Notes to the financial statements 57

Notes to the financial statements

57

1. Business analysis

Group 2004 ?m

Group share of joint

ventures 2004 ?m

Turnover by division Continuing operations:

CMP Media CMP Asia CMP Information United Advertising Publications

193.8

8.8

50.5

4.5

159.3

?

58.5

?

Professional media News distribution Market research

462.1 94.8

222.9

13.3 10.7

?

Continuing operations

779.8

24.0

Acquisitions: CMPMedica

29.8

?

809.6

24.0

Turnover by geographic market United Kingdom North America Europe and Middle East Pacific

249.6 424.1

78.1 57.8

? 18.5

1.0 4.5

809.6

24.0

Turnover analysis is based on turnover by origin. Turnover by destination would not be materially different.

Net operating assets/(liabilities) by division

CMP Media CMPMedica CMP Asia CMP Information United Advertising Publications

Professional media News distribution Market research

by geographic market United Kingdom North America Europe and Middle East Pacific

Reconciliation of net operating assets to net assets Net operating assets Investments Corporation tax Net borrowings Proposed dividend Pension liability

Net assets

Group 2003

?m

Group share of joint ventures 2003 ?m

210.5 44.4

135.0 58.1

448.0 94.8

203.9

746.7

?

746.7

225.7 450.1

31.5 39.4

746.7

8.2 3.5 1.6

?

13.3 10.3

?

23.6

?

23.6

1.6 17.7

0.8 3.5

23.6

2004 ?m

118.7 150.9

(7.0) 65.6

7.3

335.5 4.8

80.2

420.5

As restated 2003 ?m

144.6 ?

(4.0) 78.9

6.5

226.0 12.1 69.0

307.1

92.8 176.9 159.0

(8.2)

420.5

70.0 226.3

16.4 (5.6)

307.1

420.5 391.7 (208.0) (300.2) (28.5) (95.2)

180.3

307.1 605.5 (308.5) (376.0) (19.5) (83.9)

124.7

58 Notes to the financial statements

1. Business analysis (continued)

*Operating profit before amortisation of intangible assets by division Continuing operations:

CMP Media CMP Asia CMP Information United Advertising Publications Professional media News distribution Market research Continuing operations

Acquisitions: CMPMedica

*Operating profit before amortisation of intangible assets

Amortisation of intangible assets

*Operating profit/(loss) by division Continuing operations:

CMP Media CMP Asia CMP Information United Advertising Publications Professional media News distribution Market research Continuing operations

Acquisitions: CMPMedica

*Operating profit Non-operating exceptional items and amounts written off investments Net interest and other financial income Profit on ordinary activities before tax *Operating profit/(loss) by geographic market United Kingdom North America Europe and Middle East Pacific *Operating profit Non-operating exceptional items and amounts written off investments Net interest and other financial income Profit on ordinary activities before tax *Includes income from other fixed asset investments of ?6.0 million.

Group 2004

?m

Group share of joint

ventures 2004 ?m

Total 2004

?m

21.8 14.5 33.6 13.2

83.1 20.5 20.1

123.7

1.2

23.0

0.5

15.0

?

33.6

?

13.2

1.7

84.8

3.5

24.0

?

20.1

5.2

128.9

3.4 127.1

(124.5)

?

3.4

5.2

132.3

(1.5)

(126.0)

(38.7) 10.9 (3.7) 12.3 (19.2) 19.1

7.9 7.8

(5.2) 2.6

(7.4) (6.6) 3.4 13.2 2.6

0.7

(38.0)

0.5

11.4

?

(3.7)

?

12.3

1.2

(18.0)

2.5

21.6

?

7.9

3.7

11.5

? 3.7

? 3.6 (0.4) 0.5 3.7

(5.2) 6.3 7.2 9.1 22.6

(7.4) (3.0) 3.0 13.7 6.3 7.2 9.1 22.6

Notes to the financial statements

1. Business analysis (continued)

* Operating profit before amortisation of intangible assets by division Continuing operations:

CMP Media CMP Asia CMP Information United Advertising Publications Professional media News distribution Market research *Operating profit before amortisation of intangible assets

Amortisation of intangible assets

*Operating (loss)/profit by division Continuing operations:

CMP Media CMP Asia CMP Information United Advertising Publications Professional media News distribution Market research *Operating (loss)/profit Non-operating exceptional items Net interest and other financial income Loss on ordinary activities before tax *Operating (loss)/profit by geographic market United Kingdom North America Europe and Middle East Pacific *Operating (loss)/profit Non-operating exceptional items Net interest and other financial income Loss on ordinary activities before tax *Includes income from other fixed asset investments of ?3.9m

59

Group 2003

?m

Group share of joint ventures 2003 ?m

Total 2003

?m

14.1 12.1 25.2 14.0 65.4 10.2 19.3 94.9

(120.1)

0.7

14.8

0.5

12.6

0.1

25.3

?

14.0

1.3

66.7

3.2

13.4

?

19.3

4.5

99.4

(1.6)

(121.7)

(38.4) (1.4) (4.3) 13.3

(30.8) 0.7 4.9

(25.2)

(6.1) (25.7)

9.8 (3.2) (25.2)

0.1 0.5 0.1

? 0.7 2.2

? 2.9

0.6 2.8 (0.9) 0.4 2.9

(38.3) (0.9) (4.2) 13.3

(30.1) 2.9 4.9

(22.3)

? 3.9

(18.4)

(5.5) (22.9)

8.9 (2.8)

(22.3)

? 3.9

(18.4)

2. Reconciliation of operating profit before amortisation and exceptionals to profit/(loss) before tax

Operating profit before amortisation of intangible assets and exceptional items Amortisation of intangible assets: ? Group ? Joint ventures and associates

Total operating profit/(loss) Net interest income Other finance expense Exceptional items and amounts written off investments charged to profit/(loss) before tax (see note 6)

Profit/(loss) before tax

2004 ?m

132.3

(124.5) (1.5)

6.3 12.5 (3.4)

7.2

22.6

2003 ?m

99.4

(120.1) (1.6)

(22.3) 9.4 (5.5) ?

(18.4)

60 Notes to the financial statements

3. Cost of sales and operating expenses

Cost of sales Distribution costs Administrative expenses Other operating income

Cost of sales Distribution costs Administrative expenses Other operating income

Included within operating profit: Operating lease charges ? hire of plant, machinery and vehicles ? property

Included within operating profit: Operating lease charges ? hire of plant, machinery and vehicles ? property

Continuing 2004 ?m

(304.2) (136.1) (346.9)

9.1

(778.1)

Acquisitions 2004 ?m

(16.9) (2.3)

(15.7) ?

(34.9)

Total 2004

?m

(321.1) (138.4) (362.6)

9.1

(813.0)

Total 2003

?m

(279.9) (163.1) (344.4)

11.6

(775.8)

Continuing 2004 ?m

Acquisitions 2004 ?m

Total 2004

?m

(1.3) (22.3)

(0.1) (0.5)

(1.4) (22.8)

Total 2003

?m

(1.5) (24.8)

Included within operating profit:

Audit services: ? Statutory audit (Company ?10,000) ? Audit related regulatory reporting Further assurance services Tax services: ? Compliance services ? Advisory services

Total

2004 ?m

1.0 0.2 0.3

? 0.1 1.6

2003 ?m

0.6 0.2 0.1

? 0.2 1.1

The Audit Committee has established policy guidelines on the nature of non-audit work which may be undertaken by the auditors. These guidelines identify a number of categories of work where the auditors will not normally be employed, including financial due diligence assignments on potential acquisitions and financial systems consultancy. The Audit Committee has also put in place procedures for the pre-approval of any fees payable to the auditors for those non-audit services which fall within the policy guidelines.

Professional firms are selected to provide advisory services on the basis of their relevant experience and expertise. For major projects, it is the group's policy to undertake a competitive tendering process. In certain circumstances, for example reasons of confidentiality or knowledge of the group's businesses and structures, it is appropriate to employ the group's auditors to provide such services without a competitive tender being undertaken.

Notes to the financial statements

4. Income from other fixed asset investments

Income from unlisted investments

61

2004 ?m

6.0

2003 ?m

3.9

5. Share of operating profit in joint ventures and associates

Joint ventures and associates within continuing operations Amortisation of goodwill

2004 ?m

5.2 (1.5)

3.7

2003 ?m

4.5 (1.6)

2.9

6. Exceptional items and amounts written off investments

Additional profit relating to prior year disposals (a) Amounts written off investments (b)

Total charged to loss on ordinary activities before tax

2004 ?m

18.9 (11.7)

7.2

2003 ?m

? ?

?

Exceptional taxation credit (c)

121.0

?

(a) In December 2004, United agreed a settlement of ?32 million from Granada in respect of outstanding items relating to the 2000 disposals. The additional profit on disposal represents this receipt, after deduction of interest, costs, and the offset of recorded receivables.

(b) The group has written down the carrying value of certain fixed asset investments to reflect their expected realisable value. It is the group's intention to exit these investments.

(c) The group has resolved a number of outstanding items as a consequence of which there is a net exceptional tax credit of ?121.0 million.

7. Net interest income/(expense)

Interest receivable Interest payable

? on bank loans and overdrafts ? other

2004 ?m

26.6 (2.3) (11.8)

12.5

2003 ?m

25.8 (1.0) (15.4)

9.4

Interest receivable includes ?9.8 million (2003: ?8.9 million) of interest receivable from Channel 5 Television Group Limited in respect of shareholder loans.

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