RNS Number:5627J
T&F Informa PLC
10 March 2005
10 March 2005
T&F Informa plc
GOOD ORGANIC GROWTH
MERGER BENEFITS COMING THROUGH AS EXPECTED
Highlights of 2004
Constant
2004 2003 Reported Currency
£'000 £'000 Growth Growth
---------------------------------------------
Turnover 504,225 441,676 14% 19%
Adjusted operating profit1 108,343 79,309 37% 50%
Total operating profit 48,639 46,170 5%
Adjusted pre tax profit2 91,324 69,937 31%
Pre tax profit 12,384 32,976 (62%)
Adjusted diluted earnings per share3 24.50p 18.28p 34%
Diluted earnings per share 0.04p 5.89p (99%)
---------------------------------------------
- Adjusted pre tax profit2 up 31% to £91.3m on turnover up 14% to
£504.2m.
- Turnover and adjusted operating profit1 grew organically4 5.3% and
23.5% respectively at 2003 exchange rates.
- Merger of Informa and Taylor & Francis completed - benefits coming
through.
- Good contribution from recent acquisitions - including CRC Press, PJB
Publications, MMS and Dekker.
- Solid platform to drive further profitable growth.
- Confident of prospects for 2005.
Commenting on the Group's performance, Peter Rigby, CEO of T&F Informa said:
"2004 was a transforming year for the business. The Group's excellent results
combine organic growth with a good contribution from the businesses acquired in
2003. Our three operating divisions produced good organic growth reflecting the
strength of the portfolio as well as our ability to respond to improving market
conditions.
"The momentum seen in 2004 has been maintained into the current year and the
revenue and cost synergies from the merger are coming through as expected. With
the company performing in line with our expectations, the Board is confident of
delivering another good financial performance in 2005."
1 Excludes exceptional operating costs of £10.0m (2003: £11.8m) and goodwill
amortisation and impairment of £49.7m (2003: £21.3m).
2 Excludes exceptional operating and non-operating items of £44.2m (2003:
£15.7m) and goodwill amortisation of £34.7m (2003: £21.3m).
3 Excludes exceptional items after tax of £38.3m (2003: £13.1m) and goodwill
amortisation of £34.7m (2003: £21.3m).
4 Excludes acquisitions made since 1 January 2003.
Enquiries:
T&F Informa plc Tel: 020 7017 5000
Peter Rigby, Chief Executive
David Gilbertson, Managing Director
Tony Foye, Finance Director
Financial Dynamics Tel: 020 7831 3113
Tim Spratt / Charles Palmer
Operating and Financial Review 2004
Introduction
T&F Informa traded strongly during the year ended 31 December 2004, with
turnover up 14% to £504.2m from £441.7m and adjusted operating profit1 up 37% to
£108.3m from £79.3m. Adjusted pre tax profit2 increased 31% to £91.3m from
£69.9m. Adjusted diluted earnings per share3 increased 34%, to 24.50p from
18.28p.
These are the first full year results of the enlarged Group, which was formed
from the merger of Informa Group plc and Taylor & Francis Group plc on 10 May
2004. The results have been prepared under merger accounting principles, under
which the financial statements are presented as if the two groups had been
merged from 1 January 2003.
The 2004 results have been achieved during a period of considerable change,
including the integration of three major acquisitions, a number of office
relocations and the merger of two highly successful groups.
The Group's performance for the year was impacted by the adverse effects of
exchange rate movements and, in particular, the relative weakness of the US
dollar. In 2004 the Group received approximately 50% of its revenues and
incurred approximately 35% of its costs in US dollars and hence exchange rate
movements had an adverse effect on translated turnover and profit. Had exchange
rates remained constant at their 2003 levels, reported consolidated turnover
would have been £20.8m higher and operating profit £10.6m higher. In constant
currency terms therefore reported turnover would have grown by 19% and adjusted
operating profit by 50%.
The Group is highly cash generative, converting 110% of its 2004 adjusted
operating profit into cash (2003: 112%). Strong cash flow, particularly in the
second half of the year, enabled net debt to be reduced at the year end to £302m
from £356m at 30 June 2004.
The Group's three operating divisions - Academic & Scientific, Professional and
Commercial - all performed well, combining organic growth with good
contributions from recent acquisitions, including CRC Press, PJB Publications,
MMS and Dekker. The Group saw improved trading conditions in most of its
operating sectors, with particularly good growth in the Scientific, Technical
and Medical (STM), Telecoms and Financial Information market segments.
The integration of the two groups is now largely complete and the enlarged Group
has started to benefit from the revenue and cost benefits which the merger
brings. The £9m of revenue synergies announced in September 2004 will be
realised in 2005 alongside the £9m of cost savings.
In recognition of the encouraging performance in 2004 and the Group's future
prospects, the Board has decided to recommend an increased final dividend of
5.33p per ordinary share, making a total dividend for the year of 8.13p.
Adjusted figures, which exclude exceptional items and goodwill amortisation are
presented as additional performance measures:
2004 2003
£'000 £'000
---- ----
Adjusted operating profit1 108,343 79,309
Adjusted pre-tax profit2 91,324 69,937
Adjusted diluted earnings per share3 24.50p 18.28p
Adjusted operating cash flow4 119,587 88,803
Adjusted operating cash flow conversion5 110% 112%
1 Excludes exceptional operating costs of £10.0m (2003: £11.8m) and goodwill
amortisation and impairment of £49.7m (2003: £21.3m).
2 Excludes exceptional operating and non-operating items of £44.2m (2003:
£15.7m) and goodwill amortisation of £34.7m (2003: £21.3m).
3 Excludes exceptional items after tax of £38.3m (2003: £13.1m) and goodwill
amortisation of £34.7m (2003: £21.3m).
4 Adjusted operating cash flow is measured after adjusting for exceptional items
on a cash flow basis.
5 Adjusted operating cash flow conversion expresses adjusted operating cash flow
as a percentage of adjusted operating profit.
Financial Performance
As noted above, the results covered by this review have been produced under
merger accounting principles, which combine the results of the Taylor & Francis
Group with those of the Informa Group as if the two groups had been merged since
1 January 2003.
During 2004 turnover grew by 14% (£62.5m) to £504.2m (2003: £441.7m), despite
adverse exchange rate movements which reduced reported revenue by £20.8m (5%)
compared to 2003. Dekker, acquired on 2 January 2004, contributed £24.4m in
turnover. At constant exchange rates and after adjusting for acquisitions made
since 1 January 2003, the organic turnover growth was 5%.
Adjusted operating profit was £108.3m in the period, up 37%, or £29.0m, over
2003 (£79.3m). Excluding the £10.6m adverse effect of exchange rate movements,
this operating profit growth was 50%. Dekker contributed £7.6m to this result in
its first period of ownership.
Trading was stronger across all three operating divisions compared to 2003, with
acquisitions, organic growth, good subscription renewal rates and higher average
delegate numbers combining to increase revenue and profitability. This growth in
revenue, together with good cost control and the successful integration of
acquisitions, was reflected in increased adjusted operating margins of 21.5% in
2004 compared with 18.0% in 2003. At constant exchange rates the organic growth
in adjusted operating profit was 23.5%.
Total operating profit after exceptional items and goodwill amortisation
increased by 5% to £48.6m from £46.2m.
The combined Group will be required to adopt International Financial Reporting
Standards (IFRS) in producing its results for 2005 and beyond. The adoption of
IFRS will necessitate material changes to both the bases and format of financial
reports sent to shareholders. To help shareholders better understand the impact
of adopting IFRS, prior to the Annual General Meeting in May 2005 the Board
intends to issue a separate report showing the 2004 results prepared under IFRS.
Exceptional Operating Items
Over the last 12 months the Group has completed significant integration of
acquisitions resulting in exceptional operating costs of £10.0 million (2003:
£11.8m). Of this total £4.5m represented integration costs relating to the
acquisitions of Cass (July 2003), SZP (October 2003), MMS (September 2003), PJB
(December 2003) and Dekker (January 2004). £4.2m was incurred in respect of the
relocation of the UK academic books businesses from London to Oxford, the
setting up and transferring of the US books warehousing and distribution
operations to Kentucky and the move of PJB from its former Richmond offices to
existing Group premises in central London. £1.3m was provided in relation to the
merger integration.
Goodwill Amortisation and Impairment
As a result of acquisitions made over the last two years, goodwill amortisation
increased by £13.4m in 2004 to £34.7m from £21.3m.
Following the merger we have also undertaken a review of goodwill and as a
result have reduced the carrying value related to certain pre-2001 acquisitions
by £15m.
Merger Costs
As previously reported in September 2004, merger costs were £15.7m (2003: £nil),
consisting of professional and other fees incurred in connection with the merger
between Taylor & Francis Group plc and Informa Group plc on 10 May 2004.
On the merger the previous bank loan facilities of both groups were terminated
and replaced by new enlarged Group facilities and unamortised loan arrangement
fees of £2.4m were written off to the profit and loss account.
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