Regulatory Announcements
REG-United Bus Media Ld: Preliminary results - Part 1
Released: 05/03/2010
Disciplined and resilient performance in tough year
Results for the Year Ended 31 December 2009
Key Results 2009 2008
Revenue £847.6m £887.0m
Adjusted operating profit £171.2m £173.5m
Adjusted EPS 55.1p 57.0p
Dividend per share 24.2p 23.8p
Statutory group operating (loss)/profit £(25.8)m £107.6m
Statutory profit after tax £81.8m £82.7m
Statutory EPS 30.9p 31.5p
Statutory EPS (diluted) 30.5p 30.8p
Financial Highlights
- Strong margins maintained; adjusted operating profit flat
- Robust operating cash flow; cash conversion up to 102.0% (2008 - 100.1%)
- Continuing cost discipline - headcount reduced by 479 during 2009
- Emerging markets revenue up 35.9%: c.20% of UBM adjusted operating profits
from China, India & Brazil (2008 - c.15%)
- £46.5m payment in March 2010 to settle major tax issues, £135.2m tax
creditor release
- £153m impairment charge reflects structural pressures on print-heavy units
- Exceptional charge of £16.5m for restructuring costs
- Positive FX contribution: at constant currency, revenues declined 15%,
adjusted operating profit down 13%
- Balance sheet remains strong - debt / EBITDA 1.2 times; cash & undrawn
facilities of £467.1m
Trading Highlights
Resilient Events performance: 51% of adjusted operating profits (2008 - 47%)
- Revenues down 1.5%, adjusted operating profit up 6.1%, margins up 2.2 points
to 30.3%
- Very strong H2 biennial tradeshow performance; revenues up 55% on 2007
Solid performance in Data, Services & Online: 22% of adjusted operating
profits (2008 - 18%)
- Revenues up 3.4%, adjusted operating profit up 22%, margins up 2.5 points to
16.3%
Active management of Print - magazine portfolio: 5% of adjusted operating
profits (2008 - 14%)
- Revenues down 23.1%, adjusted operating profit down 62.8%, margins down 5.7
points to 5.4%
Robust performance in Targeting, Distribution & Monitoring: 26% of adjusted
operating profits (2008 - 25%); revenues up 4.6%, adjusted operating profit up
3.5%, margins down 0.3 points to 27.8%
Outlook
Overall, the outlook for underlying performance in 2010 is stable; UBM is well
positioned for medium term growth in Events; Data Services & Online; and
Targeting, Distribution & Monitoring which now account for 95% of UBM's
adjusted operating profit before corporate operations.
Events: Robust performance expected to continue, especially in high growth
emerging markets
- 12 month forward bookings for top 20 annual events down 1.7%
Data, Services & Online: Modest revenue growth anticipated in 2010
- Further investment to support print / digital transition pressures margins
slightly
Print - magazines: Continued management towards more focused print portfolio
in medium term
- Further revenue falls and title closures anticipated but margins stable
Targeting, Distribution & Monitoring: On track for modest revenue growth in
2010
- Performance driven by multimedia products and international
- Margins in mid-20s as investment continues
Note: We provide a number of adjusted financial measures to facilitate
comparison of performance across periods. Definitions of these measures are
provided in Section 1.
David Levin, Chief Executive Officer of UBM said:
"UBM produced a disciplined and resilient performance in 2009. We continued to
make progress both strategically and operationally in all of our divisions. We
have reshaped our businesses towards market opportunities that provide
sustainable growth revenue streams and we are increasingly well positioned to
take advantage of global economic recovery. The Board has declared a second
interim dividend of 18.2p, bringing the full year dividend to 24.2p, a 1.7%
increase on 2008 (2008 - 23.8p)."
"Our Events business traded well in 2009, contributing more than half our
adjusted operating profits and demonstrating the growing importance of
market-leading face to face events in the digital age. Our large tradeshows
fared particularly well with our top 20 annual events - which contribute
around half of our events revenue and over two thirds of our events adjusted
operating profits - growing nearly 12%. As expected our second half biennial
shows in Asia and Europe were notably strong."
"The performance across our Data, Services & Online business was satisfactory
with margins improving by 2.5 percentage points. In Targeting, Monitoring &
Distribution we maintained our share of US news distribution market and held
our margins while market volumes shrank 3.1%. We continue to grow our
multimedia news release business and to broaden our product portfolio to
address the opportunities offered by the web as well as expanding our
international operations."
"We continued to progress UBM's strategic development. Our long term strategy
to build our business in emerging economies is proving successful, with China,
India and Brazil now contributing over 20% of UBM's adjusted operating profits
and nearly 14% of our revenues, representing revenue and adjusted operating
profit growth of more than 35%. Our revenues from the rest of Asia Pacific,
Latin America, Africa and Middle East amounted to a further £41.0m, up 17.1%
on 2008. These territories contributed 4.5% of UBM's adjusted operating
profits in 2009 (2008 - 3%)."
"We are pleased to have resolved our decade-long dialogue with the UK tax
authorities over the tax payable on the sale of our Regional Newspapers
business in 1998. We have agreed to make a payment of £46.5m in settlement of
this and a number of other tax issues. This, together with the resolution of a
number of other tax matters, has resulted in a release of £135.2m of our
previous tax creditor."
"We go into 2010 with our strategy clearly defined and with the operational
and financial resources in place to implement that strategy. Despite the
tentative and uneven economic recovery we see across our markets, we believe
we are very well positioned for profitable growth in the medium term."*
David Levin
Chief Executive Officer, UBM
5 March 2010
* A detailed outlook by UBM business segment is given in Section 2.5
Contacts
Media
Peter Bancroft Director of Communications
E-mail communications@ubm.com
Direct telephone +44 20 7921 5961
Chris Barrie Citigate Dewe Rogerson
E-mail chris.barrie@citigatedr.co.uk
Direct telephone +44 20 7282 2943
Mobile +44 796 872 72 89
Analysts / Investors
E-mail investorrelations@ubm.com
Direct telephone +44 20 7921 5095
Robert Gray +44 20 7921 5019
Andrew Crow +44 20 7921 5940
A live webcast of the results presentation will be made available from UBM's
website from around 8.30am, 5 March 2010. To access the webcast please go to
www.ubm.com.
A video recording of the webcast will also be accessible from UBM's website,
www.ubm.com.
Notes to Editors
About UBM
UBM is a leading global provider of events; data, marketing and information
products; print products; and targeting, distribution and monitoring services
to specialist business communities. Our 5,800 staff in more than 30 countries
are organised into specialist teams that serve these communities, helping them
and their markets to work effectively and efficiently.
For more information, go to www.ubm.com
Results for the year ended 31 December 2009
1 Summary group income statement
The table set out below presents selected items from UBM's consolidated income
statement (which accompanies this summary), together with a reconciliation to
non-GAAP measures, which we provide to assist in the comparison of the results
between periods.
Year
ended
2009 2008
£m £m %
Revenue 847.6 887.0 (4.4)
Group operating profit before exceptional
items 143.7 146.7
Add back:
- Amortisation of intangible assets arising
on acquisition 26.8 26.1
- Depreciation 13.2 12.9
- Share of tax on profit in JVs and
associates 0.7 0.7
EBITDA[1] 184.4 186.4
Depreciation (13.2) (12.9)
Adjusted operating profit [2] 171.2 173.5 (1.3)
Net interest costs (13.0) (6.4)
Financing income:
- Pension schemes 2.2 4.4
- Foreign exchange gain on forward contracts 4.7 -
Adjusted profit before tax[3] 165.1 171.5 (3.7)
Net financing income - other 2.9 0.3
Net financing expense - other (6.7) (4.6)
Amortisation of intangible assets (26.8) (26.1)
Exceptional items:
- Restructuring (16.5) (39.1)
- Impairment (153.0) -
(Loss) / Profit before tax (35.0) 102.0
Taxation (18.4) (20.9)
Tax on exceptional items - 1.6
Exceptional tax credit 135.2 -
Profit after tax 81.8 82.7
Minority interest (6.6) (6.3)
Attributable profit 75.2 76.4
Dividend (pence) 24.2 23.8 1.7
Adjusted EPS (pence) [4] 55.1 57.0 (3.3)
Adjusted EPS (diluted) - (pence) [5] 54.2 55.8 (2.9)
EPS (pence) 30.9 31.5 (1.9)
EPS (diluted) 30.5 30.8 (1.0)
---------------------------------
[1] EBITDA is adjusted group operating profit before depreciation.
[2] Adjusted operating profit is group operating profit excluding amortisation
of intangible assets arising on acquisitions, exceptional items and share of
taxation on profit from joint ventures and associates.
[3] Adjusted profit before tax is before amortisation of intangible assets
arising on acquisitions, exceptional items, share of taxation on profit from
joint ventures and associates, net financing expense - other and excluding
discontinued operations.
[4] Adjusted earnings per share is before amortisation of intangible assets
arising on acquisitions, certain exceptional items, deferred tax on intangible
assets, taxation relating to exceptional items and net financing expense -
other.
[5] Adjusted diluted earnings per share is before amortisation of intangible
assets arising on acquisitions, certain exceptional items, deferred tax on
intangible assets, taxation relating to exceptional items and net financing
expense - other, after adjusting for the impact of share options.
2 2009 Review
2.1. Summary of operating results
The table below presents the revenue and adjusted operating profit for our
business segments - Events; Data, Services & Online; Print - magazines; and,
Targeting, Distribution & Monitoring.
Revenue
Constant
currency
2009 2008 Change change Under-lying2
£m £m % % %
Events 287.5 291.8 (1.5) (12.1) (8.8)
Data, Services &
Online 232.9 225.3 3.4 (9.3) (9.2)
Print - Magazines 165.8 215.6 (23.1) (30.3) (18.6)
Targeting,
Distribution &
Monitoring 161.4 154.3 4.6 (9.1) (9.6)
847.6 887.0 (4.4) (15.2) (11.1)
Adjusted operating profit1
Constant
currency
2009 2008 Change change Under-lying2
£m £m % % %
Events 87.2 82.2 6.1 (6.0) (9.9)
Data, Services &
Online 37.9 31.1 21.9 7.4 0.9
Print - Magazines 8.9 23.9 (62.8) (65.8) (49.9)
Targeting,
Distribution &
Monitoring 44.8 43.3 3.5 (9.7) (13.8)
Corporate
Operations3 (7.6) (7.0) 8.6 n/a n/a
171.2 173.5 (1.3) (13.0) (13.9)
1 Adjusted operating profit is operating profit excluding amortisation of
intangible assets arising on acquisitions, exceptional items and share of
taxation on profit from joint ventures and associates.
2 Underlying: adjusted for the effects of acquisitions, discontinued products,
foreign exchange and biennial events.
3 Corporate operations comprises net central operating costs, together with
those equity accounted investments which do not form part of one of the
group's operating divisions.
2.2. 2009 summary
In 2009 UBM delivered a disciplined and resilient operational and financial
performance in a very difficult worldwide economic environment. We maintained
our strong cash flow, margins and Sterling-reported profits, although
underlying profits fell 13.9%. We have maintained our second interim dividend
which, together with the first interim dividend, represents a modest increase
of 1.7% for the year as a whole.
Despite extremely challenging conditions in many of our markets, our major
growth segments (Events; Data, Services & Online; Targeting, Distribution &
Monitoring) all performed robustly, with notable results from our larger
tradeshows, Asian operations and online activities. During the year we
continued to ensure that we maintained a cost base appropriate to market
conditions. The principal focus of our action was on our Print -magazine
segment which faced the challenge of combined acute structural and cyclical
pressures and reported a 30.3% revenue reduction year on year in constant
currency terms. In response we closed 31 titles.
During the year we built our businesses in markets and geographies which offer
opportunities for sustainable, profitable growth. Live events are of growing
strategic importance to UBM: in 2009 we ran more than 300 events and our wider
event portfolio generated more than half of our profits. Live events have a
strong future in the digital age. We also see developing business
opportunities in linking live events and online `virtual' products as part of
a rich, integrated offering to specialist communities.
Despite 2009's economic conditions we continued to expand our successful
products and services, particularly tradeshows, in fast-growing emerging
economies. This has been a long term UBM strategic priority and a key element
in driving profitable growth in the future. Our primary - but not exclusive -
focus has been on China, India and Brazil. Of these, our largest presence is
in China where we now employ over 700 people. We have recently appointed a
senior executive to represent UBM in Beijing to build our governmental
relationships at all levels and to facilitate our expansion across China. In
2009 the revenues we generated in China, India and Brazil grew nearly 36% and
these countries contributed over 20% of our profits, doubling their
contribution since 2006.
In 2009 we invested £27.7m in the acquisition of four new businesses, and
increased our stake in a fifth. These were all `bolt-on' acquisitions to
advance the development of our existing businesses. Acquisitions made in the
last three years continue to perform well, generating an aggregate return on
investment of 9.2% in 2009, reinforcing our track record of selecting good
acquisition targets, acquiring them at attractive valuations and integrating
them effectively.
In 2009 we continued to make progress both strategically and operationally in
all of our divisions and we are increasingly well positioned to generate
superior returns as the global economy recovers.
2.3. UBM strategy summary
In 2009 we have continued to implement our clearly defined strategy. UBM
organises live events and provides marketing services, data, communications
and media products and services which support the business activities of
specialist communities in a wide range of countries worldwide. By operating
close to these communities, our businesses have the deep market insight to
develop the best possible products and services. We deploy our core skills
across and between markets, transferring best practice and innovation from one
community to another, from one geography to another, from one product type to
another.
Our strategy for profitable growth targets products and markets which will
prosper in the emerging digital age and which provide us with global growth
opportunities. Our focus is on developing our live events (in particular
tradeshows), our specialist data and online businesses, and our targeting,
distribution and monitoring business. We are building our businesses in
fast-growing, emerging markets, with a particular emphasis on China, India and
Brazil. We also invest to acquire businesses that can accelerate our growth in
markets, communities and geographies. We continue to manage our remaining
print magazines appropriately in a difficult structural context; however we
see a long term role for leading print titles in the overall future media mix.
2.4. 2009 business review
2.4.1. Events - UBM's largest business
2009 2008 Reported Underlying Constant
change growth currency
£m £m % % %
Turnover 287.5 291.8 (1.5) (8.8) (12.1)
Operating Profit 87.2 82.2 6.1 (9.9) (6.0)
In 2009 our events portfolio generated 33.9% of UBM's total revenue (2008 -
32.9%) and 50.9% of total adjusted operating profit (2008 - 47.4%). Revenue
fell by 1.5% to £287.5m (2008 - £291.8m) and adjusted operating profit
increased by 6.1% to £87.2m (2008 - £82.2m). These results reflect lower
Sterling exchange rates; on a constant currency basis revenues and adjusted
operating profit were down 12.1% and 6.0% respectively.
Our Events portfolio proved its resilience in 2009, with sales of exhibition
stand space of nearly 1 million square metres in line with 2008 (including
87,000 square meters at 2009 biennial shows, up from 76,000 for 2008
biennials). We hosted more than 1,250,000 visitors across our 300 events
worldwide, up 10% on the prior year. Notably, stand revenues excluding
biennial events were up 12% over 2008 at reported exchange rates, and were
flat in constant currency terms. These stable stand revenues were offset by
weaker paid attendee and sponsorship revenues, reflecting cyclical pressures
on corporate travel and marketing budgets. The impact of this reduction was
concentrated at our paid attendee US technology events. Attendee revenues
contribute around 10% of our overall Events revenues.
Our major event franchises, such as CPhI and Cosmoprof ran successfully during
the year. We saw particularly good performances from our Asia events such as
the September Hong Kong Jewellery Show (now our largest event and the largest
jewellery show in the world), Furniture China and CPhI China, all of which
grew by more than 10%.
Our biennial tradeshows were also very strong, notably the Marintec China show
in Shanghai and Food Ingredients Europe in Frankfurt, both of which ran during
the second half of the year. Overall, biennial events contributed revenue of
£29.7m and adjusted operating profit of £13.9m, up from £18.0m and £5.9m
respectively in 2008, and notably, up from £19.1m and £7.6m from the 2007
editions.
The performance of our events in Japan and in the UK's construction and
property-related sectors reflected difficult market conditions, as previously
indicated.
Despite the difficult environment in 2009 we continued to geo-clone our
successful events, particularly in emerging economies. Worldwide we launched a
total of 36 new events in 2009, including 15 in China, India and Brazil,
taking our total number of events in these countries to 59, up from 44 in
2008. In India we ran a total of 22 shows in 2009, compared with just three in
2006 and we launched eleven new events including the Jewellery Show (Chennai),
Informex India, Footwear Manufacturing (New Delhi) and Interop India. The
events traded successfully, helping lay the foundations for our future growth
in this rapidly growing economy. We also took our BSEC event (Built
Environment for Schools) to the Middle East for the first time.
Events are a key focus of UBM's growth strategy, founded on our belief in the
growing importance of live, `in person' interaction in the digital age and its
role in sustaining and advancing the development of commercial communities.
The events market provides us with substantial profitable growth opportunities
which are both resistant and complementary to digital developments taking
place in other media markets. We are increasingly well placed to use the
combined strengths of our global operational infrastructure and of our
in-depth knowledge of the specialist communities we serve to deliver
successful, profitable, `in person' events worldwide.
Forward bookings for our top 20 annual events due to run over the next twelve
months are currently 1.7% below last year's level. Our top 20 annual events
contribute around half of our events revenues and over two thirds of our
events profits. For a more detailed business by business Outlook, see Section
2.5.
2.4.2. Data, Services & Online
2009 2008 Reported Underlying Constant
change growth currency
£m £m % % %
Turnover 232.9 225.3 3.4 (9.2) (9.3)
Operating 37.9 31.1 21.9 0.9 7.4
Profit
Our Data, Services & Online businesses generated 27.5% of UBM's total revenue
in 2009 (2008 - 25.4%) and 22.1% of total adjusted operating profit (2008 -
17.9%). Revenue rose by 3.4% to £232.9m (2008 - £225.3m) and adjusted
operating profit climbed by 21.9% to £37.9m (2008 - £31.1m). On an underlying
basis, revenues and adjusted operating profit down 9.2% and up 0.9%
respectively.
Overall the performance across the Data, Services & Online segment was
satisfactory with margins improving by 2.5 percentage points to 16.3% (2008 -
13.8%). Margins increased due to cost savings, favourable exchange movements
and higher margins in acquired businesses and new products such as virtual
events moving from loss into profit. Reflecting the diverse markets and
geographies in which we operate, the results for individual products and
businesses were mixed, with structural market shifts and the year's tough
economic conditions having different impacts.
During 2009 we continued to invest in the development of innovative,
customised marketing solutions which deliver empirical metrics of engagement
(and return on investment) with increasingly targeted customer audiences.
Reflecting the shift in demand towards these products, as well as the cyclical
economic pressures on marketing spend, traditional online banner advertising
revenues declined by around 10% on a constant currency basis in the year.
Across our data-oriented products, Vidal (drug information directories)
performed well and ABI (construction health and safety data) in the UK
reported good sales growth but tough trading conditions drove lower revenues
in electronics (Semiconductor Insights), aviation (OAG), trade and
transportation (PIERS) and Paper & Forestry markets (RISI).
Over the last several years we have invested in the development of our virtual
events. In 2009 we ran a total of 38 virtual events, more than double the
number we ran in 2008. Our virtual events included recruitment and careers
fairs, content-rich seminars and conferences, as well as expo-type events. The
majority of our virtual events took place within the technology market but we
also ran events in markets such as UK commercial property, cruise shipping and
US healthcare.
The rapid growth in the number of these events and their attractive audience
engagement metrics have led to increasing sponsorship by our major customers.
This demonstrates the ability of virtual events to provide a powerful, cost
effective means of bringing customers together to engage and to interact with
branded business content and as well as a means of building professional
business community interaction. We now run a number of our live virtual and
`in person' tradeshow events in parallel and we believe there is a symbiotic
relationship between virtual and `in person' tradeshows which is generating
significant business opportunities.
To reinforce our leadership position in virtual events, we established UBM
Studios to provide support across UBM, enabling us to deliver a range of
specialised, engaging online interactive products to the communities we serve,
complementing the other on- and offline products offered by our businesses
(see www.ubmstudios.com for examples).
Revenues generated from other forms of online products such as net seminars,
webcasts and webinars remained broadly in line with 2008. Notably, in 2009 our
virtual events moved into profit after two years of investment.
We see significant strategic opportunities in building data-intensive services
and products for specific, niche markets. After significant investment at the
UBM Aviation business, we launched a new technology platform to facilitate
migration away from the business's legacy mainframe systems. The new platforms
allow us to enhance the existing products and to develop new products which
better exploit our rich data resources. Similarly we are investing in the
development of our healthcare business's global Drug Information System
capabilities and in 2009 we also made further progress in converting print
data products to digital products such as Vidal and MIMS in Asia.
In 2009 we made two acquisitions in the Data, Services & Online business
segment. We acquired Iasist (www.iasist.com) for a total cash consideration of
#6.4m. Iasist is a provider of benchmarking data and software to regional
health authorities, hospitals and other health service providers, principally
in Spain and Portugal. The acquisition further expands our range of healthcare
data solutions, both in Iberia and beyond. We also acquired the remaining 48%
equity of RISI, Inc (www.risiinfo.com) for a total cash consideration of
$14.3m.
2.4.3. Print - magazines - structural change and economic downturn
2009 2008 Reported Underlying Constant
change growth currency
£m £m % % %
Turnover 165.8 215.6 (23.1) (18.6) (30.3)
Operating 8.9 23.9 (62.8) (49.9) (65.8)
Profit
In 2009 Print - magazines generated 19.6% of UBM's total revenue (2008 -
24.3%) and 5.2% of adjusted operating profit (2008 - 13.8%). 2009's economic
conditions accelerated the long term structural decline in print advertising
revenues, resulting in UBM's Print - magazine portfolio reported revenue
falling 23.1% to £165.8m (2008 - £215.6m) and adjusted operating profit of
£8.9m, down from £23.9m in 2008. On an underlying basis, revenue and adjusted
operating profit fell 18.6% and 49.9% respectively. On a constant currency
basis revenue and adjusted operating profit were down 30.3% and 65.8%
respectively.
We continued to take action to mitigate the effects of both structural decline
and cyclical pressures on revenues, closing 31 titles as well as merging and
reducing the frequency of a number of other titles. These actions resulted in
a reduction in revenue and adjusted operating profit of £31.8m and £6.5m
respectively. Our exceptional charge of £16.5m largely reflects the costs of
taking these actions. The margins generated by our Print - magazine business
recovered in the second half to 7.1%, compared with the 3.8% achieved for the
first half of the year.
The B2B magazine world remains significantly over-published in the developed
world and a significant number of titles will close in the coming years. In
many - but not all - of the markets we serve, there will continue to be
sufficient demand to support one or two leading titles, a position which each
market will reach by means of a "last man standing" process. We continue to
manage our print portfolio actively towards a medium term goal of a smaller,
commercially sustainable, more profitable portfolio in which most titles
operate as part of an integrated portfolio of products serving a particular
community.
Reader demand for quality content in print remains robust in many markets and
geographies. We continue to see opportunities in emerging economies for new
print titles and during 2009 we launched a number of new publications to test
markets in India. In addition data derived from registrations for controlled
circulation publications, particularly those serving the US technology
markets, represent an important resource for our event lead generation and
performance marketing businesses, providing them with a significant
competitive advantage over their `internet only' competitors.
2.4.4. Targeting, Distribution & Monitoring - opportunities in converging
communications markets
2009 2008 Reported Underlying Constant
change growth currency
£m £m % % %
Turnover 161.4 154.3 4.6 (9.6) (9.1)
Operating 44.8 43.3 3.5 (13.8) (9.7)
Profit
Targeting, Distribution and Monitoring generated 19.0% of UBM's total revenue
(2008 - 17.4%) and 26.2% of adjusted operating profit (2008 - 25.0%). Revenue
rose by 4.6% to £161.4m (2008 - £154.3m) and adjusted operating profit rose
3.5% to £44.8m (2008 - £43.3m) although these results reflect favourable
exchange rate movements on the results of the US business. We continued to
invest in the business and capital expenditure at PR Newswire was £5.6m (2008
- £5.5m). Notwithstanding the increased depreciation charges from our historic
and continued investment in the business, margins were broadly flat (dropping
0.3 percentage points).
The business was affected by difficult economic conditions, lower aggregate
levels of corporate and market activity and the associated general reduction
in marketing and communications expenditure. In the US news distribution
business, which generated nearly 50% of overall 2009 revenues, we maintained
market share, although message volumes across the market fell by 3.1%. The
fall in aggregate volume was concentrated in the first half of the year with
the market recovering to end the second half of the year flat.
Non-wire targeting and monitoring products in the US were also affected by
lower levels of corporate spending. However we saw strong growth in the volume
of multimedia news releases (up 35%) and in the hosted website engagement
products, MediaRoom and IR Room (up almost 65%). Our significant presence in
these markets was enhanced during the year by the acquisitions of the Fuel
Team (a provider of specialist website modules for communications
professionals) and Virtual Press Office (PR services provider for the Events
industry) for a total of $9m.
The performance outside North America was mixed with challenging trading
conditions in the UK, Mexico and Dubai but with strong growth in France and
Germany. Revenue growth in China and the rest of Asia was also good despite
the weak Chinese IPO market which has previously contributed a significant
proportion of revenue. Growth in other emerging markets (India, Brazil,
Argentina and Russia) has also been strong. These emerging markets contributed
nearly 5% of total revenues (2008 - 3.3%) and in aggregate grew by more than
20% in the year.
In addition to our continued geographical expansion, we see market
opportunities arising from the convergence of marketing, public relations,
investor relations and corporate communications practice, a shift which is
being driven by the fragmentation of traditional media and the rise of social
and online media. We aim to leverage our core global distribution capabilities
to take advantage of these opportunities, by means of organic product
development and acquisitions. Revenues in these areas already substantially
outstrip those generated in the regulatory disclosure market, with just over
17% of total revenue being generated in this area, the remainder being
accounted for by communications, PR and marketing.
We are creating new cost-effective marketing products and services to support
our customers' development of ongoing, interactive relationships with
increasing specifically-targeted audiences. During the year we launched a
number of new products such as Social Media Monitoring, an intelligence tool
that enables communications professionals and marketers to monitor, analyse
and measure the impact of what is being said about an organisation, a brand, a
spokesperson or a competitor across the social media landscape.
In addition to new products, we also enhanced existing products, including
visibility reports, online proofing to news releases within the Online Member
Centre, as well as completely overhauling the main PR Newswire website and its
supporting IT systems (see www.prnewswire.com). The investment made during
2009 is reflected in the profit margin, which, together with the decline in
revenue, accounts for the fall from 28.1% in 2008 to 27.8% in 2009.
Virtual Press Office, acquired in December, will be integrated with our
existing global events platform to position the Targeting, Distribution and
Monitoring business as the leading marketing and communications service
provider in the US live event market. Announcements relating to live events
already account for 8.1% of total releases in the USA and are in the top 3 of
all categories of releases. This service will be used across UBM's global
events portfolio, as well as by other event organisers, exhibitors and
attendees worldwide. The business will also be well placed to continue its
growth beyond the domestic US market both through its access to UBM's global
tradeshow and other live event portfolio, as well as through VPO's existing
extensive relationships with leading event organisers around the world,
particularly in Europe and Asia.
2.5. Outlook
Our overall underlying trading performance is stable. Our Events business is
performing well and we see long term opportunities in this and in our Data,
Services & Online and our Targeting, Distribution & Monitoring businesses. We
anticipate continued contraction in print and, given the tentative and uneven
economic recovery, have limited visibility on attendee revenues and client
marketing spend. Our Asian and emerging market positions are set to continue
to grow - and this represents an increasing part of our business.
In the light of these factors, we believe UBM is increasingly well positioned
for sustainable, profitable growth in the medium term.
We note that 2010 is a `negative' biennial year for our Events portfolio and
that the exchange rate for 2010 may be significantly different from the $1.57
average rate in 2009.
2.5.1. Outlook for Events
In 2009 our Events portfolio contributed 33.9% of UBM's revenues and 50.9% of
adjusted operating profits.
In aggregate we expect the robust performance of our Events portfolio to
continue, particularly in high growth emerging markets. Forward bookings for
our top 20 annual events running in the next twelve months - which contributed
around half of our total events revenue and over two thirds of total events
adjusted operating profits in 2009 - are 1.7% lower than at this point last
year. However because we will run fewer of our large biennial tradeshows in
2010 than in 2009, revenues will be lower. 2009 biennial revenues were £29.7m
and 2008 biennial revenues were £19.9m at a constant currency rates.
We anticipate that events which serve markets and geographies that continue to
be affected by the downturn, such as the UK furniture industry and our events
in Japan, will continue to contract modestly in 2010. Our UK furniture show
which ran in January 2010 was down by 10% although rebookings for the January
2011 event were 12.5% up.
In comparison to our exhibitor-paid events, we have limited visibility on our
US paid attendee events which are predominantly US technology events such as
Game Developer Conference, Interop and Black Hat and note that the pattern of
attendee bookings has shifted significantly later. Paid attendee revenue
represents around 10% of our total events revenue.
We believe our Events business is well placed to generate medium term growth
in excess of GDP. Given our focus on emerging markets within that portfolio,
we are anticipating trough to trough or peak to peak growth across the
portfolio of around GDP plus 3-5% a year in the markets we serve.
2.5.2. Outlook for Data, Services & Online
In 2009 our Data, Services & Online activities contributed 27.5% of UBM's
overall revenues and 22.1% of adjusted operating profits.
The Vidal drug information products have largely traded for 2010 and are in
line with our expectations. We anticipate that the results of our subscription
data products will reflect reduced 2009 renewals.
We believe our Data, Services & Online business is well placed to secure
medium term growth in excess of GDP.
We see significant strategic opportunities to invest in data-intensive
services & products serving specific markets. We continue to migrate data
products to workflow solutions.
2.5.3. Outlook for Print - magazines
In 2009 our Print - magazine business contributed 19.6% of UBM's overall
revenues and 5.2% of adjusted operating profits.
We continue to manage our Print - magazine portfolio actively in response to
intense structural and cyclical pressures. Our medium term goal is to
establish a smaller, commercially sustainable, more profitable portfolio. The
proportion of UBM's revenues generated by print magazine products will
continue to fall and we anticipate that it will be less than 15% by the end of
2010.
2.5.4. Outlook for Targeting, Distribution & Monitoring
In 2009 our Targeting, Distribution & Monitoring business contributed 19.0% of
UBM's overall revenues and 26.2% of adjusted operating profits.
Our share of the US news distribution market - which generates nearly half of
revenue - has been stable in 2009 but overall market volumes declined 3.1%
over the year, principally in the first half of the year.
We continue to grow our non-wire, multimedia and online products such as
ProfNet, MultiVu and MediaRoom. We expect to continue to expand our revenues
generated in China, Europe and Latin America.
We believe our Targeting, Distribution and Monitoring business is well placed
to secure medium to long term growth in excess of GDP. While we expect
continued competitive pressure in the US news distribution market,
particularly in lower value text-based releases, we see significant growth
opportunities in web-based multimedia, monitoring and targeting products and
in driving the business's international growth.
3 Acquisitions
In 2009 we invested £27.7m in the acquisition of four new businesses, and
increased our stake in a fifth. Our investment comprised cash of £22.7m (net
of cash acquired) and deferred contingent consideration of £5.0m. We also made
payments totalling £10.1m in respect of earnouts relating to acquisitions made
in prior years.
Initial
consideration
net of cash Deferred Total
2009 Acquisitions acquired** consideration consideration
£m £m £m
Iasist - 3/7/09 5.5 - 5.5
RISI (remaining 48%) - 8.7 - 8.7
3/7/09
The Fuel Team - 31/7/09 1.5 2.8 4.3
CIOE (70% interest)* - 3.0 - 3.0
27/8/09
Virtual Press Office - 4.0 2.2 6.2
14/12/09
22.7 5.0 27.7
* Subsequently transferred to eMedia joint venture with Global Sources Inc.
** Excluding working capital adjustments and acquisition costs.
Contingent deferred consideration Total
£m
At 1 January 2009 38.6
Change in estimate (5.7)
Acquisitions during the year 5.0
Earnouts paid (10.1)
Foreign exchange gain (2.7)
At 31 December 2009 25.1
Acquisition performance
Consideration Pre-tax return
£m * on investment
2007 2008 2009
2007 acquisitions 91.2 10.4% 9.1% 9.3%
2008 acquisitions 51.3 - 12.4% 6.5%
2009 27.7 - - 14.8%
acquisitions**
Total 170.2 9.2%
* Consideration (net of cash acquired) includes the latest estimate of
expected earnouts.
** Return on Investment calculated on a proforma basis.
2009 acquisitions contributed adjusted operating profit of £2.6m since their
acquisition and achieved a pre-tax return of 14.8% on a pro forma basis.
4 Dividend
The Board has declared a second interim dividend of 18.2 pence per share (2008
- 18.2 p) in lieu of a final dividend, bringing the total dividend for the
year to 24.2p, an increase of 1.7% on the prior year (2008 - 23.8p). Dividend
cover (based on adjusted EPS) is 2.3 times for 2009.
The second interim dividend on ordinary shares will be paid on 20 May 2010 to
shareholders on the register at close of business on 16 April 2010.
Pursuant to the Dividend Access Plan, shareholders may elect to receive their
dividend from a UK source. Shareholders who hold more than 50,000 shares and
who wish to receive their dividend from a UK source must make an election.
Shareholders who held 50,000 or fewer UBM shares on the date of admission of
the Company's shares to the London Stock Exchange or (if later) on the first
dividend record date after they became shareholders in the Company, will be
automatically deemed to have elected to receive a UK-sourced dividend. All
elections remain in force indefinitely unless revoked. Unless shareholders
have made, or are deemed to have made, an election under the Dividend Access
Plan, their dividends will be paid from an Irish source and will be taxed
accordingly.
5 Cash flow and cash conversion
Cash generated from operations rose to £142.7m from £136.1m in 2008,
reflecting continued tight discipline in controlling costs and working capital
generation. Cash conversion[***] rose to 102.0% of adjusted operating profits
(2008 - 100.1%). Free cash flow was £98.7m, compared with £101.5m in 2008,
despite the difficult trading conditions in a number of our key markets.
During 2009, we paid £34.3m for acquisitions (net of cash acquired) and
earnout payments in relation to acquisitions made in prior years. Following
the payment of £58.8m of dividends to shareholders and a foreign exchange
movement of £27.9m, consolidated net debt at 31 December 2009 stood at
£226.4m, down from £260.4m at the end of 2008.
[***] Cash conversion is adjusted cash generated from operating activities
expressed as a percentage of the adjusted operating profit.
6 Financing and interest expense
In November 2009 we further strengthened our capital resources through the
issuance of £250m of 6.5% Sterling bonds maturing 2016, lengthening UBM's debt
maturity profile and and diversifying funding sources. The proceeds of this
issue were used to repay outstanding debt. We entered into currency and
interest rate swaps so that £100m of the issue effectively carries a US Dollar
fixed rate of approximately 6.3%; the balance is swapped into US Dollar
floating LIBOR + a spread of approximately 3.1%.
We have maintained our £325m multi-currency revolving credit facility provided
by key relationship banks, which matures in July 2012. At 31 December 2009 UBM
had drawn £16.8m from the facility leaving £308.2m available. Cash and
equivalents totalled £158.9m at year end 2009.
Our balance sheet remains strong, with net debt at 31 December 2009 of
£226.4m, or 1.23 times 2009 EBITDA of £184.4m.
Net finance expense for 2009 was £9.9m, including an exceptional cost of £6.7m
incurred on the unwind of interest rate swaps hedging debt repaid upon
issuance of the sterling bond. The composition of the net expense was as
follows:
£m £m
Interest income - Cash and cash 1.8
equivalents
Interest expense (14.8)
Financing income: 6.9
Pension schemes 2.2
Foreign exchange gain on forward 4.7
contracts
Financing income - other 2.9
Early settlement of interest rate swap (6.7)
contracts
Net finance expense (9.9)
Financing income from pension schemes for 2010 is anticipated to be £2.1m. It
is not expected that the gains on foreign exchange forward contracts, other
financing income items or the exceptional settlement cost will recur in 2010.
7 Currency
Our revenue and adjusted operating profit in 2009 were generated principally
in currencies other than Sterling, as follows:
2009 2009
Revenue % Adjusted operating
profit %
US Dollar 57.8 57.0
Euro 17.8 25.3
UK Pound Sterling 15.5 10.3
Canadian Dollar 3.1 4.7
Japanese Yen 1.9 1.3
Other 3.9 1.4
_____ _____
Total 100 100
In the following table, we provide an estimate of the sensitivity of our
revenue and adjusted operating profit to fluctuations in exchange rates of the
key foreign currencies in which we operate:
Average Exchange rate Effect on Effect on
exchange rate varies by revenue adjusted
in 2009 operating profit
+/- +/-
US Dollar 1.57 1 cent £3.1m £0.6m
Euro 1.12 1 cent £1.3m £0.4m
8 Tax
UBM's effective rate of income taxation for the year was 15.0% (2008 - 15.9%).
We have resolved a number of outstanding tax issues with various tax
authorities worldwide (including the UK, USA, Netherlands and Luxembourg). The
most significant issues were with the UK tax authorities, including the
long-standing dispute relating to the disposal of our Regional Newspapers
business in 1998. We have agreed to make a total payment of £46.5m to HMRC in
March 2010. The resolution of these issues has resulted in a release of
£135.2m of our previous tax creditor. We have now resolved all outstanding
issues in the UK for all years up to the end of 2007 and our overall tax
creditor at 31 December 2009 has been reduced to £109.0m (including the £46.5m
payable in March 2010).
9 Pensions
UBM operates a number of defined benefit and defined contribution schemes,
based primarily in the UK. The most recent actuarial funding valuations for
the majority of the UK scheme liabilities were carried out in 2008, and
updated to 31 December 2009 using the projected unit credit method. The next
triennial valuation will take place in 2011.
For US schemes, annual funding valuations are performed and therefore the
results are based on the 2008 valuation.
At 31 December 2009, the aggregate deficit under IAS 19 was £26.6m, a decrease
of £41.2m compared to the surplus of £14.6m at the previous year end,
reflecting a decrease in discount rate and an increase in projected inflation
rates, partially offset by asset returns.
The IAS 19 interest credit was £2.2m, representing the excess of expected
asset growth during 2009 over the interest accretion on the scheme
liabilities.
10 Exceptional items
10.1. Impairment charge
UBM recorded total impairment charges of £153.0m during 2009. Of this amount,
£149.8m was taken in respect of the following cash generating units:
- CMP Medica £67.0m
- UBM Technology £47.0m
- Commonwealth Business Media £35.8m
The impairment charges were taken against acquisition goodwill recorded in
these units and reflects our lowered expectations for these units,
particularly the outlook for their Print - magazine products caused by the
continuing structural decline in print markets which has been accelerated by
the difficult economic climate during 2009.
We also recorded impairment charges totalling £3.2m to the carrying value of
joint ventures and equity investments.
10.2. Restructuring and business reorganisation costs
During 2009 we closed 31 print magazine titles and merged and reduced the
frequency of others.
The exceptional charge of £16.5m includes £10.5m relating to redundancy costs
for 479 staff and £2.1m relating to restructuring and business reorganisation
costs. Of the amount charged, £7.7m has been incurred in 2009 and the balance
is expected to be incurred in 2010. The charge also includes £3.9m of costs in
respect of vacant property which will be incurred over the remainder of the
respective lease terms.
Reorganisation and
restructuring provision
£m
At 1 January 2009 20.6
Arising in the year 12.5
Utilised in the year (22.0)
Currency translation (1.3)
At 31 December 2009 9.8
The cost savings relating to the future vacant space and title closures do not
represent an improvement to the future profitability of the business but are
the elimination of future costs.
10.3. Other exceptional items
Following our issue of a £250m sterling corporate bond in November 2009, and
the subsequent repayment of outstanding debt, UBM unwound interest rate swaps
used to manage the interest rate exposure on $300m of the debt repaid. This
resulted in an exceptional charge of £6.7m, representing the mark to market
cost on the unwind.
Consolidated income statement
for the year ended 31 December 2009
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
2009 2009 2009 2008 2008 2008
Notes £m £m £m £m £m £m
Continuing operations
3 Revenue 847.6 - 847.6 887.0 - 887.0
Other operating income 9.7 - 9.7 10.2 - 10.2
Operating expenses (688.8) - (688.8) (725.5) - (725.5)
Amortisation of intangible (26.8) - (26.8) (26.1) - (26.1)
assets arising on acquisitions
4 Exceptional reorganisation and - (16.5) (16.5) - (37.5) (37.5)
restructuring costs
4 Other exceptional costs - - - - (1.6) (1.6)
4 Impairment charge - (153.0) (153.0) - - -
Share of results from joint 2.0 - 2.0 1.1 - 1.1
ventures and associates (after
tax)
Group operating (loss)/profit 143.7 (169.5) (25.8) 146.7 (39.1) 107.6
Financing income/(expense)
5 Interest income 1.8 - 1.8 4.6 - 4.6
5 Interest expense (14.8) - (14.8) (11.0) - (11.0)
5 Financing income 6.9 - 6.9 4.4 - 4.4
5 Financing income - other 2.9 - 2.9 0.3 - 0.3
5 Financing expense - other - (6.7) (6.7) (4.6) - (4.6)
(Loss)/profit before tax 140.5 (176.2) (35.7) 140.4 (39.1) 101.3
6 Taxation (17.7) - (17.7) (20.2) 1.6 (18.6)
4 Exceptional taxation credit - 135.2 135.2 - - -
(17.7) 135.2 117.5 (20.2) 1.6 (18.6)
Profit for the year 122.8 (41.0) 81.8 120.2 (37.5) 82.7
Attributable to:
Equity shareholders - ordinary 75.2 75.9
Equity shareholders - B shares - 0.5
Minority interests 6.6 6.3
81.8 82.7
Earnings per share (pence)
7 -basic 30.9p 31.5p
7 -diluted 30.5p 30.8p
£m £m
Adjusted Group operating 171.2 173.5
profit*
Amortisation of intangible (26.8) (26.1)
assets arising on acquisitions
4 Impairment charge (153.0) -
4 Exceptional reorganisation and (16.5) (37.5)
restructuring costs
4 Other exceptional costs - (1.6)
Share of taxation on profit in (0.7) (0.7)
joint ventures and associates
Group operating (loss)/profit (25.8) 107.6
Dividends £m £m
8 - Interim dividend of 6.00p 14.6 13.5
(5.60p)
8 - Proposed second interim 44.3 44.0
dividend of 18.20p (18.20p)
* Adjusted Group operating profit represents Group operating profit excluding
amortisation of intangible assets arising on acquisitions, exceptional items
and share of taxation on profit in joint ventures and associates
Consolidated statement of comprehensive income
for the year ended 31 December 2009
2009 2008
Notes £m £m
Profit for the year 81.8 82.7
Other comprehensive income:
Currency translation differences on foreign operations (50.3) 105.5
- Group
Cash flow hedges
Gains/(losses) on cash flow hedges arising during the 0.2 (8.3)
year
Add/(less) reclassification adjustments for 7.7 (3.4)
losses/(gains)included in profit or loss
7.9 (11.7)
12 Actuarial losses recognised in the pension schemes (63.9) (9.3)
12 Irrecoverable element of pension surplus 13.8 (2.2)
Share of other comprehensive income of joint ventures
and associates
Currency translation differences on foreign operations (1.5) 4.3
Actuarial losses recognised in the pension schemes of (3.9) (3.3)
associates
(5.4) 1.0
6 Income tax relating to components of other - -
comprehensive income
Other comprehensive (losses)/income for the (97.9) 83.3
year net of tax
15 Total comprehensive (losses)/income for the (16.1) 166.0
year net of tax
Attributable to:
Equity shareholders (22.6) 157.0
Minority interests 6.5 9.0
(16.1) 166.0
Consolidated statement of financial position
at 31 December 2009
As restated
31 December 31 December
2009 2008
Notes £m £m
Assets
Non-current assets
9 Goodwill 820.9 1,039.2
Intangible assets 110.6 143.4
Property, plant and equipment 38.2 40.1
Investments in joint ventures 17.0 23.8
and associates
12 Retirement benefit surplus - 30.2
Other investments
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