new products. We project continued growth for Vintage, CNW and in Europe. We
expect continued stability in margins.
We enter 2014 with our Other Marketing Services businesses aligned to support
our event franchises. We expect to generate revenues for 2014 of approximately
£100m and to achieve margin of 10% across the segment.
We generate over 90% of our revenue in currencies other than Sterling, and our
reported results are sensitive to shifts in currency exchange rates. We have
entered 2014 with a notably strong foreign exchange headwind relative to 2013
average rates. If exchange rates on 23rd February had prevailed during 2013,
reported revenue, adjusted operating profit, and diluted adjusted EPS (pence)
(Continuing), would have been reduced by £43.8m, £11.7m and 3.9p respectively.
- Ends -
Contacts
Media
Peter Director of communications@ubm.com +44(0) 207 921 5961
Bancroft Communications
Chris Barrie Citigate Dewe Chris.barrie@citigatedr.co.uk +44(0) 207 282 2943
Rogerson
Investor Relations
Chantal IR Manager Chantal.bradford@ubm.com +44(0) 207 921 5943
Bradford
UBM will host a presentation at 11am at the London Stock Exchange, 10
Paternoster Square, EC4M 7LS. A live webcast of the results presentation will
be made available from 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.
Notes to Editors
1. About UBM plc
UBM plc is a leading global events-led marketing services and communications
company. We help businesses do business, bringing the world's buyers and
sellers together at events, online and in print. Our 5,000 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_plc and go to http://media.ubm.com/social for more UBM social
media options.
2. Investor Visits
UBM will host investor visits to the following events:
IFSEC International 17th June 2014 Excel Centre, London
June Hong Kong Jewellery & Gem 20th June 2014 Hong Kong Convention & Exhibition
Centre
There are a limited number of places so if you would like to attend please
email investorrelations@ubm.com
EVENTS
Continuing 2013(3) 2012(1) Change Change Underlying
£m £m % at CC % Change(4)
%
Revenue
Annual Events Revenue 424.6 402.1 5.6 4.2 6.3
Biennial Events Revenue 38.1 25.1 51.8 55.7 25.4
Total Events Revenue 462.7 427.2 8.3 7.2
Adjusted Operating Profit 148.9 141.7 5.1
Total Adjusted Operating Profit 32.2% 33.2% -1.0%pt
Margin
3. Reflects biennial events now run as annual
4. Biennial underlying growth
Continuing Events revenue rose 8.3% to £462.7m (2012: £427.2m).
Biennial event revenues grew 25.4% over previous editions in 2011, driven by
strong growth at second half shows, particularly at Food Ingredients Europe in
Frankfurt and Marintec China in Shanghai. Both these shows would feature within
our "Top 10" shows if they were run annually. We hosted a total of 31 biennial
events during 2013 which contributed £38.1m of revenue (2012: 35 events, £
25.1m).
Annual event revenues were up 5.6% to £424.6m (2012: £402.1m); on an underlying
basis growth was 6.3%. Unadjusted for product discontinuations, underlying
revenue growth was 4.2%. The slow underlying revenue growth of 1.2% in the
first half reflected declines in certain UK Built Environment and European
shows but this weakness was more than offset by a strong second half, driven by
events in Emerging Markets, particularly the Children-Baby-Maternity-Expo in
China and the September Hong Kong Jewellery & Gem show as well as the continued
strength of the Black Hat event in the USA.
Annual stand revenues were up 7.5% to £313.1m (2012: £291.2m); sponsorship and
other revenues improved 1.5% to £72.5m (2012: £71.4m); and attendee revenues
fell 1.0% to £39.0m (2012: £39.4m). The number of square metres of exhibition
space at our annual portfolio of shows increased 7.1% to 1.5m (2012: 1.4m)
while visitor numbers increased by 18.8% to 1.9m (2012: 1.6m).
Our Top 20 shows continue to be a key driver of the Events segment's overall
performance. Revenues from the 2012 Top 20 shows accounted for 51% of annual
revenues and 69% of profit in 2013. The 2012 Top 20 events revenue grew by 5.9%
in 2013 on an underlying basis. Almost half of these shows grew at double digit
growth rates but there were notable contractions at Ecobuild and Interiors,
reflecting cyclical conditions in the UK Built Environment, and the significant
decline in our European Air Traffic. As at 31 January 2014, forward bookings
for the 2013 Top 20 events were up 12.7%, reflecting both their underlying
strength and improved business confidence driving early bookings, as well as
positive effects of phasing of rebooking for some shows.
Large events remain the key focus of our Events portfolio. In 2013 we organised
91 annual events which each generated revenue of more than £1m and contributed
83% of our total annual Events revenue (2012: 89 events(1) with revenues of
more than £1m accounting for 82%). In line with our strategy we launched
geo-adapted shows to expand in a number of geographies, launching 22 shows in
12 countries including Turkey, Indonesia, Russia and Myanmar. We also
discontinued a number of events which generated revenues of £25.3m in 2012.
We invested £12.1m (including £2.4m of contingent and deferred consideration)
in buying majority interests in five new events businesses in Turkey, China and
Indonesia, as well as increasing our stakes in our existing Turkish and
Malaysian joint ventures (for more details see page 36).
Continuing 2013(3) 2012 Change Change Underlying
£m £m % at CC % Change %
Annual Events Revenue
Emerging Markets 200.7 177.7 12.9 11.4 12.9
N. America 113.8 110.0 3.5 1.4 3.5
UK 48.2 54.7 -11.9 -12.2 -8.0
Europe 50.6 46.4 9.1 4.5 5.0
RoW 11.3 13.3 -15.0 -4.3 -0.8
Annual Events Revenue 424.6 402.1 5.6 4.2 6.3
We continued to shift the geographic mix of our events portfolio towards
Emerging Markets. Emerging Markets generated 47.3% of annual event revenues
(China and Hong Kong contributing 19.5% and 15.5%, respectively). With 12.9%
underlying revenue growth, our Emerging Markets events continue to make a major
contribution to the overall performance of the Events segment. Within the
Emerging Markets, Mainland China and Hong Kong grew by 13.9% and 8.0%
respectively on an underlying basis. Chinese shows outside our 2012 Top 20 also
performed well, including Hotelex Shanghai and P-MEC China.
North America saw solid growth from Game Developer Conference, Black Hat and
World Routes, a peripatetic show which ran in Las Vegas in 2013 (2012 - Abu
Dhabi ). Our larger advanced manufacturing events grew well but a number of
smaller and mid-sized technology shows, particularly those serving the
electronics community, had lower growth, a reflection of slow growth in the
markets the events serve. In the UK, good growth in Q2, from shows such as the
Facilities Show failed to offset a weak performance during the first quarter in
the Built Environment events. Revenues in the rest of Europe rose 5.0% on an
underlying basis with good growth at CPhI Worldwide and ICSE in Q4 more than
compensating for tough competitive conditions, particularly at ATC Global, our
historically Europe-based air traffic control management event. ATC Global has
been re-launched in Beijing for its 2014 edition, taking advantage of shifts in
the geography of growth in the ATC industry. Industry response has been
encouraging.
Adjusted operating profit rose to £148.9m (2012: £141.7m); operating margin was
32.2% (2012: 33.2%). The decline in margin was driven principally by the weaker
profitability experienced during Q1. This was coupled with our ongoing
investment to improve the overall quality of our events portfolio, particularly
in terms of health and safety, and some wage inflation in a number of our
fast-growing core markets.
OTHER MARKETING SERVICES
Continuing 2013 2012 Change Change Underlying
£m £m % at CC % Change %
Other Marketing Services - 94.9 100.1 -5.2 -6.7 -0.4
Online
Other Marketing Services - Print 34.5 45.7 -24.5 -24.7 -5.3
Total Other Marketing Services 129.4 145.8 -11.2 -12.2 -1.7
Revenue
Adjusted Operating Profit 10.2 7.2 41.7
Total Adjusted Operating Profit 7.9% 4.9% 3.0%pt
Margin
In 2013 we undertook a substantial restructuring program of our Other Marketing
Services activities. This programme aimed to align the businesses more closely
to our events, leverage our high quality content and audience reach, and to
improve their profitability. We ceased printing a number of titles,
particularly those serving US technology communities. For example, we migrated
our flagship technology publication Information Week to a web-based community
platform model late in the year and it is no longer published as a print
publication. From 2014 substantially all print activities will support events
communities.
As part of this restructuring programme, UBM Channel and the Property Week and
TTG titles were classified as "held for sale" at the half year, and were sold
by year end. Additionally, Pyramid Research and Light Reading, which together
accounted for revenues of £9.5m and losses of £0.2m, were sold in January 2014.
Consideration for all of these disposals totalled £8.0m in 2013 and £9.2m in
2014. For more detail please see Note 6.2 on page 39.
Other Marketing Services revenue fell 11.2% to £129.4m (2012: £145.8m). Of
these reported figures, about £83.1m of Online and £30.1m of Print will
continue into 2014. After adjusting for the £16.6m of revenues generated by
sold or discontinued activities, the underlying revenue decline was 1.7%.
Online revenues declined 0.4% on an underlying basis. This reflects more
conservative marketing spend from our electronics and software clients, coupled
with closure of a number of unprofitable online products. Adjusting for the
rationalisation of the print portfolio, Print revenues were £30.1m, down 5.3%
on an underlying basis.
Adjusted operating profit was £10.2m (2012: £7.2m) representing a 7.9% margin
(2012: 4.9%). This excludes the exceptional costs associated with the
reorganisation and restructuring of marketing services, principally affecting
our UBM Tech and UK Built Environment Marketing Services businesses. (See the
note on page 29 for details.)
PR NEWSWIRE
Continuing 2013 2012 Change Change Underlying
£m £m % at CC % Change %
Revenue
PR Newswire US Distribution 96.2 94.9 1.4 0.3 0.3
PR Newswire US Other 19.9 19.7 1.0 -1.1 -1.1
PR Newswire US Vintage 23.7 20.8 13.9 7.2 7.2
CNW 30.3 30.7 -1.3 2.8 2.8
PR Newswire Europe 21.0 19.2 9.4 8.9 8.9
PR Newswire Asia & LatAm 10.7 11.1 -3.6 -4.7 -4.7
Total PR Newswire Revenue 201.8 196.4 2.7 1.9 1.9
Adjusted Operating Profit 45.6 43.5 4.8
Total Adjusted Operating Profit 22.6% 22.1% 0.5%pt
Margin
PR Newswire revenue grew 2.7% in 2013 to £201.8m (2012: £196.4m). Revenues were
up 1.9% on an underlying basis.
US Distribution underlying revenue growth was 0.3%. PR Newswire US press
release volume was up 2.4%, with the increase in volume driven by growth in
"non-premium" (iReach) releases.
Volume growth was largely offset by a decrease in yield per release. On one
hand, our strategy to drive take-up of multimedia releases has been successful.
Multimedia news releases increased from 12.1% to 14.2% of total by volume,
reflecting the introduction of lower-priced multimedia news releases which are
accessible to a broader range of customers. This success has been tempered by
some weakness in high price point products which we believe is related to
constrained PR budgets. However, the increase in yield from broader multimedia
uptake was more than offset by the effect of the increased share of iReach
distribution and increased inbound volume from PR Newswire's non-US affiliates
(principally Europe) for which revenue is not recorded in the US.
We have continued to make good progress in migrating customers to long-term
contracts, especially in CNW which has been integrated during 2013. 28.0% of
North American distribution revenue was generated under contract, up from 23.5%
the previous year. We continue to invest in expanding our distribution network
and now distribute to 10,700 syndicated websites worldwide. (2012: 9,600).
Earning releases continue to decline in importance to the business, with
revenue from such releases totalling just £9.3m (4.6% of PR Newswire total
revenue), down from £9.4m (4.8%) the previous year.
US Other revenues declined by 1.1% on an underlying basis. Some growth in
MultiVu Broadcast services and Media, IR and CSR Rooms was more than offset by
the loss of MediaAtlas revenues following the end of the Vocus relationship in
the first half of 2012.
US Vintage organic revenue growth was 7.2%. Through July this growth was driven
by continued take up of our XBRL services as companies complied for the first
time with a new regulatory obligation to XBRL-tag detailed footnotes. From
August year-on-year growth has reflected tougher comparatives. We expect growth
to moderate going forward.
CNW showed 2.8% organic revenue growth. Although the number of releases CNW
distributed was slightly reduced, growth was driven by converting larger
customers to long-term contracts, a push to increase pay-as-you-go volumes over
the latter part of the year and by increased purchase of multimedia news
releases. Almost a quarter of CNW distribution revenues are now under contract.
The integration of the CNW business into PR Newswire is progressing well and we
are now seeing both revenue and cost synergies.
Outside North America, the Europe business continued to show good growth, with
progress in France, Germany, the Nordics, Israel and the Middle East being
offset by some softness in the UK. PR Newswire Asia was affected by the trend
of Chinese companies to de-list from the US stock exchanges in the first half
of the year. Growth was driven in the second half through focusing on the
Chinese domestic PR market. In Latin America we continue to see softness in
monitoring revenues.
Adjusted operating profit was £45.6m (2012: £43.5m), representing a 22.6%
margin (2012: 22.1%). This includes £0.6m restructuring cost charged to the P&L
and not taken as exceptional.
Chief Financial Officer's Review
The financial results for 2013 reflect a good year for UBM, both strategically
and operationally. We have generated good underlying growth in our key Events
and PR Newswire segments while making significant progress in repositioning our
portfolio through disposals, organic development, and acquisitions.
The most notable divestiture was of our Data Services businesses (Delta), a
significant strategic step for UBM as it tightens our focus on core businesses,
and improves the quality and growth profile of the Group's earnings. The Group
also performed a review of the Marketing Services segment during the year which
resulted in restructuring charges of £16.6m and the sale of the UBM Channel
business and certain UBM Built Environment Marketing Services activities (Built
MS). The Delta, UBM Channel and Built MS operations have been treated as
discontinued in the financial statements.
Continuing revenues in 2013 were £793.9m, 3.2% higher than in 2012 (2012: £
769.4m) driven by strong underlying performance of the Events and PR Newswire
segments. Continuing adjusted operating profit* for 2013 was 6.3% higher at £
186.3m (2012: £175.3m). Continuing margins* rose by 0.7ppts to 23.5% (2012:
22.8%) reflecting the biennial cycle in Events partially offset by higher net
corporate costs.
As at 31 December 2013 net debt was £443.4m, representing 2.2 times 2013 EBITDA
*. The decrease from net debt of £553.4m (2.5 times 2012 EBITDA) at the end of
2012 reflects the consideration received from the Delta disposal of £146.5m
(detailed in the Discontinued operations section below) comprised of £109.5m in
cash and a £37m vendor loan note.
During 2013, we continued to invest in the implementation of CORE - our new
Global ERP system and outsourced finance processes - with £22.7m of capital
expenditure to date (£12.5m in 2013) and restructuring charges of £8.6m. This
project has been focused on our Events-led businesses, and will result in
improved management information including the benchmarking and best practice
initiatives showcased in GEM. Routine finance processes for much of the Group
will be outsourced to CapGemini. CORE was deployed for our UK and Europe-based
operations in February 2014, and we expect to roll the system out across the
remainder of the Group's Events and Other Marketing Services through 2014.
The lease on UBM's principal UK office space at 245 Blackfriars Road in London
expires in March 2015. We will consolidate our London-based workforce
(approximately 700 people) into new premises. We expect to incur fit out and
relocation costs of approximately £17m (net of the landlord's contribution)
over the course of 2014.
In December 2013, PA Group, the parent company of the Press Association, in
which UBM holds a 17% stake, announced the sale of its weather forecasting
business, MeteoGroup. UBM expects to record an exceptional gain on disposal of
around £21m in 2014. We anticipate a proportion of the proceeds will be
distributed to UBM by the PA Group through dividends after completion, although
the amount and timing of any distribution is yet to be determined.
Summary of Income Statement
IFRS Measures As adjusted(b)
Continuing £m FY Restated % FY Restated %
2013 FY 2012 Change 2013 FY 2012 Change
Revenue 793.9 769.4 3.2 793.9 769.4 3.2
Operating expenses (excluding (a) (594.4) (581.9) (594.4) (581.9)
line items below)
Share of tax on profit in JV & (0.9) (1.1) (b) (b)
associates (a)
Exceptional operating items (a) (22.8) (0.2) (b) (b)
Impairment charges (a) (10.4) (1.0) (b) (b)
EBITDA 199.5 187.5 6.4
Depreciation (a) (13.2) (12.2) (13.2) (12.2)
EBITA 186.3 175.3 6.3
Amortisation - intangible assets (21.3) (24.8) (b) (b)
arising on acquisition (a)
Operating profit 130.9 148.2 -11.7 186.3 175.3 6.3
Net interest expense and pension (25.7) (29.2) (25.7) (29.2)
finance expense
Exceptional finance income 4.1 3.1 (b) (b)
Financing income/expense - other 0.2 0.1 (b) (b)
PBT 109.5 122.2 -10.4 160.6 146.1 9.9
Taxation (10.9) (6.1) (18.4) (17.4)
PAT from continuing operations 98.6 116.1 -15.1 142.2 128.7 10.5
Discontinued operations adjusted 2.1 23.5 2.1 23.5
PAT
Profit/(loss) on disposal/assets 16.3 (186.9) (b) (b)
held for sale and adjusting items
Profit for the year 117.0 (47.3) 144.3 152.2
Non-controlling interest (9.5) (10.5) (9.5) (10.5)
Attributable profit 107.5 (57.8) 134.8 141.7
(a) Expenses not included within Operating expenses figure.
(b) All non-IFRS measures and business performance measures have been notated
with a * and additional information on these measures has been provided at the
end of this section.
Weighted average no. of shares 244.9 244.4 244.9 244.4
(million)
Fully diluted weighted average no. 247.8 249.0 247.8 249.0
of shares (million)
Earnings per share (pence)
Continuing operations - basic 36.4 43.3 -15.9 54.2 48.4 12.0
Continuing operations - diluted 36.0 42.4 -15.1 53.6 47.5 12.8
Profit for the year - basic 43.9 (23.6) nm 55.1 58.0 -5.0
Profit for the year - diluted 43.4 (23.6) nm 54.4 56.9 -4.4
Dividend per share (pence) 27.2 26.7 1.9
Discontinued operations
Discontinued operations are the disposed Delta businesses (which were
designated as held for sale at 31 December 2012, and have not been consolidated
in the 2013 financial statements under IFRS10), and the UBM Channel and Built
MS businesses.
Delta UBM Total Delta UBM Total
2013 Channel 2013 2012 Channel 2012
£m and £m £m and £m
Built MS Built
2013 MS 2012
£m £m
PAT from discontinued n/a 2.1 2.1 16.5 1.5 18.0
operations
Loss on assets held for sale n/a n/a n/a (181.4) n/a (181.4)
Profit on disposal 20.5 (4.2) 16.3 n/a n/a n/a
Total discontinued operations 20.5 (2.1) 18.4 (164.9) 1.5 (163.4)
The Delta disposal substantially completed on 8 April 2013, with the exception
of certain businesses in China, India and the UK. The divestiture of the China
business completed on 16 August 2013. We expect to obtain the required
regulatory approvals for the transfer of the India business in the next six
months; accordingly it remains held for sale at 31 December 2013. In the UK,
Chemist and Druggist (C+D), which provides online publications and data
services to the UK pharmaceutical industry, was included in the Delta perimeter
but completion was subject to a condition precedent which has not been
satisfied. C+D will be retained by the Group and has been restored to
continuing operations in the financial statements. Its activities will be
included within Other Marketing Services. C+D revenues and operating income
were £5.3m and £1.7m, respectively, for the year ended 31 December 2013 and £
5.3m and £1.8m for the prior year.
UBM has retained a number of data services products which are closely related
to retained businesses. The revenues from these retained products have been
reclassified to Other Marketing Services and Events for 2012 to facilitate
comparison. The reallocation is disclosed in the table in Section 2 on page 28.
A £20.5m profit on disposal of Delta has been recognised in 2013, including a
gain of £26.0m from recycling foreign exchange gains previously reported in
other comprehensive income. Cash inflow from the Delta disposal was £99.7m net
of working capital adjustments.
The sale of UBM Channel completed on 16 September 2013 and resulted in a loss
of £6.7m on disposal. The majority of the Built MS disposal group was disposed
on 31 October 2013 with a gain on disposal of £2.5m.
Exceptional operating items - continuing operations
Total charges of £22.8m were incurred in the year in relation to:
* the restructuring of the UBM Tech business (£7.7m) and other marketing
services operations (£2.8m) reflecting decisions taken in the Group's
strategic review;
* vacant property provisions in US and UK locations (£2.4m) that has arisen
as a result of the reduced headcounts from restructuring and disposals;
* contracts with the ExCel London Exhibition and Convention Centre (£3.7m).
These contracts entail minimum commitments for space rentals in excess of
those foreseen to be necessary which exceed the economic benefits expected
to be received and which have therefore been designated as onerous
contracts;
* one-off transition and redundancy charges for CORE (£8.6m);
* an exceptional credit of £2.5m from prior year disposal provisions no
longer required; and
* acquisition costs of £0.8m and aborted acquisition costs of £1.2m, offset
by an exceptional credit of £1.9m relating to revised contingent
consideration estimates for prior year acquisitions.
Impairment charges
We have reviewed the carrying value of goodwill and intangible assets in light
of current trading conditions and future outlook. As a result of this review,
impairment charges of £5.3m relating to goodwill and intangible assets, £1.0m
of leasehold assets, £1.5m in respect of the Group's investment in ActuaMedica
NV and £2.6m in respect of the loan note with Janus SAS have been recognised.
Corporate costs
Net corporate costs for 2013 were £18.4m (2012 restated: £17.1m). This includes
an additional pension expense from the adoption of IAS19 (revised) of £0.8m
(2012: £1.4m) offset by a curtailment gain of £1.9m from the Delta disposal.
Corporate costs are partially offset by internal cost recoveries from UBM's
operating businesses, results from joint ventures and associates and sundry
income which is not attributable to any reporting segment. Our share of post
tax results from joint ventures and associates was £2.5m (2012: £2.3m) and
sundry income was nil (2012: £3.7m).
Interest
Net interest expense represents interest payments on UBM's bonds and bank
loans, net of interest receipts on cash holdings and vendor loan notes. Net
interest expense in 2013 was £24.0m, compared with £27.9m in 2012. Further
information is set out in the Capital structure section on page 12.
Financing expense includes an IAS 19 pension interest charge of £1.7m (2012
restated: £1.3m); the impact of IAS 19 (revised) is detailed in the Pension
section below.
Income tax
UBM's effective rate of taxation* for the year was 11.5% (2012 restated:
11.9%). Movements in our tax creditor balance during 2013 were as follows:
£m
Current tax liability at 1 January 2013 52.7
Current tax charge 17.5
Tax paid (25.4)
Currency translation and other movements 0.6
Current tax liability at 31 December 45.4
2013
Overall our current tax liability decreased from £52.7m as at 31 December 2012
to £45.4m as at 31 December 2013. The tax creditor includes provisions for tax
settlements in various jurisdictions in which UBM operates.
We have necessarily made judgments as to the outcome of tax matters not
concluded. This creditor has been consistently classified as a short term
liability in accordance with our accounting policy although we do not expect
the tax cash outflow in 2014 in respect of the year end balance sheet creditor
to exceed £10.0m. The total cash paid in respect of income taxes was £25.4m in
2013.
As part of our focus on improved transparency in relation to taxation, the UBM
plc board has formally adopted the CBI's Statement of Principles for
responsible tax management. Our aim is to explain the amount of tax we pay and
where we pay it in a clear and transparent manner.
At 31 December 2013 the Group had unrecognised deferred tax assets relating to
tax losses carried forward in the UK £43.8m and the US £82.9.m that are
available to offset against future taxable profits.
Current tax liability analysed:
By Geography: % By Year %
United States and Canada 32.6 Up to 2009 10.4
Europe 37.7 2010 11.9
China 21.0 2011 18.5
Other Emerging Markets 8.2 2012 20.2
Rest of World 0.5 2013 39.0
Total 100.0 Total 100.0
We pay the bulk of our tax in Emerging Markets. Of the total £25.4m paid, £
14.4m was in Emerging Markets. A further breakdown is provided in Note 3.6 to
the financial statements.
Foreign currency exposure
We do not generally hedge our income statement currency exposure, though we do
arrange debt in our major trading currencies (principally the US Dollar, the
Euro and the Canadian Dollar). This debt is designated as a hedge against
balance sheet exposure, and interest expense provides a modest hedge against
operating earnings generated in those currencies. The following table outlines
the currency profile of our revenues and adjusted operating profits for 2013
continuing operations:
Adjusted operating Average exchange rate
Revenue % profit* % 2013 2012
US Dollar 45.1 32.4 1.5657 1.5872
Hong Kong Dollar 12.1 21.7 12.1453 12.3120
Euro 11.4 18.8 1.1770 1.2316
Renminbi 9.2 11.7 9.6217 10.0087
UK Pound Sterling 9.1 3.7 1.000 1.000
Canadian Dollar 3.9 4.6 1.6191 1.5883
Japanese Yen 1.9 1.9 153.9662 127.7777
Indian Rupee 1.8 0.9 92.1418 84.8526
Brazilian Real 1.7 1.8 3.3923 3.1033
Other 3.8 2.5 - -
Total 100.0 100.0
Our income statement exposure to foreign exchange risk is shown for our most
important foreign currency exposures in the sensitivity analysis below, based
on 2013 continuing operations:
Average Currency Effect on Effect on adjusted
exchange value rises/ revenue operating profit*
rate in 2013 falls by + / - £m + / - £m
US dollar 1.5657 1 % 4.5 1.1
Euro 1.1770 1 % 0.8 0.5
The Group closely monitors its exposure to foreign currencies, and seeks to
match revenues and costs when possible. The revolving credit facility may be
drawn in currencies other than the Pound; we also hold cash and cash
equivalents in Pounds Sterling, US Dollar, the Renminbi and other currencies
closely linked to the US Dollar. Given our large and diverse customer base,
there are no significant concentrations of credit risk.
Capital structure
Balance sheet
UBM's consolidated net debt at 31 December 2013 stood at £443.4m, down from £
553.4m at the end of 2012. During 2013, cash generated from operations fell to
£165.8m (2012: £189.8m). UBM received £107.9m on disposal of Delta, UBM
Channel, Built MS and other small businesses, paid £19.4m for acquisitions (net
of cash acquired), earn out payments in relation to acquisitions made in prior
years and increases in stakes in subsidiaries, together with £65.2m of
dividends to shareholders (excluding dividends paid to non-controlling
interests).
Pensions
UBM has operated a number of defined benefit and defined contribution schemes,
based primarily in the UK. On 30 December 2013, the three main UK schemes (the
United Pension Plan, the United Magazines Final Salary Scheme and the defined
benefit section of the United Group Pension Scheme) were merged into the new
UBM Pension Scheme. These schemes are closed to new members, further details
are provided in Note 7.2 to the financial statements.
The most recent actuarial funding valuations for the majority of the UK schemes
were carried out in 2011, and updated to 31 December 2013 using the projected
unit credit method. At 31 December 2013, the aggregate deficit under IAS 19 was
£25.9m, a decrease of £24.3m compared to the deficit of £50.2m at the previous
year end, due to improved asset returns and changes in actuarial assumptions.
The adoption of IAS 19 (revised) from 1 January 2013 has reduced the return on
plan assets included in pension scheme finance income and reduced the actuarial
gains and losses recognised in other comprehensive income by the same amount.
The effect of this revision has resulted in a pension interest expense of £1.7m
reported for 2013 compared to an interest credit under the previous standard of
£2.7m in 2012. Pension schemes operating cost has increased to £1.2m in 2013
(2012 under the previous standard: £0.7m) although this was offset in the
period by a curtailment credit of £1.9m in connection with the Delta disposal.
Administration expenses are now reported within operating costs rather than in
other comprehensive income. The 2012 figures in the financial statements have
been restated to reflect IAS 19 (revised).
Debt and liquidity
Our funding strategy is to maintain a balance between continuity of funding and
flexibility through the use of capital markets, bank loans and overdrafts. To
facilitate access to these sources of funds we seek to maintain long-term
investment grade credit ratings on our long-term debt from Moody's (current
rating Baa3 - negative outlook) and Standard & Poor's (current rating BBB -
stable outlook).
Our debt facilities include £250m of 6.5% Sterling bonds maturing November
2016; $350m of 5.75% US bonds maturing November 2020; and a £300m syndicated
bank loan facility. Our hedging arrangements and policies are detailed in Note
5.5 to the financial statements. At 31 December 2013, UBM had drawn £61.4m from
the syndicated bank facility and all conditions precedent were met leaving the
unutilised commitment of £238.6m available.
The Group maintains a strong liquidity position. In addition to the unutilised
commitment of £238.6m, we had cash on hand of £74.0m at 31 December 2013. The
Group's treasury policy does not allow significant exposures to counterparties
that are rated less than A by Standard & Poor's, Moody's or Fitch and we
consistently monitor the concentration of risk.
£m Facility Drawn Undrawn Maturity Margin % Fair value hedges
Syndicated 300.0 61.4 238.6 May-16 LIBOR +
bank 1.0
facility
£250m fixed 250.0 250.0 - Nov-16 6.5% Floating rate swap
rate fixed for £150m
sterling US$ LIBOR + 3.14%
bond
$350m fixed 211.3 211.3 - Nov-20 5.75% Floating rate swap
rate dollar fixed for $100m
bond US$ LIBOR + 2.63%
Total 761.3 522.7 238.6
The following table summarises our estimated payment profile for contractual
obligations, provisions and contingent consideration as of 31 December 2013:
£m 2014 2015 2016 2017 Thereafter
Long-term debt - - 311.4 - 211.3
Interest payable1 29.5 29.6 28.9 12.1 36.3
Derivative financial liabilities - (0.2) 1.4 - -
Operating lease payments 29.7 13.7 7.6 4.7 12.7
Pension contributions 3.5 3.5 3.5 3.5 3.5
Trade and other payables 345.2 2.6 - - -
Provisions 16.7 3.2 1.8 0.5 6.1
Contingent and deferred 4.0 - - - -
consideration
Put options over non-controlling 5.0 1.0 1.9 3.9 3.8
interests
Total 433.6 53.4 356.5 24.7 273.7
1 Interest payable based on current year rates.
Capital management
Our policy is to maintain prudent debt capital ratios to assure continual
access to capital on attractive terms and conditions. Cash proceeds from
disposals of £107.9m, together with robust operating cash flow, enabled us to
reduce borrowings. At 31 December 2013, the ratio of net debt to earnings
before interest, taxation, depreciation and amortisation was 2.2 times as shown
below:
£m 2013 2012
Financial liabilities 531.8 666.8
Financial assets (88.4) (113.4)
Net debt* 443.4 553.4
Adjusted earnings before interest, taxation, depreciation 199.5 218.7
and amortisation*
Net debt to EBITDA ratio* 2.2 2.5
times times
We target investment grade ratings from each of Moody's and Standard & Poor's.
In assessing the leverage ratios of net debt to adjusted earnings before
interest, taxation, depreciation and amortisation, both Moody's and Standard &
Poor's take account of a number of other factors, including future operating
lease obligations and pension deficit.
Cash flow
Cash generated from operations was £165.8m (2012: £189.8m), reflecting the
disposal of Delta, UBM Channel and Built MS, partially offset by negative
working capital movements in a strong biennial year. Cash generated from
continuing operations was £164.4m (2012: £169.5m). Cash conversion* was 97.0%
of adjusted operating profit* (2012: 97.9%) impacted by the additional capital
expenditure on CORE. Free cash flow* prior to cash invested in acquisitions was
£97.7m (2012: £102.9m). A reconciliation of net cash inflow from operating
activities to free cash flow is shown below:
£m 2013 2012
Adjusted cash generated from operating 185.9 206.0
activities*
Restructuring payments (12.9) (11.9)
Other adjustments (7.2) (4.3)
Cash generated from operations (IFRS) 165.8 189.8
Dividends from JVs and associates 3.7 1.1
Net interest paid (24.3) (30.2)
Taxation paid (25.4) (29.7)
Capital expenditure (22.1) (28.1)
Free cash flow* 97.7 102.9
Acquisitions (19.8) (88.3)
Proceeds from disposals 107.9 10.1
Advances to JVs, associates and minority (0.2) (3.3)
partners
Free cash flow after investment activities 185.6 21.4
Net share issues 1.4 2.5
Dividends (74.5) (74.8)
Purchase of ESOP shares (6.0) (8.1)
Net debt* as at 31 December (443.4) (553.4)
Net debt/EBITDA* as at 31 December (times) 2.2 2.5
Capital expenditure for the year was £22.1m (2012: £28.1m), mainly due to CORE
mentioned earlier. The other significant capital investments were to enhance PR
Newswire's existing products and to upgrade IT infrastructure.
We expect to continue to generate significant free cash flow in 2014 because of
our business model and believe that our cash on hand, cash from our operations
and available credit facilities will be sufficient to fund our cash dividends,
debt service and acquisitions in the normal course of business.
Acquisitions and disposals
We invested £12.1m (including £2.4m of expected contingent and deferred
consideration) in acquiring five new events businesses. These acquisitions were
closely aligned to our strategic priorities, increasing our exposure to
attractive communities and geographies. We also invested cash of £0.3m in the
purchase of non-controlling interests and made payments for contingent and
deferred consideration for acquisitions made in the current and prior years
totalling £11.1m.
The 2013 acquisitions contributed adjusted operating profit of £0.3m since
acquisition and achieved a pre-tax return on investment* of 13.5% on a pro
forma basis. The following table shows the performance of our acquisitions
since 2011 relative to our target pre-tax cost of capital threshold of 10%:
Consideration2 Return on Investment*
£m 2011 2012 2013
2011 acquisitions 68.8 8.3% 11.5% 6.2%
2012 acquisitions 28.7 - 16.2% 8.6%
2013 acquisitions3 12.1 - - 13.5%
Total 109.6 7.6%4
2Net of cash acquired and includes the latest estimate of expected contingent
consideration.
3 2013 Return on investment calculated on a full year pro forma basis.
4 2013 Return on 3 year initial (cash) consideration is 9.6%.
Return on average capital employed
The return on average capital employed* for 2013 including discontinued
operations was 17.9% (2012: 15.5%). The table below shows our performance over
time:
£m 2009 2010 2011 2012 2013
Operating profit before exceptional 143.7 143.2 163.7 166.9 165.9
items5 (£m)
Average capital employed (£m) 910.6 971.1 1,124.10 1,074.5 928.1
Return on average capital employed* 15.8 14.7 14.6 15.5 17.9
(ROACE) (%)
5 Including discontinued operations
Dividends
Our progressive dividend policy targeting two times cover through economic and
biennial cycles remains unchanged. In line with this policy the Board is
recommending a final dividend of 20.5p (2012: 20.0p). This brings the total
dividend for the year to 27.2p (2012: 26.7p), representing an increase of 1.9%
in the full year dividend. Subject to shareholder approval, the final dividend
on ordinary shares will be paid on 27 May 2014 to shareholders on the register
on 2 May 2014.
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 two years
that require refinancing from resources not already available. Further
information is provided in Note 5.3.
* 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.
* Further information on the financial position of UBM, its cash flows,
financial risk management policies and available debt facilities are
described in the my review on the preceding pages. UBM's business
activities, together with the factors likely to impact its future growth
and operating performance are set out in the Strategic Report.
Conclusion
During 2013, great strategic progress has been made to position UBM as an
Events-led marketing services and communications business. The disposals of
Delta, UBM Channel and Built MS and continuing bolt-on events acquisitions
continue to accelerate the shift to our attractive core businesses.
Simultaneously we have made significant advances in CORE which will be
implemented through 2014. CORE has required considerable effort from both
finance and project teams across the Group during a year of substantial
strategic and organisational change and I thank them immensely for their
contributions to the success of the project. I look forward to the efficiencies
that the new system will enable in the future.
We end the year with a strong balance sheet and a profitable, diversified,
cash-generative business well positioned for future growth.
Robert Gray
Chief Financial Officer
Statement of Directors' responsibility
UBM's annual report and accounts for the year end, to be published in due
course, will contain a responsibility statement as required under Disclosure
and Transparency Rule 4.1.12, regarding responsibility for the financial
statements and the annual report. This responsibility statement is repeated
here (below) solely for the purposes of complying with Disclosure and
Transparency Rule 6.3.5. It is not connected to the extracted and unaudited
information presented in this results announcement.
Each of the Directors confirm that, to the best of their knowledge:
* the Group financial statements, which have been prepared in accordance with
International Financial Reporting Standards (IFRS), as issued by the
International Accounting Standards Board (IASB) and IFRIC interpretations,
give a true and fair view of the assets, liabilities, financial position
and profit of the Group; and
* the management report includes a fair review of the development and
performance of the business and the position of the Group and the
undertakings included in the consolidation taken as a whole, together with
a description of the principal risks and uncertainties they face.
The Directors of UBM plc will be listed in the annual report and are listed on
the UBM plc's corporate
website: ubm.com.
This press release contains statements which are not based on current or
historical fact and which are forward looking in nature. These forward looking
statements reflect knowledge and information available at the date of
preparation of this press release and the Company undertakes no obligation to
update these forward looking statements. Such forward looking statements are
subject to known and unknown risks and uncertainties facing the Group
including, without limitation, those risks described in this press release, and
other unknown future events and circumstances which can cause results and
developments to differ materially from those anticipated. Nothing in this press
release should be construed as a profit forecast
Summary of major risks
* Macro-economic slowdown and/or exchange rate fluctuations
*
+ A slowdown in the macro 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.
* 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, anti-bribery laws, health and
safety standards 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 which 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.
+ Similarly, additional venue capacity could introduce competition as
well as enhance opportunities for growth.
* Technological risk: security or execution
*
+ System failure could have a significant impact on our business.
Unauthorised access to our systems by external parties could lead to
reputational damage and legal action. The collapse of the Cloud on
which various products and systems are hosted could have negative
consequences for our reputation.
+ UBM may need to carry out new projects or deliver new services which
involve significant capital investment. Failure to deliver these
efficiently could lead to increased costs, delays or erosion of UBM's
competitive position.
* Reduced access to capital and ability to pursue portfolio management
element of strategy
*
+ Changes in the availability or cost of financing, the availability of
suitable acquisitions, the ability to obtain regulatory approval,
integration issues or the failure to realise operating benefits or
synergies may affect our acquisition strategy.
Explanation of UBM's business measures
Financial Measure How we define it Why we use it
Underlying revenue and Underlying measures are We believe that underlying
underlying operating adjusted for the estimated growth rates provide
profit effects of acquisitions, insight into the organic
disposals discontinued growth of the business,
products, foreign exchange without distortion from
and biennial events. the effect of
acquisitions, discontinued
products, biennial events
and foreign currency
movements during the
period.
Adjusted operating profit Operating profit excluding Commonly used by
amortisation of intangible shareholders to measure
Margin assets arising on our performance,
acquisitions, exceptional individually and relative
items and share of to other companies.
taxation on joint ventures
and associates.
Margin relates to our
adjusted operating margin.
It is adjusted operating
profit expressed as a
percentage of revenues
EBITDA Earnings before interest, Assists investors in their
tax, depreciation, assessment and
amortisation and understanding of our
exceptional items earnings and cash
generative capacity.
Adjusted profit before Before amortisation of Assists investors in their
tax and adjusted EPS intangible assets on assessment and
acquisitions, exceptional understanding of our
items, share of taxation earnings and is also a
on profit from joint measure commonly used by
ventures and associates shareholders to measure
and net financing expense our performance,
adjustments. individually and relative
Adjusted EPS includes to other companies.
share of taxation on
profit from joint ventures
and associates but
excludes deferred tax on
the amortisation of
intangible assets. Diluted
adjusted EPS includes the
impact of share options.
Net debt Net debt is current and Provides a measure of
non-current borrowings and indebtedness in excess of
derivatives associated the current cash available
with debt instruments, to pay down debt.
less cash and cash
equivalents.
Net debt to EBITDA Net debt divided by Provides a measure of
EBITDA. financial leverage.
Net debt to LTM EBITDA
EBITDA adjusted to include
a full year of pro forma
operating profit from
acquisitions made during
2012.
Free cash flow Net cash provided by Helps assess our ability,
operating activities after over the long-term, to
meeting obligations for create value for our
interest, tax, dividends shareholders as it
paid to non controlling represents cash available
interests, capital to repay debt, pay
expenditures and other dividends and fund future
investing activities. acquisitions.
Adjusted operating cash Adjusted to exclude The Group believes
flow non-operating movements in adjusted operating cash
working-capital, such as flow assists investors in
Cash conversion expenditure against their assessment and
reorganisation and understanding of our
restructuring provisions. operating cash flows.
Cash conversion is the
ratio of adjusted cash
generated from operations
to adjusted operating
profit.
Pre-tax return on Attributable adjusted Helps us assess the
investment operating profit divided performance of our
by the cost of acquisitions relative to
acquisitions. Calculated our target pre-tax cost of
on a pro forma basis, as capital threshold of 10%.
if the acquired business
were owned throughout the
year.
Estimated total Estimated total Provides a measure of
consideration consideration includes total consideration for
initial consideration (net businesses acquired.
of cash acquired), the
latest estimate of
expected contingent
consideration and deferred
consideration.
Return on average capital ROACE is operating profit Provides a measure of the
employed (ROACE) before exceptional items efficiency of
divided by average capital profitability of our
employed. Average capital capital investment.
employed is the average of
opening and closing total
assets less current
liabilities for each
period.
Effective tax rate The effective tax rate on Provides a more comparable
adjusted profit before tax basis to analyse our tax
reflects the tax rate rate.
excluding movements on
deferred tax balances on
the amortisation of
intangible assets.
Consolidated income statement
for the year ended 31 December 2013
Restated
Before before Restated
exceptional Exceptional exceptional exceptional Restated
items items Total items items total
2013 2013 2013 2012 2012 2012
Notes £m £m £m £m £m £m
Continuing operations
2 Revenue 793.9 - 793.9 769.4 - 769.4
Other operating income 6.5 - 6.5 7.9 - 7.9
Operating expenses (618.0) - (618.0) (610.3) - (610.3)
3.1 Exceptional operating - (33.2) (33.2) - (1.2) (1.2)
items
Amortisation of (21.3) - (21.3) (24.8) - (24.8)
intangible assets
arising on acquisitions
Share of results from 3.0 - 3.0 7.2 - 7.2
joint ventures and
associates (after tax)
Group operating profit 164.1 (33.2) 130.9 149.4 (1.2) 148.2
from continuing
operations
5.2 Financing income 6.6 4.1 10.7 2.8 - 2.8
5.2 Financing expense (32.1) - (32.1) (31.9) 3.1 (28.8)
5.2 Net financing expense (25.5) 4.1 (21.4) (29.1) 3.1 (26.0)
Profit before tax from 138.6 (29.1) 109.5 120.3 1.9 122.2
continuing operations
3.2 Tax (10.9) - (10.9) (6.1) - (6.1)
Profit for the year from 127.7 (29.1) 98.6 114.2 1.9 116.1
continuing operations
Discontinued operations
6.3 Profit/(loss) for the 1.8 16.6 18.4 15.9 (179.3) (163.4)
year from discontinued
operations
Profit/(loss) for the 129.5 (12.5) 117.0 130.1 (177.4) (47.3)
year
Attributable to:
Owners of the parent 107.5 (57.8)
entity
Non-controlling 9.5 10.5
interests
117.0 (47.3)
Earnings per share
(pence)
3.3 Continuing operations - 36.4p 43.3p
basic
3.3 Continuing operations - 36.0p 42.4p
diluted
3.3 Profit for the year - 43.9p (23.6)p
basic
3.3 Profit for the year - 43.4p (23.6)p
diluted
£m £m
Group operating profit 130.9 148.2
from continuing
operations
3.1 Exceptional operating 33.2 1.2
items
Amortisation of 21.3 24.8
intangible assets
arising on acquisitions
Share of tax on profit 0.9 1.1
in joint ventures and
associates
6.3 Adjusted operating 2.1 27.0
profit from discontinued
operations
Adjusted Group operating 188.4 202.3
profit*
£m £m
Dividends
5.3 Interim dividend of 6.7p 16.4 16.4
(6.7p)
5.3 Proposed final dividend 50.3 48.8
of 20.5p (20.0p)
* Adjusted Group operating profit represents Group operating profit excluding
amortisation of intangible assets arising on acquisitions, exceptional items
and share of tax on profit in joint ventures and associates.
Consolidated statement of comprehensive income
for the year ended 31 December 2013
Restated
2013 2012
Notes £m £m
Profit/(loss) for the year 117.0 (47.3)
Other comprehensive (loss)/income
Other comprehensive income to be reclassified to
profit or loss in subsequent periods
5.3 Currency translation differences on foreign (22.3) 15.6
operations - Group
5.3 Net investment hedge 6.9 (28.2)
Currency translation differences on foreign (0.4) (0.2)
operations - joint ventures and associates
6.2 Reclassification adjustment for foreign operations (26.0) -
disposed of in the year
3.2 Income tax relating to components of other - -
comprehensive income
(41.8) (12.8)
Other comprehensive income not to be reclassified to
profit or loss in subsequent periods
Remeasurement of defined benefit obligation 18.1 (23.4)
Irrecoverable element of pension surplus 0.4 3.8
Remeasurement of defined benefit obligation of (0.4) (0.4)
associates
3.2 Income tax relating to components of other - -
comprehensive income
18.1 (20.0)
Other comprehensive loss for the year, net of tax (23.7) (32.8)
Total comprehensive income/(loss) for the year net of 93.3 (80.1)
tax
Attributable to:
Owners of the parent entity 86.6 (88.4)
Non-controlling interests 6.7 8.3
93.3 (80.1)
Consolidated statement of financial position
at 31 December 2013
Restated
31 31
December December
Notes 2013 2012
£m £m
Assets
Non-current assets
4.1 Goodwill 776.7 791.4
Intangible assets 111.4 112.0
Property, plant and equipment 21.3 28.4
Investments in joint ventures and associates 20.4 23.1
Other fixed asset investments 1.7 -
Vendor loan note 38.6 -
Derivative financial instruments 14.4 26.5
Retirement benefit surplus 3.4 4.2
3.2 Deferred tax asset 3.7 3.0
991.6 988.6
Current assets
Trade and other receivables 200.7 237.6
Cash and cash equivalents 74.0 78.5
6.3 Assets of disposal group classified as held for sale 0.9 207.4
275.6 523.5
Total assets 1,267.2 1,512.1
Liabilities
Current liabilities
3.2 Current tax liabilities 45.4 52.7
Trade and other payables 349.2 370.3
Provisions 16.7 10.5
Borrowings - 0.2
Derivative financial instruments 5.1 3.4
6.3 Liabilities associated with assets of disposal group 0.4 69.2
classified as held for sale
416.8 506.3
Non-current liabilities
3.2 Deferred tax liabilities 22.1 27.6
Trade and other payables 2.6 6.0
Provisions 11.6 11.4
Borrowings 530.5 661.1
Derivative financial instruments 11.9 15.9
Retirement benefit obligation 29.3 54.4
608.0 776.4
Total liabilities 1,024.8 1,282.7
Equity attributable to owners of the parent entity
5.3 Share capital 24.6 24.5
Share premium 7.9 6.6
5.3 Other reserves (652.1) (618.5)
Retained earnings 854.7 802.6
Put options over non-controlling interests (19.4) (13.0)
Total equity attributable to owners of the parent 215.7 202.2
entity
Non-controlling interests 26.7 27.2
Total equity 242.4 229.4
Total equity and liabilities 1,267.2 1,512.1
These financial statements were approved by the Board of Directors and were
signed on its behalf on 28 February 2014 by:
Robert A. Gray Director
Consolidated statement of changes in equity
for the year ended 31 December 2013
Total
Put equity
options attributable
over non- to owners Non-
Share Share Other Retained controlling of parent controlling Total
capital premium reserves earnings interests entity interests equity
Notes £m £m £m £m £m £m £m £m
At 1 January 2013 24.5 6.6 (618.5) 802.6 (13.0) 202.2 27.2 229.4
Profit for the year - - - 107.5 - 107.5 9.5 117.0
Other comprehensive - - (39.0) 18.1 - (20.9) (2.8) (23.7)
(loss)/income
Total comprehensive - - (39.0) 125.6 - 86.6 6.7 93.3
(loss)/income for the
year
5.3 Equity dividends - - - (65.2) - (65.2) - (65.2)
Non-controlling - - - - - - (9.3) (9.3)
interest dividends
6.1 Non-controlling - - - - (7.8) (7.8) 3.0 (4.8)
interest arising on
business combinations
Acquisition of - - - (0.6) 1.4 0.8 (0.9) (0.1)
non-controlling
interests
Issued in respect of 0.1 1.3 - - - 1.4 - 1.4
share option schemes
and other entitlements
Share-based payments - - - 3.7 - 3.7 - 3.7
5.3 Shares awarded by ESOP - - 25.5 (25.5) - - - -
5.3 Own shares purchased - - (20.1) 14.1 - (6.0) - (6.0)
by the Company
At 31 December 2013 24.6 7.9 (652.1) 854.7 (19.4) 215.7 26.7 242.4
At 1 January 2012 24.5 4.1 (605.1) 973.9 (12.4) 385.0 27.0 412.0
(Loss)/profit for the - - - (57.8) - (57.8) 10.5 (47.3)
year (restated)
Other comprehensive - - (10.6) (20.0) - (30.6) (2.2) (32.8)
loss (restated)
Total comprehensive - - (10.6) (77.8) - (88.4) 8.3 (80.1)
(loss)/income for the
year (restated)
5.3 Equity dividends - - - (65.3) - (65.3) - (65.3)
Non-controlling - - - - - - (9.5) (9.5)
interest dividends
Non-controlling - - - - (0.6) (0.6) 5.0 4.4
interest arising on
business combinations
Acquisition of - - - (28.4) - (28.4) (3.6) (32.0)
non-controlling
interests
Issued in respect of - 2.5 - - - 2.5 - 2.5
share option schemes
and other entitlements
Share-based payments - - - 5.5 - 5.5 - 5.5
5.3 Shares awarded by ESOP - - 15.5 (15.5) - - - -
5.3 Own shares purchased - - (18.3) 10.2 - (8.1) - (8.1)
by the Company
At 31 December 2012 24.5 6.6 (618.5) 802.6 (13.0) 202.2 27.2 229.4
Consolidated statement of cash flows
for the year ended 31 December 2013
Restated
2013 2012
Notes £m £m
Cash flows from operating activities
Profit for the year from continuing operations 98.6 116.1
6.3 Profit/(loss) for the year from discontinued 18.4 (163.4)
operations
Profit/(loss) for the year 117.0 (47.3)
Add back:
Exceptional items (excluding fair value adjustments 14.7 180.3
below)
6.1 Fair value adjustments of contingent consideration (2.2) (2.9)
3.2 Tax 10.9 6.3
Amortisation of intangible assets 21.6 35.7
Amortisation of website development costs 5.0 3.9
Depreciation 8.4 12.6
Share of results from joint ventures and associates (3.0) (7.9)
(after tax)
5.2 Financing income (6.6) (2.8)
5.2 Financing expense 32.1 31.9
Other non-cash items 3.8 6.1
201.7 215.9
Payments against provisions (12.9) (11.9)
Pension deficit contributions (3.5) (3.2)
Decrease in inventories - 0.2
Decrease/(increase) in trade and other receivables 15.1 (22.6)
(Decrease)/increase in trade and other payables (34.6) 11.4
Cash generated from operations 165.8 189.8
Cash generated from operations - continuing 164.4 169.5
Cash generated from operations - discontinued 1.4 20.3
Interest and finance income received 1.4 1.0
Interest and finance costs paid (25.7) (31.2)
3.2 Tax paid (25.4) (29.7)
Dividends received from joint ventures and associates 3.7 1.1
Net cash flows from operating activities 119.8 131.0
Net cash flows from operating activities - continuing 118.4 113.8
Net cash flows from operating activities - 1.4 17.2
discontinued
Cash flows from investing activities
6.1 Acquisition of interests in subsidiaries, net of cash (19.0) (57.6)
acquired
Investment in joint ventures (0.1) -
Purchase of investments (0.4) -
Purchase of property, plant and equipment (5.8) (11.6)
Expenditure on intangible assets (16.3) (16.5)
6.2 Proceeds from sale of businesses, net of cash 107.9 10.1
disposed
Advances to joint ventures and associates (0.2) (0.4)
Advances to non-controlling interest partners - (2.9)
Net cash flows from investing activities 66.1 (78.9)
Net cash flows from investing activities - continuing 78.3 (72.1)
Net cash flows from investing activities - (12.2) (6.8)
discontinued
Cash flows from financing activities
Proceeds from issuance of ordinary share capital 1.4 2.5
Acquisition of non-controlling interests (0.3) (30.7)
Dividends paid to shareholders (65.2) (65.3)
Dividends paid to non-controlling interests (9.3) (9.5)
Investment in own shares - ESOP (6.0) (8.1)
(Decrease)/increase in borrowings (117.8) 94.9
Repayment of €53.1m floating rate reset loans - (52.7)
Net cash flows from financing activities (197.2) (68.9)
Net cash flows from financing activities - continuing (196.0) (54.5)
Net cash flows from financing activities - (1.2) (14.4)
discontinued
Net decrease in cash and cash equivalents (11.3) (16.8)
Net foreign exchange difference (1.4) (3.1)
Cash and cash equivalents at 1 January 86.7 106.6
Cash and cash equivalents at 31 December 74.0 86.7
Notes to the consolidated financial statements
at 31 December 2013
1. Basis of preparation
UBM plc is a public limited company incorporated in Jersey under the Companies
(Jersey) Law 1991. The registered office is Ogier House, The Esplanade, St.
Helier, JE4 9WG, Jersey. UBM plc was tax resident in the Republic of Ireland
until 30 November 2012 when it returned to the United Kingdom. The principal
activities of the Group are described in Note 2.
The preliminary announcement was approved by the Board of Directors on 28
February 2014.
The figures and financial information for the year ended 31 December 2013 do
not constitute the statutory financial statements for that year. Those
financial statements have not yet been delivered to the Jersey Registrar of
Companies, but include the auditor's report which was unqualified. The figures
and financial information for the year ended 31 December 2012 included in the
preliminary announcement do not constitute the statutory financial statements
for that year. Those financial statements have been delivered to the Registrar
and included the auditor's report which was unqualified.
The financial statements are prepared in accordance with International
Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB). The consolidated financial statements comply with the
Companies (Jersey) Law 1991 and are prepared under the historical cost basis
except for derivative financial instruments and hedged items which are measured
at fair value.
The consolidated financial statements are presented in pounds sterling, which
is the functional currency of the parent company, UBM plc. All amounts are
rounded to the nearest £0.1m unless otherwise indicated.
The accounting policies adopted in the preparation of the consolidated
financial statements are consistent with those used for the previous financial
year, except for the adoption of the following new and amended IFRSs.
Accounting Requirements Impact on financial
standard statements
IFRS 10 Establishes a single control model for None; accounting policy
`Consolidated deciding whether entities should be has been amended to
Financial consolidated by a parent. IFRS 10 reflect the new
Statements' changes the definition of control such standard.
that an investor controls an investee
when it is exposed, or has the rights,
to variable returns from its
involvement with the investee and has
the ability to affect those returns
through its power over the investee.
Adopted retrospectively from 1 January
2013.
IFRS 11 `Joint Distinguishes between joint ventures None; accounting policy
Arrangements' and joint operations and requires the has been amended to
(and related use of the equity method for interests reflect the new
amendments to in joint ventures. Adopted standard.
IAS 28 retrospectively from 1 January 2013.
`Investments in
Associates')
IFRS 12 Requires additional disclosures about Additional disclosures
`Disclosures of an entity's interests in subsidiaries, provided in the
Interests in joint arrangements and associates. financial statements.
Other Entities' Adopted from 1 January 2013.
IFRS 13 `Fair Establishes a single source of None; additional
Value guidance for all fair value disclosures provided in
Measurement' measurements and requires including the financial
additional disclosures about fair statements.
value measurements. IFRS 13 does not
change when an entity is required to
use fair value, but provides guidance
on how to measure fair value under
IFRS when it is required or permitted.
Adopted prospectively from 1 January
2013.
IAS 1 Requires separate presentation of Revised presentation
`Presentation other comprehensive income items that (see consolidated
of Financial could be reclassified in future to statement of
Statements' profit or loss and those which will comprehensive income).
(amended) never be reclassified. Adopted The amendment has had no
retrospectively from 1 January 2013. impact on the Group's
financial position or
performance.
IAS 19 Requires: Reduction in return on
`Employee plan assets included in
Benefits' * all remeasurements of defined profit or loss which, as
(revised 2011) benefit obligations and plan the Group's schemes are
assets to be included in other currently in deficit,
comprehensive income. will result in a net
financing expense being
* pension scheme net finance expense recognised, rather than
to be measured using the discount the previous net
rate applied in measuring the financing income. The
defined benefit obligation. cost of administering
the plan will be
* unvested past service costs to be reported through the
recognised in profit or loss at profit and loss. The
the earlier of when the amendment impact on the
occurs or when the related consolidated financial
restructuring or termination costs statements for 2013 is a
are recognised. net decrease in
continuing profit for
* quantitative sensitivity the year of £7.7m (2012:
disclosures. £5.4m). There is no
material impact on the
Adopted retrospectively from 1 January statement of financial
2013. position or statement of
cash flows.
IAS 36 Removes certain disclosures of the None; disclosures not
`Impairment recoverable amount of cash-generating required prior to IFRS
units which were unintentionally 13.
of Assets' included in IAS 36 following the issue
of IFRS 13. Early adopted from 1
January 2013.
The following amendments to accounting standards have also been adopted but
they do not impact the consolidated financial statements of the Group:
* IFRS 1 `First-time Adoption of International Financial Reporting Standards'
* IFRS 7 `Financial Instruments: Disclosures'
* IAS 27 `Separate Financial Statements'
* Annual improvements 2009-2011:
*
+ IFRS 1 `First-time Adoption of International Financial Reporting
Standards'
+ IAS 1 `Presentation of Financial Statements'
+ IAS 16 `Property, Plant and Equipment'
+ IAS 32 `Financial Instruments: Presentation'
+ IAS 34 `Interim Financial Reporting'
Discontinued operations
During the year, the Board of directors approved a plan as part of a strategic
review of Marketing Services activities to dispose of the UBM Channel business
and certain UBM Built Environment Marketing Services activities (Built MS). The
sale of UBM Channel completed on 16 September 2013 and Built MS was disposed on
31 October 2013. In accordance with IFRS 5 `Non-current assets held for sale
and discontinued operations' the net results for the year are presented within
discontinued operations in the income statement.
The Group classified a disposal group (Delta) as held for sale at 31 December
2012. The sale of Delta was completed on 8 April 2013, with the exception of
certain businesses in China, India and the UK. The sale of the China businesses
completed on 16 August 2013. The India businesses still require regulatory
approvals and are reported as held for sale at 31 December 2013. Completion is
expected in the next six months. The UK business will be retained by the Group
and is no longer classified as discontinued operations or held for sale.
Under the terms of the sale agreement, Electra Partners LLP received the
returns of Delta from 1 January 2013. Consolidation of the Delta entities
therefore ceased on this date in accordance with the requirements of IFRS 10
`Consolidated Financial Statements'.
Comparative information
The comparative information in the income statement and associated notes has
been restated for the impact of the UBM Channel and Built MS discontinued
operations. In line with the requirements of IFRS 5, the statement of financial
position has not been restated. The Delta UK business which was classified as
discontinuing operations and held for sale at 31 December 2012 has been
restated as continuing in the comparative periods.
The comparative information for the year ended 31 December 2012 has also been
restated for the finalisation of acquisition accounting for Insight Media
Limited, in accordance with IFRS 3 `Business Combinations'. The impact of this
restatement is to increase goodwill and deferred revenue by £0.8m and £0.7m
respectively, and to reduce other receivables by £0.1m. Trade receivables and
deferred revenue have been increased by £36.5m to reclassify certain balances
that were previously reported on a net basis.
Going concern
After making enquiries, the directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future (see the Chief Financial Officer's Review). The consolidated
financial statements are therefore prepared on the going concern basis.
2. Segment information
Operating segments
The Group considers that operating segments presented on a products and
services basis are the most appropriate way to demonstrate 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.
On 8 April 2013, the Group sold the majority of the Delta businesses. Products
that were classified as Data Services prior to 31 December 2012 that were not
part of Delta have been reclassified to Marketing Services and Events given
their natures. In addition, the Group sold UBM Channel on 16 September 2013 and
Built MS on 31 October 2013. Accordingly, these operations have been treated as
discontinued as detailed in Note 1 and Note 6.3.
The segment results do not include amounts for discontinued operations. The
CODM now 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.
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.
Year ended 31 December 2013
Other Dis-
Marketing PR Corporate Continuing continued
Events Services Newswire costs total operations Total
£m £m £m £m £m £m £m
Revenue
Total segment 463.6 129.4 202.6 - 795.6 24.3 819.9
revenue
Intersegment (0.9) - (0.8) - (1.7) - (1.7)
revenue
External revenue 462.7 129.4 201.8 - 793.9 24.3 818.2
Result
Depreciation (4.6) (1.3) (6.6) (0.7) (13.2) (0.2) (13.4)
(including
amortisation of
website development
costs)
Share of pre-tax 1.0 - 0.4 2.5 3.9 - 3.9
results from joint
ventures and
associates
Segment adjusted 148.9 10.2 45.6 (18.4) 186.3 2.1 188.4
operating profit
Amortisation of intangible (21.3) (0.3) (21.6)
assets arising on acquisitions
Exceptional operating items (33.2) 0.3 (32.9)
Exceptional discontinued items - 16.3 16.3
Share of tax on (0.9) - (0.9)
profit in joint
ventures and
associates
Group operating profit 130.9 18.4 149.3
Financing income 6.6 - 6.6
Financing expense (32.1) - (32.1)
Exceptional items relating to 4.1 - 4.1
net financing expense
Profit before tax 109.5 18.4 127.9
Tax (10.9) - (10.9)
Profit for the year 98.6 18.4 117.0
Total corporate costs for 2013 are net of internal cost recoveries and sundry
income of nil (2012: £3.7m) and share of pre-tax results from joint ventures
and associates of £2.5m (2012: £2.3m). The internal cost recoveries from the
Group's operating businesses and sundry income are not attributable to any of
the Group's reported segments.
Year ended 31 December 2012 (restated)
Other Dis-
Marketing PR Corporate Continuing continued
Events Services Newswire costs total operations Total
£m £m £m £m £m £m £m
Revenue
Total segment 427.8 145.8 197.3 - 770.9 207.7 978.6
revenue
Intersegment (0.6) - (0.9) - (1.5) - (1.5)
revenue
External revenue 427.2 145.8 196.4 - 769.4 207.7 977.1
Result
Depreciation (3.7) (1.2) (7.1) (0.3) (12.3) (4.2) (16.5)
(including
amortisation of
website development
costs)
Share of pre-tax 1.3 0.2 0.7 2.3 4.5 0.7 5.2
results from joint
ventures and
associates
Segment adjusted 141.7 7.2 43.5 (17.1) 175.3 27.0 202.3
operating profit
Amortisation of intangible (24.8) (10.9) (35.7)
assets arising on acquisitions
Exceptional (1.2) 2.1 0.9
operating items
Loss on assets held for sale - (181.4) (181.4)
Share of tax on profit in (1.1) - (1.1)
joint ventures and associates
Group operating 148.2 (163.2) (15.0)
loss
Financing income 2.8 - 2.8
Financing expense (31.9) - (31.9)
Exceptional items relating to 3.1 - 3.1
net financing expense
Loss before tax 122.2 (163.2) (41.0)
Tax (6.1) (0.2) (6.3)
Loss for the year 116.1 (163.4) (47.3)
In October 2012 the Group acquired the remaining 50% share of Canada Newswire
from its associate, PA Group Limited. The Group recognised a one-off share of
joint venture and associates result in respect of PA Group's gain on disposal
of Canada Newswire totalling £3.8m.
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.
Restated
Year year
ended ended
31 31
December December
2013 2012
Continuing revenue £m £m
United Kingdom 83.6 95.6
Foreign countries
United States and Canada 376.9 382.1
Europe 80.7 67.0
China 174.8 144.5
Emerging markets1 62.3 60.4
Rest of the world 15.6 19.8
710.3 673.8
External revenue 793.9 769.4
1 Emerging markets comprise the non-G10 countries - most notably for the Group:
Brazil, India, Indonesia, Malaysia, Mexico, Saudi Arabia, Singapore, Thailand
and Turkey.
There are no revenues derived from a single external customer which are
significant.
Non-current assets Restated
2013 2012
£m £m
United Kingdom 295.7 270.9
Foreign countries
United States and Canada 480.7 529.6
Europe 22.2 17.2
China 32.8 31.4
Emerging markets1 94.3 99.8
Rest of the world 5.8 6.0
635.8 684.0
Total non-current assets 931.5 954.9
Non-current assets consist of goodwill, intangible assets, property, plant and
equipment, investments in joint ventures and associates and other investments.
Discontinued operations and reclassification of retained Data Services products
The tables below show the discontinuation of revenue and adjusted operating
profit associated with the disposals of UBM Channel, Built MS and Delta; the
reclassification of Data Services products retained by the Group; and the
impact of IAS19 (revised) for restated comparative periods. As the Delta
businesses are not consolidated by the Group from 1 January 2013, there are no
Delta discontinued operations for the year ended 31 December 2013.
Year ended 31 December 2013
UBM Channel and
UBM Channel and Built MS Adjusted
Built MS Revenue operating profit
£m £m
Events 8.0 1.4
Other Marketing 16.3 0.7
Services
Total 24.3 2.1
Year ended 31 December 2012
UBM
Channel
and IAS 19 Total
Revenue Total Built MS Delta Reclassified (revised) continuing
£m £m £m £m £m £m
Events 449.9 (10.7) (13.0) 1.0 - 427.2
Other Marketing 168.6 (23.0) (25.5) 25.7 - 145.8
Services
PR Newswire 196.4 - - - - 196.4
Data Services 162.2 - (135.5) (26.7) - -
Total 977.1 (33.7) (174.0) - - 769.4
UBM
Channel
Adjusted operating and IAS 19 Total
profit Total Built MS Delta Reclassified (revised) continuing
£m £m £m £m £m £m
Events 145.4 (0.8) (2.4) (0.5) - 141.7
Other Marketing 7.8 (1.3) (2.4) 3.1 - 7.2
Services
PR Newswire 43.5 - - - - 43.5
Data Services 22.7 - (20.1) (2.6) - -
Corporate costs (15.7) - - - (1.4) (17.1)
Total 203.7 (2.1) (24.9) - (1.4) 175.3
3. Operating profit and tax
3.1 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.
Restated
2013 2012
(Charged)/credited to continuing operating profit £m £m
Acquisition costs on continuing business combinations (0.8) (1.0)
Aborted acquisition costs (1.2) -
Changes in estimates of contingent consideration 1.9 0.8
Exceptional items relating to acquisitions (0.1) (0.2)
Restructuring and business reorganisation (16.6) -
Global ERP and process outsourcing implementation cost (8.6) -
Other restructuring items 2.5 -
Exceptional items relating to reorganisation and (22.7) -
restructuring
Impairment of goodwill and intangible assets (5.3) (1.0)
Impairment of assets (1.0) -
Impairment of joint ventures and associates (1.5) -
Impairment of joint venture loan note (2.6) -
Impairment charge (10.4) (1.0)
Total charged to continuing operating profit (33.2) (1.2)
Acquisition exceptional items
Acquisition costs of £0.8m and aborted acquisition costs of £1.2m have been
expensed as exceptional items. An exceptional credit of £1.9m was recognised
relating to revised contingent consideration estimates for prior year
acquisitions.
Reorganisation and restructuring
Restructuring and business reorganisation charges comprise:
* £7.7m in relation to the restructuring of the UBM Tech business and £2.8m
in other marketing services operations reflecting decisions taken in the
Group's strategic review;
* £2.4m in connection with vacant property provisions in US and UK locations
that has arisen as a result of the reduced headcounts from restructuring
and disposals; and
* £3.7m in connection with contracts with the ExCel London Exhibition and
Convention Centre. These contracts entail minimum commitments for space
rentals in excess of those foreseen to be necessary which exceed the
economic benefits expected to be received and which have therefore been
designated as onerous contracts.
`Project CORE', the global Oracle ERP and business process outsourcing
arrangement commenced for Europe at the start of 2014. The one-off
non-operating expenditure incurred during the year in the transition or
provided as at 31 December 2013 in respect of redundancy payments are reported
as an exceptional item.
Other restructuring items represent an exceptional credit of £2.5m from prior
year disposal provisions no longer required.
Impairment
The Group has reviewed the carrying value of goodwill and intangible assets
(other than within assets held for sale) in light of current trading conditions
and future outlook. As a result of this review, impairment charges of £5.3m
relating to goodwill and intangible assets, £1.0m of leasehold assets, £1.5m in
respect of the Group's investment in ActuaMedica NV and £2.6m in respect of the
loan note with Janus SAS have been recognised.
The taxation effect of the exceptional items reported above on the amounts
charged to the income statement is nil.
3.2 Tax
Income statement
2013 2012
£m £m
Continuing
Current tax expense (17.5) (15.6)
Deferred tax credit 6.6 9.5
Income tax expense (10.9) (6.1)Reconciliation of total tax expense to the accounting profit:
Restated
2013 2012
£m £m
Profit before tax from continuing operations 109.5 122.2
Profit/(loss) before tax from discontinued operations 18.4 (163.4)
Profit/(loss) before tax 127.9 (41.2)
Profit/(loss) before tax multiplied by UK rate of 29.7 (10.1)
corporation tax of 23.25% (2012: 24.5%)
Effect of:
Expenses not deductible for tax purposes 12.5 54.1
Origination and reversal of temporary differences not (7.1) (17.5)
recognised
Different tax rates on overseas earnings 4.5 11.8
Share of results from associates and joint ventures (after (0.7) (2.1)
tax)
Tax effect of items not recognised in consolidated financial (16.3) (24.8)
statements
Non-taxable income (11.7) (5.1)
Total tax expense 10.9 6.3
Tax expense reported in the consolidated income statement 10.9 6.1
for continuing operations
Tax attributable to discontinued operations - 0.2
10.9 6.3
The Group has assessed the impact of changes in tax rates in various
jurisdictions in which it operates and has determined that the changes do not
have a significant impact on the current or future tax charges.
Other comprehensive income
No current or deferred tax relates to items reported in other comprehensive
income (2012: nil).
Statement of financial position: current tax
2013 2012
£m £m
Current tax liability at 1 January 52.7 65.9
Current tax expense 17.5 19.1
Tax paid (25.4) (29.7)
Classified as held for sale - (2.0)
Currency translation and other movements 0.6 (0.6)
Current tax liability at 31 December 45.4 52.7
The Group does not expect the cash outflow in respect of this current tax
liability in 2014 to exceed £10.0m.
During the year, tax has been paid in the following jurisdictions:
2013
£m
China 11.4
Netherlands 3.7
Other emerging markets 3.0
Canada 2.7
Japan 2.3
Other 2.3
Total 25.4
Statement of financial position: deferred tax
Deferred tax liabilities/(assets) Consolidated Consolidated income
statement of statement
financial position
2013 2012 2013 2012
£m £m £m £m
Intangibles 44.1 54.8 (6.2) (2.9)
Accelerated capital allowances 1.9 2.7 (0.8) 0.1
Tax losses (17.1) (25.4) 3.7 (7.0)
Other temporary differences (10.5) (7.5) (3.3) 0.3
18.4 24.6 (6.6) (9.5)
The movement in deferred tax balance during the year is:
2013 2012
£m £m
Net deferred tax liability at 1 January 24.6 44.9
Acquisition of subsidiaries (Note 6.1) 0.7 3.2
Amounts credited to net profit (6.6) (12.8)
Classified as held for sale - (8.7)
Currency translation (0.3) (2.0)
Net deferred tax liability at 31 December 18.4 24.6
Analysed in the statement of financial position, after
offset of balances within countries, as:
Deferred tax assets (3.7) (3.0)
Deferred tax liabilities 22.1 27.6
18.4 24.6
The deferred tax asset of £3.7m (2012: £3.0m) relates to tax losses and other
temporary differences. These have been recognised as the Group expects to
generate taxable profits against which these will be used.
The Group has the following unrecognised deferred tax assets relating to unused
tax losses:
* £43.8m (2012: £45.4m) in respect of UK subsidiaries which are available to
offset against future UK corporate tax liabilities;
* £82.9m (2012: £94.8m) in respect of US subsidiaries which are available to
offset against future US federal tax liabilities. Of these £82.2m expire
between 2019 and 2033 (2012: £93.6m between 2019 and 2032);
* £46.4m (2012: £56.4m) in respect of UK capital losses which are only
available for offset against future capital gains;
* £2,082m (2012: £2,036m) that have arisen in Luxembourg holding companies as
a result of revaluations of those companies' investments for local GAAP
purposes;
* £0.1m (2012: nil) in respect of companies in other countries.
No deferred tax asset has been recognised in respect of any of these amounts as
it is uncertain that these losses will be utilised.
In addition the Group has unrecognised deferred tax assets in relation to other
deductible temporary differences of £35.1m (£28.5m in relation to the US, £5.5m
in relation to the UK and £1.1m in relation to other countries) (2012: £50.3m
(£40.5m, £8.0m and £1.8m respectively). No deferred tax asset has been
recognised in respect these assets as it is uncertain that they will be
utilised.
At 31 December 2013, there was no deferred tax liability recognised for taxes
that would be payable on the unremitted earnings of the Group's subsidiaries as
the Group has determined that profits of subsidiaries will not be distributed
in the foreseeable future.
The temporary differences associated with investments in subsidiaries for which
a deferred tax liability has not been recognised amount in aggregate to £4.2bn
(2012: £4.2bn).
3.3 Earnings per share
Basic earnings per share is calculated by dividing net profit for the year
attributable to owners of the parent entity by the weighted average number of
ordinary shares outstanding during the year.
Adjusted basic earnings per share excludes amortisation of intangible assets
arising on acquisitions, deferred tax on amortisation of intangible assets,
exceptional items and net financing expense adjustments (detailed in Note 5.2).
Diluted earnings per share is calculated by dividing net profit for the year
attributable to owners of the parent entity by the weighted average number of
ordinary shares outstanding during the year 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 2013 would be to increase weighted average shares by 2.9 million
shares (2012: 4.6 million shares).
The weighted average number of shares excludes ordinary shares held by the
Employee Share Ownership Plan (the ESOP).
Weighted Weighted
average average Restated
no. Earnings no. earnings
of per Restated of per
Earnings shares share earnings shares share
2013 2013 2013 2012 2012 2012
Continuing operations £m million pence £m million pence
Adjusted Group operating 186.3 175.3
profit
Net interest expense (24.0) (27.9)
Pension schemes finance (1.7) (1.3)
expense
Adjusted profit before tax 160.6 146.1
Tax (18.4) (17.4)
Non-controlling interests (9.5) (10.5)
Adjusted earnings per share 132.7 244.9 54.2 118.2 244.4 48.4
Adjustments
Amortisation of intangible (21.3) (8.6) (24.8) (10.1)
assets arising on
acquisitions
Deferred tax on amortisation 6.6 2.7 10.2 4.2
of intangible assets
Exceptional items (33.2) (13.6) 1.9 0.8
Net financing income - other 4.3 1.7 0.1 -
Basic earnings per share 89.1 244.9 36.4 105.6 244.4 43.3
Dilution
Options - 2.9 (0.4) - 4.6 (0.9)
Diluted earnings per share 89.1 247.8 36.0 105.6 249.0 42.4
Adjusted earnings per share 132.7 244.9 54.2 118.2 244.4 48.4
(as above)
Options - 2.9 (0.6) - 4.6 (0.9)
Diluted adjusted earnings 132.7 247.8 53.6 118.2 249.0 47.5
per share
Weighted Weighted
average average Restated
no. Earnings no. earnings
of per Restated of per
Earnings shares share earnings shares share
2013 2013 2013 2012 2012 2012
Total Group £m million pence £m million pence
Adjusted Group operating 188.4 202.3
profit
Net interest expense (24.0) (27.9)
Pension schemes finance (1.7) (1.3)
expense
Adjusted profit before tax 162.7 173.1
Tax (18.4) (20.9)
Non-controlling interests (9.5) (10.5)
Adjusted earnings per share 134.8 244.9 55.1 141.7 244.4 58.0
Adjustments
Amortisation of intangible (21.6) (8.8) (35.7) (14.6)
assets arising on
acquisitions
Deferred tax on amortisation 6.6 2.7 13.5 5.6
of intangible assets
Exceptional items (16.6) (6.8) (177.4) (72.6)
Net financing income - other 4.3 1.7 0.1 -
Basic earnings per share 107.5 244.9 43.9 (57.8) 244.4 (23.6)
Dilution
Options - 2.9 (0.5) - 4.6 -
Diluted earnings per share 107.5 247.8 43.4 (57.8) 249.0 (23.6)
Adjusted earnings per share 134.8 244.9 55.1 141.7 244.4 58.0
(as above)
Options - 2.9 (0.7) - 4.6 (1.1)
Diluted adjusted earnings 134.8 247.8 54.4 147.7 249.0 56.9
per share
4. Statement of financial position
4.1 Goodwill
Goodwill is allocated and monitored by management at a CGU level, consisting of
the five business units operating across the Group's operating segments. Not
all business units are active in all segments; there are 11 CGUs at 31 December
2013 (2012: 29 CGUs). The reduction in CGUs in 2013 is due to the Delta sale
(12 CGUs), the UBM Channel sale (three CGUs), the merger of UBM Techweb and UBM
Electronics (three CGUs) and the merger of UBM Live and UBM Built Environment
(one CGU). For reporting purposes, the CGUs have been aggregated into the
reportable segments, as shown in the tables below. The CGUs are individually
tested for impairment each year.
31 December 2013
Other
Marketing PR
Events Services Newswire Total
£m £m £m £m
Cost
At 1 January 2013 642.1 110.8 85.2 838.1
(restated)
Acquisitions (Note 9.3 - - 9.3
6.1)
Disposals (Note 6.2) - (10.7) - (10.7)
Currency translation (7.1) (1.6) (1.7) (10.4)
At 31 December 2013 644.3 98.5 83.5 826.3
Impairment
At 1 January 2013 1.0 45.7 - 46.7
Charge for the year 3.1 0.7 - 3.8
Currency translation - (0.9) - (0.9)
At 31 December 2013 4.1 45.5 - 49.6
Carrying amount
At 1 January 2013 641.1 65.1 85.2 791.4
At 31 December 2013 640.2 53.0 83.5 776.7
5. Capital Structure and financial policy
5.1 Movements in net debt
Net debt reflects the Group's cash and cash equivalents, borrowings and
derivatives associated with debt instruments. This definition facilitates an
accurate reflection of the estimated settlement at maturity and is consistent
with reporting by other companies.
31
1 January Non-cash Cash Currency December
2013 items flow translation 2013
£m £m £m £m £m
Cash and cash equivalents 86.9 - (11.5) (1.4) 74.0
(including held for sale)
Bank overdrafts (0.2) - 0.2 - -
Net cash 86.7 - (11.3) (1.4) 74.0
Bank loans due in more than (178.3) - 117.8 (0.9) (61.4)
one year
Bonds due in more than one (482.8) 9.7 - 4.0 (469.1)
year
Borrowings (661.1) 9.7 117.8 3.1 (530.5)
Derivative assets associated 26.5 (12.1) - - 14.4
with borrowings
Derivative liabilities (5.5) 1.5 2.7 - (1.3)
associated with borrowings
Net debt (553.4) (0.9) 109.2 1.7 (443.4)
31
1 January Non-cash Cash Currency December
2012 items flow translation 2012
£m £m £m £m £m
Cash and cash equivalents 106.7 - (16.7) (3.1) 86.9
(including held for sale)
Bank overdrafts (0.1) - (0.1) - (0.2)
Net cash 106.6 - (16.8) (3.1) 86.7
Bank loans due in less than (52.9) - 52.7 0.2 -
one year
Bank loans due in more than (87.8) - (94.9) 4.4 (178.3)
one year
Bonds due in more than one (492.3) (0.9) - 10.4 (482.8)
year
Borrowings (633.0) (0.9) (42.2) 15.0 (661.1)
Derivative assets associated 23.3 3.2 - - 26.5
with borrowings
Derivative liabilities (22.2) 15.0 1.7 - (5.5)
associated with borrowings
Net debt (525.3) 17.3 (57.3) 11.9 (553.4)
5.2 Net financing expense
Restated
Before before
Exceptional Exceptional exceptional Exceptional Restated
Items items Total items items total
2013 2013 2013 2012 2012 2012
£m £m £m £m £m £m
Financing expense
Borrowings and loans (26.5) - (26.5) (28.3) - (28.3)
Other (0.4) - (0.4) (0.6) - (0.6)
Total interest expense (26.9) - (26.9) (28.9) - (28.9)
for financial
liabilities not
classified at fair
value through profit
or loss
Pension schemes net (1.7) - (1.7) (1.3) - (1.3)
finance expense
Fair value movement on (6.4) - (6.4) 1.0 - 1.0
interest rate swaps
Fair value movement on 5.8 - 5.8 (1.1) - (1.1)
£250m bond
Ineffectiveness on (0.6) - (0.6) (0.1) - (0.1)
fair value hedges
Fair value movement on (5.3) - (5.3) 2.7 - 2.7
interest rate swaps
Fair value movement on 4.8 - 4.8 (2.9) 4.0 1.1
$350m bond
Ineffectiveness on (0.5) - (0.5) (0.2) 4.0 3.8
fair value hedges
Fair value movement on - - - - (0.9) (0.9)
put options over
non-controlling
interests
Foreign exchange loss - - - (1.2) - (1.2)
on forward contracts
Other fair value (2.4) - (2.4) (0.2) - (0.2)
movements
(32.1) - (32.1) (31.9) 3.1 (28.8)
Financing income
Cash and cash 1.3 - 1.3 1.0 - 1.0
equivalents
Vendor Loan Note 1.6 - 1.6 - - -
Total interest income 2.9 - 2.9 1.0 - 1.0
Foreign exchange gain 0.8 - 0.8 1.7 - 1.7
Fair value movement on - 4.1 4.1 - - -
put options over
non-controlling
interests
Foreign exchange gain 1.0 - 1.0 - - -
on forward contracts
Other fair value 1.9 - 1.9 0.1 - 0.1
movements
6.6 4.1 10.7 2.8 - 2.8
Net financing expense (25.5) 4.1 (21.4) (29.1) 3.1 (26.0)
The ineffectiveness on fair value hedges represents the difference between the
fair value movement of the interest rate swaps designated as hedge instruments
and the fair value movement of the hedged portions of the £250m 6.5% sterling
bonds due 2016 and the $350m 5.75% dollar bonds due 2020.
The exceptional financing items comprise:
* £4.1m gain relating to the fair value movement on put options over
non-controlling interests (2012: £0.9m loss); and
* In 2012, a £4.0m gain from the cessation of fair value hedge accounting for
a $50m portion of the $350m bond. This $50m portion of the bond is
subsequently accounted for at amortised cost.
5.3 Equity and dividends
Share capital
2013 2012
Authorised £m £m
1,217,124,740 (2012: 1,217,124,740) ordinary shares of 10 121.7 121.7
pence each
Ordinary Ordinary
shares Shares
Issued and fully paid Number £m
At 1 January 2012 244,779,035 24.5
Issued in respect of share option schemes and other 688,094 -
entitlements
At 31 December 2012 245,467,129 24.5
Issued in respect of share option schemes and other 293,458 0.1
entitlements
At 31 December 2013 245,760,587 24.6
The ESOP Trust owns 0.17% (2012: 0.48%) of the issued share capital of the
Company in trust for the benefit of employees of the Group and their
dependents. The voting rights in relation to these shares are exercised by the
Trustees.
Dividends
2013 2012
£m £m
Declared and paid during the year
Equity dividends on ordinary shares
Final dividend for 2012 of 20.0p (2011: 20.0p) 48.8 48.9
Interim dividend for 2013 of 6.7p (2012: 6.7p) 16.4 16.4
65.2 65.3
Proposed (not recognised as a liability at 31 December)
Equity dividends on ordinary shares
Final dividend for 2013 of 20.5p (2012: 20.0p) 50.3 48.9
Prior to the return of the Company to the UK on 30 November 2013, the Dividend
Access Plan (DAP) arrangements put in place as part of the Scheme of
Arrangement allowed shareholders in the Company to elect to receive their
dividends from a UK source (the DAP election). Shareholders who held 50,000 or
fewer shares (i) on the date of admission of the Company's shares to the London
Stock Exchange and (ii) in the case of shareholders who did not own the shares
at that time, on the first dividend record date after they become shareholders
in the Company, unless they elect otherwise, were deemed to have elected to
receive their dividends under the DAP arrangements. Shareholders who held more
than 50,000 shares and who wished to receive their dividends from a UK source
were required to make a DAP election. All elections remained in force
indefinitely unless revoked. Unless shareholders made a DAP election, or were
deemed to have made a DAP election, dividends were received from an Irish
source and were taxed accordingly. After 30 November 2012 the DAP is no longer
used.
There are no income tax consequences to the Group arising from the payment of
dividends by the Company to its shareholders.
Other reserves
Foreign
currency Total
Merger translation ESOP Other other
reserve reserve reserve reserve reserves
£m £m £m £m £m
Balance at 1 January 2012 (732.2) 7.3 (5.5) 125.3 (605.1)
Total comprehensive income for - (10.6) - - (10.6)
the year1
Shares awarded by ESOP - - 15.5 - 15.5
Own shares purchased by the - - (18.3) - (18.3)
Company
Balance at 31 December 2012 (732.2) (3.3) (8.3) 125.3 (618.5)
Total comprehensive income for - (39.0) - - (39.0)
the year2
Shares awarded by ESOP - - 25.5 - 25.5
Own shares purchased by the - - (20.1) - (20.1)
Company
Balance at 31 December 2013 (732.2) (42.3) (2.9) 125.3 (652.1)
1 The amount included in the foreign currency translation reserve for 2012
represents the currency translation difference on foreign operations on Group
subsidiaries of £17.8m (excluding £(2.2)m relating to non-controlling
interests), on net investment hedges of £(28.2)m and on joint ventures and
associates of £(0.2)m.
2 The amount included in the foreign currency translation reserve for 2013
represents the currency translation difference on foreign operations on Group
subsidiaries of £(19.5)m (excluding £(2.8)m relating to non-controlling
interests), on the reclassification adjustment for foreign operations disposed
£(26.0)m on net investment hedges of £6.9m and on joint ventures and associates
of £(0.4)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 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 to satisfy future
share awards. The shares are recorded at the cost of purchasing shares in the
open market. During the year ended 31 December 2013, 2,855,000 shares were
purchased by the ESOP (2012: 2,675,000 shares).
6. Acquisitions and disposals
6.1 Acquisitions
The Group completed five acquisitions in 2013 none of which were individually
significant (2012: ten acquisitions none of which were individually
significant). Details of acquisitions have been provided in aggregate in the
table below.
Acquisitions
The fair value of the identifiable assets and liabilities acquired in respect
of acquisitions (excluding equity transactions) made in 2013 and 2012 was:
Restated
All all
acquisitions acquisitions
2013 2012
£m £m
Intangible assets 4.7 14.4
Property, plant and equipment 0.2 -
Trade and other receivables 1.6 3.2
Cash and cash equivalents 1.8 0.2
Total assets 8.3 17.8
Trade and other payables (1.8) (6.7)
Deferred tax liability (0.7) (3.2)
Total liabilities (2.5) (9.9)
Identifiable net assets acquired 5.8 7.9
Goodwill arising on acquisition 9.3 28.5
Contingent consideration adjustments on pre 1 January - (1.0)
2010 acquisitions
Non-controlling interests (3.0) (5.0)
12.1 30.4
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 intangible assets acquired as part of the acquisitions were:
All All
acquisitions acquisitions
2013 2012
£m £m
Brands 2.3 7.5
Order backlog - 0.6
Customer relationships 1.8 5.5
Customer contracts and relationships 1.8 6.1
Databases 0.6 0.8
Total 4.7 14.4
The total consideration transferred on acquisitions (excluding equity
transactions) is as follows:
All All
acquisitions acquisitions
2013 2012
£m £m
Cash and cash equivalents 9.7 24.8
Fair value of contingent consideration 0.4 4.7
Deferred consideration 2.0 1.9
Contingent consideration adjustments on pre 1 January - (1.0)
2010 acquisitions
Total consideration transferred 12.1 30.4
Acquisition costs of £0.8m (2012: £1.0m) have been recognised as an exceptional
operating item in the income statement (Note 3.1) and are included in operating
cash flows in the statement of cash flows.
Cash flow effect of acquisitions
The aggregate cash flow effect of acquisitions was as follows:
2013 2012
£m £m
Net cash acquired with the subsidiaries (1.8) (0.2)
Cash paid to acquire subsidiaries 9.7 24.8
Contingent consideration paid:
2007 acquisitions - 0.9
2008 acquisitions - 3.3
2009 acquisitions - 1.4
2010 acquisitions 2.2 9.0
2011 acquisitions 1.4 14.4
2012 acquisitions 1.8 2.1
2013 acquisitions 0.2 -
Deferred consideration paid:
2010 acquisitions - 0.1
2011 acquisitions 3.9 1.6
2012 acquisitions 1.6 0.2
Net cash outflow on acquisitions 19.0 57.6
The Group paid £5.4m of contingent consideration during 2013 in relation 2010
acquisitions of SharedVue, Corporate 360 and The Route Development Group, the
2011 acquisitions of Rotaforte International Trade Fairs & Media and
International Business Events Limited, the 2012 acquisitions of Shanghai UBM
ShowStar Exhibition Co. Limited and RISI Inc. The Group also paid £5.5m of
deferred consideration during 2013 in relation to the 2011 acquisitions of AMB
Exhibitions Sdn Bhd and AMB Exhibitions Events Sdn Bhd, International Business
Events Limited and Online Marketing Summit, the 2012 acquisition of Shanghai
UBM ShowStar Exhibition Co. Limited, Insight Media Limited, Malaysian
International Furniture Fair, I.C.C. Fuarcilik ve Organizasyon Ticaret A.S and
Eco Exhibitions Sdn Bhd.
2013 acquisitions
Each of the acquisitions add further industry-leading exhibitions to each of
the Group's community portfolios and are in line with the Group's strategy to
enhance and expand its international presence in geographic regions of
significant growth. The goodwill of £9.3m recognised relates to certain
intangible assets that cannot be individually separated. These include items
such as customer loyalty, market share, skilled workforce and synergies
expected to arise after the acquisition completion. Of the goodwill arising, an
amount of £0.7m is expected to be deductible for tax purposes.
The Group has acquired 100% of the voting rights in all cases where
acquisitions involved the purchase of companies unless otherwise stated below.
All 2013 and 2012 acquisitions where less than 100% of the voting rights of a
company were purchased have been accounted for using the full goodwill method.
Initial and
2013 deferred Maximum
acquisition consideration contingent
Acquisition date Activity Segment £m consideration
JV Novomania 18 March Urban/street Events 0.3 £2.0m payable
Limited fashion event over the next
(JVNML), 60% three years
PT Pameran 15 April Events operator Events 0.2 -
Niaga Indonesia
(PTPNI), 51%
China 2 August Starch and starch Events 0.7 £0.2m payable
(Shanghai) derivatives over the next
International exhibition three years
Starch & Starch
Derivatives
Exhibition
(Epica)
NTSR Fuar ve 29 November Maritime, Events 8.4 -
Gösteri infrastructure,
Hizmetleri A.Ş agriculture,
(NTSR) 75% lighting and
leisure boating
exhibitions
Shanghai 16 December Vending machine Events 2.1 £2.3m payable
Tiansheng and digital over the next
Exhibition signage three years
Service Co., exhibitions
Ltd (Tiansheng)
11.7 £4.5m
Acquisition performance
From their respective dates of acquisition to 31 December 2013, the
acquisitions completed in 2013 contributed £0.3m to operating profit and £2.2m
to revenue of the Group. If the acquisitions had taken place at the beginning
of 2013, the acquisitions would have contributed £1.6m of operating profit and
£6.5m to revenue of the Group.
Put and call options
During the year, the Group has recognised the following put and call options.
These reflect new transactions and options which have also been recognised this
year following evaluation in the context of the new consolidation standards.
Put options are reported within derivative financial instruments. The fair
value of call options are not material to the Group.
31 December 2013
Put option
2013
Option price Option exercise date £m
JV Novomania Limited 40% Fair value of the 18 March 2018 -
put and call options shares as agreed by
the parties capped
at RMB 80.0m (£
8.6m)
PT Pameran Niaga Indonesia Rp1,470.0m (£0.1m) At any time -
49% call option
China (Shanghai) Fair value of the 2 August 2016 -
International Starch & shares as agreed by
Starch Derivatives the parties
Exhibition (Epica) 10%
call option
I.C.C. Fuarcilik ve Fair value of the Put: 15% after 0.6
Organizasyon Ticaret A.S. shares as agreed by finalisation of 2015
30% put and call options the parties capped accounts; further 15%
at $10.0m (£6.0m) after finalisation of
2017 accounts
Call: finalisation of
2022 accounts
Intermodal Organizacao de 5.5x EBITDA capped 30 day period after 2.2
Eventos S.A. 25% put and at $20.0m (£12.0m) 31 December 2015 and
call options each subsequent 31
December
UBM Mexico Exposiciones, 5.0x EBITA capped Put: 31 December 2020 0.7
S.A.P.I. De C.V. 20% put at MXP200.0m (£ to 31 December 2023
and call options 10.1m) Call: after 31
December 2020
UBMMG Holdings Sdn Bhd 25% 6.0x EBITA capped Put: 31 December 1.1
put and call options at $30.0m (£18.1m) 2013, 2015 or 2017 or
any date after 31
December 2019
Call: after 31
December 2022
NTSR Fuar ve Gösteri 7x EBITA plus Between 1 Jan 2020 1.3
Hizmetleri A.Ş (NTSR) 25% 6x new/organic and 31 March 2022
put and call options branded and
non-branded EBITA
capped at €50m (£
41.7m)
UBM Istanbul - 25%'s put 11.2 x EBITA plus Between 1 Jan 2020 0.7
and call options 6-11.2x new/organic and 31 March 2022
branded and
non-branded EBITA
capped at €50m (£
41.7m)
PT Dyandra UBM 5x EBITA for 21 Feb 2018 1.2
International (Dyandra) previous year
capped at $20.0m (£
12.0m)
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 2013
acquisitions are between nil and the maximum amounts disclosed by acquisition
on the previous pages; £4.5m in aggregate (maximum remaining at 31 December
2013 for 2013, 2012 and 2011 acquisitions: £4.2m, £1.5m and £1.5m
respectively). The contingent consideration for each acquisition made during
the year is based on the terms set out in the relevant purchase agreements. The
amounts recognised in the consideration tables as the fair values of contingent
considerations have been determined by reference to the projected financial
performance in relation to the specific contingent consideration criteria for
each acquisition.
The movement in the contingent and deferred consideration payable during the
year was:
Contingent Deferred Total Contingent Deferred Total
2013 2013 2013 2012 2012 2012
£m £m £m £m £m £m
At 1 January 7.5 5.6 13.1 37.3 5.7 43.0
Acquisitions and equity 2.3 2.0 4.3 6.0 1.9 7.9
transactions
Consideration paid (5.6) (5.5) (11.1) (31.1) (1.9) (33.0)
Changes in estimates - - - (1.0) - (1.0)
(goodwill)
Changes in estimates (2.2) - (2.2) (2.9) - (2.9)
(income statement)
Classified as held for - - - (0.1) - (0.1)
sale
Currency translation 0.1 (0.2) (0.1) (0.7) (0.1) (0.8)
At 31 December 2.1 1.9 4.0 7.5 5.6 13.1
Current 2.1 1.9 4.0 4.9 5.6 10.5
Non-current - - - 2.6 - 2.6
At 31 December 2.1 1.9 4.0 7.5 5.6 13.1
Income statement changes are reported within `Exceptional operating items'.
6.2 Disposals
2013 disposals Gain/
Initial and (loss)
2013 deferred on
disposal consideration disposal
Disposal date Activity Segment £m £m
Asian Awards 4 April Annual Asian Events - 0.1
Limited awards event
Delta1 8 April Data services Data 146.5 20.5
Services
European Hotel 26 July Hotel awards Events 0.2 0.2
Design event
Awards
UBM Channel1,2 16 IT channel Marketing 4.5 (6.7)
70% September business Services -
Online
International 20 Exhibition Events 0.1 (0.3)
Confex and Live September supporting the
Experience meetings and
events industry
UBM Built 31 Property and Marketing 3.5 2.5
Environment October travel magazine Services -
Marketing business Print
Services (Built
MS)1
154.8 16.3
1 Discontinued operations as disclosed in Note 6.3
2 The Group accounts for the remaining 30% interest as a fixed asset
investment, valued at £1.7m.
The aggregate effect of the disposals on the Group's assets and liabilities
were as follows:
UBM
Channel
and Built Other
Delta MS disposals Total Total
2013 2013 2013 2013 2012
£m £m £m £m £m
Goodwill (117.7) (10.7) - (128.4) (10.3)
Intangible assets (24.8) (1.8) - (26.6) -
Property, plant and equipment (7.9) (0.4) - (8.3) (0.1)
Investments in joint ventures and (3.1) - - (3.1) -
associates
Trade and other receivables (38.0) (6.4) - (44.4) (1.6)
Inventories (5.6) - - (5.6) -
Cash and cash equivalents (9.8) - - (9.8) (1.8)
Total assets (206.9) (19.3) - (226.2) (13.8)
Trade and other payables 57.2 5.9 0.2 63.3 4.4
Deferred tax liability 8.7 - - 8.7 -
Total liabilities 65.9 5.9 0.2 72.0 4.4
Identifiable net assets (141.0) (13.4) 0.2 (154.2) (9.4)
Costs associated with disposal (11.0) (0.5) (0.5) (12.0) (2.2)
Cumulative exchange gain 26.0 - - 26.0 -
reclassified to profit and loss on
disposal
Fair value of retained interest2 - 1.7 - 1.7 1.3
(Profit)/loss on disposal (20.5) 4.2 - (16.3) (1.6)
Consideration received 146.5 8.0 0.3 154.8 11.9
Vendor loan note (37.0) (0.1) - (37.1) -
Less cash disposed and deferred (9.8) - - (9.8) (1.8)
consideration
Net cash inflow 99.7 7.9 0.3 107.9 10.1
The Delta vendor loan note is repayable in April 2019 and accrues an annual
interest coupon of 6%.
6.3 Discontinued operations and assets held for sale
Discontinued operations
As disclosed in Note 1, the Group has classified the UBM Channel business,
certain Built MS activities and the Delta businesses as discontinued
operations. Delta was classified as held for sale at 31 December 2012. Details
of the disposed assets and liabilities and the calculation of profit or loss on
disposal are disclosed in Note 6.2.
The results of the discontinued operations which have been included in the
consolidated income statement and consolidated statement of cash flows are as
follows:
Year ended 31 December 2013 UBM
Channel
and Built
Delta MS Total
£m £m £m
Revenue - 24.3 24.3
Operating expenses - (22.2) (22.2)
Adjusted operating profit from discontinued - 2.1 2.1
operations
Amortisation of intangible assets arising on - (0.3) (0.3)
acquisitions
Exceptional operating items - 0.3 0.3
Operating profit from discontinued operations - 2.1 2.1
Financing income - - -
Financing expense - - -
Profit before tax attributable to discontinued - 2.1 2.1
operations
Attributable tax - - -
Profit after tax from discontinued operations - 2.1 2.1
Profit/(loss) on disposal (Note 6.2) 20.5 (4.2) 16.3
Attributable tax - - -
Profit for the period from discontinued 20.5 (2.1) 18.4
operations
Earnings per share for discontinued operations
Basic 7.5p
Diluted 7.4p
Net cash flows attributable to discontinued
operations
Net cash from operating activities 1.4
Net cash from investing activities (12.2)
Net cash from financing activities (1.2)
Net cash flows attributable to discontinued (12.0)
operations
Year ended 31 December 2012 UBM
Channel
and Built
Delta MS Total
£m £m £m
Revenue 174.0 33.7 207.7
Operating expenses (149.8) (31.6) (181.4)
Share of results from joint ventures and 0.7 - 0.7
associates (after tax)
Adjusted operating profit from discontinued 24.9 2.1 27.0
operations
Amortisation of intangible assets arising on (10.0) (0.9) (10.9)
acquisitions
Exceptional operating items 1.8 0.3 2.1
Operating profit from discontinued operations 16.7 1.5 18.2
Financing income - - -
Financing expense - - -
Profit before tax attributable to discontinued 16.7 1.5 18.2
operations
Attributable tax (0.2) - (0.2)
Profit after tax from discontinued operations 16.5 1.5 18.0
Loss on assets held for sale (181.4) - (181.4)
Attributable tax - - -
Loss for the year from discontinued operations (164.9) 1.5 (163.4)
Earnings per share for discontinued operations
Basic (67.0)p
Diluted (67.0)p
Net cash flows attributable to discontinued
operations
Net cash from operating activities 17.2
Net cash from investing activities (6.8)
Net cash from financing activities (14.4)
Net cash flows attributable to discontinued (4.0)
operations
The Delta loss on assets held for sale includes an impairment charge of £159.6m
and costs incurred in relation to the disposal of £21.8m. The classification as
held for sale requires assets and liabilities to be measured at the lower of
their carrying amounts and fair value less costs to sell. Costs of sale include
professional fees of £8.5m, disposal and separation costs of £9.2m and £4.1m of
costs incurred in preparing the business for sale for the year ended 31
December 2012. Further costs incurred on disposal are detailed in Note 6.2.
Assets held for sale measured at the lower of their carrying amounts and fair
value less costs to sell
Delta Delta
2013 2012
£m £m
Goodwill - 117.7
Intangible assets - 24.8
Property, plant and equipment 0.1 8.0
Investments in joint ventures and - 3.1
associates
Inventories - 5.6
Trade and other receivables 0.8 39.8
Cash and cash equivalents - 8.4
Assets classified as held for sale 0.9 207.4
Trade and other payables (0.4) (58.5)
Current tax liability - (2.0)
Deferred tax liability - (8.7)
Liabilities associated with assets (0.4) (69.2)
classified as held for sale
Net assets classified as held for sale 0.5 138.2
7. Events after the reporting period
On 1 January 2014, the Group disposed of the International Customer Management
Institute (ICMI) business for initial cash consideration of £1.1m, subject to
working capital and performance adjustments.
On 1 January 2014, the Group disposed of its telecoms research business,
Pyramid Research, for initial cash consideration of £2.0m, subject to working
capital adjustments.
On 31 January 2014, the Group disposed of 66% of its interest in the Light
Reading business for initial cash consideration of £7.2m including a £5.4m
vendor loan note, subject to working capital adjustments.