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 14.2p 10.8p 31.5% Continuing - Diluted, pro forma 15.8p Total - Diluted 20.2p 15.8p 27.8%
* See page 3 and page 39 for definition of non-IFRS metrics
- Uses weighted average number of shares over the period of 441m (H1 2015: 446m)
- 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.
Kate Postans Head of Investor [email protected] +44(0)20 7921 5023 Relations & [email protected] Corporate Communications Jon Coles Andy Rivett-Carnac Brunswick Group [email protected] +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.
For the six months ended 30 June 2016
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.
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.
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%).
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
 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.
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.
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
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 as at 30 June 2016 (45.0) (519.6)
 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.
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
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 GBPm H1 2016 H1 2016 H1 2015 Net debt 288.7 45.0 519.6 Adjusted EBITDA - LTM 234.0 234.0 208.1 Net debt to EBITDA ratio 1.2 times 0.2 times 2.5 times
 Includes fair value adjustments
 H1 2016 reflects last 12 months of continuing operations EBITDA only. H1 2015 reflects last 12 months of Total Group EBITDA (NB. Advanstar was acquired at the end of 2014.)
 Including payment of special dividend of £243.7m on 8 July 2016 which accompanies the sale of PR Newswire and share consolidation.
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%
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
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.
- 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).
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.
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.
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
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'.
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)
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
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)
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.
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).
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.
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
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
Chief Financial Officer
28 July 2016
UBM plc Board of Directors:
Tim Cobbold (Group Chief Executive)
Marina Wyatt (Chief Financial Officer)
Dame Helen Alexander (Chairman)
Dr Alan Gillespie CBE (Senior Independent Director)
Trynka Shineman (appointed 1 March 2016)
Independent review report to UBM plc
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.
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 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.
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
28 July 2016
SOURCE UBM plc