TIDMTRS
RNS Number : 1509G
Tarsus Group PLC
28 February 2018
Tarsus Group plc
Final results for year ended 31 December 2017
Record performance in 2017 - next phase of strategy set to
deliver further growth
Tarsus Group plc (LSE: TRS, "Tarsus" or "the Group"), the
international business-to-business media group, announces its
results for the year ended 31 December 2017.
2017 saw the culmination of Tarsus' "Quickening the Pace" (QTP)
strategy which delivered another year of strong performance. The
Group saw like-for-like revenue growth of 7% over the year (at
constant exchange rates) and across the portfolio buyers also
increased by 7% on a like-for-like basis.
Financial results
2017 2016 2015
Revenue (GBPm) 117.7 68.4 86.9
Like-for-like* revenue
growth 7% 8% 10%
EBITDA (GBPm) 44.9 22.0 28.7
Operating profit 33.6 14.7 24.5
Adjusted profit before
tax* (GBPm) 40.2 19.2 26.3
Profit before tax (GBPm) 27.9 8.6 19.1
Adjusted EPS* (pence) 27.7 15.2 21.4
Basic EPS (pence) 21.5 6.9 14.4
Dividend (pence) 10.0 9.1 8.4
Net debt (GBPm) 84.8 69.5 43.8
Financial highlights
-- Revenue of GBP117.7m up 35% against 2015
-- Group like-for-like revenues* up 7%
-- Adjusted profit before tax of GBP40.2m up 53% against 2015
(statutory profit before tax GBP27.9m up 46%)
-- Adjusted earnings per share of 27.7p up 29% against 2015
(statutory earnings per share 21.5p up 49%)
-- Proposed final dividend of 7.0p per share - total for year up
10% to 10.0p
-- Banking facilities increased to GBP126m with interest rates
fixed
Operational highlights
-- Buyer/visitor growth across the portfolio of 7%, more than
double the industry average
-- Strong performances from leading events
-- Recent acquisitions of Connect, Hometex and Intex all
performed well
-- 28 brand replications launched
-- JV in Mexico expanded through acquisition of remaining nine E
J Krause Mexico events
Current trading and outlook
-- Next phase of Quickening the Pace strategy launched
-- Trading off to a good start in 2018
-- Forward bookings for 2018 on a like-for-like basis currently
ahead of the Group's target range (adjusted for biennials and
acquisitions)
-- Well positioned to deliver another strong performance in
2018
Douglas Emslie, Group Managing Director of Tarsus,
commented:
"2017 was a record year for Tarsus. It saw the culmination of
the first phase of our Quickening the Pace strategy, which over the
past few years has transformed the business and produced strong
returns for our shareholders.
"The Group has grown significantly, both organically and through
carefully targeted acquisitions and over the next four years of our
strategy we will build further on the strong foundations we have
laid down.
"Our growth ambitions are supported by the global industry
outlook and enhanced by our own focus on deepening our presence in
higher-growth markets, maximising the scale of our events and
delivering high-quality buyers.
"2018 is off to a good start, with forward bookings currently
ahead of our target range. Whilst we continue to be mindful of
geopolitical uncertainty, the outlook for the year is good, and we
proceed with confidence".
For further information contact:
Tarsus Group plc:
Douglas Emslie, Group Managing Director 020 8846 2700
Dan O'Brien, Group Finance Director
Neville Harris, Investor Relations 07909 976 044
The Company will be hosting a presentation to analysts at
11.30am today at the offices of Herbert Smith Freehills LLP,
Exchange House, Primrose St, London EC2A 2EG. The presentation will
be made available on Tarsus' website (www.tarsus.com) from 9.30am
on 1 March 2018.
Glossary*
Adjusted profit before tax:
Profit before tax adjusted for share option charges,
amortisation of intangible assets arising from business
combinations, taxation on joint venture profits, unwinding of
discount charges, changes in fair value of contingent consideration
and put/call liabilities and acquisition related costs.
EBITDA:
Calculated using adjusted profit before interest, tax,
depreciation and amortisation charges arising from business
combinations.
Adjusted EPS:
Calculated on profit after tax attributable to ordinary
shareholders adjusted for share option charges, amortisation of
intangible assets arising from business combinations, unwinding of
discount charges, changes in fair value of contingent consideration
and put/call liabilities, acquisition related costs and the related
taxation impact along with the abnormal impact of tax legislative
changes, and the diluted weighted average number of ordinary shares
in issue during the period.
Pro-forma revenue:
Revenue excluding any disposals made in the year and including
Group's share of any revenues recorded in joint venture companies
not consolidated.
Like-for-like revenue:
Pro-forma revenue at constant exchange rates adjusted for
biennial events, adjusting for acquisitions impacting for the first
time in 2017, prior year disposals and non-recurring products and
items.
Buyer Growth:
Buyers adjusted for biennial events, prior year disposals and
non-recurring products and items.
See note 3 for a reconciliation showing the impact of adjusting
items.
Strategic overview
2017 was a landmark year for Tarsus, which saw a record
performance and the culmination of the first phase of the Group's
"Quickening the Pace" strategy.
Launched in 2013, this strategy had one over-riding ambition: to
accelerate the pace of financial returns to shareholders. This was
to be achieved through two initiatives. First, by driving organic
growth from the existing portfolio, replications and by increasing
buyer attendance. Second, by making strategic acquisitions in
selected high-growth geographies.
To execute the strategy Tarsus re-shaped its portfolio
significantly and moved into fast-growing economies. In addition to
the US and China - the world's largest exhibition markets - the
Group's selected territories now comprise Mexico, South East Asia,
Turkey and the Middle East (principally Dubai).
Tarsus targets not only high-growth geographies but also
high-growth industries where technological innovation or
substantial investment is driving growth.
Between 2013 and 2017, the first phase of the strategy delivered
average revenue growth of 9% per annum, average buyer growth of 8%
per annum and average adjusted earnings per share growth of 9% per
annum. We have also driven a fundamental shift in the shape of
Tarsus' business, in terms of where it operates, the business
verticals that it serves and the overall scale of the Group. We
have grown the number of events held from 65 to 153 over the
five-year period, through a combination of acquisition and new
launches. Total shareholder return over the period was 111%,
approximately 50% better than our peer group.
2018 sees the launch of the next phase of the Quickening the
Pace strategy - "QTP2: driving scale and momentum". The Group will
deepen its presence in higher growth markets; look to maximise the
scale of existing events; and acquire new platforms for growth. A
key part of this will be continued investment in the Tarsus
replication programme, which spreads the success of the Group's
leading brands around the world.
The ability to deliver the strategy successfully is dependent on
a number of factors, but two in particular are key:
First, the Group will continue to take an entrepreneurial
approach towards developing its portfolio. Around the world,
exhibition markets are consolidating, with high-quality assets in
great demand. In this context, Tarsus' flexibility and willingness
to work in partnership with vendors is increasingly seen by the
Group as a point of differentiation from our competitors. Rather
than seeking to impose a blue-print from above, we look for dynamic
entrepreneurs to partner with in order to build a business
together. This gives the Group an edge in acquiring the most
promising new assets.
Second, the Group will continue to focus relentlessly on
improving the experiences of its exhibitors and buyers. For Tarsus,
everything depends on the user experience; the front line leads
directly to the bottom line. Therefore attracting high-quality
buyers will continue to be a priority - and with an
industry-leading record in buyer growth, the Group is confident it
can continue to drive up volumes.
To measure the success of this next phase of its strategy
through to 2021, the Group has set itself three Key Performance
Indicators: growth of 5% to 10% per annum in like-for-like revenue
growth, buyer growth and earnings per share growth.
Financial results
The financial results for the year ended 31 December 2017 were
in line with the Board's expectations. Group revenues for the full
year were GBP117.7m (2016: GBP68.4m), up 35% on a biennial basis
(2015: GBP86.9m). Like-for-like revenues, at constant exchange
rates, increased by 7%.
Group adjusted profit before tax was GBP40.2m (2016: GBP19.2m),
up 53% on a biennial basis (2015: GBP26.3m). Net interest expense
of GBP4.2m (2016: GBP2.4m) reflected increased debt levels in 2017
as a result of acquisitions made during 2016 and 2017. Reported
profit before tax was GBP27.9m (2016: GBP8.6m).
The Group incurred an amortisation charge of GBP8.4m (2016:
GBP6.9m).
The adjusted tax charge of GBP6.3m (2016: GBP2.9m) represents
16% (2016: 15%) of the Group's adjusted profit before tax. The
reported tax charge is GBP1.1m (2016: GBP0.7m).
Adjusted earnings per share were 27.7p (2016: 15.2p), 29% up on
a biennial basis (2015: 21.4p). Basic earnings per share for 2017
were 21.5p (2016: 6.9p).
The Group continued to deliver strong operating cash conversion,
with GBP36.5m of cash generated from operations during the year
(2016: GBP15.8 and 2015: GBP22.4m). The Group's net debt as at 31
December 2017 was GBP84.8m (2016: GBP69.5m) the increase during the
year resulting from acquisitions made in the period.
Reflecting the strong financial performance during 2017, the
Tarsus Board is proposing a final dividend of 7.0p per share,
bringing the total for the year to 10.0p per share (2016: 9.1p per
share), an increase of 10%. This proposed rise is the seventh
consecutive year of increases to the dividend and represents a
compound annual growth rate of 8%.
The final dividend, subject to shareholder approval, will be
paid on 12 July 2018 to shareholders on the Register of Members on
1 June 2018. A scrip dividend will continue to be offered to
Shareholders as an alternative.
Corporate activity
Two acquisitions were completed during the year:
In January 2017, Tarsus acquired a 65% interest in Hometex, the
leading bi-annual home textiles exhibition based in Shenzhen,
China. The home furnishings market is now the fourth highest sector
of family consumption in China, and Guangdong province itself
accounts for more than 50% of the Chinese home furnishing market by
value. Hometex takes place bi-annually in the spring and autumn.
The spring edition, the larger of the two events, occupies all of
the available venue capacity and there is a currently a waiting
list for this event.
In September 2017, Tarsus' 50% owned joint venture in Mexico
acquired a further nine events from EJ Krause, resulting in the JV
now owning all of EJK Mexico's event portfolio. These new events
include industry-leading brands such as Mexico Wind Power (energy),
Green Expo (environmental energy and waste), EBIO (beauty and
cosmetics), Intertraffic (traffic and road infrastructure) and Expo
Produccion (textiles). The JV also provides a platform for Tarsus
to continue to launch new replications, drawing on the Group's
existing major brands. This has already seen the successful launch
of GESS (launched 2015) and Airport Solutions (2017) into Mexico.
This transaction will result in the JV being the largest
international exhibition company in Mexico, a relatively fragmented
but high-growth emerging market, with both domestic and
international growth angles.
Operating Review
Americas
(GBPm) 2017 2016 2015
Biennial revenue - 6.8 -
Annual revenue 46.2 31.3 26.0
Total revenue 46.2 38.1 26.0
Adjusted profit before tax 20.0 17.1 11.4
Connect
Connect - purchased at the end of 2016 - performed in line with
expectations, with the business making good strategic progress in
terms of both expansion into new verticals and new launches. A
total of 23 events were held and the main event, Connect
marketplace (held in New Orleans this year) produced a very strong
result.
Medical
The Medical division as a whole continued on its growth path in
2017. The Group's established anti-aging events again performed
well with a particularly strong showing at the Las Vegas event in
December. PAINWeek had another good year and while both South Beach
Symposium (oncology) and the Cardiometabolic Health Congress
continued to be adversely affected by weaker drug pipelines, the
outlook for both in 2018 is improving.
Offprice
The Las Vegas event produced another solid performance across
its two showings in 2017.
Mexico
There was a strong performance from Expo Manufactura
(manufacturing) and Plastimagen (plastics) and bookings for 2018
are strong. The events acquired during the year as part of the
Group's joint venture with EJ Krause all performed in line with the
acquisition case. Two replications were also held and both did
well.
EMEA
(GBPm) 2017 2016 2015
Biennial revenue 35.5 3.7 32.7
Annual revenue 12.6 13.7 12.0
Total continuing revenue 48.1 17.4 44.7
Discontinued# - - 4.9
Total revenue 48.1 17.4 49.6
Adjusted profit before
tax (continuing) 17.2 2.1 15.3
Discontinued# - - 0.4
Total Adjusted profit
before tax 17.2 2.1 15.7
# French operations sold in 2015
Dubai
The biennial Dubai Airshow produced an excellent result, with
record revenues and trade visitors to the show up by 7%. Exhibitor
orders announced also reached an impressive $113.8 billion.
Importantly, the Group extended its agreement with the Dubai
Airports Corporation in respect of the event until 2027.
Tarsus' education event GESS produced a solid performance and -
having launched into both Mexico City and Jakarta in the last two
years - it further extended its reach with a launch into Turkey in
October 2017. The smaller aerospace events portfolio also performed
well.
Europe
The biennial Labelexpo Europe extended its long track record of
growth with another record edition in 2017. Supported by the
addition of an extra hall, and over 200 new product launches, buyer
numbers rose by 6%. There has already been a strong rebook (84%)
for the next edition in 2019.
Turkey
Against a difficult political background at the start of the
year, a number of first-half events saw weaker revenues compared to
2016. As the year progressed trading improved. The larger second
half events all produced performances ahead of 2016. So far 2018
trading in Turkey is following a similar pattern.
Asia
(GBPm) 2017 2016 2015
Biennial revenue 2.4 1.0 1.8
Annual revenue 21.0 11.8 9.4
Total revenue 23.4 12.8 11.2
Adjusted profit before
tax 9.8 4.8 3.3
China
The Group's exposure to China - the world's second largest
exhibition market - has steadily increased in recent years and is a
market in which Tarsus seeks to deepen its exposure. In order to
take advantage of the transition occurring in the country's
economic growth and demographics, the Group is focusing on internal
markets led by consumer demand. The aim is also to create further
scale in China's key cities of Shanghai and Shenzhen. This will be
aided in the medium-term by significant new capacity coming on
stream in Shenzhen, which is expected to provide a platform for
further growth.
Overall, the portfolio performed in line with the Group's
expectations in 2017. Hometex and Intex were both successfully
bedded in. The biennial Labelexpo Asia grew strongly, achieving a
record result. SIUF, Asia's largest underwear show, again performed
well with buyer growth of 13%. AAITF showed good growth with
overseas buyer numbers up by 20%. Hope, the Group's Central China
division, continued to perform well with like-for-like revenues
ahead of 2016.
South East Asia
The overall portfolio performed weIl, with nine new replications
launched in the region. In Indonesia, the established IIICE
(Infrastructure) event, achieved good buyer attendance.
Central costs
(GBPm) 2017 2016 2015
Central costs (before interest
and tax) 2.5 2.4 2.1
Interest 4.2 2.4 2.0
Central costs have remained flat as the Group retains tight
controls.
Outlook
Trading for the first two months of 2018 has been in line with
management's expectations. We have made a good start to 2018 in the
US and China in addition to particularly pleasing performances in
Dubai and Mexico.
Bookings are currently ahead of our target range. We have
launched the next phase of the Group's strategy and are focused on
maximising the scale of our existing events and driving momentum in
new markets. Though we are mindful of geopolitical uncertainty, we
believe the fundamentals of the Tarsus strategy promise another
year of good progress.
Neville Buch, Chairman
Douglas Emslie, Group Managing Director
28 February 2018
Financing
The geographical composition of Tarsus' international event
portfolio means that revenues and profits are generated in a range
of currencies, principally US Dollars, Chinese Renminbi, Euros,
Turkish Lira and Sterling. In 2017 approximately 58% of pro-forma
revenues were generated in US Dollars, 21% in Chinese Renminbi, 10%
in Sterling and 7% in Turkish Lira. As a result of the Group's
currency composition, Sterling translated trading results are
significantly affected by any changes in prevailing exchange rates
during the year. The average exchange rates applicable were:
2017 2016 2015
US $ 1.30 1.30 1.50
Chinese
Renminbi 8.72 9.43 9.25
Turkish
Lira 4.75 3.95 4.20
Cash flows
Tarsus continues to generate strong cash flows from its
operations. The larger events in the Group's portfolio typically
have a positive working capital cycle and the business in general
has a low capital investment requirement.
The biennial nature of the Group's event portfolio results in an
increase in working capital (excluding cash) in odd years
(including 2017) which include the Group's two largest events. This
occurs as deferred income relating to these events is released from
the Statement of Financial Position which has been built up over
the 2 year cycle ahead of the events taking place this year. During
2017, cash generated from operations was GBP36.5m (2016: GBP15.8m
and 2015: GBP22.4m).
The key non-operating cash flows in 2017 included:
-- Dividends paid of GBP9.9m
-- Contingent consideration payments totalling GBP5.8m
-- Tax and interest paid totalling GBP5.2m
-- Acquisition of Hometex for GBP16.4m
-- Acquisition of joint venture interests for GBP5.5m
-- Share purchases by Employee Benefit Trust GBP0.6m
Net debt
The Group's funding objective is to ensure that the business has
sufficient resources, secured on competitive terms, to meet its
various financial commitments as they arise. It achieves this
objective by actively monitoring its cash flows and requirements on
both an historic and forward looking basis. The Group is cautious
in its approach, applying appropriate sensitivities to both the
quantum and timing of its projections. The Group has a medium term
gearing target of 1.5-2.0 x net debt/EBITDA across its two year
earnings cycle.
In July 2017 Tarsus' external bank debt facility of GBP111m was
extended to GBP126m and remains in place until December 2020. At 31
December 2017 95% were of borrowings were denominated in Sterling
with the remainder in US Dollars. The Group has entered into
interest rate swaps to fix the interest rates payable under its
banking facilities.
The Group's net debt was GBP84.8m at 31 December 2017 (31
December 2016: GBP69.5m).
Net assets
As at 31 December 2017 the Group had net assets of GBP75.7m (31
December 2016: GBP71.6m).
Intangible assets
Intangible assets comprise goodwill, trademarks and customer
lists. The carrying value of intangible assets at 31 December 2017
was GBP188.3m (31 December 2016: GBP186.8m).
Working capital
It is the Group's policy to recognise profits upon the
completion of an event. Until completion, revenues and costs are
held on the Statement of Financial Position. Included in net
current liabilities as at 31 December 2017 is deferred income of
GBP38.0m (2016: GBP35.8m; 2015: GBP24.1m). Prepaid event costs of
GBP7.9m (2016: GBP7.9m; 2015: GBP4.8m) are included in Trade and
Other Receivables.
Adjusted Results
Adjusted results are presented in addition to statutory results
as these are the measures the Board uses to manage the operating
performance of the Group. The categories of adjusting items are
consistent with prior years and many of the items are consistent
with our peer group, aiding comparability across the sector, as
well as our year on year performance.
Reconciliation of Profit before
taxation to adjusted profit before
tax
GBP'm 2017 2016
Profit Before Tax 27.9 8.6
Operating items
Amortisation of acquired intangibles 6.8 5.3
Acquisition and potential acquisition
costs 2.0 2.1
Share Option Charge 2.6 2.2
Changes in fair value of put/call
options and contingent consideration (2.2) (4.1)
Tax on Joint Venture profits 1.6 1.1
Other 0.1 0.3
Financing Items
Unwinding of discount 1.4 3.7
Adjusted Profit before tax 40.2 19.2
--------------------------------------- ------------------- ----------------
Dan O'Brien
Group Finance Director
28 February 2018
CONSOLIDATED INCOME STATEMENT
Year to 31 December 2017 Year to 31 December 2016
Note Adjusted Adjusting Statutory Adjusted Adjusting Statutory
items * items *
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Group
revenue 2 117,660 - 117,660 68,358 - 68,358
Operating
costs (78,981) (9,178) (88,159) (51,178) (5,762) (56,940)
Share of
profit of
joint
ventures 5,723 (1,647) 4,076 4,427 (1,144) 3,283
------------- ---------- ------------- ------------- ---------- --------------
Group
operating
profit 44,402 (10,825) 33,577 21,607 (6,906) 14,701
Net finance
costs (4,234) (1,441) (5,675) (2,427) (3,699) (6,126)
------------- ---------- ------------- ------------- ---------- --------------
Profit
before
taxation 40,168 (12,266) 27,902 19,180 (10,605) 8,575
Taxation
expense 4 (6,331) 5,247 (1,084) (2,899) 2,170 (729)
Profit for
the
financial
year 33,837 (7,019) 26,818 16,281 (8,435) 7,846
============= ========== ============= ============= ========== ==============
Profit for the
financial period
attributable to equity
shareholders of the
parent company 31,184 (7,019) 24,165 15,526 (8,435) 7,091
Profit for the
financial period
attributable to
non-controlling
interests 2,653 - 2,653 755 - 755
33,838 (7,019) 26,818 16,281 (8,435) 7,846
============= ========== ============= ============= ========== ==============
Note Adjusted Statutory Adjusted Statutory
Earnings
per share
(pence) 6
- basic 27.7 21.5 15.2 6.9
- diluted 27.6 21.4 15.1 6.9
GBP000 GBP000
Dividends 5
Equity -
ordinary
Final 2016
dividend
paid 7,199 5,998
Interim
2016
dividend
paid 2,749 2,530
Minority
dividend
paid 793 470
10,741 8,998
============= ==============
*see note 3 for adjusting items
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year to Year to
31 31 December
December 2016
2017
GBP000 GBP000
Profit for the financial year 26,818 7,846
---------- -------------
Other comprehensive income/(expense):
Cash flow hedge reserve -
movement in fair value 810 (1,354)
Foreign exchange translation
differences (14,756) 11,584
---------- -------------
Other comprehensive (expense)/income (13,946) 10,230
Total comprehensive income
for the year 12,872 18,076
========== =============
Attributable to:
Equity shareholders of the
parent company 10,082 17,364
Non-controlling interests 2,790 712
Total comprehensive income
for the year 12,872 18,076
========== =============
Other comprehensive income relating to foreign exchange
translation differences, fair value movements in cash flow hedges
and the tax effects thereon may all subsequently be reclassified to
profit and loss if certain conditions are met.
The amounts above are presented net of tax.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at 31
31 December
December 2016
2017
Notes GBP000 GBP000
NON-CURRENT ASSETS
Property, plant and equipment 1,082 1,355
Intangible assets 188,344 186,813
Investment in Joint Ventures 38,490 34,281
Other investments - 1
Deferred tax assets 3,003 3,224
230,919 225,674
CURRENT ASSETS
Trade and other receivables 44,452 33,420
Cash and cash equivalents 7 22,373 15,946
---------- ----------
66,825 49,366
CURRENT LIABILITIES
Trade and other payables (36,457) (33,357)
Deferred income (37,993) (35,790)
Provisions (120) (165)
Liabilities for current tax (3,155) (692)
---------- ----------
(77,725) (70,004)
---------- ----------
NET CURRENT LIABILITIES (10,900) (20,638)
---------- ----------
TOTAL ASSETS LESS CURRENT
LIABILITIES 220,019 205,036
---------- ----------
NON-CURRENT LIABILITIES
Other payables (27,981) (38,716)
Deferred tax liabilities (10,059) (10,881)
Interest bearing loans and
borrowings 7 (106,239) (83,800)
---------- ----------
(144,279) (133,397)
NET ASSETS 75,740 71,639
========== ==========
EQUITY
Share capital 5,654 5,637
Share premium account 73,303 72,304
Other reserves (19,701) (5,618)
Retained profit/(loss) 11,914 (3,047)
Issued capital and reserves attributable
to equity shareholders of the parent 71,170 69,276
NON-CONTROLLING INTERESTS 4,570 2,363
TOTAL EQUITY 75,740 71,639
========== ==========
The financial statements of Tarsus Group plc, registered number
101579 (Jersey), were approved by the board and authorised for
issue on 28 February 2018 and signed on its behalf by:
CONSOLIDATED STATEMENT OF CASH FLOWS
Notes
Year to Year to
31 December 31 December
2017 2016
GBP000 GBP000
Cash flows from operating
activities
Profit for the year 26,818 7,846
Adjustments for:
Depreciation 511 387
Amortisation & Impairment 8,418 6,918
Other gains (2,967) (4,445)
Loss on disposal of tangible
assets 3 5
Share option charge 2,598 2,234
Taxation charge 4 1,084 729
Interest payable 5,675 6,126
Share of joint venture profits (4,076) (3,283)
Dividend received from joint
venture company 4,295 957
Operating cash flow before
changes in working capital 42,359 17,474
Increase in trade and other
receivables (11,283) (2,079)
Increase in trade and other
payables 5,330 525
Increase/(decrease) in provisions 53 (106)
Cash generated from operations 36,459 15,814
Interest paid (3,991) (2,401)
Income taxes paid (1,184) (711)
Net cash from operating activities 31,284 12,702
Cash flows from investing
activities
Proceeds from sale of tangible 36 -
fixed assets
Acquisition of property, plant
& equipment (304) (232)
Acquisition of intangible
fixed assets (831) (687)
Acquisition of subsidiaries
- cash paid (16,378) (36,332)
Acquisition of joint venture
- cash paid (5,481) (6,130)
Proceeds on disposal of business - 1,536
Acquisition of subsidiaries
- cash acquired - 459
Deferred and contingent consideration
paid (5,800) (4,943)
Put call option liability
paid (5,573) (4,392)
Net cash outflow from investing
activities (34,331) (50,721)
------------- -------------
Cash flows from financing
activities
Drawdown of borrowings 22,546 29,450
Bank facility fees (187) (305)
Proceeds from the issue of
share capital - 24,094
Purchases for employee benefit
trust (553) (1,077)
Dividends paid to shareholders
in parent company (9,901) (8,474)
Dividends paid to non-controlling
interests in subsidiaries (793) (417)
Costs of shares issued - (719)
Net cash inflow / (outflow)
from financing activities 11,112 42,552
------------- -------------
Net increase / (decrease)
in cash and cash equivalents 8,065 4,533
Opening cash and cash equivalents 15,946 10,693
Foreign exchange movements (1,638) 720
Closing cash and cash equivalents 16 22,373 15,946
============= =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Other Reserves
-------------------------------- ---------
Share Share Reorgan- Capital Fair Foreign Retained Non- Total
Capital Premium isation Redemption Value Exchange Earnings Controlling
Account Reserve Reserve* Reserve Reserve Reserve Interests
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
As at 1 January
2017 5,637 72,304 6,013 (443) (2,434) (8,754) (3,047) 2,363 71,639
Recognised foreign
exchange gains
for the period - - - - - (14,893) - 137 (14,756)
Profit for the
period:
- Attributable
to equity shareholders - - - - - - 24,165 - 24,165
- Attributable
to non-controlling
interests - - - - - - - 2,653 2,653
Cash flow hedge
reserve - - - - 810 - - - 810
Total comprehensive
income / (expense)
for the period - - - - 810 (14,893) 24,165 2,790 12,872
Scrip dividend 1 49 - - - - - - 50
New share capital
subscribed 16 950 - - - - - - 966
Share option
charge - - - - - - 2,281 - 2,281
Movement in
reserves relating
to deferred
tax 4 - - - - - - 499 - 499
Other movements
in reserves - - - - - - (2,036) - (2,036)
Dividend paid 5 - - - - - - (9,948) - (9,948)
Dividend paid to
non-controlling
interests - - - - - - - (793) (793)
Non-controlling
interests arising
on acquisition - - - - - - - 210 210
Net change in
shareholders'
funds 17 999 - - 810 (14,893) 14,961 2,207 4,101
-------- -------- --------- ----------- -------- --------- --------- ---------- ---------
As at 31 December
2017 5,654 73,303 6,013 (443) (1,624) (23,647) 11,914 4,570 75,740
======== ======== ========= =========== ======== ========= ========= ========== =========
Other
Reserves
------------------------ -------- ---------
Share Share Reorgan- Capital Fair Foreign Retained Non- Total
Capital Premium isation Redemption Value Exchange Earnings Controlling
Account Reserve Reserve Reserve Reserve Reserve Interests
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January
2016 5,091 48,280 6,013 (443) (1,080) (20,381) (1,972) 4,424 39,932
Recognised foreign
exchange losses
for the period - - - - - 11,627 - (43) 11,584
Profit for the
period:
- Attributable to
equity shareholders - - - - - - 7,091 - 7,091
- Attributable to
non-controlling
interests - - - - - - - 755 755
Cash flow
hedge
reserve - - - - (1,354) - - - (1,354)
Total comprehensive
income / (expense)
for the period - - - - (1,354) 11,627 7,091 721 18,076
Scrip dividend 1 53 - - - - - - 54
New share
capital
subscribed 545 24,782 - - - - - - 25,327
Cost of shares
issued - (811) - - - - - - (811)
Share option
charge - - - - - - 1,896 - 1,896
Movement in
reserves
relating to
deferred
tax 4 - - - - - - (829) - (829)
Other
movements
in reserves - - - - - - (1,582) - (1,582)
Dividend paid 5 - - - - - - (8,528) - (8,528)
Dividend paid to
non-controlling
interests - - - - - - - (470) (470)
Purchase of
non-controlling
interests - - - - - - 2,240 (2,240) -
Written Put/Call
options over
non-controlling
interests - - - - - - (1,363) - (1,363)
Non-controlling
interests arising
on acquisition - - - - - - - (63) (63)
Net change in
shareholders'
funds 546 24,024 - - (1,354) 11,627 (1,075) (2,061) 31,707
-------- -------- --------- ------------- -------- --------- --------- ---------- --------
As at 31
December
2016 5,637 72,304 6,013 (443) (2,434) (8,754) (3,047) 2,363 71,639
======== ======== ========= ============= ======== ========= ========= ========== ========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The results for the year ended 31 December 2017 have been
prepared using accounting policies and methods of computation
consistent with those used in the Group's annual report for the
year ended 31 December 2016. The results have also been presented
and prepared in a form consistent with that which will be adopted
in the Group's annual report for the year ended 31 December 2017
and in accordance with the recognition and measurement requirements
of International Financial Reporting Standards as adopted by the
European Union.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2017
or 2016 but is derived from those accounts. Statutory accounts for
2016 have been delivered to the Jersey Financial Services
Commission Companies Registry. Those for the year ended 31 December
2017 will be delivered following the Company's Annual General
Meeting on 21 June 2018.
This financial information has been extracted from the Group's
Annual Report and Accounts for the year ended 31 December 2017. The
auditors have reported on these accounts; their reports were
unqualified, did not draw attention to any matters by the emphasis
without qualifying their report and did not contain statements
under s.113B(3) or (4) Companies (Jersey) Law 1991 or equivalent
preceding legislation. The Group intends to publish its 2017 Annual
Report and Accounts in March 2018.
2. SEGMENTAL ANALYSIS
As at 31 December 2017, the Group was organised into three main
segments - EMEA, Americas, and Asia. The main activities of all
segments are the production of exhibitions supported by other media
activities related to those exhibitions.
The following table sets out the revenue and profit information
and certain asset and liability information for the Group's
reportable segments:
31 December 2017
Central
Americas Asia EMEA Costs Group
Revenue by sector GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Group revenue from continuing operations 46,247 23,357 48,056 - 117,660
========= ========= ========== ========= ==========
Profit/(loss) from operating activities 19,989 9,757 17,154 (13,323) 33,577
Net financing costs - - - (5,675) (5,675)
Profit/(loss) before taxation 19,989 9,757 17,154 (18,998) 27,902
Total adjusting items - note 3 - - - 12,266 12,266
Adjusted profit/(loss) before tax * 19,989 9,757 17,154 (6,732) 40,168
========= ========= ========== ========= ==========
Segment non-current assets 114,630 71,266 42,020 - 227,916
Segment current assets 17,648 20,253 28,924 - 66,825
132,278 91,519 70,944 - 294,741
========= ========= ========== =========
Deferred tax assets 3,003
Total assets 297,744
==========
Segment liabilities (39,580) (25,887) (143,323) - (208,790)
========= ========= ========== =========
Liabilities for current tax (3,155)
Deferred tax liabilities (10,059)
Total liabilities (222,004)
==========
* Includes JV profit before tax of GBP2.2m in Americas and
GBP3.5m in Asia.
31 December 2016
Central
Americas Asia EMEA Costs Group
Revenue by sector GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total Revenue 38,122 12,818 17,418 - 68,358
========= ========= ========== ========= ==========
Profit/(loss) from operating activities 17,088 4,804 2,144 (9,335) 14,701
Net financing costs - - - (6,126) (6,126)
Profit/(loss) before taxation 17,088 4,804 2,144 (15,461) 8,575
Total adjusting items - note 3 - - - 10,605 10,605
Adjusted profit/(loss) before tax * 17,088 4,804 2,144 (4,856) 19,180
========= ========= ========== ========= ==========
Segment non-current assets 126,763 47,254 48,433 - 222,450
Segment current assets 13,546 8,060 27,760 - 49,366
140,309 55,314 76,193 - 271,816
========= ========= ========== =========
Deferred tax assets 3,224
Total assets 275,040
==========
Segment liabilities (36,588) (21,755) (133,485) - (191,828)
========= ========= ========== =========
Liabilities for current tax (692)
Deferred tax liabilities (10,881)
Total liabilities (203,401)
==========
* Includes JV profit before tax of GBP1.3m in Americas and
GBP3.1m in Asia.
3. ADJUSTING ITEMS
The following analysis details the adjusting items in the
consolidated income statement. Adjusted profit is prepared to
provide a better indication of operational financial performance
and to reflect how the business is managed and measured on a day to
day basis. The adjusted profit excludes share option charges,
amortisation of intangible assets arising from business
combinations, unwinding of discount charges, changes in fair value
of contingent consideration and put/call liabilities, acquisition
related costs and the related taxation impact along with the
abnormal impact of tax legislative changes.
Year to Year to
31 December 31 December
2017 2016
GBP000 GBP000
Operating items:
Operating costs:
Acquisition and potential acquisition
costs 2,009 2,144
Changes in fair value of put/call
and contingent consideration (2,225) (4,104)
Share option charge 2,598 2,234
Other 2 184
Amortisation charge (excluding
amounts charged to costs of
sale) 6,794 5,304
Total adjusting items in operating
costs 9,178 5,762
Tax on joint venture profits 1,647 1,144
---------------------- -------------
Total adjusting items in operating
profit 10,825 6,906
Finance item - Unwinding of
discount 1,441 3,699
---------------------- -------------
Adjusting items before tax 12,266 10,605
Taxation:
Tax on joint venture profits (1,648) (1,144)
Tax relating to adjusting items (1,161) (1,026)
Impact of tax law changes (2,438) -
---------------------- -------------
(5,247) (2,170)
Total adjusting items 7,019 8,435
====================== =============
4. INCOME TAX EXPENSE
2017 2016
GBP000 GBP000
Corporation tax:
Overseas tax on profits for the period 2,790 1,236
Adjustments to overseas corporation
tax in respect of previous periods 431 (269)
Current tax charge for the period 3,221 967
-------- -------
Deferred tax:
Origination and reversal of timing
differences (1,725) 215
Adjustment in respect of previous
periods (tax losses recognised) 7 (8)
Adjustments in respect of previous
periods (timing difference recognised) (419) (445)
Total deferred tax (2,137) (238)
-------- -------
Tax charge for the year 1,084 729
======== =======
The tax charge below differs from the tax at the effective rate
on the profit for the year. The differences are explained
below:
2017 2016
GBP000 GBP000
Profit before taxation 27,902 8,575
Tax on profit on ordinary activities
at 25% (2016 - 25%) 6,976 2,144
Effects of:
Non-deductible expenses / non-taxable
income 1,933 (1,133)
Current period losses unrecognised 323 698
Tax effect of share of results of
associates (2,100) (889)
Impact of US tax reform rate change (2,438) -
Effect of tax rates in overseas jurisdictions (2,872) 165
Over provision in respect of prior
periods (491) (722)
Recognition of previously unrecognised
losses (588) (29)
Other items 341 495
Tax on profit on ordinary activities 1,084 729
======== ========
The impact of US tax reform rate change is created by a one off
revaluation of deferred tax liabilities due to the reduction in
combined federal and state tax rate from 38% to 26% partially
offset by an anticipated charge on unremitted earnings of overseas
subsidiaries.
Tax debit recognised directly in equity
2017 2016
GBP000 GBP000
Deferred tax on losses and prepaid
expenses - (55)
Deferred tax on intangible assets
due to foreign exchange movements 44 (1,029)
Deferred tax on unexercised employee
share options 455 255
Total tax recognised in equity 499 (829)
======= ========
5. DIVIDS
2017 2016
GBP000 GBP000
Dividend paid in cash or scrip
2016/2015 interim dividend paid
(2.7p / 2.5p per share) 2,749 2,530
2016/2015 final dividend proposed
(6.4p / 5.9p per share) 7,199 5,998
9,948 8,528
======= =======
Dividend paid and proposed post
year end
2017/2016 interim dividend paid
(3.0p / 2.7p per share) 3,372 2,751
2017/2016 final dividend proposed
(7.0p / 6.4p per share) 7,869 7,218
11,241 9,969
======= =======
An interim dividend of 3.0p per share (2016: 2.7p) was paid on
12 January 2018 to shareholders on the Register of Members of the
Company as at 1 December 2017.
The directors announced the proposed final dividend for 2017, of
7.0p per share, on 28 February 2018. Subject to approval at the
Annual General Meeting on 21 June 2018, the proposed date of
payment is 12 July 2018 to Shareholders on the Register of Members
as at 1 June 2018.
Dividends are recognised as a liability in the period in which
they are appropriately authorised and are no longer at the
discretion of the entity.
6. EARNINGS PER SHARE
2017 2016
Pence Pence
Basic earnings per share 21.5 6.9
Diluted earnings per share 21.4 6.9
Adjusted earnings per share 27.7 15.2
Adjusted diluted earnings per share 27.6 15.1
Basic earnings per share
Basic earnings per share has been calculated on profit after tax
attributable to ordinary shareholders for the year (as shown on the
Consolidated Income Statement) and the weighted average number of
ordinary shares in issue during the period (see below table).
Diluted earnings per share
Diluted earnings per share has been calculated on profit after
tax attributable to ordinary shareholders for the year (as shown on
the Consolidated Income Statement) and the diluted weighted average
number of ordinary shares in issue during the period (see below
table):
Adjusted earnings per share
Adjusted earnings per share is calculated using adjusted profit
after tax as reconciled in note 3 and the weighted average number
of ordinary shares (as above) in issue in the year.
Adjusted diluted earnings per share
Adjusted diluted earnings per share is calculated using adjusted
profit after tax as reconciled in note 3 and the weighted average
number of diluted ordinary shares (as above) in issue in the
year.
Weighted average number of ordinary shares (diluted):
2017 2016
Number Number
Weighted average number of ordinary shares 112,410,537 102,353,366
Dilutive effect of share options 415,521 739,494
Weighted average number of ordinary shares (diluted) 112,826,058 103,092,860
============ ============
Dilutive and anti-dilutive share options were determined using
the average closing price for the period. The average share price
used was 293.01 pence.
7. OVERDRAFTS AND OTHER INTEREST-BEARING LOANS AND
BORROWINGS
2017 2016
GBP000 GBP000
Two to five years
Bank loans 106,239 83,800
--------- ---------
Total financial liabilities 106,239 83,800
Cash balances (22,373) (15,946)
--------- ---------
Net financial liabilities and cash balances 83,866 67,854
Capitalised bank fees (676) (848)
Fair value of foreign exchange forwards - 23
Fair value of interest rate swaps 1,624 2,434
--------- ---------
Net debt 84,814 69,463
========= =========
The bank loans are secured by a fixed and floating charge over
the undertakings and property of certain subsidiaries. The parent
and subsidiaries also act as guarantors for the loans.
2017 2016
GBP000 GBP000
Current liabilities
Secured bank loans - -
-------- -------
Non-current liabilities
106,239 83,800
-------- -------
Total financial liabilities 106,239 83,800
======== =======
8. ACQUISITION OF SUBSIDIARY
i) On 18 January 2017, the Group acquired 65% of the share
capital of Foshan Huaxia Home Textile Development Co. Ltd
("Hometex"), an exhibition business.
The following table sets out the book values of the identifiable
assets and liabilities acquired and their fair value to the Group,
in respect of this acquisition:
Book Adjustments Fair
Value value
GBP000 GBP000 GBP000
Other intangibles - 8,293 8,293
Net liabilities 395 (555) (160)
Deferred liability - (2,073) (2,073)
Net assets acquired 395 5,665 6,060
------- ------------
Goodwill arising on acquisition 17,291
23,351
========
Consideration paid and costs
incurred:
Satisfied in cash 19,618
Contingent consideration
(less than one year) 3,733
Total consideration incurred 23,351
========
Consideration paid in cash 19,618
Cash acquired (3,240)
Total net cash outflow 16,378
========
Contingent consideration, relates to payments to vendors,
payable after completion, that are dependent on the outcome of
future events. The contingent consideration is dependent on the
financial performance of the exhibitions occurring in 2017.
From the date of acquisition to 31 December 2017, the
acquisition has contributed GBP8.3m of revenue to the Group.
Goodwill of GBP17.3 million, recognised on this acquisition,
relates to certain assets that cannot be separated and reliably
measured. These items include sector knowledge, customer loyalty
and the anticipated future profitability that the Group can bring
to the business acquired. Consistent with other media companies,
goodwill makes up a large percentage of the fair value of the
acquisition.
The Group incurred transaction costs of GBP400,000 in respect of
the acquisition, which were expensed.
The values used in accounting for the identifiable assets and
liabilities and related contingent consideration of this
acquisition are estimates and are therefore provisional in nature
at the balance sheet date. The non-controlling interest is measured
as their proportionate share of the fair value of the net
assets.
Consideration paid in cash represents the initial cash payment
and the first contingent consideration payment net of cash
acquired.
9. GOING CONCERN AND VIABILITY
After considering the current financial projections of the Group
and taking into account the cash needs of the business and
availability of funds, the Directors have a reasonable expectation
that the Group has adequate resources to continue its operations
for the foreseeable future. For this reason, they continue to adopt
a "going concern" basis in preparing this Statement of Annual
Results.
The directors have assessed the viability of the Group over a
three year period to December 2020, taking account of the Group's
current position and the potential impact of the principal risks
documented in note 10. The choice of a 3 year period is aligned
with the Board's periodic strategic review and plan - it is also
used by the Remuneration Committee to set targets for the long term
incentive plan.
The plan makes certain assumptions about the acceptable
performance of the underlying portfolio of shows, the availability
of venues and future tax and foreign exchange rates.
The directors' assessment considered the resilience of the
Group, taking account of its current position including committed
financing throughout the period, forward bookings, the principal
risks facing the business in severe but reasonable scenarios and
the effectiveness of any mitigating actions. This assessment has
considered the potential impacts of these risks on the plan,
including solvency and liquidity over the period - primarily
through reducing revenues and cash-flows in the plan. It has also
taken account of the mitigating actions including withholding
dividends and reducing launch investments and capex.
Based on this assessment, the directors have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period to
December 2020.
10. PRINCIPAL RISKS AND UNCERTAINTIES
The directors have identified below the principal risks and
uncertainties relating to the Group's business. The Board discusses
and monitors these risks and has implemented mitigation measures
against each one.
Tarsus' events and exhibitions business may be adversely
affected by incidents which curtail travel, such as terrorist
attacks, higher oil prices or health pandemics
Tarsus' exhibitions businesses contribute in excess of 90% of
the Group's revenue. Visitors travel to these shows from around the
world. Any incident that curtails travel, such as the 11 September
2001 terrorist attacks in the US, may have an impact on the running
of the relevant event and may, therefore, affect reported
revenues.
Expansion into new geographic regions subjects the Group to new
operating risks
As a result of acquisitions and organic growth, the Group
operates in many geographic regions such as China, India, the
United Arab Emirates, Turkey, Indonesia and Latin America. Whilst
the Group conducts its business on a global scale, growth in these
regions presents logistical and management challenges due to
different business cultures, laws and languages. This may result in
incremental operational risks for the Group.
The ability of the Company to implement and execute its
strategic plans depends on its ability to attract and retain the
key management personnel required
The Group operates in a number of industry segments in which
there is intense competition for experienced and highly qualified
individuals. The Group cannot predict the future availability of
suitably experienced and qualified people; it places significant
emphasis on developing and retaining management talent.
Accordingly, the Group has and will continue to implement a number
of incentive schemes, to attract and motivate key senior managers.
There can be no certainty that such retention policies and
incentive plans will be successful in allowing the Company to
attract and retain the right calibre of key management
personnel.
Fluctuations in exchange rates may affect the reported
results
The Group is exposed to movements in foreign exchange rates
against Sterling for trading transactions and the translation of
the net assets and income statements of overseas operations. The
principal exposure is to the US Dollar and Euro exchange rates,
which form the basis of pricing for the Group's customers.
Venue availability
Damage to or unavailability of a particular venue could impact
specific events within the Group's portfolio. The Group also has
key commercial relationships with venues which secure the Group's
rights to run its exhibitions in the future.
There are inherent risks and uncertainties in connection with
the Group's acquisition strategy
The Group will seek and effect appropriate acquisitions across
various geographic regions, consequently exposing the Company to
inherent risks and uncertainties associated with such acquisitions.
The risks associated with such a strategy include the availability
of suitable acquisitions, obtaining regulatory approval for any
acquisition, and assimilating and integrating acquired companies
into the Group. In addition, potential difficulties inherent in
mergers and acquisitions may adversely affect the results of an
acquisition. These include delays in implementation or unexpected
costs or liabilities, as well as the risk of failing to realise
operating benefits or synergies from completed transactions. Nor
can there be any certainty that the benefits of acquisitions and
strategic investments, including synergies, increased cash flows
and other operational benefits, will be realised.
Breaches of the Group's data security systems or other
unauthorised access to its databases, intellectual property or
information could adversely affect its businesses and
operations
The Group has valuable databases and intellectual property and,
as part of its businesses, provides its customers with access to
database information such as treatises, journals and publications
as well as other data. There are persons who may try to breach the
Group's data security systems or gain other unauthorised access to
its databases in order to misappropriate such information for
potentially fraudulent purposes. Due to the rapid change in the
nature of these threats to the Group's databases, intellectual
property and other information, it may be unable to anticipate or
protect against the threat of breaches of data security or other
unauthorised access. Such breaches could damage the Group's
reputation and expose it to a risk of loss or litigation and
possible liability, as well as increase the likelihood of more
extensive governmental regulation of these activities in a way that
could adversely affect this aspect of the Group's business. Legal
actions against the Group could have a material adverse effect on
the Group's business, financial condition and results of
operations.
Competition
The Group's businesses operate in competitive markets, which
continue to evolve in response to technological innovations,
legislative and regulatory changes, the entrance of new
competitions and other factors. Whilst an event or sectors in a
market could have its prospects curtailed by these factors, the
breadth of the Group's portfolio, with its geographic and sector
diversity, reduces the risk to Tarsus' overall business.
11. RESPONSIBILITY STATEMENT OF THE DIRECTORS
The responsibility statement below has been prepared in
connection with the company's full annual report for the year
ending 31 December 2017. Certain parts thereof are not included
within this announcement.
We confirm to the best of our knowledge:
the financial statements, prepared in accordance with
International Financial Reporting Standards as adopted by the EU,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the company and the undertakings
included in the consolidation taken as a whole; and
the strategic report includes a fair review of the development
and performance of the business and the position of the company and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties they face.
This responsibility statement was approved by the board of
directors for release on 28 February 2018.
The Annual General Meeting will be held at the Writers Room,
Radisson BLU Hotel Dublin Airport, Dublin, Ireland on 21 June 2018
at 11.00am.
A copy of this report will also be available on the Group's
website at www.tarsus.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KMGZZNNGGRZM
(END) Dow Jones Newswires
February 28, 2018 02:00 ET (07:00 GMT)
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