Preliminary Results Presentation 12 months to 31 December 2004 Another year of strong growth -...

Preliminary Results Presentation12 months to 31 December 2004Preliminary Results Presentation12 months to 31 December 2004

Another year of strong growth -

driven by multi-platform strategy

Tim Weller Chief Executive

Jamie Campbell-Harris Finance Director

Incisive (in-sy-siv) adj. mentally sharp; acute; clear and effective; cutting; penetrating Incisive (in-sy-siv) adj. mentally sharp; acute; clear and effective; cutting; penetrating

2

Agenda

• Preliminary results Operational highlights Financial highlights Divisional structure Divisional highlights

• Track record 2000-2004

• Outlook Current trading IFRS

• Appendices


3

Operational highlights

• Underlying growth in all core divisions underlying advertising revenues up 10%, overall underlying revenue up 8% recovery being led by major brands

• Successful acquisition and swift integration of Initiative Europe

• Continued investment in existing products Mortgage Solutions now published weekly investment in Insurance Age, Energy Risk, Operational Risk and Asia Risk Trading Technology Week re-branded as DWT

• Continued organic growth in new titles and other brand extensions successfully launched Structured Products in autumn

• Launch of “Conjecture” and further developed Incisive Research


4

Financial highlights

• Turnover increased by 31% to £46.5m

• Profit before tax and goodwill up 46% to £9.7m

• Increased operating margin before goodwill to 26%

• Diluted earnings per share before goodwill up 20% to 7.96p

• 25% increase in total dividend to 2.00p


5

Financial highlightsProfit and loss account - operations

2004 2003£'000 £'000 £'000 %

Turnover - existing 43,953 35,365 8,588 24.3% - acquisition 2,539 - - -Total turnover 46,492 35,365 11,127 31.5%

Operating profit* - existing 10,824 8,223 2,601 31.6% - acquisition 1,269 - - -Total operating profit* 12,093 8,223 3,870 47.1%

Operating margin* 26.0% 23.3%

Notes*= before goodwill

Change


6

Financial highlightsProfit and loss account - financing

2004 2003£'000 £'000 £'000 %

Total operating profit* 12,093 8,223 3,870 47.1%

Interest (2,355) (1,573) (782) 49.7%Profit before tax* 9,738 6,650 3,088 46.4%

Interest cover 5.14 5.23

Goodwill (4,434) (3,096) (1,338) 43.2%Minority interests 6 - 6 -Taxation - on ordinary activities (2,532) (1,809) (723) -40.0% - ex/rate diff. on deferred tax liability on US goodwill (255) - (255) -Profit after tax 2,523 1,745 778 44.6%

Average tax rate* 26.0% 27.2%

Notes*= before effect of goodwill

Change


7

Financial HighlightsProfit and loss account – performance per share

2004 2003pence pence pence %

Earnings per share* - basic 8.13 6.72 1.41 21.0% - fully diluted 7.96 6.62 1.34 20.2%

Dividend per share 2.00 1.60 0.40 25.0%

Dividend cover - basic 4.1 4.2 - fully diluted 4.0 4.1

Shares in issue

Actual at 31 December 91,393,093 82,937,793

Average to 31 December - basic 88,659,460 72,071,983 - fully diluted 90,548,646 73,113,606

Notes*=before effect of goodwill

Change


8

Financial highlightsCash flow

2004 2003 Change£'000 £'000 £'000

Cash from operating activities 11,932 5,163 6,769

Net interest and financing items (2,507) (1,906) (601)

Taxation (1,843) (786) (1,057)

Net capital expenditure (422) (405) (17)

Acquisitions (16,851) (39,334) 22,483

Equity dividends paid (1,514) (873) (641)

Issue of share capital 10,987 16,228 (5,241)

Increase in bank debt 3,919 20,817 (16,898)

Net cash flow 3,701 (1,096) 4,797

Cash conversion rate of operating activities 99% 63%


9

Financial highlightsBalance sheet

31-Dec-04 31-Dec-03£'000 £'000 £'000 %

Fixed assetsGoodwill and other intangible assets 86,806 69,754 17,052 24%Tangible fixed assets 841 741 100 13%

87,647 70,495 17,152 24%

Working capitalStock 467 306 161 53%Debtors 10,235 10,470 (235) -2%Trade creditors, deferred income, accruals andother provisions (15,649) (13,478) (2,171) -16%

(4,947) (2,702) (2,245) -83%

Net debtCash 5,334 1,633 3,701 227%Bank debt (29,735) (23,744) (5,991) -25%Loan notes (4,150) (6,269) 2,119 34%Deferred consideration (4,200) (553) (3,647) -659%

(32,751) (28,933) (3,818) -13%

Total net assets 49,949 38,860 11,089 29%

Change


10

Retail InvestmentRetail Investment

Investment WeekInternational InvestmentMulti ManagerIFAOnlineBloomberg MoneyYour MoneyWealth MagazineIncisive ResearchConjecture

Risk ManagementRisk Management

RiskAsia RiskEnergy RiskOperational RiskHedge Funds ReviewCreditUS CreditFX WeekStructured Products

InsuranceInsurance

PostReinsuranceProfessional BrokingInsurance Age CoverInsurance Window

MortgageMortgage

Your MortgageMortgage SolutionsMortgage Edge Your Mortgage.comIncisive Communications

Financial IT/ Market Financial IT/ Market DataData

WatersDealing with TechnologyInside Market DataHedge Fund IT

Divisional structure. Proven record of new product innovation and value enhancing acquisitions

Private EquityPrivate Equity

UnquotePrivate Equity EuropeHigh Growth InvestorDATRIILP Congress Customised Research Consultancy


11

Divisional highlightsRisk management (£15.5m, 33% of group revenues [2003: 31%])Key brands: Risk, Credit, US Credit, Energy Risk, Hedge Funds Review, Operational Risk, FX Week

• Reported growth of 43%, like for like revenue up 6%

• Growth from Risk, Operational Risk, Hedge Fund Review, Asia Risk and Risk Books

• Operational Risk re-launched in May 2004

• Events and publications benefited from improved management and infrastructure in Asia

• Improved outlook for Energy Risk, Credit and US Credit


12

Divisional highlights Retail investment (£10.8m – 23% of group revenues [2003: 28%])Key brands: Investment Week, International Investment, Multi-Manager, Bloomberg Money

• Revenues up 8%

• Investment Week publication revenue up 18%, event revenue flat

• International Investment event revenue up 41%

• IFAOnline up 26%

• Launched Conjecture and further developed Incisive Research


13

Divisional highlightsInsurance (£8.2m - 18% of group revenues [2003: 21%])Key brands: Post, Insurance Age, Professional Broking, Reinsurance, Cover

• Revenue up 10% boosted by acquisition of Insurance Age

• Post Magazine publication revenue up 6%

• Strong publication growth on COVER, Reinsurance and Professional Broking

• Divisional events revenue flat


14

Divisional highlightsMortgage (£5.5m - 12% of group revenues [2003: 12%])Key brands: Your Mortgage, Mortgage Solutions, Mortgage Edge

• Revenue up 26%

• Mortgage Solutions, Mortgage Edge and Your Mortgage benefited from regulatory changes affecting IFAs

• Mortgage Solutions revenues up 40%, weekly from June

• Your Mortgage Awards up 19%

• Better outlook for contract publishing


15

Divisional highlightsFinancial IT and market data (£2.9m - 6% of group revenues [2003: 4%])Key brands: Waters, Inside Market Data

• Strong event revenue drove 6% improvement, particularly on IMD

• Improved financial IT market benefited Waters publication and events revenue

• Acquired outstanding 50% of Dealing with Technology (‘DWT’), and subsequently re-branded Trading Technology Week as DWT


16

Divisional highlightsPrivate Equity (£2.5m, 6% of group revenues) Key brand: Unquote, DAT, RII

• 8 months of trading contributed 6% of group revenues

• Data driven business with subscription renewal rates very high with all products between 70%-95%. Unquote renewals running at 80%

• Cross selling opportunities to hedge fund customers

• First private equity conference held in January 2005, and other new events planned for 2005


17

Five year track record – 2000 to 2004

• Margins grown from 16% to 26% indicative of good portfolio management and greater degree of integration of

platform execution teams the business model is cash generative with the highest free cash to sales ratio

in the sector

• Delivered 22% compound EPS growth the highest four year earnings growth in the sector fuelled by value enhancing deals and tight management growth driven both by organic activity and acquisitions, the group has strong

fundamentals

• Delivered 10% compound underlying organic revenue growth

• Significant step up in the quality of earnings transformed both qualitatively and quantitatively


18

Track record of Incisive Media 10 year track record of revenue and profit growth

Turnover (£’m) Profit before tax and goodwill (£’m)

0

10

20

30

40

50

1995 1996 1997 1998 1999 2000 2001 2002 2003 20040.0

2.5

5.0

7.5

10.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004


19

Track record of Incisive Media 10 year track record of EPS growth

Diluted earnings per share (pence)

0.0

2.0

4.0

6.0

8.0

10.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

CAGR 2000 to 2004 = 22.2%


20

Track record of Incisive Media Consistent organic growth delivery

Revenue breakdown – organic vs acquisition

Organic (excluding discontinued Investor’s Week and related brand extensions)CAGR 2000-2004 = 10%Timothy Benn Publishing / Matching Hat / Risk Waters Group / Insurance Age / Initiative Europe

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004


21

Advertising Subs & other publication Events Internet

Track record of Incisive Media Change in spread of revenues – 2000 to 2004

2000 2004

65%10%

23%2%

44%

24%

26%

6%


22

OutlookCurrent trading

• Steady growth from strong core positive start to 2005 across all divisions full year benefit from acquired Private Equity division

• The group is continuing to expand organically two magazine launches and further new events planned for 2005 opportunity to roll out of Conjecture and Incisive Research across other

divisions increase the frequency of a number of magazine brands

• Well positioned to make more acquisitions


23

OutlookInternational Financial Reporting Standards – effect on Incisive Media• Reporting for 2005

including interims in September 2005

• Impact on profit and loss account no amortisation of goodwill – just annual impairment review charge for share based payments deferred tax treatment

• Mainly disclosure differences segmental reporting no adjusted EPS figures allowed on face of P&L

• System and operational changes segmental balance sheet reporting by division

AppendixAppendix


25

Corporate history

• City Financial Communications established in 1994

• Company re-branded as Incisive Media in July 2000 following the

acquisition of Timothy Benn Publishing Group

• Incisive Media floated in December 2000

• Matching Hat acquired in August 2001

• Acquired Risk Waters for £35.1million in May 2003

• Acquired Insurance Age for £1.05million in July 2003

• Acquired final 50% of DWT Conferences December 2003

• Acquired Initiative Europe in April 2004


26

Background on Incisive Media An experienced management team

Tim WellerChief Executive22 yrs experience

VNU, CentaurReuters, Incisive Media 1994

Jamie Campbell-HarrisFinance Director

PwC, Saatchi & SaatchiIncisive Media 1998

James HanburyChief Operating Officer

17 yrs experienceCentaur

Holmes & MarchantIncisive Media 1994

Chris StibbsDevelopment Director

E&Y, ICIPearson, Timothy Benn

Incisive Media 2000

Nick RapleyManaging Director

19 yrs experienceVNU, Centaur

Incisive Media 1994

Tony GibsonManaging Director

21 yrs experienceEuromoney

Global FinanceRisk Waters

Incisive Media 2003

Bharat SagarManaging Director

20 yrs experienceBrass Tacks

Matching HatIncisive Media 2001

Jonathaon WhiteleyManaging Director

10 yrs experienceFT Business

Incisive Media 1996

InsuranceMarket Data

Investment Risk Management Mortgage Private Equity


27

Incisive Media strategy

• Our objective is to develop valuable market leading brands serving both large and growth sectors which deliver need to know information and provide measurable marketing solutions. We will achieve this both through organic growth and controlled acquisitions.

• The surround strategy we apply to achieve this objective is: Apply market focused approach Deliver high quality need to know information Deliver to targeted information intensive communities Publish narrow and deep Extend brands across a variety of platforms Develop close relationships to increase barriers to entry


28

Delivery platforms

Newspapers/magazines/newsletters

Books/Journals/Guides

Training

Research

Customer magazines

Consultancy

Electronic/ online services

List-based products

Conferences/forums

round tables/exhibitions

Integrity,Trust and Authority


29

Acquisitions criteria Facilitating the business model

• Acquisitions accelerate organic growth

• Disciplined acquisition criteria are established to enable the business model to be rolled out Quality brands / assets Attractive vertical sectors Extensive brand reach Robust core earnings Value of hard / soft synergies Platform neutral Earnings enhancing

• Learning experience can extend the business model

• Maintaining strategic integrity is key


30

Margin deliveryHow we achieve and maintain high margins

• Business model Deliver focused “need to know” information to tightly defined communities Enables small but focused print runs Results in high gross margins - target 75-80% Focus allows for premium advertising and subscription rates Focus increases barriers to entry

• Surround strategy Ensures we own relationships Can quickly identify new opportunities Reduced risk and low cost launches


31

Margin deliveryHow we achieve and maintain high margins

• Management of cost base Publishers accountable for own P&L Publishers incentivised on bottom line growth Editorial and commercial integration Controlled recruitment Swift integration of acquisitions


32

Investment case

• Experienced management team

• 10 year track record of growth

• Excellent organic growth track record delivered via proven business model

• Controlled approach to acquisition with proven experience of successful integration

• Each division headed by robust brand leader

• Superior industry margins sustainable, with potential future growth

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Preliminary Results Presentation 12 months to 31 December 2004 Another year of strong growth -...

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