UBM Interim Report 2005

Summary Group Income Statement
The income statement set out below represents the group’s full income statement (which accompanies this summary) in order to show more clearly the results from operations.

	Six months ended 30 June 2005 £m	Six months ended 30 June 2004 £m	%

Revenue	336.6	281.1	19.7
Adjusted group operating profit*	76.1	61.7	23.3
Net interest income	6.5	3.2	103.1
Other financing costs – pension schemes	(1.3)	(2.4)	(45.8)

Adjusted profit before tax**	81.3	62.5	30.1
Net financing income other than interest	23.5	–	–

Profit before non recurring items and tax*	104.8	62.5	67.7
Amortisation of intangible assets	(4.6)	–	–
Non-recurring items	262.2	–	–
Share of taxation of JVs and associates	4.9	(0.7)	–
Operating profit on discontinued operations	(4.7)	(11.0)	–

Profit/(loss) before tax	362.6	50.8	614.8
Taxation	(12.7)	(11.4)	(11.4)
Taxation relating to non-recurring items	(1.2)	–	–

Profit after tax – Continuing activities	348.7	39.4
Discontinued operations	3.8	8.7

Profit after tax	352.5	48.1	633.9
Minority interest	(0.9)	(0.9)	–

Retained profit for the period	351.6	47.2	646.0


Dividends paid in period	326.6	19.5
EPS** (pence)	21.2	14.1	50.4
Basic EPS (pence)	106.2	14.1

*	Before amortisation of intangible assets, non-recurring items and including discontinued operations.
**	Before amortisation of intangible assets, non-recurring items, other financial income other than interest and including discontinued operations.

Reflecting new management structure – continuing businesses only

	Revenue Six months to 30 June (£m)				Adjusted Group Operating Profit* Six months to 30 June (£m)

	2005	2004	Change %	Underlying #(%)	2005	2004	Change %	Underlying #(%)

CMP Media	103.9	110.6	(6.1)	(3.4)	12.9	14.3	(9.8)	(8.2)
CMPMedica	54.7	–	–	–	13.5	–	–	–
CMP Asia	22.0	20.1	9.5	10.1	6.3	5.7	10.5	7.5
CMPi	104.7	102.7	1.9	0.7	21.0	24.2	(13.2)	(13.0)
PR Newswire	51.3	47.7	7.5	9.6	14.3	12.4	15.3	21.5
Corporate+	–	–	–	–	3.4	(5.9)	–	–

Total	336.6	281.1	19.7	1.2	71.4	50.7	40.8	16.5

#	Underlying: adjusted for the estimated effects of acquisitions, foreign exchange and biennial events.
*	before amortisation of intangible assets, non-recurring items and including discontinued operations.
+	Corporate operations comprises net central operating costs, together with those equity accounted investments which do not form part of one of the group’s operating divisions.

Underlying revenue was up 1.2 per cent – after adjusting for the effects of acquisitions, foreign exchange and biennials. Group revenue in 2005 was increased by £61.1m of revenue from acquisitions in 2004 and 2005. The weakness of the US dollar has a direct translation impact – with approximately two thirds of UBM revenue reported locally in US dollars, group revenue was reduced by £3.7m as a result of foreign exchange.

The average rate of $:£ exchange in the first six months of 2005 was 1.87 (1.82), together with the effects of other currency movements this reduced operating profit in the first half of 2005 by £0.7m. A 1 cent movement in the US dollar against sterling is approximately equivalent to a move in profit of around £200,000 to £300,000 over the full year.

DIVISIONAL COMMENTARY
Note: As previously notified the amounts shown against CMP Media, CMP Asia and CMP Information in the table above have been restated to reflect the intra-group transfer of United Entertainment Media in the US from CMP Information to CMP Media, the transfer of CMP Princeton from CMP Asia to CMP Media, and the transfer of United Advertising Publications to CMP Information. The amounts transferred are stated in detail in the business segments section of the accompanying financial statements.

PR Newswire
PR Newswire delivered another strong performance in all main areas of operation. Underlying revenue was up 9.6 per cent, underlying operating profit was up 21.5 per cent, with an overall operating margin up from 26.0 per cent to 27.9 per cent. The core US messaging business achieved a strong yield increase on steady volume levels. Revenue from new and recent developments in the media intelligence product range was up over 22 per cent. Businesses in Europe and Asia achieved 17.8 per cent revenue growth with the European operating margin up to 20.8 per cent and a total Rest of the World operating profit of £1.1m (£0.3m loss in the same period in 2004).

CMP Information
The UAP and CMPi businesses were combined during the first half of 2005. The UK Auto businesses have been put up for sale with the remaining UAP businesses being fully integrated into CMPi. Underlying revenue of the combined entity was up 0.7 per cent reflecting some softness in the UK markets but also strong growth in online revenues. Overall underlying operating profit was down 13.0 per cent, also reflecting increased investment in new product development (this increased spend is not backed out in the underlying calculation). The “old” CMPi again grew underlying revenue – by a solid 3.8 per cent.

The 2005 acquisitions of ABI and the Publican titles are performing in line with business case.

CMP Media
In dollar terms technology revenues were down 1.6 per cent reflecting the continuation of recent trends across the different media platforms – with print declining and with events and online both strong.

Although the healthcare business was weak, with dollar revenues down 13.0 per cent, the medical education businesses customers have now restructured themselves to address US regulatory concerns.

The US based entertainment businesses – formerly part of CMPi – have now been integrated into CMP Media and have delivered steady revenue levels compared to the same period in 2004.

The 8.2 per cent decline in underlying operating profits across CMP Media largely reflected the previously announced increased level of investment in new product development – in particular in online. Overall new cost savings of over $7m were achieved in controllable areas such as staffing but these were offset to some extent by incremental increases in postage and paper costs.

CMPMedica
CMPMedica was acquired on 30 July 2004 with the acquisition of additional MediMedia assets completed on 31 March 2005. The 2004 acquisition has been trading broadly in line with its acquisition case. Its performance again reflects a strong seasonal weighting towards the first half of the year. The drug information products have performed well but there was some softness in the Asia-Pacific trade press markets.

The 2005 acquisition is proceeding according to plan – with the integration of the French medical education and communication business – including trade press titles – Quotidien Du Medecin and Le Generaliste – well underway.

CMP Asia
The first half of 2005 saw CMP Asia deliver another strong performance from this exhibitions based business. Underlying revenue was up 10.1 per cent, with underlying operating profits up 7.5 per cent. Operating margins were again high at 28.6 per cent (28.4 per cent) and the steady programme of new product launches continued – including more geographic extensions into mainland China.

The acquisition of Tissue World is performing in line with its business case.

These numbers exclude the Princeton based businesses (the Cruise Shipping and the Health & Beauty exhibitions) which are now part of CMP Media.

Corporate
As noted above “Corporate” operations comprises net central operating costs, together with those equity accounted investments which do not form part of one of the group’s operating divisions – these included five, SIS, ITN and SDN.

A major factor during this period was the strong improvement in the operating performance of five. Total revenue at five was up 16.2 per cent to £155.3m (£133.6m) with operating profit up from £6.2m to £17.9m.

DIVIDEND
An interim dividend of 4.00 pence (3.63) pence per share will be paid – an increase of 10.2 per cent.

The interim dividend on the ordinary shares will be paid on 20 October to shareholders on the register on 12 August.

BALANCE SHEET AND CASH CONVERSION
Net debt at the end of the period was £(0.2)m, after operating cash conversion of 85.0 per cent of operating profit, expenditure of £67m on acquisitions during the year, receipts of £418m from disposals, a return of approximately £300m of capital to investors by means of a special dividend.

Our target rate for the full year is again to achieve cash conversion of over 90 per cent.

PENSIONS
During the period the pension deficit was reduced from £96.0m to £90.4m, reflecting the effects of additional contributions.

TAX
The effective tax rate in the first half of 2005 was 20.0 per cent (21.8 per cent).

Neither the disposals of NOP World nor (post balance sheet) of the stake in five are expected to generate any tax liability for UBM.

INTEREST
Net interest income for the year was £6.5m (£3.2m). Interest income of £16.0m included £4.1m in relation to loans to five, with interest expense being £(9.5)m.

NON-RECURRING ITEMS
Non-recurring items of £262.2m represents the net of the profits on the disposal of NOP World and SDN of £267.4m, less redundancy and restructuring costs of £5.2m. The disposals are both subject to completion adjustments. SDN has an associated tax charge of £1.2m.

INTERNATIONAL FINANCIAL REPORTING STANDARDS “IFRS”
UK GAAP to IFRS Reconciliation of 2005 Interim Results
The following table reconciles the adjusted group operating profit, PBT and EPS between the reported IFRS results and the ‘UK GAAP’ numbers consistent with UBM’s historical reporting:


	Adjusted operating profit £m	Adjusted PBT £m	Adjusted EPS pence

‘UK GAAP’	75.8	80.2	19.5
Charge for share based payments	(1.2)	(1.2)	(0.3)
Movement in holiday pay accrual	(1.1)	(1.1)	(0.3)
Accounting for equity investments pre tax	3.3	3.3	1.0
Share of tax of JV’s and equity investments	–	–	1.3
Adjustment to WIP overhead capitalisation	(0.7)	(0.7)	–
IAS 32 & 39 adjustments	–	0.8	–
IFRS	76.1	81.3	21.2

In addition to these items, the statutory results also include £23.5m of net financing income – other than interest. This includes £10.2m net foreign exchange gain, a £(2.5)m charge reflecting the accretion of the convertible bond debt to maturity value and a £15.9m gain on the fair value of the embedded derivative in the US Dollar convertible bond. The accounting for this embedded derivative follows currently worded accounting standards however it is possible that the accounting standard will change. The £23.5m of net financing income – other than interest has been excluded from the headline PBT and EPS numbers.