Annual Report and Accounts 2010 Helping business...United Business Media Limited United Business Media Limited Annual Report and Accounts 2010www.ubm.com ...to do businessDesigned and produced by Radley Yeldar www.ry.com
Financial Calendar Cautionary Statement Record date for 2010 second interim dividend 15 April This Annual Report has been prepared for, and only for, the members of Annual General Meeting 10 May United Business Media Limited (the Company), as a body, and no other persons. The Company, its directors, employees, agents or advisers do not accept or Second interim dividend payment date 19 May assume responsibility to any other person to whom this document is shown or Announcement of interim results 29 July into whose hands it may come and any such responsibility or liability is expressly First Interim dividend for 2011 payment date OctoberWe help businesses do business. disclaimed. By their nature, the statements concerning the risks and uncertainties facing the Group in this Annual Report involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated.We enable professional people around the world to The forward-looking statements reflect knowledge and information available at the date of preparation of this Annual Report and the Company undertakesconnect and engage with each other, with the markets no obligation to update these forward-looking statements. Nothing in this Annual Report should be construed as a profit forecast.they serve and with the information they need to succeed. We do this by providing them with access both totheir audiences and to insightful, business-criticalinformation by whatever means works best – at live events,through digital media or in publications. Our expert staff are deeply embedded within eachof the many professional communities we serve. Workingwithin a culture of creativity and collaboration, we shareknowledge, know-how and ideas right across UBM’sbusinesses and around the globe.United Business Media Annual Report and Accounts 2010 United Business Media Annual Report and Accounts 2010 153
Financial highlights ContentsRevenue £m 4 Chairman’s Statement Section 1: Section 1: 2010 Review 887.0 847.6 889.2 6 Chief Executive Ofﬁcer’s Statement+4.9% 739.1 801.6 2010 Review 8 14 UBM Strategy Segmental Performance 14 Events 18 Targeting, Distribution and Monitoring 22 Data Services 06 07 08 09 10 26 Online – Marketing Services 30 Print – MagazinesAdjusted operating proﬁt* £m 32 Financial Review 166.1 173.5 171.2 171.8 40 Risks and Uncertainties+0.4% 149.0 44 51 Corporate Responsibility Explanation of UBM’s business measures Section 2: 52 Board of directors Section 2: Governance 54 Directors’ remuneration report 06 07 08 09 10 Governance 64 Corporate governance statement 69 Independent auditors’ report to the membersAdjusted operating margin* % of United Business Media Limited 20.7 70 Report of the directors 20.2 20.2-0.9%pt 19.6 19.3 06 07 08 09 10Adjusted diluted EPS* pence 55.8 54.2 Section 3: 72 Consolidated income statement-7.4% 52.3 50.2 Section 3: Financial statements 43.8 73 Consolidated statement of comprehensive income Financial 74 Consolidated statement of ﬁnancial position 75 Consolidated statement of changes in equity Statements 76 Consolidated statement of cash ﬂows 77 Notes to the consolidated ﬁnancial statements 06 07 08 09 10 140 Five year ﬁnancial summary 141 Independent auditors’ report to the membersDividend per share pence of United Business Media Limited 142 Parent company proﬁt and loss account 23.8 24.2 25.0+3.3% 18.0 21.6 143 144 151 Parent company balance sheet Notes to the parent company ﬁnancial statements Shareholder information 153 Financial calendar 2010 153 Cautionary statement 06 07 08 09 10Cash generated from operations £m 154.7+8.4% 92.6 138.7 136.1 142.7 06 07 08 09 10* See explanation of UBM’s business measures on page 51. United Business Media Annual Report and Accounts 2010 1
Section 1: 2010 Review At a glance UBM is a global live media and B2B communications, marketing service and data provider. We seek to help companies make connections, communicate their proposition and do business effectively. What do we do? What are our key strengths? Events A market leader in hosting face-to-face We organise tradeshows and other live ‘in person’ events which enable communities to do business interactions – increasingly important in the – UBM is the world’s second largest ‘pure play’ event organiser. Revenues are generated by digital age exhibitors purchasing vendor space, through event sponsorship or, for certain events, through Positioned to capitalise on growth in the attendee entrance fees. digital age with a range of quality multi-media See page 14 for further details. products and services Strong presence in high growth and emerging economies – broad international infrastructure Targeting, Distribution and Monitoring (‘TD&M’) Diverse portfolio of products and services with cross integration Our PR Newswire business provides communications products and services to professionals working in marketing, public relations, corporate communications or investor relations roles. Committed, skilled people working in As well as distributing our clients’ messages and information, PR Newswire also helps identify an innovative and collaborative culture target audiences and monitors how effectively the message has been communicated. Brand strength within attractive business communities See page 18 for further details. Distributed customer base – no single customer generates more than 1% of UBM’s revenues Data Services1 (‘DS’) Highly cash generative We provide data and information products which support professionals in their decision making Strong balance sheet and day-to-day activities. We look to create unique, market-leading data sets that can be utilised by multiple end users in niche sectors. Revenues are generated through annual subscriptions and listing fees; consulting, content and training services; and advertising or marketing support. Contribution to 2010 revenue % See page 22 for further details. 1. Events 34.8 2. TD&M 20.4 Online – Marketing Services1 (‘Online’) 3. DS 20.8 4. Online 7.8 We execute campaigns on behalf of clients looking to enhance their branding, customer awareness, 5. Print 16.2 reach and engagement or to generate sales leads. We offer our clients measurable return on investment and high audience engagement. Revenues are generated through advertising (such as 1 banner ads), lead generation services and, increasingly, virtual event organisation and building/ managing community websites on behalf of clients. See page 26 for further details. 5 Print – Magazines (‘Print’) 4 We also publish 123 print titles which provide clients with a more traditional advertising platform. The majority of titles are controlled circulation magazines which continue to play an important role in serving specific professional and commercial communities. We have seen growing cross-over 2 with online marketing services as clients seek an integrated marketing approach or as publications migrate online. We are managing the print business towards a focused portfolio of leading titles. 3 See page 30 for further details. 1 Previously Data Services and Online – Marketing Services were reported as a combined segment.2 United Business Media Annual Report and Accounts 2010
We transfer the skills, knowledge and experience we gain in serving one community across and between markets, transferring best practice and innovation from one community to another, from one geography to another and from one product type to another.Where do we operate? Who are our customers? Section 1: 2010 ReviewWe have a well balanced portfolio with exposure to both mature markets and higher UBM services a variety of specialist businessgrowth Emerging Markets.* Over the last five years we have increased our exposure communities. It is through intimate knowledgeto fast growth Emerging Markets, since 2005 our revenues from China and other of these chosen communities that we canEmerging Markets have grown 110% to £166m. service our customers most effectively. Revenue by geographies 2005–2010 £m 2010 Revenue by community % 414 1. Technology & IP 22.4 2. News Distribution 20.4 Section 2: Governance 2005 2010 Total: £634m £889m 3. Health 20.2 290 4. Lifestyle 7.4 5. Trade & Transport 7.0 6. Ingredients 6.2 7. Fashion 5.6 146 149 129 Emerging Markets* 8. Built Environment 5.5 112 106 9. Paper 2.0 48 54 10. Other 3.3 31 34 10 N. America Europe UK China* Other Emerging RoW Markets* 10 1 9 Section 3: Financial statements * Emerging Markets constituents are the non-G10 countries – most notably for UBM: China, Brazil, India, Thailand, Singapore, Indonesia, Malaysia, Philippines, Mexico and UAE. 8 7 6 2 Ottawa Chicago London Amsterdam Manhasset Beijing Guangzhou Shanghai 5 Cleveland Brussels New Paris York Tokyo San Francisco Manila Albuquerque Los Angeles Hong Kong 4 Mexico City Mumbai Singapore 3 Sydney São Paulo* Denotes offices with more than 50 employees. United Business Media Annual Report and Accounts 2010 3
Section 1: 2010 Review 2010 Review Chairman’s Statement Our Aim: To create long term value while generating attractive returns for shareholders. In 2010 our revenues have been restored to 2008 UBM’s strategic progress levels, despite the £72m contraction in print and As David Levin describes in more detail in his review, a relatively mixed global recovery. In 2010 UBM our strategy of enhancing our range of quality revenue grew by 5% to £889.2m. Statutory IFRS products and services while expanding our presence operating profit, after exceptional items, increased in high growth Emerging Markets and attractive to £132.3m (2009: £25.8m loss) and basic EPS was business communities, remains unchanged. Through 37.3p (2009: 30.9p). 2010 is both about operational both organic initiatives and targeted acquisitions we progress and building and investing in UBM to are creating a portfolio which will benefit from prosper in the future. structural growth going forward. Initiatives to strengthen UBM’s foundations Our aim have included: launching the ‘GEM1’ best practice Revenues initiative during the year; investing in our technology, Our main aim is to create long term value and Restored to 2008 levels generate attractive returns for shareholders. new product development and sales force of PR despite print contraction. The dividend graph (on page 5) shows our strong Newswire, our Targeting, Distribution and track record of dividend growth for shareholders. Monitoring (‘TD&M’) business; strengthening For 2010 the Board has announced a second interim Data Services (‘DS’) through new products, core £889.2m dividend of 19.0p (2009: 18.2p) to bring the total dividend for 2010 to 25.0p (2009: 24.2p) database development and geographic expansion; and, enhancing our Online – Marketing Services representing a 3.3% increase. (‘Online’), particularly in virtual events. Meanwhile The Total Shareholder Return graph shows we our strategy of managing the contraction of the print outperformed the sector during 2010 although our portfolio continues. performance dipped during 2009. During the year we acquired full or majority interests in 22 businesses. The most notable of these John Botts was Canon Communications, which provides UBM Chairman with market leading media brands serving the medical device design and advanced manufacturing industry. Canon brings geographically diverse revenues from a complementary electronics community and its events portfolio also lends itself well to geo-cloning. This acquisition and eight others have increased our exposure to the attractive events industry – which now accounts for 54.4% of UBM’s adjusted profit2 (2009: 50.9%) – while the remaining 13 acquisitions have further strengthened the offerings and geographic reach of our TD&M, DS and Online businesses. It is worth noting that in total, Emerging Markets3 now account for 18.7% of UBM’s revenues and 28.6% of adjusted profits (2009: 16.7% and 23.8% respectively). 1 Global Events Momentum. 2 See explanations of UBM’s business measures on pages 51. 3 Emerging Markets constituents are the non-G10 countries – most notably for UBM: China, Brazil, India, Thailand, Singapore, Indonesia, Malaysia, Philippines, Mexico and UAE.4 United Business Media Annual Report and Accounts 2010
Dividend pence Total shareholder return 23.8 24.2 25.0 150 UBM FTSE All Share Media 21.6 18.0 125 15.0 12.0 100 9.0 75 50 03 04 05 06 07 08 09 10 01/01/06 01/01/07 01/01/08 01/01/09 01/01/10 01/01/11 Our people Corporate responsibility Section 1: 2010 ReviewDividendFull year dividend increased Our people are UBM’s key asset and, as you can UBM’s commitment to environmental and social3.3%. see on page 13, motivating and supporting them responsibility continues to expand and is a key priority. is a major priority for delivering on our strategy. On pages 47 to 50 we detail our continued progress in25.0p During 2010 we have continued to make progress in developing our management talent including managing our environmental impact and supporting the communities in which we work. Two successes re-scoping and expanding the Business Leaders stand out: first, the Non Government Organisation Programme (‘BLP’) and the European Leadership (‘NGO’) Event programme – for the second yearEmerging Markets3 Development Programme (‘E-LDP’) (for further running our staff volunteered significant time toNow accounts for a signiﬁcant details see page 45). To reflect the global nature organising our second event in São Paulo which hadproportion of UBM revenues. of UBM, programme modules have been hosted in more than 500 exhibiting NGOs (2009: 270) and the UK, US and India. 58 people have now graduated almost 13,000 visitors (2009: 2,500). NGO Brazil from the programmes, nine of whom have since made 2011 is in hand and we are soon launching our first18.7% Section 2: Governance cross-divisional transfers. We have also introduced Responsible Business conference in the UK. Secondly, a formal mentoring programme of rising managers we are implementing an internal global environmental by board members and senior executives, which reporting system for 156 office locations in 35 facilitates a shared perspective on leadership talent countries which significantly improves our ability across UBM and enhances engagement of our to monitor and manage our carbon footprint. non-executive directors. In short, UBM has made good strategic progress Communication within UBM has continued to in 2010. The appointment of executives to cross develop during 2010. Usage of the Wiki, our online divisional roles is giving us organisational cohesion UBM community, has grown 28% and is helping and the growing cadre of graduates from our our cross-UBM relationships to grow stronger and management training programmes is playing an multiply with the transfer of knowledge and best increasingly significant part in directing our practice. Our UBM-wide employee engagement businesses. We are investing significantly in organic survey highlighted our meritocratic/innovative work Section 3: Financial statements initiatives as well as in targeted acquisitions. environment and commitment to social responsibility This investment is building our business in Emerging as areas of strength. (See page 45 for more detail.) Markets as well as strengthening our existing core operations, increasing our exposure to attractive The Board business communities and improving our ability Our Board composition provides UBM with a to capitalise on opportunities created by the digital broad range of sector, geographical and management revolution. experience. This breadth of knowledge is particularly Finally, the Board would like to thank everyone appropriate given the global nature of UBM, its range at UBM for their vision and efforts during 2010. of products and services and the emerging digital We have now largely completed the process to trends. There is a high degree of engagement with the reshape UBM and we have established strong business and in addition to the usual presentations foundations on which to build our business’s from divisional CEOs the Board also visited two of future growth. our largest exhibitions in Brazil and India and hosted the offsite strategy meeting in India, reflecting the growing importance of Emerging Markets for UBM. (For more details on governance see pages 64 to 68.) John Botts Chairman United Business Media Limited United Business Media Annual Report and Accounts 2010 5
Section 1: 2010 Review Operating and Financial Review Chief Executive Officer’s statement 2010 has been a year of both operational and strategic progress for UBM. 2010 results corporate spending while the operational performance of the business has continued to develop. Revenues from continuing operations rose 4.9% to We held over 300 events in 21 countries during £889.2m (2009: £847.6m) and adjusted operating the year and launched four new geo-cloned events profit* from continuing operations was broadly in India, China, Abu Dhabi and the US. We have Revenues flat at £171.8m (2009: £171.2m) reflecting higher also continued to enhance best practice across the From continuing operations investment in new product development, sales and entire event portfolio through our ‘GEM’ initiative rose 4.9%. IT. The adjusted operating margin* was 19.3% in launched in June 2010. The other important driver 2010 compared to 20.2% in 2009. Adjusted profit for events has been the continuation of our successful before tax* was £156.4m (2009: £165.1m). Adjusted acquisition strategy and we, since year end, £889.2m earnings per share* (‘EPS’) were 51.0p, down from 55.1p in 2009 reflecting higher interest and tax. announced the acquisition of two leading events in India which will further strengthen our position as one of the leading commercial organisers in that 2010 achievements country. During 2010 UBM bought outright or Our consistent strategy of developing products acquired major positions in nine event related in winning formats, targeting attractive business businesses. The most notable of these was Canon communities in growing geographies, provides Communications, acquired for £182.9m, which us with a good platform for growth. is performing well and will deliver on planned We are encouraged by the progress of our Events geo-cloning opportunities, most notably in Brazil and business which, notwithstanding the anticipated India. Other events related acquisitions have provided lower ‘even’ year biennial revenue contribution, showed us with further exposure to the attractive Emerging 7.8% revenue growth and a solid margin performance. Markets** (which accounted for 38.7% of 2010 The strength of our events brands has enabled us total events revenues), strengthened our offering to capitalise on the gradually improving trends in to an existing community or provided access to a David Levin Chief Executive Officer community we think has natural growth potential or geo-cloning opportunities. PR Newswire, our Targeting, Distribution and Monitoring (‘TD&M’) business revenues grew by 12.3% during 2010. Our US wire business saw resilient revenue growth of 2.9% with continued solid margins, while our strategy of diversifying the revenues base is delivering strong growth in non-wire US products (including products such as multimedia news releases, where we believe we are the market leader in the US, and filing services) which grew by 21.4% and in our international business which expanded by 18.8%. During the year we successfully migrated the businesses’ 600+ servers to an outsourced provider, substantially enhancing the robustness of the platform and providing a secure foundation for future development. * See explanation of UBM’s business measures on page 51. ***Emerging Markets constituents are the non-G10 countries – most notably for UBM: China, Brazil, India, Thailand, Singapore, Indonesia, Malaysia, Philippines, Mexico and UAE.6 United Business Media Annual Report and Accounts 2010
2010 revenue by segment £m 2009 2010 Events 288 310 TD&M 161 181 DS 179 185 Online 54 69 Print 166 144 Total 848 889 09 10 This investment in IT infrastructure, the development Print – Magazines (‘Print’) revenues fell 13.1% Section 1: 2010 ReviewAdjusted operating proﬁt* of new products and services and the enhancement during the year and now accounts for only 16.2%From continuing operationswas broadly ﬂat despite of the sales teams, coupled with product mix dilution, of UBM’s total revenues. In line with our establishedhigher levels of investment. resulted in a 4.6 percentage point decline in the strategy we have continued to manage our print TD&M margin. We also acquired five businesses magazine portfolio towards a smaller, more profitable£171.8m which enhance the geographic reach of our PR Newswire business. and commercially sustainable set of titles, as evidenced by a 1.5 percent point increase in the Data Services (‘DS’) has seen improving top margin in 2010. Adjusted operating profit* for line trends with revenues up 3.1%, largely driven Print rose to £10.0m (2009: £8.9m). As we further by good performance in products and services for rationalise our portfolio of titles we expect that in the technology community. We are making good time our continuing print titles will form part of an progress in migrating our print data products to the integrated ‘Online and Print – Marketing Services’ online environment with online data and services offering and growth will be driven by our ability to revenues now accounting for 66.7% of total DS engage with an audience through a variety of channels Section 2: Governance revenues (2009: 61.4%). We are investing in the including, more recently, mobile. It is worth noting development of new products such as: trading that the combined revenues of Online and Print platforms for our shipping database business, declined 2.9% in 2010 while the combined margin expanding our aviation cargo database; a new improved to 5.3% (2009: 4.3%). analytics tool for the paper industry as well as Total adjusted operating profits* for UBM expanding our offering geographically, particularly in were broadly flat at £171.8m – this was owing to Asia. This investment in DS combined with the shift the operational investments in TD&M, DS and in product mix resulted in the overall DS margin Online plus a small increase in net corporate costs. declining from 20.8% to 18.5%. We also made Gross corporate costs remained constant at £15.6m £9.0m of DS related acquisitions to bolster specific (2009: £15.5m) but were offset by lower sundry opportunities in the import/export community, corporate income of £6.4m (2009: £7.9m). In 2011 maritime industry, UK Built Environment and we expect the gross corporate costs to increase slightly Section 3: Financial statements Chinese paper industry. while the level of sundry corporate income continues The fastest revenue growth has been in our to decline. Online – Marketing Services (‘Online’) Finally, given the strategic emphasis we are segment where revenues rose 28.6%, principally placing on growth markets it is worth noting that due to increased revenues from the technology 18.7% of 2010 total revenues are now generated inAdjusted proﬁt before tax* community where the marketing budget Emerging Markets**. During the year these revenuesWas down 5.3%. environment is improving and we are offering an grew 17.6% with an increasing presence in both India enhanced product range with improved client and South America. In our largest Emerging Market engagement. Our most significant investment has of China (which now accounts for 12.6% of total been in virtual events which, rather than cannibalising revenues) we appointed Philip Chapnick, formerly£156.4m the live events, are proving a complementary revenue stream that helps strengthen the associated brands. CEO of our Think Services business, as Group Chief Representative in Beijing to manage and coordinate During 2010 we ran 103 virtual events worldwide, our overall Chinese relationships. investing operating expenditure in developing thisAdjusted EPS* area. Enhancements in our key online brands, such asWas down 7.4%. Information Week, coupled with product innovations are also having positive revenue effects and receiving recognition through industry awards.51.0p David Levin Chief Executive Ofﬁcer United Business Media Limited United Business Media Annual Report and Accounts 2010 7
Section 1: 2010 Review Operating and Financial Review UBM Strategy Our strategic thinking Our business model Business model UBM seeks to help companies make connections, communicate their proposition and do business effectively. We transfer the skills, knowledge and experience Community we gain in serving one community across and understanding between markets, transferring best practice and innovation from one community to another, from one geography to another and from one product type to another. From one company to many, we enable the flow of information, directing messages and Geographic Quality assessing their impact on specific audiences. diversity offering Community understanding As the graph on page 3 highlights we operate in a variety of specialist communities which have attractive growth characteristics. We seek to know who’s who in the community, have relationships with key participants, create rich databases of relevance UBM’s marketplace to those professionals, understand the key themes affecting their community, their information needs The B2B marketplace which UBM operates in is and how they operate. It is through this thorough extremely fragmented, reflecting the number and understanding that we are able to service them variety of communities and geographies we serve most effectively. and the diversity of products and services we offer. Estimates of its size and growth prospects vary Quality offering considerably. Outsell estimates that the ‘information industries’ marketplace (which includes HR By having a broad range of quality services and information, Search, Aggregation & Syndication, products we can create an offering specifically Market Research, B2B Trade publishing and designed to meet the needs of the community being directories) is worth $366.3bn and is expected to served. As described in more detail below, we think demonstrate a compounded annual growth rate the media industry is shifting to a more integrated (‘CAGR’) of 2.3% between 2010 and 2013. approach and therefore having a full range of PricewaterhouseCoopers meanwhile estimate products and services is increasingly important. the more narrowly defined ‘Business to Business’ market (which exclude live events, but include Geographic diversity business information, trade magazines and directory advertising) at $141.3bn for 2010 and expect The transformation to a global economy coupled CAGR of 1.0% between 2010 and 2014. with the shift towards digital media leads us to believe There are two key influences on the long term that diverse geographic experience and infrastructure development of the marketplace: the continuing is advantageous. It also provides us with access to high impact of the ‘digital revolution’ and the shift towards growth opportunities in Emerging Markets and the ‘Emerging Markets’. quality revenues from more mature markets. Worldwide Enterprise IT spend is forecast to surpass $2.4 trillion in 2010, a 4.1% increase from 2009, with the communications, media and services industry expected to grow at a 4.6% CAGR between8 United Business Media Annual Report and Accounts 2010
Segmental revenues 2005 vs 2010 £m Geographic revenues 2005 vs 2010 £m 2005 2010 2005 2010 Events 167 310 N. America 290 414 TD&M 104 181 Europe 106 146 DS 73 185 UK 149 129 Online 30 69 Emerging Markets 79 166 Print 260 144 RoW 10 34 Total 634 889 05 10 Total 634 889 05 10 2009–2014 (Source: Gartner Inc.). It is no surprise Our strategy is to take a leading role in the Live Media Section 1: 2010 Review therefore that we are seeing a trend towards a more and B2B Communications markets, in chosen More information on segmental integrated marketing approach with digital at its core. communities, by building businesses which are well marketplaces see pages 14 to 31. Perhaps stimulated by the global recession, we are positioned to prosper in the digital age and have the seeing a greater degree of client focus on efficiency potential for global growth. The graphs above show and profitability; for example our customers want how, over the last five years, we have re-shaped the to be able to measure the impact of their marketing portfolio and geographic exposure of UBM. campaigns, or our audiences, who have access to a Whilst our strategy remains consistent, some of proliferation of content, are now looking for quality you may note that we’ve changed how we articulate it and accessibility. The distribution channels are and are adopting a more granular approach. We have changing, with mobile apps becoming increasingly identified five priorities for delivering on our strategy: important, and we are seeing a trend from solely traditional media platforms to a combination 1. Organic revenue growth which offer a high level of engagement and are 2. Growth through acquisition Section 2: Governance more embedded in the professionals’ work flow. 3. People and culture The importance of relationship marketing 4. Responsible business remains and we believe that face-to-face interactions will continue to be a crucial element of the B2B 5. Appropriate processes industry. One could even argue that in an increasingly environmentally conscious world it is appealing We have made good strategic progress in 2010 – to attend a single event and meet a multitude evidenced through the financial key performance of contacts, rather than travelling to meet each indicators: contact individually. Year on The other factor influencing the long term year KPI 2009 2010 change development of the marketplace is the macroeconomic environment and the shift towards Revenue (£m) 847.6 889.2 +4.9% Adjusted operating Section 3: Financial statements the ‘Emerging Markets’. In the short term the industry as a whole should benefit from the global recovery profit* (£m) 171.2 171.8 +0.4% – with improvements in the corporate spending Adjusted operating environment and in the proportion of spend allocated margin* 20.2% 19.3% –0.9% to marketing. The speed of growth will vary, with the Adjusted EPS* (p) 55.1 51.0 –7.4% expectation that Emerging Markets will deliver the Cash fromInformation industries highest levels of growth. operations (£m) 142.7 154.7 +8.4%Outsell estimate the The digitalisation trends and Emerging Markets ROACE* 15.8% 14.7% –1.1%ptmarketplace is worth shift are driving development both of new media Net debt/ products and services, and of new business models to Adjusted EBITDA* 1.2x 2.6x support them, across all sectors and in all geographies.$336.3bn We view UBM’s diversity as a distinct advantage – our varied portfolio and breadth of geographic As you can see the Board have increased the number of financial KPIs they formally review to measure the exposure enables us to be agile and capitalise on health and progress of the business. They also reviewWorldwide IT spend changes in our marketplace. performance indicators which are more operationalGartner Inc estimate in in nature (as detailed over the next two pages).2010 IT Enterprise spendwill surpass Our strategy Positioning UBM to benefit from these macro,$2.4tr long term shifts in the industry is our primary strategic objective. * See explanations of UBM’s business measures on page 51. United Business Media Annual Report and Accounts 2010 9
Section 1: 2010 Review Operating and Financial Review UBM Strategy continued 1. Organic revenue growth: We continually look to organically strengthen the products and services within our portfolio. Below we detail initiatives to improve the performance of each of the segments. Targeting, Distribution Events and Monitoring We continue to develop the Events portfolio by launching new events, enlarging the size We continue to invest and innovate to of the events, increasing the yields and sharing best practice knowledge. further expand PRN’s offering beyond the US wire product. Revenue £m Operational Performance Indicators Revenue £m 310 Year on 181 292 288 year 154 161 245 2009 2010 change 141 220 130 167 Sqm of Annual Events 895.3k 925.2k 3.3% 104 Sqm of Biennial Events* 87.2k 56.6k –35.1% Attendees to Annual Events 1.21m 1.22m 1.1% Attendees to Biennial Events* 109.4k 78.2k –28.5% 05 06 07 08 09 10 * Biennial ‘odd’ year events are larger. 05 06 07 08 09 10 We also grow in Emerging Markets (‘EM’) through the launch of new events under brands which have been successful elsewhere (‘Geo-cloning.’) Proportion of EM revenue % Operational Performance Indicators Mix type of revenues % Year on year 2009 2010 2009 2010 2010 change 2009 EM 34.3 38.7 Revenue of new launch events (£m) 3.6 4.0 £m £m % Non EM 65.7 61.3 No. of new geo-cloned events 7 4 US wire 73.3 75.4 2.9 Non US wire 43.4 52.7 21.4 PR Newswire Europe 12.2 13.5 10.7 Other 32.5 39.6 21.8 2010 Geo-cloned events 09 10 For more detail about the events business and For more detail about the TD&M business and its performance in 2010 see pages 14-17. its performance in 2010 see pages 18-21. Internal infrastructure In China, which now accounts for 12.6% of total revenues, given its strategic focus, we have We continue to build our internal infrastructure created a managerial role in Beijing to manage to better support the businesses. and coordinate our overall Chinese relationships and leverage the capabilities offered by the entire UBM portfolio of products and services.10 United Business Media Annual Report and Accounts 2010
Contribution to 2010 revenue % 1. Events 34.8 1 2. TD&M 20.4 3. DS 20.8 4. Online 7.8 5 5. Print 16.2 4 2 3 Section 1: 2010 ReviewData Services Online – Marketing Services Print – MagazinesWith content now becoming more available The rapidity of technological advance Although print publishing in general isthrough the internet it is important we means that we must continually innovate in decline we believe there is a role forinvest and innovate to deepen our data sets to ensure we are best serving our clients. leading community titles. We continueand enhance the delivery channels to our We seek to capitalise on the trend towards to manage the print portfolio to focuscustomers. We are also looking to improve an integrated marketing approach through on leading titles. Over time it will makethe quality of revenues (increasing the developing our high engagement offering sense to combine our print segment withproportion of digital revenues) and diversify and growing the number of quality virtual online for an integrated marketing servicesthe delivery channels (the mix between events increasing proportion of Lead product offering. Section 2: Governance‘subscription’, ‘consulting, content and generation and other revenues.training’ and ‘advertising’ revenues).Revenue £m Revenue £m Revenue £m 179 185 69 260 256 168 231 57 54 216 143 43 42 166 144 91 73 30 05 06 07 08 09 10 05 06 07 08 09 10 05 06 07 08 09 10 Section 3: Financial statementsOperational Performance Indicators Operational Performance Indicators Number of titles Year on Year on 182 year year 155 2009 2010 change 2009 2010 change 140 123*Digital revenues (£m) 109.9 123.2 +12.1% Lead generation & other 109Digital & services revenues (£m) 16.4 21.8 32.9%proportion 61.4% 66.7% +5.3%pt Proportion of Lead generation and other 30.5% 31.5% 1.0%ptProportion of revenues No. of virtual events 38 103 171.1%Subscription 64.3% 63.4% –0.9%pt 06 07 08 09 10Consulting, content * Reflects acquisition of 26 titles.& training 23.5% 27.0% +3.5%ptAdvertising 12.2% 9.6% –2.6%pt For more detail about the DS business and For more detail about the Online business and For more detail about the Print business and its performance in 2010 see pages 22-25. its performance in 2010 see pages 26-29. its performance in 2010 see pages 30-31.The UBM Wiki – online community, allows Wiki usageemployees from all around the globe and Wiki usage continues todifferent businesses to share ideas, information increase – number of pagesand best practice. viewed in 2010 +28% United Business Media Annual Report and Accounts 2010 11
Section 1: 2010 Review Operating and Financial Review UBM Strategy continued 2. Growth through acquisition We invest in strategic acquisitions in order to strengthen our existing portfolio or provide exposure to markets we feel are attractive. Target selection Strict ﬁnancial discipline We select targets which are complementary to our A target acquisition also has to satisfy financial criteria existing business in terms of geography, segment or with projected post tax ROI* exceeding 8% within community. Below is a table showing the acquisitions the first full year of ownership. made in 2010. Pre tax Consideration return on investment % £m 2008 2009 2010 Integration process 2008 In order to facilitate a smooth process, executives are acquisitions 49.9 12.4 6.5 7.8 given responsibility for integration. The integration 2009 of the Canon acquisition, completed in October, acquisitions 26.5 – 14.8 4.51 is progressing well. 2010 acquisitions2 258.0 – – 10.6 Total 334.4 10.0 Initial Expected consideration contingent and net of cash deferred Estimated total acquired* consideration consideration 2010 acquisitions Geography Segment Community £m £m £m E Commerce Expo UK Events Technology 0.4 1.2 1.6 Sign China China Events Other 6.3 4.3 10.6 DesignCon USA Events Technology 0.9 – 0.9 Sienna – Concrete show Brazil Events Built Environment 6.5 6.8 13.3 NavalShore Brazil Events Trade & Transport 1.2 0.1 1.3 Children – Baby – Maternity – Expo China Events Lifestyle 6.3 4.2 10.5 The Routes Development Group UK Events Trade & Transport 6.8 1.3 8.1 Canon Communications USA Events Technology/Health 182.9 – 182.9 Publishing Expo UK Events Other 0.2 – 0.2 DNA-13 Canada TD&M News Distribution 4.0 0.6 4.6 PR Newswire do Brasil Brazil TD&M News Distribution 0.7 0.1 0.8 PR Newswire Argentina Argentina TD&M News Distribution 0.0 – 0.0 Corporate360 Hong Kong TD&M News Distribution 0.2 0.7 0.9 Hors Antenne Europe TD&M News Distribution 5.3 2.7 8.0 SharedVue USA DS Technology 0.2 4.9 5.1 CenTradeX USA DS Trade & Transport 0.3 0.1 0.4 UM Paper China DS Paper 0.1 0.2 0.3 JOC Exchange (Triton) USA DS Trade & Transport 0.3 1.7 2.0 Lead-In Research UK DS Built Environment 0.9 0.3 1.2 Game Advertising Online New Zealand Online Technology 0.6 3.0 3.6 Astound USA Online Technology 0.1 1.0 1.1 OBGYN.net USA Online Health 0.5 0.1 0.6 Total 224.7 33.3 258.0 1 Performance reflects reported results for The Fuel Team which was integrated into PR Newswire in 2010. Excluding it, the pre tax return on acquisition would have been 8.6% for 2009 acquisitions. 2 2010 return on investment calculated on a full year pro-forma basis. * See explanation of UBM’s business measures on page 51.12 United Business Media Annual Report and Accounts 2010
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