UBM: Unaudited Results for the Period Ended 30 June 2016

Jul 29, 2016, 09:31 ET from UBM plc

LONDON, July 29, 2016 /PRNewswire/ --

Strategic progress and performance on track 

- PR Newswire (PRN) disposal completed - GBP490m net cash proceeds
· GBP243.7m special dividend paid to shareholders on 8 July

- Continued progress with execution of Events First strategy:
· Invested GBP61.4m in acquisitions and announced disposal of Electronics Media portfolio
· GBP10.2m of portfolio rationalisation
· Operational initiatives driving performance improvement

- Continuing revenue up 8.0% at GBP380.0m - benefiting from 6.5% currency tailwind

- Continuing revenue up 1.0% on an adjusted underlying basis*, comprising:
· Events revenue growth of 1.3%
· Other Marketing Services (OMS) revenue down 0.4%

- Continuing adjusted operating profit* up 24.5% to GBP93.4m

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

- Free cash flow* of GBP81.6m and cash conversion* of 114%

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

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

- Interim dividend declared of 5.4 pence per share

- Full year trading outlook unchanged

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

Tim Cobbold, CEO of UBM plc said: 

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

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

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

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

Key financial information (unaudited) 


   
                                       Revenue                   Adjusted operating profit*

                                                       Adj.                         Margin
                           H1 2016  Underlying   underlying     H1 2016   Margin    change
                              GBPm   change* %    change* %        GBPm        %       %pt
    Continuing operations
    Annual                  293.9      (1.7)%          1.3%        88.0     30.0%  +0.4%pts
    - of which majors*      251.6        0.3%          0.3%                               -
    Biennial                 12.8                                   3.2     24.8% +22.4%pts
    Events                  306.7      (1.7)%          1.3%        91.2     29.7%  +1.3%pts

    Online                   42.9        1.4%          3.5%         7.0     16.3%  +17.5%pt
    Print                    30.4      (9.1)%        (5.2)%         5.1     16.7%  -2.0%pts
    OMS                      73.3      (3.4)%        (0.4)%        12.1     16.4%  +8.8%pts
    Corporate costs                                                (9.9)
    Group                   380.0      (2.0)%          1.0%        93.4     24.6%  +3.3%pts

   
    Adjusted EPS* (p)                      H1 2016    H1 2015  Change %
    Continuing - Diluted[1]                  14.2p      10.8p     31.5%
    Continuing - Diluted, pro forma[2]       15.8p
    Total - Diluted[1]                       20.2p      15.8p     27.8%

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

  1. Uses weighted average number of shares over the period of 441m (H1 2015: 446m) 
  2. Uses post consolidation number of shares of 396m for 2016  

Group IFRS results (unaudited) 


   
                                               H1 2016 H1 2015
                                                  GBPm    GBPm Change %
    Continuing operations
    Revenue                                      380.0   351.8     8.0%

    Operating profit                              70.8    49.2    43.9%
    % margin                                     18.6%   14.0%

    Profit after tax                              39.9    25.8    54.7%

    Diluted EPS (p)                               8.0p    4.9p    63.3%
    Diluted weighted average no of shares (m)   441.3m  445.8m

    Total Group
    Profit after tax                             443.3    47.6        -

    Diluted EPS (p)                              99.4p    9.7p        -
    Diluted weighted average no of shares (m)   441.3m  445.8m

Notes to business and financial review 

Unless otherwise stated:

  • Underlying revenue growth measures are adjusted for the effects of acquisitions, disposals, foreign exchange movements, phasing and peripatetic and biennial events
  • Adjusted underlying growth measures additionally remove the impact of portfolio rationalisation
  • Major events refer to events generating more than £1m revenue
  • Biennial events occur once every two years    
  • Adjusted operating profit excludes amortisation of intangible assets arising on acquisitions, exceptional items and share of taxation on joint ventures and associates
  • Strategic opex relates to Events First execution  

See page 39 for explanation of non-IFRS items.

Contacts 


   
    Kate Postans      Head of Investor     investorrelations@ubm.com  +44(0)20 7921 5023
                      Relations &          communications@ubm.com  
                      Corporate           
                      Communications           
    Jon Coles
    Andy
    Rivett-Carnac     Brunswick Group      ubm@brunswickgroup.com     +44(0)20 7404 5959
    Craig Breheny

UBM will host a presentation today at 10.30am at the London Stock Exchange, 10 Paternoster Square, EC4M 7LS. A live webcast of the results presentation will be made available via UBM's website. To access the webcast please go to http://www.ubm.com . A recording of the webcast will also be available on demand from UBM's website after 4pm (BST).

Notes to Editors 

UBM plc is a leading global B2B events organiser. Running over 350 events per year, UBM is the largest listed pure-play exhibitions organiser globally and the largest independent organiser in the US and China. We help businesses do business, bringing the world's buyers and sellers together at events, online and in print. Our 3,500 staff in more than 20 countries are organised into specialist teams which serve commercial and professional communities, helping them to do business, and their markets to work effectively and efficiently.  For more information, go to http://www.ubm.com;  for UBM corporate news, follow us on Twitter at @UBM.

Forward Looking Statements 

This announcement may contain certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans and objectives for the management of future operations of UBM plc ("UBM") and its subsidiaries (the "Group") are not warranted or guaranteed. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although UBM believes that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors, many of which are beyond the control of the Group, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, factors such as: future revenues being lower than expected; increasing competitive pressures in the industry; and/or general economic conditions or conditions affecting the relevant industry, both domestically and internationally, being less favourable than expected. We do not intend to publicly update or revise these projections or other forward-looking statements to reflect events or circumstances after the date hereof, and we do not assume any responsibility for doing so.

This announcement contains inside information for the purpose of Article 7 of Regulation (EU) No 596/2014.

BUSINESS REVIEW
For the six months ended 30 June 2016

Strategic progress  

UBM is focused on delivering its Events First strategy, with the objective of becoming the world's leading events business. As a result the Group's financial performance will increasingly reflect the attractive characteristics of the events industry: good organic growth dynamics supported by acquisitions, high margins and strong cash generation. Central to the strategy is the quality of the portfolio. The sectoral and geographic spread of the portfolio combined with its overall scale provides an inherent breadth and resilience which underpins the revenues and earnings of the business.

The completion of the sale of PRN in June 2016 leaves the proportion of the business derived from events at 82% on an annualised basis. This proportion will increase further in the future as more events-focused acquisitions are made and the alignment of OMS activities to the events portfolio increases.

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

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

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

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

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

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

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

Outlook 

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

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

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

Events 


   
                                              H1 2016  H1 2015 Underlying  Adj. underlying
                                                 GBPm     GBPm  change* %        change* %
    Annual Events revenue
    North America                               157.9    143.0     (0.5)%             0.0%
    Emerging Markets                             99.0     87.2       1.2%             3.9%
    UK                                           19.6     26.6    (20.0)%           (2.9)%
    Continental Europe                            9.7      9.5     (5.2)%             0.9%
    RoW                                           7.7      6.3       9.7%             9.7%
                                                293.9    272.6     (1.7)%             1.3%
    Biennial Events revenue                      12.8     12.5
    Total Events revenue                        306.7    285.1     (1.7)%             1.3%

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

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

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

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

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

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

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


   
                                                                         H1 2016    H1 2015
                                                                            GBPm       GBPm
    Annual Events adjusted operating profit                                 88.0       80.8
    Annual Events adjusted operating profit margin                         30.0%      29.6%
    Annual Events adjusted operating profit margin (pre strategic opex)    30.5%      30.6%

    Biennial Events adjusted operating profit                                3.2        0.3
    Biennial Events adjusted operating profit margin                       24.8%       2.4%

    Adjusted operating profit                                               91.2       81.1
    Total adjusted operating profit margin                                 29.7%      28.5%
    Strategic opex                                                         (1.7)      (2.7)
    Total adjusted operating profit margin (pre strategic opex)            30.3%      29.4%

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

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

Other Marketing Services (OMS) 

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

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


   
                                                     H1     H1
                                                   2016   2015 Underlying  Adj. underlying
                                                   GBPm   GBPm  change* %        change* %
    OMS - Online                                   42.9   36.9       1.4%             3.5%
    OMS - Print                                    30.4   29.8     (9.1)%           (5.2)%
    Total OMS revenue                              73.3   66.7     (3.4)%           (0.4)%
    Adjusted operating profit                      12.1    5.1
    Total adjusted operating profit margin        16.4%   7.6%
    Strategic opex                                    -  (1.8)
    Total adjusted operating profit margin (pre   16.4%  10.3%
    strategic opex)

PR Newswire (PRN) 

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

FINANCIAL REVIEW
For the six months ended 30 June 2016

Profit & Loss 


   
                                     IFRS measures
                                                              As adjusted[(b)]
    Unaudited                   H1 2016  H1 2015   Change   H1 2016   H1 2015   Change
                                  GBPm     GBPm       %        GBPm      GBPm       %
    Continuing
    Revenue                       380.0    351.8     8.0%     380.0     351.8     8.0%
    Other operating income          3.2      3.9                3.2       3.9
    Operating expenses
    (excluding (a) line items
    below)                      (281.5)  (268.8)            (281.5)   (268.8)
    Strategic opex                (1.7)    (4.6)              (1.7)     (4.6)
    Share of results from JVs
    & associates                    1.8      0.6               1.8        0.6
    Share of tax on profit in
    JV & associates (a)           (0.4)    (0.1)                (b)       (b)
    Exceptional operating
    items (a)                     (2.8)    (3.1)                 (b)      (b)
    Impairment charges (a)          0.0    (4.2)                 (b)      (b)
    EBITDA                                                     101.8     82.9    22.8%
    Depreciation (a)              (8.4)    (7.9)               (8.4)    (7.9)
    EBITA                                                       93.4     75.0    24.5%
    Amortisation - intangible
    assets arising on
    acquisition (a)              (19.4)   (18.4)                 (b)      (b)
    Operating profit               70.8     49.2    43.9%       93.4     75.0    24.5%
    Net interest expense and
    pension interest             (13.3)   (13.3)              (13.3)   (13.3)
    Exceptional finance
    expense                       (4.5)    (0.4)                 (b)      (b)
    Financing expense - other     (1.2)    (0.4)                 (b)      (b)
    PBT                            51.8     35.1    47.6%       80.1     61.7    29.8%
    Taxation                     (11.9)    (9.3)              (12.8)    (9.4)
    PAT from continuing
    operations                     39.9     25.8    54.7%       67.3     52.3    28.7%
    Discontinued operations
    adjusted PAT                   26.3     22.3                26.3     22.3
    Profit on disposal and
    adjusting items               377.1    (0.5)                 (b)      (b)
    Profit for the year           443.3     47.6                93.6     74.6
    Non-controlling interests     (4.6)    (4.4)               (4.6)    (4.4)
    Attributable profit           438.7     43.2        -       89.0     70.2    26.8%

    Earnings per share (pence)
    Continuing operations -
    diluted                         8.0      4.9    63.3%       14.2     10.8    31.5%
    Total operations - diluted     99.4      9.7        -       20.2     15.8    27.8%
    Weighted average no. of
    shares diluted (million)      441.3    445.8               441.3    445.8
    Declared dividend per
    share (pence)                   5.4      5.3                 5.4      5.3

(a)  Expenses not included within operating expense figure 

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

Recruitment and retention


   
                                  Revenue - Continuing GBPm

    2015 H1   Acquisitions   Strategic       Phasing  Annual  OMS  Biennial  FX    2016 H1 
    revenue   and disposals  rationalisation          Events       events          Revenue

    351.8     14.9           (10.2)          (2.1)    3.4    (0.2) (0.3)     22.7   380.0

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


   
                         Adjusted operating profit - Continuing GBPm

    2015 H1    Acquisitions   Strategic      Phasing  Annual  OMS  Biennial  FX   2016 H1
    operating  and disposals  opex/corporate          Events       events         operating   
    profit                    operations                                          profit

    75.0       3.4            4.2            (1.4)    (1.8)   3.1  2.6       8.3  93.4

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

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


   
                             Diluted adjusted EPS - continuing p
    
    2015 H1  Operating   Net       Pension    Tax    Share     Number of   FX   2016 H1 EPS
    EPS      profit      interest  finance           option    shares
                         expense   capital           dilution
    10.8       2.3       (0.1)     0.1       (0.8)   (0.1)     0.2         1.8  14.2

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

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

Corporate operations and strategic operating expense  


   
                                                   H1 2016 H1 2015

                                                      GBPm    GBPm
    Corporate costs                                    9.8     9.6
    Strategic operating expense - corporate              -     0.1
    Pension administration and service cost            0.3     0.7
    Non-cash share-based payments                      1.5     1.2
    Income from equity-accounted investments          (1.7)   (0.4)
    Total corporate costs                              9.9    11.2

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


   
                                                   H1 2016 H1 2015

                                                      GBPm    GBPm
    Strategic operating expenses                       1.7     4.6
    Strategic capital expenditure                      2.0       -

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

Discontinued operations  

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

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

Income statement adjustments and exceptional items from continuing operations 

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


   
                                                                H1 2016         H1 2015       
                                                                   GBPm            GBPm
    Amortisation - intangible assets arising on acquisition        19.4            18.4
    Tax on share of profits from JVs and Associates                 0.4             0.1
    Exceptional items
    - Advanstar and BJI integration costs                           3.6             1.8
    - Changes in estimates of contingent consideration                -             0.3
    - Acquisition costs                                             0.9             1.0
    - Impairment charge                                               -             4.2
    - Gain on disposal of investment                              (2.2)               -
    - Disposal of non-core businesses                               0.5               -
    Total exceptional items                                         2.8             7.3

    Total income statement adjustments                             22.6            25.8

Acquisition exceptional items 

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

Gain on disposal of investment 

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

Interest and financing expense 

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

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

Tax 

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


   
                                          Tax rate %
   
    UK tax    Higher tax  Tax at     US Goodwill   Effects of  Other         2016 adjusted
    rate      rate on     statutory  amortisation  intragroup  adjustments   tax rate
              overseas    rates                    financing                 
              earnings
    20.0      11.6        31.6       (8.2)         (9.8)        2.4          16.0

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


   
    GBPm                               H1 2016
    Netherlands                            3.6
    United States                          1.6
    Canada                                 1.3
    China                                  1.3
    Japan                                  1.0
    Other Emerging Markets                 3.4
    Other                                  0.5
                                          12.7

Foreign Currency 

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


   
                                     Adjusted    Average exchange rates
                                    operating                             Year on year FX
                      Revenue %     profit* %      H1 2016      H1 2015        movement %                                                    
    US Dollar*             55.6          74.9       1.4118       1.5272              7.6%
    Hong Kong Dollar*       8.0           9.1      10.6202      11.8405             10.3%
    Renminbi*              11.6          15.5       9.0898       9.4820              4.1%
    UK Pound Sterling      10.8         (7.3)       1.0000       1.0000                 -
    Euro                    1.7         (3.7)       1.2844       1.3777              6.8%
    Indian Rupee            0.7         (1.8)      94.4766      95.6651              1.2%
    Japanese Yen            3.1           4.7     160.5319     183.3848             12.5%
    Brazilian Real          2.5           4.1       5.1408       4.5437           (13.1)%
    Other                   6.0           4.5            -            -                 -
    Total                 100.0         100.0

* $ or quasi-$ pegged 

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

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

The income statement exposure to foreign exchange risk is shown for our most important foreign currency exposures in the sensitivity analysis below, based on 2015 operations:


   
                       Average exchange Currency value Effect on revenue Effect on adjusted
                           rate in 2015   rises/ falls        + / - GBPm  operating profit*
                                                    by                           + / - GBPm

    US Dollar                    1.5302             1%               3.5                1.0
    Hong Kong Dollar            11.8616             1%               1.1                0.5
    Renminbi                     9.6206             1%               0.9                0.3
    Euro                         1.3854             1%               0.6                0.3

* The actual impact of currency on Group profit may be different to that implied due to the timing of profit receipts, with financials translated on a monthly basis using the average for that month 


   
                                        Cash flow GBPm

   31    Adjusted   Operating Interest Capex  Dividends, Acquisitions Disposal  FX/Fair 30 
   Dec   cash       cash      & tax           NCI &                   proceeds  value   June
   2015  generated  adjust-                   treasury                                  2016
   Net   from       ments                     stock                                     net
   Debt  operations                                                                     debt
   484.9 (138.7)    28.0      21.5     7.6    85.2       61.4         (532.2)   27.3    45.0

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

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


   
    GBPm                                                           H1 2016       H1 2015
    Adjusted cash generated from operations*                         138.7         154.5
    Payments against provisions                                      (8.6)         (4.2)
    PRN disposal non-operating cash adjustments                     (25.5)             -
    Other adjustments                                                  6.1          12.3
    Cash generated from operations (IFRS)                            110.7         162.6
    Dividends from JVs and associates                                    -           3.4
    Net interest paid                                                (8.8)        (10.4)
    Taxation paid                                                   (12.7)         (8.1)
    Capital expenditure (including intangibles)                      (7.6)        (19.0)
    Free cash flow                                                    81.6         128.5
    Acquisitions                                                    (61.4)        (33.9)
    Proceeds from disposals                                          532.2           1.2
    Repayment of loan notes                                              -           4.6
    Advances to JVs, associates and minority partners                    -           0.2
    Free cash flow after investment activities                       552.4         100.6
    Net share issues                                                     -           0.7
    Dividends                                                       (78.1)        (75.5)
    Purchase of ESOP shares                                          (7.1)         (6.2)
    Net debt[1] as at 30 June 2016                                  (45.0)       (519.6)

[1] Includes fair value adjustments.

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


   
    GBPm                                                                    H1         H1   
                                                                          2016       2015
    Total group adjusted operating profit                                121.5       98.8
    Depreciation                                                           8.4       10.8
    Capital expenditure (including intangibles)                          (7.6)     (19.0)
    Movement in working capital (excluding non-operating movements)       15.8       56.3
    Associates and JVs pre tax                                           (2.0)      (0.7)
    Dividends from associates and JVs                                        -        3.4
    Other non-cash expenses                                                2.6        3.7
    Proceeds from non-core disposals                                         -        1.2
    Adjusted cash generated from operations*                             138.7      154.5
    Cash conversion                                                       114%       156%

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

Capital structure 

Debt and liquidity 

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


   
    GBPm                    Facility  Drawn  Undrawn Maturity  Margin%   Fair value hedges


    GBP250m fixed              250.0  250.0        -   Nov 16     6.5%   Floating rate swap
    rate Sterling bond                                          coupon   for GBP150m
                                                                         GBP LIBOR + 2.9%
    $350m fixed rate           263.8  263.8        -   Nov 20     5.75%  Floating rate swap
    Dollar bond                                                  coupon  for $100m
                                                                         US$ LIBOR + 2.65%
    GBP400m                    400.0      -    400.0   Apr 21   LIBOR +
    syndicated facility                                           0.60%

    Total                      913.8  513.8    400.0             

Capital management 

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

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


   
                                                    Pro
                                               forma[3]
    GBPm                                        H1 2016      H1 2016     H1 2015
    Net debt[1]                                   288.7         45.0       519.6
    Adjusted EBITDA - LTM[2]                      234.0        234.0       208.1
    Net debt to EBITDA ratio                  1.2 times    0.2 times   2.5 times


[1] Includes fair value adjustments

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

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

Pensions 

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

Related party transactions 

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

Return on average capital employed  

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


   
    As at                                            Pro forma  
                                                       H1 2016  H1 2016   FY 2015  H1 2015
    Post tax adjusted operating profit LTM (GBPm)        186.9    236.6     217.6    168.5
    Average capital employed (GBPm)                    1,211.8  1,253.6   1,391.9  1,020.0
    Return on average capital employed (ROACE) (%)       15.4%    18.9%     15.6%    16.5%

Dividend 

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

Key dates for the payment of the dividend are:

Ex-dividend date:        8 September 2016

Dividend Record date:    9 September 2016

Dividend Payment date:   11 October 2016

Going concern 

After making enquiries, the Directors have a reasonable expectation that UBM has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. In reaching this conclusion, the Directors have had due regard to the following:

  • After taking account of available cash resources and committed bank facilities, none of UBM's borrowings fall due within the next 12 months that require refinancing from resources not already available.
  • The cash generated from operations, committed facilities and UBM's ability to access debt capital markets, taken together, provide confidence that UBM will be able to meet its obligations as they fall due.

Summary of principal risks 

Macro-economic slowdown and/or exchange rate fluctuations

  • A slowdown in the macro-economic environment could adversely impact revenue, as advertising, attendee, sponsorship and other discretionary revenue tends to be cyclical
  • A downturn may also result in slower debt collections, thereby affecting cash flow
  • Foreign exchange rate fluctuations could adversely affect our reported earnings and the strength of our balance sheet

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

Acquisition

  • Acquisitions are an important part of our strategy - the most notable recently being the Advanstar acquisition. Acquisitions may not provide returns greater than UBM's weighted average cost of capital in their first year. Integration issues or failure to realise operating benefits or synergies may also impact the expected returns from acquisitions
  • More generally, as part of Agile growth it remains our intention to acquire in order to enhance the UBM portfolio

Specific country risk and emerging market exposure

  • Our business operates in many geographies, particularly Emerging Markets, which may present logistical and management challenges due to different business cultures, languages or unfavourable changes in applicable law or compliance requirements
  • Expansion through joint ventures reduces logistical and management issues but can create governance challenges or affect our ability to extract rewards from our investment

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

  • A disaster or natural catastrophe, terrorism, political instability or disease could affect people's willingness to attend our events, which could have an adverse effect on our revenues
  • Similarly, the business model relies on the availability of venues for hosting events

Changes in our business environment

  • We cannot predict all the changes and impacts that may affect the competitiveness of the business, such as changes in customer behaviour, or technological innovations which would increase competition or make some products or services less relevant. Social media platforms, search engines and other online technologies could all pose a competitive threat to our businesses, as could changes in legislation or compliance requirements where we operate
  • Similarly, additional venue capacity (for example: NECC in Shanghai) is introducing competition as well as enhancing opportunities for growth

Technological risk: execution and cyber security

  • As part of its strategy, UBM will be investing in the technology platforms of the business, starting with UBM EMEA. Failure to deliver these projects effectively could lead to increased costs, delays or erosion of UBM's competitive position
  • System failure could have a significant impact on our business. The collapse of the Cloud on which various products and systems are hosted could have negative consequences for our reputation
  • Unauthorised access to our systems by external parties could lead to reputational damage and legal action, most notably for PR Newswire which handles potentially price sensitive earning information for certain clients

Access to capital

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

Recruitment and retention

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

Interim consolidated income statement

for the six months ended 30 June 2016


   
                                                              Restated  
                              Before                            before    Restated 
                         exceptional Exceptional           exceptional exceptional  Restated 
                               items       items     Total       items       items     total
                             30 June     30 June   30 June     30 June     30 June   30 June
                                2016        2016      2016        2015        2015      2015

                                                  Unaudited                         Unaudited
    Notes                       GBPm        GBPm      GBPm        GBPm        GBPm      GBPm
          Continuing
          operations
    4     Revenue              380.0           -     380.0       351.8           -     351.8
          Other operating
          income                 3.2           -       3.2         3.9           -       3.9
          Operating
          expenses           (291.6)           -   (291.6)      (281.3)           -   (281.3)
          Exceptional
    5     operating items          -       (2.8)     (2.8)           -        (7.3)     (7.3)
          Amortisation of
          intangible
          assets arising
          on acquisitions     (19.4)           -    (19.4)      (18.4)           -    (18.4)
          Share of
          results from
          joint ventures
          and associates
          (after tax)            1.4           -       1.4         0.5           -       0.5

          Group operating
          profit from
          continuing
          operations            73.6       (2.8)      70.8        56.5        (7.3)     49.2

          Financing
    6     income                 1.0           -       1.0         1.8           -       1.8
          Financing
    6     expense             (15.5)       (4.5)    (20.0)      (15.5)       (0.4)    (15.9)
          Net financing
          expense             (14.5)       (4.5)    (19.0)      (13.7)       (0.4)    (14.1)
          Profit before
          tax from
          continuing
          operations            59.1       (7.3)      51.8        42.8       (7.7)      35.1

          Tax                 (10.0)       (1.9)    (11.9)       (8.9)       (0.4)     (9.3)

          Profit for the
          period from
          continuing
          operations            49.1       (9.2)      39.9        33.9       (8.1)      25.8

          Discontinued
          operations
          Profit for the
          period from
          discontinued
    17    operations            26.3       377.1     403.4        22.3       (0.5)      21.8
          Profit for the
          period                75.4       367.9     443.3        56.2       (8.6)      47.6

          Attributable
          to:
          Owners of the
          parent entity                              438.7                              43.2
          Non-controlling
          interests                                    4.6                               4.4
                                                     443.3                              47.6

          Earnings per
          share (pence)
          Continuing
          operations -
    7     basic                                       8.1p                              4.9p
          Continuing
          operations -
    7     diluted                                     8.0p                              4.9p
          Profit for the
    7     period - basic                            100.4p                              9.8p
          Profit for the
          period -
    7     diluted                                    99.4p                              9.7p

                                                      GBPm                              GBPm
          Group operating
          profit from
          continuing
          operations                                  70.8                              49.2
          Exceptional
    5     operating items                              2.8                               7.3
          Amortisation of
          intangible
          assets arising
          on acquisitions                             19.4                              18.4
          Share of tax on
          profit in joint
          ventures and
          associates                                   0.4                               0.1
          Continuing
          adjusted
          operating
    4     profit*                                     93.4                              75.0
          Discontinued
          adjusted
          operating
    17    profit                                      28.1                              23.8
          Group adjusted
          operating
    4     profit[*]                                  121.5                              98.8

                                                      GBPm                              GBPm
          Dividends
          Final dividend
          of 16.3p (2015:
    8     16.0p)                                      71.8                              70.8
          Special
          dividend of
          55.3p (2015:
    8     nil)                                       243.7                                 -
          Proposed
          interim
          dividend of
          5.4p (2015:
    8     5.3p)                                       21.2                              23.4

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

Consolidated income statement

for the year ended 31 December 2015


   
                                                        Before    
                                                   exceptional  Exceptional   
                                                         items        items        Total    
                                                   31 December  31 December  31 December
                                                          2015         2015         2015
                                                                                 Audited
    Notes                                                 GBPm         GBPm         GBPm
          Continuing operations
    4     Revenue                                       769.9             -        769.9
          Other operating income                          6.6             -          6.6
          Operating expenses                          (581.0)             -      (581.0)
    5     Exceptional operating items                       -        (12.0)       (12.0)
          Amortisation of intangible assets arising on
          acquisitions                                 (37.9)             -       (37.9)
          Share of results from joint ventures and
          associates (after tax)                          1.2         (2.1)        (0.9)
          Group operating profit from continuing
          operations                                    158.8        (14.1)        144.7

    6     Financing income                                2.9           1.1          4.0
    6     Financing expense                             (29.1)            -       (29.1)
          Net financing expense                         (26.2)          1.1       (25.1)
          Profit before tax from continuing operations   132.6        (13.0)       119.6

          Tax                                           (23.3)         (4.0)      (27.3)

          Profit for the year from continuing
          operations                                     109.3        (17.0)        92.3

          Discontinued operations
          Profit for the year from discontinued
    17    operations                                      44.7        (29.3)        15.4
          Profit for the year                            154.0        (46.3)       107.7

          Attributable to:
          Owners of the parent entity                                               96.6
          Non-controlling interests                                                 11.1
                                                                                   107.7

          Earnings per share (pence)
    7     Continuing operations - basic                                            18.3p
    7     Continuing operations - diluted                                          18.2p
    7     Profit for the year - basic                                              21.8p
    7     Profit for the year - diluted                                            21.7p

                                                                                    GBPm
          Group operating profit from continuing
          operations                                                               144.7
    5     Exceptional operating items                                               14.1
          Amortisation of intangible assets arising on
          acquisitions                                                              37.9
          Share of tax on profit in joint ventures and
          associates                                                                 0.4
    4     Continuing adjusted operating profit*                                    197.1
    17    Discontinued adjusted operating profit                                    48.4
    4     Group adjusted operating profit[*]                                       245.5

                                                                                    GBPm
          Dividends
    8     Interim dividend of 5.3p                                                  23.4
    8     Proposed final dividend of 16.3p                                          71.8

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

Interim consolidated statement of comprehensive income

for the six months ended 30 June 2016


   
                                            Six months     Six months          Year   
                                                 ended          ended         ended   
                                               30 June        30 June   31 December   
                                                  2016           2015          2015   
                                             Unaudited      Unaudited       Audited   
    Notes                                         GBPm           GBPm          GBPm

          Profit for the period                  443.3           47.6         107.7

          Other comprehensive income/(loss)

          Other comprehensive income to be
          reclassified to profit or loss in
          subsequent periods
          Currency translation differences on
    13    foreign operations - Group             117.6         (13.6)         59.9
    13    Net investment hedge                   (35.8)           5.6       (17.5)
          Currency translation differences on
          foreign operations - joint ventures
          and associates                            0.4          (0.3)         0.3
          Reclassification adjustment for
    16    foreign operations in the period         32.6          (2.0)       (2.0)

          Income tax relating to components
          of other comprehensive income               -             -           -
                                                  114.8          (10.3)       40.7

          Other comprehensive income not to
          be reclassified to profit or loss
          in subsequent periods
          Remeasurement of defined benefit
          obligation                             (24.8)           14.1        27.6
          Irrecoverable element of pension
          surplus                                 (0.3)              -       (0.1)
          Remeasurement of defined benefit
          obligation of associates                (0.7)           (0.3)      (0.8)

          Income tax relating to components
          of other comprehensive income              -               -          -
                                                 (25.8)           13.8       26.7

          Other comprehensive income for the
          period, net of tax                      89.0             3.5       67.4

          Total comprehensive income for the
          period, net of tax                     532.3            51.1      175.1

          Attributable to:
          Owners of the parent entity            523.1            48.5      164.4
          Non-controlling interests                9.2             2.6       10.7
                                                 532.3            51.1      175.1

Interim consolidated statement of financial position

at 30 June 2016


   
                                                             30 June   30 June 31 December  
                                                                2016      2015        2015   
                                                           Unaudited Unaudited     Audited 
    Notes                                                       GBPm      GBPm        GBPm
          Assets
          Non-current assets
    9     Goodwill                                           1,330.7   1,234.5     1,195.3
    9     Intangible assets                                    415.3     373.2       371.3
    9     Property, plant and equipment                         42.2      54.6        40.4
          Investments in joint ventures and associates          20.5      21.0        20.2
    16    Other fixed asset investments                         23.4         -           -
          Vendor loan note                                       4.1      27.6         5.5
          Derivative financial assets                            9.2      11.8         6.4
    18    Retirement benefit surplus                             5.3       4.3         4.6
          Deferred tax asset                                    19.8       4.8        18.2
                                                             1,870.5   1,731.8     1,661.9
          Current assets
          Trade and other receivables                          248.2     277.9       219.4
    10    Cash and cash equivalents                            483.6     114.3        76.5
          Vendor loan note                                       4.6         -         2.3
          Derivative financial assets                            1.7         -         3.6
    17    Assets classified as held for sale                    18.3         -       166.3
                                                               756.4     392.2       468.1

          Total assets                                       2,626.9   2,124.0     2,130.0

          Liabilities
          Current liabilities
          Current tax liabilities                               65.0      46.3        56.4
          Trade and other payables                             785.8     530.4       418.8
          Provisions                                            19.8       7.0        11.6
    10    Borrowings                                           252.1       1.2       255.9
          Derivative financial liabilities                      24.0       8.0        17.0
          Liabilities associated with assets classified as
    17    held for sale                                          6.7         -        79.1
                                                             1,153.4     592.9       838.8
          Non-current liabilities
          Deferred tax liabilities                               8.4       3.9         7.4
          Trade and other payables                              14.2       1.3        12.9
          Provisions                                             6.2       9.0         7.3
    10    Borrowings                                           268.3     639.4       313.5
          Derivative financial liabilities                      11.9      12.4         6.7
    18    Retirement benefit obligation                         44.1      42.9        29.3
                                                               353.1     708.9       377.1
          Total liabilities                                  1,506.5   1,301.8     1,215.9

          Equity attributable to owners of the parent
          entity
    12    Share capital                                         44.3      44.3        44.3
          Share premium                                        534.7     534.2       534.7
    13    Other reserves                                     (500.7)   (649.8)     (605.3)
          Retained earnings                                  1,020.3     883.8       927.6
          Put options over non-controlling interests           (8.1)    (17.5)      (17.5)
          Total equity attributable to owners of the
          parent entity                                      1,090.5     795.0       883.8
          Non-controlling interests                             29.9      27.2        30.3
          Total equity                                       1,120.4     822.2       914.1

          Total equity and liabilities                       2,626.9   2,124.0     2,130.0

Interim consolidated statement of changes in equity

for the six months ended 30 June 2016


   
                                                                     Total
                                                               Put  equity
                                                            option attribu
                                                            s over   table
                                                            non-co      to Non-co  
                                                            ntroll  owners ntroll
                                                               ing      of    ing
                           Share   Share     Other Retained intere  parent intere   Total
                          capital premium reserves earnings    sts  entity    sts   equity 
    Notes                    GBPm    GBPm     GBPm     GBPm   GBPm    GBPm   GBPm    GBPm

          At 1 January
          2016               44.3   534.7  (605.3)    927.6 (17.5)   883.8   30.3   914.1
          Profit for the
          period                -       -        -    438.7      -   438.7    4.6   443.3
          Other
          comprehensive
          income/(loss)         -       -    110.2   (25.8)      -    84.4    4.6    89.0
          Total
          comprehensive
          income for the
          period                -       -    110.2    412.9      -   523.1    9.2   532.3
          Equity
    8     dividends             -       -        -  (315.5)      - (315.5)      -  (315.5)
          Non-controlling
          interest
          dividends             -       -        -        -      -       -   (6.3)   (6.3)
          Acquisition of
          non-controlling
          interests             -       -        -    (6.1)    9.4     3.3   (3.3)      -
          Share-based
          payments              -       -        -      2.9      -     2.9      -     2.9
          Shares awarded
    13    by ESOP               -       -      8.8    (8.8)      -       -      -       -
          Own shares
          purchased by
    13    the Company           -       -   (14.4)      7.3      -   (7.1)      -    (7.1)
          At 30 June 2016
          (unaudited)        44.3   534.7  (500.7)  1,020.3  (8.1) 1,090.5   29.9  1,120.4

          At 1 January
          2015               44.3   533.5  (640.1)    900.0  (17.5)  820.2   26.6   846.8
          Profit for the
          period                -       -        -     43.2      -    43.2    4.4    47.6
          Other
          comprehensive
          (loss)/income         -       -    (8.5)     13.8      -     5.3  (1.8)     3.5
          Total
          comprehensive
          (loss)/income
          for the period        -       -    (8.5)     57.0      -    48.5    2.6    51.1
          Equity
    8     dividends             -       -        -   (70.8)      -  (70.8)      -  (70.8)
          Non-controlling
          interest
          dividends             -       -        -        -      -       -  (4.7)   (4.7)
          Non-controlling
          interest
          recognised on
          business
          combinations          -       -        -        -      -       -    3.0     3.0
          Acquisition of
          non-controlling
          interests             -       -        -      0.3      -     0.3  (0.3)       -
          Issued in
          respect of
          share option
          schemes and
          other
          entitlements          -     0.7        -        -      -     0.7      -     0.7
          Share-based
          payments              -       -        -      2.3      -     2.3      -     2.3
          Shares awarded
    13    by ESOP               -       -     14.6   (14.6)      -       -      -       -
          Own shares
          purchased by
    13    the Company           -       -   (15.8)      9.6      -   (6.2)      -    (6.2)
          At 30 June 2015
          (unaudited)        44.3   534.2  (649.8)    883.8  (17.5)  795.0   27.2    822.2

          At 1 January
          2015               44.3   533.5  (640.1)    900.0  (17.5)  820.2   26.6    846.8
          Profit for the
          year                  -       -       -      96.6      -    96.6   11.1   107.7
          Other
          comprehensive
          income/(loss)         -       -     41.1     26.7      -    67.8  (0.4)    67.4
          Total
          comprehensive
          income for the
          year                  -       -     41.1     123.3     -   164.4   10.7   175.1
          Equity
    8     dividends             -       -       -     (94.2)     -  (94.2)      -  (94.2)
          Non-controlling
          interest
          dividends             -       -       -        -       -       -  (9.6)   (9.6)
          Non-controlling
          interest
          arising on
          business
          combinations          -       -       -        -       -       -    2.9    2.9
          Acquisition of
          non-controlling
          interests             -       -       -      0.3       -     0.3   (0.3)     -
          Issued in
          respect of
          share option
          schemes and
          other
          entitlements          -     1.2      -        -        -     1.2      -    1.2
          Share-based
          payments              -       -      -      4.0        -     4.0      -    4.0
          Shares awarded
    13    by ESOP               -       -   17.1   (17.1)        -       -      -      -
          Own shares
          purchased by
    13    the Company           -       -  (23.4)   11.3         -  (12.1)      - (12.1)
          At 31 December
          2015               44.3   534.7 (605.3)  927.6    (17.5)   883.8   30.3  914.1

 

Interim consolidated statement of cash flows

for the six months ended 30 June 2016


   
                                                                                     
                                                          Six months Six months         Year   
                                                               ended      ended        ended                                                                                        
                                                             30 June    30 June  31 December 
                                                                2016       2015         2015  
                                                           Unaudited  Unaudited      Audited   
    Notes                                                       GBPm       GBPm         GBPm
          Cash flows from operating activities
          Profit for the period from continuing
          operations                                            39.9       25.8         92.3
          Profit for the period from discontinued
          operations                                           403.4       21.8         15.4
          Profit for the period                                443.3       47.6        107.7
          Add back:
          Exceptional items (excluding fair value
          adjustments below)                                     2.8        7.0         13.9
    17    Exceptional items from discontinued operations     (377.1)          -         29.3
          Fair value adjustments of contingent
          consideration                                            -        0.3          0.2
          Tax                                                   13.7       10.8         30.0
          Amortisation of intangible assets                     19.4       18.9         38.9
          Amortisation of website development costs              4.4        5.7         14.7
          Depreciation                                           4.0        5.1         10.0
          Share of results from joint ventures and
          associates (after tax)                               (1.6)      (0.6)        (1.5)
    6     Financing income                                     (1.0)      (1.8)        (4.0)
    6     Financing expense                                     20.0       15.9         29.1
          Other non-cash items                                   2.6        3.7          5.4
                                                               130.5      112.6        273.7
          Payments against provisions                          (8.6)      (4.2)        (7.8)
          Pension deficit contributions                       (11.5)      (2.1)        (3.1)
          (Increase) in trade and other receivables            (6.2)     (11.6)         20.3
          Increase in trade and other payables                   6.5       67.9       (11.2)
          Cash generated from operations                       110.7      162.6        271.9
          Interest and finance income received                   0.9        0.9          5.8
          Interest and finance costs paid                      (9.7)     (11.3)       (27.1)
          Tax paid                                            (12.7)      (8.1)       (31.0)
          Dividends received from joint ventures and
          associates                                               -        3.4          5.5
          Net cash flows from operating activities              89.2      147.5        225.1
          Net cash flows from operating activities -
          continuing                                            68.3      128.8        194.2
          Net cash flows from operating activities -
          discontinued                                          20.9       18.7         30.9

          Cash flows from investing activities
          Acquisition of interests in subsidiaries, net
    14    of cash acquired                                    (56.4)     (33.9)       (34.7)
          Proceeds from sale of businesses, net of cash
    16    disposed                                             530.1        1.2          0.9
    16    Proceeds from sale of investments                      2.1          -            -
          Proceeds from repayment of vendor loan note              -        4.6         21.8
          Purchase of property, plant and equipment            (4.3)      (8.4)       (13.9)
          Expenditure on intangible assets                     (3.3)     (10.6)       (14.4)
          Advances to joint ventures and associates                -        0.2            -
          Net cash flows from investing activities             468.2     (46.9)       (40.3)
          Net cash flows from investing activities -
          continuing                                           472.1     (43.5)       (35.6)
          Net cash flows from investing activities -
          discontinued                                         (3.9)      (3.4)        (4.7)

          Cash flows from financing activities
          Proceeds from the issuance of ordinary share
          capital                                                  -        0.7          1.2
    15    Acquisition of non-controlling interests             (5.0)          -            -
    8     Dividends paid to shareholders                      (71.8)     (70.8)       (94.2)
          Dividends paid to non-controlling interests          (6.3)      (4.7)        (9.6)
          Net movement in ESOP shares                          (7.1)      (6.2)       (12.1)
    10    (Decrease)/increase in borrowings                   (76.8)       23.8       (62.6)
          Net cash flows from financing activities           (167.0)     (57.2)      (177.3)
          Net cash flows from financing activities -
          continuing                                         (140.1)     (42.0)      (150.9)
          Net cash flows from financing activities -
          discontinued                                        (26.9)     (15.2)       (26.4)

          Net increase in cash and cash equivalents            390.4       43.4          7.5

          Net foreign exchange difference                       11.4      (3.4)          2.3
          Cash and cash equivalents at beginning of
    10    period (including held for sale)                      82.9       73.1         73.1
          Cash and cash equivalents classified as held
          for sale                                             (1.1)          -        (8.3)
          Cash and cash equivalents at end of period
    10    (including bank overdraft)                           483.6      113.1         74.6

Notes to the interim consolidated financial statements

for the six months ended 30 June 2016

1.  General information 

UBM plc is a company incorporated in Jersey under the Companies (Jersey) Law 1991.  The address of the registered office is Ogier House, The Esplanade, St. Helier, JE4 9WG, Jersey.  UBM plc is tax resident in the United Kingdom.  The nature of the Group's operations and its principal activities are detailed in Note 4.  

The interim condensed consolidated financial statements of the Group for the six months ended 30 June 2016 were authorised for issue by the Board of directors on 28 July 2016.  The interim condensed consolidated financial statements are unaudited but have been reviewed by the auditors as set out in their report.  

2.  Basis of preparation 

The interim condensed consolidated financial statements for the six months ended 30 June 2016 have been prepared in accordance with IAS 34 'Interim financial reporting' and the Disclosure and Transparency Rules of the Financial Conduct Authority.  

The interim condensed consolidated financial statements do not constitute the Group's statutory financial statements.  The Group's most recent statutory financial statements, which comprise the Annual Report and Accounts for the year ended 31 December 2015, were approved by the directors on 24 February 2016 and have been filed with the Jersey Registrar of Companies.  The auditors have reported on those financial statements and have given an unqualified report which does not contain a statement under Article 113B(3) or Article 113B(6) of the Companies (Jersey) Law 1991.  These interim condensed consolidated financial statements should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2015, which were prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB).  

Discontinued operations 

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

Comparative information 

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

Going concern 

The directors of UBM plc, having made appropriate enquiries, consider that adequate resources exist for the business to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the financial information for the six months ended 30 June 2016.  

3.  Accounting policies and estimates 

The accounting policies, significant judgments made by management and key sources of estimation adopted in the preparation of the interim condensed consolidated financial statements for the six months ended 30 June 2016 are consistent with those used in the preparation of the Group's Annual Report and Accounts for the year ended 31 December 2015, as listed below.

The judgements made in the process of applying the Group's accounting policies that have the most significant effect on amounts recognised in the financial statements relate to:

  • Unrecognised deferred tax assets
  • The identification of cash generating units and assumptions used in the impairment testing of goodwill
  • The measurement of retirement benefit obligations
  • The identification of intangible assets acquired in business combinations

The key areas of estimation uncertainty at the reporting date that could have a material effect on the carrying amounts of assets and liabilities within the next six months relate to:

  • Current tax liabilities
  • Forecast cash flows used in annual impairment testing of goodwill
  • Provisions, including warranty provisions
  • Put options over non-controlling interests

4.  Segment information 

Operating segments 

The Group considers that operating segments presented on a products and services basis are the most appropriate way to present the performance of the Group.  This is consistent with the internal reporting provided to the Group Chief Executive Officer and the Group Chief Financial Officer, together the chief operating decision maker (CODM), and reflects the way in which resources are allocated.

The CODM considers there to be four operating segments:

  • Events which provide face to face interaction in the form of exhibitions, trade shows, conferences and other live events;
  • Marketing Services - Online which provide website sponsorships and banner advertising as well as online directory and data products;
  • Marketing Services - Print which publishes magazines and trade press to specialist markets; and
  • PR Newswire which provides communications products and services to professionals working in marketing, public relations, corporate communications or investor relations roles - distributing messages, identifying target audiences and monitoring the impact.

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

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

Segment measures 

The CODM assesses the performance of the operating segments and the allocation of resources using revenue and adjusted operating profit.  Adjusted operating profit is IFRS operating profit excluding amortisation of intangible assets arising on acquisitions, exceptional items and share of tax on results of joint ventures and associates.  

Finance income/expense and tax are not allocated to operating segments and are reported to the CODM only in aggregate.  

Segment assets and liabilities are not reported to the CODM.  

Transactions between segments are measured on the basis of prices that would apply to third-party transactions.

Six months ended 30 June 2016 


   
                                          Other
                                      marketing Corporate Continuing Discontinued
                               Events  services     costs      total   operations   Total
                                 GBPm      GBPm      GBPm       GBPm         GBPm    GBPm
    Revenue
    Total segment revenue       307.2      73.3         -      380.5        103.2   483.7
    Intersegment revenue        (0.5)         -         -      (0.5)        (0.2)   (0.7)
    External revenue            306.7      73.3         -      380.0        103.0   483.0

    Result
    Depreciation (including
    amortisation of website
    development costs)          (6.2)     (1.5)     (0.7)      (8.4)            -   (8.4)
    Share of pre-tax results
    from joint ventures and
    associates                    0.8        -        1.0        1.8          0.2     2.0
    Segment adjusted operating
    profit                       91.2      12.1     (9.9)       93.4         28.1   121.5
    Amortisation of intangible
    assets arising on
    acquisitions                                              (19.4)            -  (19.4)
    Exceptional operating items                                (2.8)        377.1   374.3
    Share of tax on profit in
    joint ventures and
    associates                                                 (0.4)            -   (0.4)
    Group operating profit                                      70.8        405.2   476.0
    Financing income                                             1.0            -     1.0
    Financing expense                                         (15.5)            -  (15.5)
    Exceptional items
    relating to net
    financing expense                                          (4.5)            -   (4.5)
    Profit before tax                                           51.8        405.2   457.0
    Tax                                                       (11.9)        (1.8)  (13.7)
    Profit for the period                                       39.9        403.4   443.3

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

4.  Segment information (continued)

Six months ended 30 June 2015 (restated)  


   
                                           Other
                                       Marketing Corporate Continuing Discontinued
                               Events   Services     costs      total   operations   Total
                                 GBPm       GBPm      GBPm       GBPm         GBPm    GBPm
    Revenue
    Total segment revenue       285.5      66.7          -      352.2        104.6   456.8
    Intersegment revenue         (0.4)        -          -      (0.4)        (0.4)   (0.8)
    External revenue             285.1      66.7         -      351.8        104.2   456.0

    Result
    Depreciation (including
    amortisation of website
    development costs)           (5.9)     (1.3)     (0.7)      (7.9)        (2.9)  (10.8)
    Share of pre-tax results
    from joint ventures and
    associates                     0.1        -        0.5        0.6          0.1     0.7
    Segment adjusted operating
    profit                        81.1      5.1     (11.2)       75.0         23.8    98.8
    Amortisation of intangible
    assets arising on
    acquisitions                                               (18.4)        (0.5)  (18.9)
    Exceptional operating items                                 (7.3)           -    (7.3)
    Share of tax on profit in
    joint ventures and
    associates                                                  (0.1)           -    (0.1)
    Group operating profit                                       49.2        23.3     72.5
    Financing income                                              1.8           -      1.8
    Financing expense                                          (15.5)           -   (15.5)
    Exceptional items relating to net
    financing expense                                           (0.4)           -    (0.4)
    Profit before tax                                            35.1        23.3     58.4
    Tax                                                         (9.3)       (1.5)   (10.8)
    Profit for the period                                        25.8        21.8     47.6

Year ended 31 December 2015 


   
                                           Other
                                       Marketing Corporate Continuing Discontinued
                               Events   Services     costs      total   operations   Total
                                 GBPm       GBPm      GBPm       GBPm         GBPm    GBPm
    Revenue
    Total segment revenue       635.0      139.3         -      774.3        205.4   979.7
    Intersegment revenue        (4.4)          -         -      (4.4)        (0.7)   (5.1)
    External revenue            630.6      139.3         -      769.9        204.7   974.6
 
    Result
    Depreciation (including
    amortisation of website
    development costs)         (13.9)      (3.0)      (1.1)    (18.0)        (6.7)  (24.7)
    Share of pre-tax results
    from joint ventures and
    associates                    0.3         -        1.3       1.6          0.3      1.9
    Segment adjusted operating
    profit                      202.5      17.7     (23.1)     197.1         48.4    245.5
    Amortisation of intangible
    assets arising on
    acquisitions                                              (37.9)        (1.0)   (38.9)
    Exceptional operating items                               (14.1)       (29.3)   (43.4)
    Share of tax on profit in
    joint ventures and
    associates                                                 (0.4)            -    (0.4)
    Group operating profit                                     144.7         18.1    162.8
    Financing income                                             2.9            -      2.9
    Financing expense                                         (29.1)            -   (29.1)
    Exceptional items relating to net
    financing expense                                            1.1            -      1.1
    Profit before tax                                          119.6         18.1    137.7
    Tax                                                       (27.3)        (2.7)   (30.0)
    Profit for the period                                       92.3         15.4    107.7

4.  Segment information (continued)

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
                                Six months  six months        Year
                                     ended       ended       ended
                                   30 June     30 June 31 December
                                      2016        2015        2015
    Continuing revenue                GBPm        GBPm        GBPm
    United Kingdom                    37.6        42.0        72.5
    Foreign countries
    United States and Canada         212.2       190.9       345.6
    Europe                            10.0        11.7        61.7
    China                             73.4        66.5       195.7
    Other emerging markets*           35.1        32.3        79.7
    Rest of the world                 11.7         8.4        14.7
                                     342.4       309.8       697.4
    External revenue                 380.0       351.8       769.9

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

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


   
                                    30 June     30 June 31 December
                                       2016        2015        2015
    Non-current assets                 GBPm        GBPm        GBPm
    United Kingdom                    354.3       317.5       357.4
    Foreign countries
    United States and Canada        1,362.8     1,197.4     1,100.3
    Europe                             12.1        18.1        10.9
    China                              28.9        21.1        36.4
    Other emerging markets*            70.2       123.0       116.2
    Rest of the world                   3.8         6.2         6.0
                                    1,477.8     1,365.8     1,269.8
    Total non-current assets        1,832.1     1,683.3     1,627.2

Non-current assets for this purpose consist of goodwill, intangible assets, property, plant and equipment, investments in joint ventures and associates and other fixed asset investments.

5.  Exceptional operating items  

Certain items are recognised as exceptional items since, due to their nature or infrequency, such presentation is relevant to an understanding of the Group's financial statements.  These items are not part of the Group's normal ongoing operations.


   
                                                         Six months Six months        Year
                                                              ended      ended       ended
                                                            30 June    30 June 31 December
                                                               2016       2015        2015
    (Charged)/credited to continuing operating profit          GBPm       GBPm        GBPm
    Advanstar integration costs                               (2.2)      (1.8)       (8.7)
    Acquisition costs on Advanstar                                -      (0.5)       (0.6)
    Business Journals Inc integration costs                   (1.4)          -          -
    Acquisition costs on other business combinations          (0.9)      (0.5)       (0.6)
    Changes in estimates of contingent consideration              -      (0.3)       (0.2)
    Exceptional items relating to acquisitions                (4.5)      (3.1)      (10.1)

    Gain on joint venture previously impaired                     -         -          2.1
    Exceptional items in share of results from joint
    ventures and associates                                       -         -          2.1

    Gain on disposal of investment                              2.2         -            -
    Disposal of non-core businesses                           (0.5)         -            -
    Exceptional items relating to disposal of
    investments                                                 1.7         -            -

    Impairment of goodwill and intangible assets                  -         -        (1.9)
    Impairment of joint ventures and associates                   -      (4.2)       (4.2)
    Impairment charge                                             -      (4.2)       (6.1)

    Total charged to continuing operating profit              (2.8)      (7.3)      (14.1)

5.  Exceptional operating items (continued)

Advanstar integration costs 

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

Business Journals Inc (BJI) integration costs 

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

Acquisition costs on other business combinations 

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

Exceptionals relating to disposal of investments 

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

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

6.  Net financing expense 


   
                                                      Six months Six months        Year      
                                                           ended      ended       ended   
                                                         30 June    30 June 31 December   
                                                            2016       2015        2015  
                                                            GBPm       GBPm        GBPm
    Financing expense
    Borrowings and loans                                  (13.8)     (13.7)      (26.9)
    Other                                                      -      (0.2)          -
    Total interest expense for financial liabilities
    not classified at fair value through profit or
    loss                                                  (13.8)     (13.9)      (26.9)
    Pension schemes net finance expense (Note 18)          (0.4)      (0.9)       (1.7)
    Net loss on financial instruments at fair value
    through profit or loss                                 (0.2)          -          -
    Foreign exchange loss on forward contracts             (0.8)          -       (0.1)
    Other fair value movements                             (0.3)      (0.2)       (0.4)
    Recycling of capitalised arrangement fees                  -      (0.5)          -
    Financing expense before exceptional items            (15.5)     (15.5)      (29.1)

    Exceptional financing expense
    Fair value movement on put options over
    non-controlling interests                              (4.5)      (0.4)          -

    Total financing expense                                (20.0)    (15.9)      (29.1)

    Financing income
    Cash and cash equivalents                                0.6        0.8         1.0
    Vendor Loan Note                                         0.3        0.7         1.6
    Total interest income                                    0.9        1.5         2.6
    Net gain on financial instruments at fair value
    through profit or loss                                   0.1        0.3           -
    Ineffective portion on fair value hedges                   -          -         0.3
    Financing income before exceptional items                1.0        1.8         2.9

    Exceptional financing income
    Fair value movement on put options over
    non-controlling interests                                  -          -         1.1

    Total financing income                                   1.0        1.8         4.0

    Net financing expense                                 (19.0)     (14.1)      (25.1)

7.  Earnings per share 

Basic earnings per share is calculated by dividing net profit for the period attributable to owners of the parent entity by the weighted average number of ordinary shares outstanding during the period.  

Adjusted basic earnings per share excludes amortisation of intangible assets arising on acquisitions, movements on deferred tax balances recognised as a consequence of acquisition of intangibles, exceptional items and net financing expense adjustments.

The weighted average number of shares used in the calculation of earnings per share reflects the share consolidation on 27 June 2016 of eight for every nine shares owned, detailed in Note 12: period ended 30 June 2016: 437.2 million (period ended 30 June 2015: 442.4 million; year ended 31 December 2015: 442.5 million).  In accordance with IAS 33, the prior period weighted average number of shares has not been restated as the share consolidation was coupled with the payment of the special dividend (Note 8).

Diluted earnings per share is calculated by dividing net profit for the period attributable to owners of the parent entity by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.  The impact of dilutive securities in the six months ended 30 June 2016 would be to increase weighted average shares by 4.1 million shares (six months ended 30 June 2015: 3.4 million shares; year ended 31 December 2015: 3.0 million shares).

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


   
                                Six months ended    Six months ended       Year ended    
                                  30 June 2016        30 June 2015      31 December 2015
    Continuing operations                 Earnings            Earnings            Earnings
                                Earnings per share  Earnings per share  Earnings per share
                                    GBPm     pence      GBPm     pence      GBPm     pence
    Adjusted operating profit       93.4                75.0               197.1
    Net interest expense          (12.9)              (12.4)              (24.3)
    Pension schemes finance
    expense                        (0.4)               (0.9)               (1.7)
    Adjusted profit before tax      80.1                61.7               171.1
    Tax                           (12.8)               (9.4)              (25.2)
    Non-controlling interests      (4.6)               (4.4)              (11.1)
    Adjusted earnings per 
    share                           62.7      14.3      47.9     10.9      134.8      30.5
    Adjustments
    Amortisation of intangible
    assets arising on
    acquisitions                  (19.4)     (4.4)    (18.4)    (4.2)     (37.9)     (8.6)
    Net deferred tax movement
    on intangible assets             2.4       0.5       0.4      0.1        1.5       0.3
    Exceptional items              (2.8)     (0.6)     (7.3)    (1.6)     (14.1)     (3.2)
    Exceptional deferred tax
    (charge)                       (1.9)     (0.4)     (0.4)    (0.1)      (4.0)     (0.9)
    Net financing expense -
    other                          (5.7)     (1.3)     (0.8)    (0.2)        0.9       0.2
    Basic earnings per share        35.3       8.1      21.4      4.9       81.2      18.3
    Dilution
    Options                            -     (0.1)         -        -          -     (0.1)
    Diluted earnings per share      35.3       8.0      21.4      4.9       81.2      18.2

    Adjusted earnings per
    share (as above)                62.7      14.3      47.9     10.9      134.8      30.5
    Options                            -     (0.1)         -     (0.1)         -     (0.2)
    Diluted adjusted earnings
    per share                       62.7      14.2      47.9     10.8      134.8      30.3


   
                                Six months ended    Six months ended       Year ended   
                                  30 June 2016        30 June 2015      31 December 2015
    Total Group                            Earnings            Earnings             Earnings
                                Earnings  per share  Earnings per share  Earnings  per share
                                    GBPm      pence      GBPm     pence      GBPm      pence
    Adjusted operating profit      121.5                98.8                245.5
    Net interest expense          (12.9)              (12.4)               (24.3)
    Pension schemes finance
    expense                        (0.4)               (0.9)                (1.7)
    Adjusted profit before tax     108.2                85.5                219.5
    Tax                           (14.6)              (10.9)               (27.9)
    Non-controlling interests      (4.6)               (4.4)               (11.1)
    Adjusted earnings per
    share                           89.0      20.4      70.2      15.9      180.5     40.8
    Adjustments
    Amortisation of intangible
    assets arising on
    acquisitions                  (19.4)     (4.4)    (18.9)     (4.3)     (38.9)    (8.8)
    Net deferred tax movement
    on intangible assets             2.4       0.5       0.4       0.1        1.5      0.3
    Exceptional items              374.3      85.6     (7.3)     (1.6)     (43.4)    (9.8)
    Exceptional deferred tax
    (charge)                       (1.9)     (0.4)     (0.4)     (0.1)      (4.0)    (0.9)
    Net financing expense -
    other                          (5.7)     (1.3)     (0.8)     (0.2)        0.9      0.2
    Basic earnings per share       438.7     100.4      43.2       9.8       96.6     21.8
    Dilution
    Options                            -     (1.0)         -     (0.1)          -    (0.1)
    Diluted earnings per share     438.7      99.4      43.2       9.7       96.6     21.7

    Adjusted earnings per
    share (as above)                89.0      20.4      70.2      15.9      180.5     40.8
    Options                            -     (0.2)         -     (0.1)          -    (0.3)
    Diluted adjusted earnings
    per share                       89.0      20.2      70.2      15.8      180.5     40.5

8.  Dividends  


   
                                                         Six months Six months        Year  
                                                              ended      ended       ended 
                                                            30 June    30 June 31 December 
                                                               2016       2015        2015   
                                                               GBPm       GBPm        GBPm
    Declared and paid during the period
    Equity dividends on ordinary shares
    Final dividend for 2014 of 16.0p                              -       70.8        70.8
    Interim dividend for 2015 of 5.3p                             -          -        23.4
    Final dividend for 2015 of 16.3p                           71.8          -           -
    Declared, not paid during the period
    Equity dividends on ordinary shares
    Special dividend of 55.3p                                 243.7          -           -
                                                              315.5       70.8        94.2

    Proposed (not recognised as a liability at the end
    of the period)
    Equity dividends on ordinary shares
    Interim dividend for 2015 of 5.3p                             -       23.4           -
    Final dividend for 2015 of 16.3p                              -          -        71.8
    Interim dividend for 2016 of 5.4p                          21.2          -           -

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

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


   
                                                                          Year
                                              Six months Six months      ended
                                                   ended      ended         31                                                                           
                                                 30 June    30 June   December
                                                    2016       2015       2015
                                                    GBPm       GBPm       GBPm
    Net book value at 1 January                    411.7      439.2      439.2
    Acquired with subsidiaries                      24.7        2.2       15.0
    Additions                                        7.6       19.1       21.4
    Intangible asset construction in progress          -          -        6.9
    Disposals                                          -      (0.4)      (3.0)
    Disposal of subsidiaries                           -      (0.9)      (1.0)
    Classified as held for sale (Note 17)          (0.3)          -     (17.5)
    Depreciation and amortisation                 (27.8)     (29.7)     (63.6)
    Currency translation                            41.6      (1.7)       14.3
    Net book value at 30 June/31 December          457.5      427.8      411.7

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

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

10.  Movement in net debt 


   
                                    1 January  Non-cash               Currency  30 June
                                         2016     items Cash flow  translation     2016
                                         GBPm      GBPm      GBPm         GBPm     GBPm
    Cash and cash equivalents
    (including held for sale)            84.8         -     388.5         11.4    484.7
    Bank overdrafts                     (1.9)         -       1.9            -        -
    Net cash                             82.9         -     390.4         11.4    484.7

    Bonds due in less than one year   (254.0)       1.9         -            -  (252.1)
    Bank loans due in more than one
    year                               (74.0)         -      76.8        (2.8)        -
    Bonds due in more than one year   (239.5)      (2.2)        -       (26.6)  (268.3)
    Borrowings                        (567.5)      (0.3)     76.8       (29.4)  (520.4)

    Derivative assets associated
    with borrowings                      10.0        0.1        -          0.8     10.9
    Derivative liabilities
    associated with borrowings         (10.3)      (0.7)        -        (9.2)   (20.2)
    Net debt                          (484.9)      (0.9)    467.2       (26.4)   (45.0)

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

10.  Movement in net debt (continued)


   
                                     1 January  Non-cash              Currency 30 June
                                          2015     items Cash flow translation    2015
                                          GBPm      GBPm      GBPm        GBPm    GBPm
    Cash and cash equivalents
    (including held for sale)             74.4         -      43.3       (3.4)   114.3
    Bank overdrafts                      (1.3)         -       0.1           -   (1.2)
    Net cash                              73.1         -      43.4       (3.4)   113.1

    Bank loans due in more than one
    year                               (135.5)     (0.7)    (23.8)         0.4 (159.6)
    Bonds due in more than one year    (483.6)       1.9        -          1.9 (479.8)
    Borrowings                         (619.1)       1.2    (23.8)         2.3 (639.4)

    Derivative assets associated
    with borrowings                       14.0     (2.2)        -            -    11.8
    Derivative liabilities
    associated with borrowings           (6.0)        -         -          0.9   (5.1)
    Net debt                           (538.0)     (1.0)     19.6        (0.2) (519.6)


   
                                    1 January  Non-cash              Currency  31 December
                                         2015     items Cash flow translation         2015
                                         GBPm      GBPm      GBPm        GBPm         GBPm
    Cash and cash equivalents
    (including held for sale)            74.4         -       8.1         2.3         84.8
    Bank overdrafts                     (1.3)         -     (0.6)           -        (1.9)
    Net cash                             73.1         -       7.5         2.3         82.9

    Bonds due in less than one year         -   (254.0)         -           -      (254.0)
    Bank loans due in more than one
    year                              (135.5)         -      62.6       (1.1)       (74.0)
    Bonds due in more than one year   (483.6)     257.3         -      (13.2)      (239.5)
    Borrowings                        (619.1)       3.3      62.6      (14.3)      (567.5)

    Derivative assets associated
    with borrowings                      14.0      (4.4)        -         0.4         10.0
    Derivative liabilities
    associated with borrowings          (6.0)        0.1        -       (4.4)       (10.3)
    Net debt                          (538.0)      (1.0)     70.1      (16.0)      (484.9)

11.  Financial instruments 

Fair values of financial assets and financial liabilities 

Valuation techniques use observable market data where it is available and rely as little as possible on entity specific estimates.  

The fair values of interest rate swaps and forward exchange contracts are measured using discounted cash flows.  Future cash flows are based on forward interest/exchange rates (from observable yield curves/forward exchange rates at the end of the reporting period) and contract interest/forward rates, discounted at a rate that reflects the credit risk of the counterparties.

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

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

The fair values of put options over non-controlling interests (including exercise price) and contingent and deferred consideration on acquisitions are measured using discounted cash flows models with inputs derived from the projected financial performance in relation to the specific criteria for each acquisition, as no observable market data is available.  The changes in estimates of put options over non-controlling interests are reported within exceptional financing expense.  The changes in estimates of contingent and deferred consideration on acquisitions are reported within exceptional operating items.  The fair values are most sensitive to the projected financial performance of each acquisition; management makes a best estimate of these projections at each financial reporting date and regularly assesses a range of reasonably possible alternatives for those inputs and determines their impact on the total fair value.  An increase of 20% to the projected financial performance used in the put option measurements would increase the aggregate liability by £3.4m.  The fair value of the contingent and deferred consideration on acquisitions is not significantly sensitive to a reasonable change in the forecast performance.  


   
                                                               Carrying    Fair
                                                                 amount   value
                                                                   GBPm    GBPm
    Financial assets at fair value through profit or loss
    Interest rate swaps                                            10.9    10.9
    Available for sale financial assets
    Preferred equity                                               23.4    23.4
                                                                   34.3    34.3

    Financial liabilities at amortised cost
    GBP250m 6.5% sterling bonds due 2016                         (99.9) (101.0)
    $350m 5.75% dollar bonds due 2020                           (186.2) (198.5)
    Financial liabilities at fair value through profit or loss
    GBP250m 6.5% sterling bonds due 2016                        (152.2) (153.8)
    $350m 5.75% dollar bonds due 2020                            (82.1)  (87.5)
    Interest rate swaps                                           (0.6)   (0.6)
    Forward exchange contracts                                   (20.4)  (20.4)
    Put options over non-controlling interests                   (14.9)  (14.9)
    Contingent and deferred consideration on acquisitions         (6.4)   (6.4)
                                                                (562.7) (583.1)

The fair values of all other financial assets and liabilities do not differ from their carrying amounts.

11.  Financial instruments (continued)

Fair value hierarchy 

The fair value measurements at the reporting date are classified according to the significance of the inputs used in making the measurements.  The level in the hierarchy within which the fair value is categorised is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Level 1:    quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:    inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (e.g. prices) or indirectly (e.g. derived from prices).

Level 3:    inputs for the assets or liabilities that are not based on observable market data.

For financial assets and financial liabilities that are recognised at fair value in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

At 30 June 2016, the Group held the following classes of financial instruments measured at fair value.  


   
                                                  30 June
                                                     2016 Level 1 Level 2  Level 3
                                                     GBPm    GBPm    GBPm     GBPm
    Financial assets at fair value through
    profit or loss
    Interest rate swaps - hedged                      7.8       -     7.8        -
    Interest rate swaps - not hedged                  3.1       -     3.1        -
    Available for sale financial assets
    Preferred equity                                 23.4       -       -     23.4

    Financial liabilities at amortised cost
    GBP250m 6.5% sterling bonds due 2016           (99.3)       -  (99.3)        -
    $350m 5.75% dollar bonds due 2020             (198.5)       - (198.5)        -
    Financial liabilities at fair value
    through profit or loss                                                       -
    GBP250m 6.5% sterling bonds due 2016          (155.5)       - (155.5)        -
    $350m 5.75% dollar bonds due 2020              (87.5)       -  (87.5)        -
    Interest rate swaps - hedged                    (0.6)       -   (0.6)        -
    Forward exchange contracts - hedged            (19.6)       -  (19.6)        -
    Forward exchange contracts - not hedged         (0.8)       -   (0.8)        -
    Put options over non-controlling
    interests                                      (14.9)       -       -   (14.9)
    Contingent and deferred consideration
    acquisitions                                    (6.4)       -       -    (6.4)

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

Reconciliation of recurring level 3 fair value measurements:


                                                                                  
                                                               Put options       Contingent
                                                                 over non-     and deferred
                                                     Preferred controlling    consideration
                                                        equity   interests  on acquisitions
                                                       30 June     30 June          30 June
                                                          2016        2016             2016
                                                          GBPm        GBPm             GBPm
    At 1 January                                             -      (13.4)            (0.8)
    Acquisitions                                             -           -            (5.7)
    Additions                                             21.9           -                -
    Consideration paid                                       -         5.0              0.8
    Changes in estimates (income statement)                  -       (4.5)                -
    Currency translation                                   1.5       (2.0)            (0.7)
    At 30 June                                            23.4      (14.9)            (6.4)

 

12.  Share capital 


   
                                                         30 June  30 June  31 December  
                                                            2016     2015         2015
    Authorised                                              GBPm     GBPm         GBPm
    1,081,888,658 ordinary shares of 11.25p each (30
    June 2015 and 31 December 2015: 1,217,124,740
    ordinary shares of 10p each)                           121.7    121.7        121.7


   
                                                                    Ordinary Ordinary
                                                                      Shares   shares
    Issued and fully paid                                             Number     GBPm
    At 1 January 2015                                            442,652,520     44.3
    Issued in respect of share option schemes and other
    entitlements                                                     189,566        -
    At 30 June 2015                                              442,842,086     44.3
    Issued in respect of share option schemes and other
    entitlements                                                     135,452        -
    At 31 December 2015                                          442,977,538     44.3
    Issued in respect of share option schemes and other
    entitlements                                                           5        -
    Share consolidation                                         (49,219,727)        -
    At 30 June 2016                                              393,757,816     44.3

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

Company share schemes 

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

13.  Other reserves 


   
                                                  Foreign
                                                 currency                            Total
                                        Merger translatio       ESOP      Other      other
                                       reserve  n reserve    reserve    reserve   reserves
                                          GBPm       GBPm       GBPm       GBPm       GBPm
    At 1 January 2016                  (732.2)        9.4      (7.8)      125.3    (605.3)
    Total comprehensive income for
    the period*                              -      110.2          -          -      110.2
    Shares awarded by ESOP                   -          -        8.8          -        8.8
    Own shares purchased by the
    Company                                  -          -     (14.4)          -     (14.4)
    At 30 June 2016                    (732.2)      119.6     (13.4)      125.3    (500.7)

    At 1 January 2015                  (732.2)     (31.7)      (1.5)      125.3    (640.1)
    Total comprehensive income for
    the period**                             -      (8.5)          -          -      (8.5)
    Shares awarded by ESOP                   -          -       14.6          -       14.6
    Own shares purchased by the
    Company                                  -          -     (15.8)          -     (15.8)
    At 30 June 2015                    (732.2)     (40.2)      (2.7)      125.3    (649.8)

    At 1 January 2015                  (732.2)     (31.7)      (1.5)      125.3    (640.1)
    Total comprehensive income for
    the period***                            -       41.1          -          -       41.1
    Shares awarded by ESOP                   -          -       17.1          -       17.1
    Own shares purchased by the
    Company                                  -          -     (23.4)          -     (23.4)
    At 31 December 2015                (732.2)        9.4      (7.8)      125.3    (605.3)

* The amount included in the foreign currency translation reserve for the period ended 30 June 2016 represents the currency translation difference on foreign operations on Group subsidiaries of £113.0m (excluding £4.6m relating to non-controlling interests), on net investment hedges of £(35.8)m, on joint ventures and associates of £0.4m and on the reclassification adjustment for foreign operations in the period of £32.6m.

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

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

13.  Other reserves (continued)

Merger reserve 

The merger reserve is used to record entries in relation to certain reorganisations that took place in previous accounting periods.  The majority of the balance on the reserve relates to the capital reorganisation that took place in 2008 which created a new holding company which is UK-listed, incorporated in Jersey and with its tax residence in the Republic of Ireland.  The return of the Company's tax residency to the United Kingdom in 2012 has had no impact on these balances.  

Foreign currency translation reserve 

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.  It is also used to record the effect of hedging net investments of foreign operations.

ESOP reserve 

The ESOP reserve records ordinary shares held by the ESOP Trust to satisfy future share awards.  The shares are recorded at cost.  In the six months ended 30 June 2016, 2,400,000 ordinary shares were purchased by the ESOP (six months ended 30 June 2015: 2,864,749; year ended 31 December 2015: 4,364,749).

14.  Acquisitions 

The Group has completed two acquisitions of Events businesses in the six months ended 30 June 2016.  These acquisitions continue the Group's strategy of expansion through acquisition of Events. Details of the acquisitions made by the Group in the prior year are available in the Annual Report and Accounts for the year ended 31 December 2015.  

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

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

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

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


   
                                                                        Other           All
                                                            BJI  acquisitions  acquisitions
                                                   30 June 2016  30 June 2016  30 June 2016
                                                           GBPm          GBPm          GBPm
    Intangible assets                                      18.6           6.1          24.7
    Cash and cash equivalents                               3.7             -           3.7
    Trade and other receivables                             3.0           0.8           3.8
    Total assets                                           25.3           6.9          32.2
    Trade and other payables                              (4.2)         (1.4)         (5.6)
    Total liabilities                                     (4.2)         (1.4)         (5.6)
    Identifiable net assets acquired                       21.1           5.5          26.6
    Goodwill arising on acquisition                        27.7          10.7          38.4
                                                           48.8          16.2          65.0

Trade and other receivables acquired have been measured at fair value which is the gross contractual amounts receivable.  All amounts recognised are expected to be collected.  The goodwill of £38.4m recognised relates to certain intangible assets that cannot be individually separated.  These include items such as customer loyalty, market share, skilled workforce and synergies expected to arise after the acquisition completion.  The goodwill arising is expected to be deductible for tax purposes.

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

  • BJI is a well-established player in the US market for fashion trade shows, allowing UBM to benefit from expected growth in this sector
  • The acquisition is highly complementary to UBM's existing fashion tradeshow portfolio, providing UBM with scope to generate material synergies in areas such as event operations, property and cross-marketing opportunities
  • Revenue synergies from New York venue optimisation where UBM can combine BJI-controlled space which is under-utilised with UBM's existing space during key market periods to optimise the marketplace for customers, drive operational efficiency, and maximise revenue
  • Cost synergies from combining show management structures, scale efficiencies an overhead cost reductions.

Acquisition performance 

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

14.  Acquisitions (continued)

Cash flow effect of acquisitions 

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


   
                                                                         Other           All  
                                                             BJI  acquisitions  acquisitions                                                                                             
                                                          30 June      30 June       30 June
                                                             2016         2016          2016
                                                             GBPm         GBPm          GBPm
    Net cash acquired with subsidiaries                     (3.7)            -         (3.7)
    Cash paid to acquire subsidiaries                        48.8         10.5          59.3
    Net cash outflow on 2016 acquisitions                    45.1         10.5          55.6
    Payment of contingent consideration on
    prior year acquisitions                                                              0.8
    Total cash outflow on acquisitions                                                  56.4

None of the deferred consideration payments are individually material.

Contingent and deferred consideration 

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

15.  Equity Transactions 

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

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


   
                                                                       30 June
                                                                          2016
                                                                          GBPm
    Cash paid                                                              5.0
    Put option liability                                                 (5.0)
    Carrying amount of non-controlling interest at
    acquisition date                                                       3.3
    Recognised in equity                                                   3.3

16.  Disposals 

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

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

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


   
                                                                           PR Newswire
                                                                               30 June
                                                                                  2016
                                                                                  GBPm
    Goodwill                                                                      94.7
    Intangible assets                                                              6.6
    Property, plant and equipment                                                 12.9
    Deferred tax asset                                                             1.6
    Investments in joint ventures and associates                                   2.1
    Trade and other receivables                                                   44.9
    Cash and cash equivalents                                                      1.6
    Total assets                                                                 164.4
    Trade and other payables                                                    (48.2)
    Total liabilities                                                           (48.2)
    Identifiable net assets                                                      116.2
    Costs associated with disposal                                                38.9
    Loss on deal contingent forward                                               20.4
    Cumulative exchange loss reclassified to profit and
    loss following disposal                                                       32.6
    Profit on disposal                                                           385.3
    Consideration received                                                       593.4
    Less preferred equity                                                       (21.9)
    Translation difference using deal contingent forward                        (41.4)
    Net cash inflow                                                              530.1

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

17.  Discontinued operations and assets held for sale 

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

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


   
                                                       PR Newswire PR Newswire PR Newswire
                                                           30 June     30 June 31 December
                                                              2016        2015        2015
                                                              GBPm        GBPm        GBPm
    Revenue                                                  103.0       104.2       204.7
    Other operating income                                     0.1           -         0.1
    Operating expenses                                      (75.2)      (80.5)     (156.7)
    Share of results from joint ventures and
    associates                                                 0.2         0.1         0.3
    Adjusted operating profit from discontinued
    operations                                                28.1        23.8        48.4
    Amortisation of intangible assets arising on
    acquisitions                                                 -       (0.5)       (1.0)
    Exceptional items                                        385.3           -      (29.3)
    Operating profit from discontinued operations            413.4        23.3        18.1
    Tax                                                      (1.8)       (1.5)       (2.7)
    Profit for the year from discontinued operations         411.6        21.8        15.4

    Earnings per share for discontinued operations
    Basic                                                    92.3p        4.9p        3.5p
    Diluted                                                  91.4p        4.8p        3.5p

    Net cash flows attributable to discontinued
    operations
    Net cash from operating activities                        20.9        18.7        30.9
    Net cash from investing activities                       (3.9)       (3.4)       (4.7)
    Net cash from financing activities                      (26.9)      (15.2)      (26.4)
    Net cash flows attributable to discontinued
    operations                                               (9.9)       (0.1)       (0.2)

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

  • £38.9m of disposal costs for services incurred relating to the disposal.  The costs include broker fees, management transaction bonuses, legal advice and warranties and indemnities recognised in accordance with specific clauses in the sale agreement.
  • £20.4m foreign exchange loss on the fair value measurement of a deal contingent forward used to fix the US dollar proceeds into sterling is in addition to a £21.0m loss recognised in 2015. Consistent with the accounting treatment adopted for a similar instrument taken out for the Advanstar acquisition, hedge accounting has not been applied. 

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

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

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

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

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


   
                                                       PRN China  Electronics       Total
                                                         30 June      30 June     30 June
                                                            2016         2016        2016
                                                            GBPm         GBPm        GBPm
    Goodwill                                                   -          8.7         8.7
    Property, plant and equipment                            0.2          0.1         0.3
    Trade and other receivables                              5.8          2.4         8.2
    Cash and cash equivalents                                1.1            -         1.1
    Assets classified as held for sale                       7.1         11.2        18.3
    Trade and other payables                               (5.3)        (1.4)       (6.7)
    Liabilities associated with assets classified as
    held for sale                                          (5.3)        (1.4)       (6.7)
    Net assets classified as held for sale                   1.8          9.8        11.6

18.  Retirement benefit obligations  

The Group operates funded defined benefit and defined contribution pension schemes in the UK and overseas.  The most recent actuarial valuations were carried out during 2014 and updated to 30 June 2016 for accounting purposes by independent qualified actuaries.

The amounts recognised in the income statement were as follows:


   
                                             Six months Six months        Year
                                                  ended      ended       ended
                                                     30         30          31
                                                   June       June    December
                                                   2016       2015        2015
                                                   GBPm       GBPm        GBPm
    Current service cost                            0.3        0.2         0.5
    Administration cost                             0.4        0.5         0.9
    Curtailment gain                              (0.3)          -           -
    Interest cost (Note 6)                          0.4        0.9         1.7
    Total pension expense                           0.8        1.6         3.1

The amounts recognised in the balance sheet were as follows:


   
                                                            30      30         31
                                                          June    June   December                                                                       
                                                          2016    2015       2015
                                                          GBPm    GBPm       GBPm
    Fair value of plan assets                            536.0   488.7      481.3
    Present value of defined benefit obligations       (572.0) (525.0)    (503.5)
    Irrecoverable element of pension surplus             (2.8)   (2.3)      (2.5)
    Net deficit in the statement of financial position  (38.8)  (38.6)     (24.7)

    Retirement benefit surplus                             5.3     4.3       4.6
    Retirement benefit obligation                       (44.1)  (42.9)    (29.3)
    Net deficit in the statement of financial position  (38.8)  (38.6)    (24.7)

19.  Share-based payments 

The Group's management awards share options and shares with performance conditions to directors and employees, from time to time, on a discretionary basis.  During the six months ended 30 June 2016, the Group awarded 1,589,914 (six months ended 30 June 2015: 3;846,179; year ended 31 December 2015: 4,631,565) shares under the Group's share incentive plans.

20.  Related party transactions 

Transactions with related parties are made at arm's length.  Outstanding balances at the end of the period are unsecured and settlement occurs in cash.  There are no bad debt provisions for related party balances as at 30 June 2016 (30 June 2015; £nil; 31 December 2015: £nil), and no related party transactions have been written off during the period.  Unless otherwise stated above, there are no amounts owed by or due to related parties by the Group at 30 June 2016.

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


   
                              Balances            Balances              Balances
                                 (owed               (owed                 (owed
                                  by)/                by)/                  by)/
                                due to     Value    due to     Value      due to      Value
                                   the        of       the        of   the Group         of
                              Group at  transac-  Group at  transac-       at 31   transac-
                               30 June     tions   30 June     tions    December      tions
    Related
    party and    Nature of        2016   H1 2016     2015      H1 2015     2015     FY 2015
    relationship transactions     GBPm      GBPm     GBPm         GBPm     GBPm        GBPm
    Guangzhou    Commission
    Beauty Fair  and
    - Joint      management
    Venture      fees                -         -        -            -       -          2.1
    The Channel
    Company -    Management
    Client       fees                -         -        -          0.1       -            -
    Light        Transitional
    Reading LLC  services and
    - Associate  financing         8.7       0.2        -          0.2      7.8         0.3

21.  Events after the balance sheet date 

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

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

Explanation of non-IFRS measures


   
    Financial
    Measure         How we define it                      Why we use it

    Underlying      Underlying measures are adjusted for  Underlying growth rates provide
    revenue and     the effects of acquisitions,          insight into the organic growth
    underlying      disposals, foreign exchange           of the business.
    operating       movements, phasing and peripatetic  
    profit          and biennial events                 

    Adjusted        Operating profit excluding            Provides insight into ongoing
    operating       amortisation of intangible assets     profit generation, individually
    profit          arising on acquisitions, exceptional  and relative to other companies
                    items and share of taxation on joint
                    ventures and associates             

    Margin          Adjusted operating profit expressed
                    as a percentage of revenue

    EBITDA          Earnings before interest, tax,        Measure of earnings and cash
                    depreciation, amortization and        generative capacity
                    exceptional items                   

    Adjusted profit Profit before tax before              Facilitates performance
    before tax      amortisation of intangible assets on  evaluation, individually and
                    acquisitions, exceptional items,      relative to other companies
                    share of taxation on profit from    
                    joint ventures and associates and   
                    net financing expense adjustments   

    Adjusted EPS    Adjusted basic EPS includes share of
                    taxation on profit from joint
                    ventures and associates but excludes
                    movements on deferred tax balances
                    recognised as a consequence of
                    acquisition intangibles. Adjusted
                    diluted EPS includes the impact of
                    share options

    Net debt        Net debt is current and noncurrent   Measure of indebtedness -
                    borrowings and derivatives           includes benefit of current    
                    associated with debt instruments,    cash available to pay down debt
                    less cash and cash equivalents      

    Net debt to     Net debt divided by EBITDA. Includes Commonly used measure of
    EBITDA          an annualised EBITDA figure for      financial leverage
    Net debt to LTM interim reporting                    
    EBITDA
                                      
    Free cash flow  Net cash provided by operating       Measure of cash available to
                    activities after meeting obligations repay debt, pay dividends and
                    for interest, tax and capital        invest in acquisitions after
                    expenditures.                        capital expenditure

    Adjusted        Adjusted to exclude non-operating    Provides an understanding of
    operating cash  movements in working-capital, such   our operating cash flows
    flow            as expenditure against
                    reorganisation and restructuring    
                    provisions.                         

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

    Return on       Adjusted post tax incremental        To assess returns on
    investment      operating profit divided by the      acquisitions relative to our
                    cost of acquisition calculated on    cost of capital. The measure
                    a constant currency, biennial        was amended during 2015 to
                    adjusted pro forma basis,            adjust for foreign exchange
                    if the business                      movements and incorporate the
                    had been owned throughout the year   incremental operating result of
                                                         the acquisition. This aligned
                                                         the measure to our acquisition
                                                         assessment criteria
  
    Estimated total Estimated total consideration        Provides a measure of total
    consideration   includes initial consideration (net  consideration for businesses
                    of cash acquired), the latest        acquired
                    estimate of expected contingent
                    consideration and deferred          
                    consideration                       

    Return on       ROACE is post tax adjusted operating Provides a measure of the
    average capital profit over average shareholders'    efficiency of our capital
    employed        funds plus net debt. Shareholders'   investment
    (ROACE)         funds is adjusted for cumulative    
                    impairment charges from 1 January   
                    2016                                

    Effective tax   The effective tax rate on adjusted   Provides a more comparable
    rate            profit before tax reflects the tax   basis to analyse our tax rate
                    rate excluding movements on deferred
                    tax balances recognised as a
                    consequence of acquisition          
                    intangibles.
                      
    Adjusted EPS    Adjusted basic EPS includes share of
                    taxation on profit from joint
                    ventures and associates but excludes
                    movements on deferred tax balances
                    recognised as a consequence of
                    acquisition intangibles. Adjusted
                    diluted EPS includes the impact of
                    share options

Statement of directors' responsibilities

The Directors listed below (being all the Directors of UBM plc) confirm that to the best of their knowledge these interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board, and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

  • an indication of important events that have occurred during the six months ended 30 June 2016 and their impact on the interim condensed consolidated financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
  • material related party transactions in the six months ended 30 June 2016 and any material changes in the related party transactions described in the last annual report.

Signed on behalf of the Board by

Marina Wyatt
Chief Financial Officer
28 July 2016

UBM plc Board of Directors:

Executive Directors:

Tim Cobbold (Group Chief Executive)
Marina Wyatt (Chief Financial Officer)

Non-executive Directors:

Dame Helen Alexander (Chairman)
Dr Alan Gillespie CBE (Senior Independent Director)
Pradeep Kar
Greg Lock
John McConnell
Mary McDowell
Terry Neill
Trynka Shineman (appointed 1 March 2016)    

Independent review report to UBM plc

Introduction  

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 which comprises the Interim consolidated income statement, Consolidated income statement, Interim consolidated statement of comprehensive income, Interim consolidated statement of financial position, Interim consolidated statement of changes in equity, Interim consolidated statement of cash flows , and the related explanatory notes 1 to 21. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities  

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in the group accounting policies, the annual financial statements of the group are prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as issued by the IASB.

Our Responsibility  

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review  

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion  

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as issued by the IASB and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP
London
28 July 2016

SOURCE UBM plc