Tarsus Regulatory News (TRS)

30 July 2014

Tarsus Group plc

Interim results for the six months ended 30 June 2014

Tarsus Group plc ('Tarsus', the 'Group' or 'Company'), the international business-to-business media group, announces its results for the six months ended 30 June 2014.

Financial highlights

· Like-for-like revenue up 9% on 2013 as adjusted for biennial exhibitions and acquisitions

· Adjusted* profit before tax and EPS up significantly over the biennial cycle

· Interim dividend raised to 2.4p (2013: 2.3p)

Operational highlights

· Good strategic progress in the first half of year

· Strong performance from Emerging Markets

· Further brand replications launched into new territories

· Banking facilities extended to 2019 to support "Quickening the Pace" strategy

Outlook

· Forward bookings currently 9% ahead of 2013 (adjusted for biennial exhibitions)

· Promising outlook for larger events in second half, including Labelexpo Americas, Zuchex and MEBA

· Group remains confident of delivering a good performance in 2014 on a constant currency basis

· Bookings for major 2015 biennial events strongly ahead of previous editions

Douglas Emslie,Group Managing Director, said:

"Tarsus has delivered a solid performance in what is the quietest six months for trading in our two-year cycle.

"We are continuing to progress our "Quickening the Pace" strategy which has seen us make a number of strategic acquisitions in the last year as well as accelerate launch activity as we seek to replicate some of our leading brands internationally.

"We have good visibility for 2014 as a whole and remain confident of a positive full year outcome on a constant currency basis. The Group is well positioned for the future to deliver its "Quickening the Pace" strategy."

For further information contact:

Tarsus Group plc:

Douglas Emslie, Group Managing Director 020 8846 2700

Dan O'Brien, Group Finance Director

IR Focus

Neville Harris 07909 976044

The Group will be hosting a presentation to analysts at 11.30am today at the offices of Investec Bank plc, 2 Gresham Street, London EC2V 7QP. A webcast of the presentation will be available on Tarsus's website (www.tarsus.com) from 9.30am on 31 July 2014.

Notes

*Reconciliation between reported profits and adjusted profits is included in note 6.

Like-for-like revenues are on a constant currency basis and after adjusting for the impact of acquisitions, disposals and biennials.

Overview

We continue to concentrate on the execution of our "Quickening the Pace" strategy, focusing on accelerating financial returns to shareholders. This is being achieved by investing in and strengthening our core businesses, in particular driving organic growth and adding value to our key brands through replication into faster growing economies, supplemented by selective small strategic acquisitions.

We are focused on replicating some of the Group's leading brands, thereby expanding our geographical coverage. In May 2014 we successfully held our first replication of AAITF in Jakarta, and have announced a further eight replications of Tarsus' brands during the remainder of 2014 and 2015.

Our joint venture in Mexico with EJ Krause presents an exciting opportunity to replicate a number of Tarsus' existing brands into the fast growing Mexican markets.

The Group has acquired 60% of 3D Printshow, which has a current portfolio of market leading annual events in London, Paris and New York. This fast developing sector has strong growth opportunities in many territories and has good synergies with the existing Tarsus portfolio.

Financial review

Group revenue for the period was £23.1 million (2013: £26.0 million), adversely impacted by foreign exchange in the period reflecting the strength of Sterling against the US Dollar and the Euro.

Adjusting for acquisitions and biennial shows, on a constant currency basis the Group achieved underlying like-for-like revenue growth of 9% in the quietest half of the Group's biennial cycle.

Adjusted profit before tax was £3.0 million (2013: £3.9 million; 2012: £1.8 million), which compared with 2012 reflects strong revenue growth in the portfolio together with the enhanced operational gearing as a result of the move towards higher growth markets. The Group incurred exceptional costs of £0.2 million (2013 £0.4 million) in respect of completed and pending acquisitions. Profit before tax was £0.3 million (2013: £0.8 million).*

Adjusted earnings per share were 1.5p (2013: 2.6p). Basic loss per share was 1.1p (2013: 0.9p).

An interim dividend of 2.4p per share (2013: 2.3p) has been declared and will be paid on 15 January 2015 to Shareholders on the Register on 5 December 2014. The Group will continue to offer a scrip alternative.

Operating cash inflow was £1.9 million (2013: inflow £8.9 million) which compares favorably with the £0.8 million outflow in 2012. Net debt at 30 June 2014 was £34.7 million (2013: £29.2 million). Tarsus has extended its existing £60m bank facility through to 2019 with improved terms. This extended bank facility is expected to provide the financial resources to support our "Quickening the Pace" strategy.

Note

\* The reconciliation of adjusted profit before tax is shown in note 6.

Operating review

Geographic Analysis

Emerging Markets - strong performances from Dubai and China

USA - growth in Off Price; transitional year for Medical

Europe - growth in France in a challenging market

Emerging markets

In Dubai, Tarsus' education event GESS performed strongly with excellent visitor attendance and revenues up 37%. The Group's largest event in Dubai in 2014 is MEBA (Middle East Business Aviation) and forward bookings for this show are tracking ahead of its previous edition.

Tarsus' position in China has been strengthened by the acquisition in April 2014 of SIUF, Asia's leading underwear show. The first edition under Tarsus ownership, held in May 2014, performed strongly and slightly ahead of management expectations. Hope, the Group's Central China operation has continued to perform well with revenues significantly ahead of 2013. As previously reported GZ Auto, held in February 2014, was behind the previous edition. Forward bookings for 2015 are encouraging but we are exploring repositioning this exhibition for the future.

Trading in Turkey was in line with our cautious expectations for the first half. The largest event Ideal Homex in April 2014 showed good year-on-year growth. The outlook for the Group's larger 2014 events in the second half: Zuchex, Sign (both September 2014) and the Flower Show (November 2014), is good.

The Group's presence in Turkey was reinforced in February 2014 with the acquisition of Komatek, Turkey's largest construction equipment show. This adds critical mass to the Group's construction events in both Turkey and Indonesia.

In Mexico, the Group established a joint venture ("JV") with EJ Krause in late 2013. There was a strong performance at Expo Manufactura, the country's premier metalworking/manufacturing exhibition which took place in March 2014. The outlook for Plastimagen in November 2014 is also promising and as part of our "Quickening the Pace" strategy, the JV plans to launch three further shows in 2015, replicating Tarsus brands into Mexico.

USA

The February 2014 Off Price show in Las Vegas was a strong event, with good visitor growth. Bookings for the August 2014 edition of the exhibition are ahead of the 2013 edition.

The Medical business held its established medical event, the Anti-aging congress in Orlando in May 2014, producing a record edition. The Cardiometabolic Health Congress (acquired in February 2014) will be held in October 2014 and the event is progressing in line with our expectations.

The Medical business is undergoing a transitional period as the Group extends its reach to address a broader medical practitioner market. As part of this the division launched the Medical Metabolic Institute (MMI) in February 2014 and successfully held the first MMI event in June 2014 in Miami.

The introduction of Obama care in January has caused uncertainty for doctors and delayed investments. In the medium term this should be a positive driver for the preventative medicine market as doctors seek to diversify their practices.

During this transitional period we expect the educational revenues to be lower than 2013, whilst we lay the foundations to ensure future growth from this business.

The Group's largest event in the US in 2014 is Labelexpo Americas in September where a record edition is expected.

Europe

Like-for-like sales in France were slightly ahead of 2013 but with the largest exhibitions taking place in the second half of the year against a backdrop of a difficult macroeconomic environment, the Group remains cautious for the full year outlook.

Outlook

The Group's "Quickening the Pace" strategy is gaining momentum. We have seen good levels of organic growth supplemented by brand replications and selective acquisitions.

Trading in even years is heavily weighted towards the second half of the year. The outlook for the second half of 2014 is good, with bookings for the Group's larger shows including Labelexpo Americas, Zuchex and MEBA, comfortably ahead of previous editions. Forward bookings across the portfolio as a whole are currently 9% ahead of 2013 on a like-for-like basis, adjusting for acquisitions and biennial events.

Owing to the incidence of large biennial exhibitions within the portfolio, profits generated in even years are typically smaller than those generated in odd years. Adjusting for this biennial effect, the Group remains confident of delivering a good performance in 2014 on a constant currency basis.

Forward bookings for the larger biennial events in 2015 are tracking well ahead of their previous editions.

N D Buch J D Emslie

Chairman Group Managing Director

30 July 2014

INDEPENDENT REVIEW REPORT TO TARSUS GROUP PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2014 which comprises the Condensed Consolidated Interim Income Statement, Condensed Consolidated Interim Statement of Comprehensive Income, Condensed Consolidated Interim Statement of Financial Position, Condensed Consolidated Interim Statement of Changes in Equity, the Condensed Consolidated Interim Statement of Cash Flows and the related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

30 July 2014

CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June

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.CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

The financial statements of Tarsus Group plc, registered number 101579 (Jersey), were approved by the board and authorised for issue on 30 July 2014 and signed on its behalf by:

J D Emslie D P O'Brien

Group Managing Director Group Finance Director

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

\* The reorganisation reserve was created as a result of the Scheme of Arrangement effective from 26 November 2008. Tarsus Group Limited, previously Tarsus Group plc, registered in England and Wales under company number 2000544, entered into a "Share for Share" exchange on a one-for-one basis with Tarsus Group plc, registered in Jersey under company number 101579.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. REPORTING ENTITY

Tarsus Group plc (the "Company") is a company incorporated in Jersey and resident in Ireland. The condensed consolidated financial statements of the Company as at and for the six months ended 30 June 2014 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interest in jointly controlled entities.

The consolidated financial statements of the Group as at and for the year ended 31 December 2013 are available upon request from the Company Secretary at 17 Upper Pembroke Street, Dublin 2, Ireland.

In July 2014 the Group renegotiated their borrowing facilities. The new facility will extend until July 2019. Having reviewed the Group's liquid resources, borrowing facilities and cash flow forecasts, the directors believe that the Group has adequate resources to continue as a going concern for the foreseeable future.

2. STATEMENT OF COMPLIANCE

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) IAS 34 Interim Financial Reporting. They do not constitute the Group's statutory accounts.

The interim financial statements should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2013 which were prepared under International Financial Reporting Standards, as adopted by the European Union, and have been reported on by the Company's auditor. The auditor report was unqualified.

The financial statements of Tarsus Group plc, registered number 101579 (Jersey), were approved by the board and authorised for issue on 30 July 2014.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2013.

4. ESTIMATES

The preparation of consolidation interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2013.

5. FINANCIAL RISK MANAGEMENT

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December 2013. 

6. PROFIT AND LOSS ANALYSIS

The following analysis illustrates the performance of the Group's activities, and reconciles the Group's profit as shown in the condensed consolidated interim income statement, to adjusted profits. Adjusted profit is prepared to provide a better indication of overall 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 and unwinding of discount charges.

*In 2014, the Group incurred exceptional one-off costs resulting from acquisition costs or potential acquisition costs.

7. SEGMENTAL ANALYSIS

As at 30 June 2014, the Group is organised into three main operating segments - Europe, USA and Emerging Markets. These segments are the basis on which the Group reports its segments are the basis on which the Group reports its segment information for management purposes.

The main activities of all segments are the production of exhibitions, conferences, magazines, directories and online media.

The following table sets out the revenue and profit information and certain asset and liability information for the Group's reportable segments:

Total assets within Emerging Markets have significantly increased due to the acquisition of SADA on 05 February 2014 and SIUF on 18 March 2014. The segmental analysis of total assets is as follows:

8. TAXATION CHARGE

The taxation charge for the six months ended 30 June 2014 is based upon the estimated effective tax rate of 15.9% on adjusted profit before tax (2013: 15.4%) for the year ending 31 December 2014.

9. EARNINGS PER SHARE

Basic earnings per share

Basic earnings per share has been calculated on loss after tax attributable to ordinary shareholders for the six months of £1,056,620 (June 2013 loss: £833,000) and 98,387,303 (June 2013: 94,539,919) ordinary shares, being the weighted average number of shares in issue during the period.

Diluted earnings per share

Diluted earnings per share has been calculated on loss after tax attributable to ordinary shareholders for the six months of £1,056,620 (June 2013 loss: £833,000) and 99,625,372 (June 2013: 95,776,435) ordinary shares, being the diluted weighted average number of shares in issue during the period.

Adjusted earnings per share

Adjusted earnings per share is calculated using adjusted profit after tax as reconciled in note 6 and the weighted average number of ordinary shares (as below) in issue in the year.

Adjusted diluted earnings per share

Adjusted diluted earnings per share is calculated using profit after tax as reconciled in note 6 and the weighted average number of diluted ordinary shares (as below) in issue in the year.

Weighted average number of ordinary shares (diluted):

10. INTANGIBLE FIXED ASSETS

11. ACQUISITIONS

The Group completed three acquisitions during the first half of 2014, in line with the Group's "Quickening the Pace" strategy.

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 the acquisition made during 2014:

From the date of acquisition to 30 June 2014, the acquisition has contributed £nil of revenue to the Group.

Goodwill of £6.7 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.

The Group incurred transaction costs of £48,000 in respect of the acquisition, which were expensed.

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 the acquisition made during 2014: