In this section we describe the principal risks that the directors believe could materially affect our business, revenues, operating income, net income, net assets and liquidity and capital resources. The nature of risk is such that no list can be comprehensive and it is possible that other risks may arise, or that risks not currently considered material may become so in the future.

Sound risk management is therefore an essential discipline for running the business efficiently and pursuing our strategy successfully. UBM has a Group-wide risk management process, monitored by the Board, to ensure a consistent, coherent approach.

We operate in a highly competitive environment that is subject to rapid change and must continue to invest and adapt to remain competitive.

Our professional media and news distribution businesses operate in highly competitive markets that continue to change in response to technological innovation and other factors, as discussed in ‘Strategy’ above. We cannot predict with certainty changes that may affect the competitiveness of the business, or whether technological innovation will render some of our existing products and services partially or wholly obsolete.

We aim to mitigate this risk through creating a balanced portfolio of products that evolves to meet the needs of our customers, investing particularly in organic initiatives that address this environment, and acquiring leading online businesses.

Our strategy calls for acquisitions in a number of our businesses and, therefore, we face risks typical of acquisitions.

The risks associated with such a strategy include the availability of suitable acquisition candidates, obtaining regulatory approval for any acquisition, and assimilating and integrating acquired companies into the Group. In addition, potential difficulties inherent in mergers and acquisitions such as delays in implementation or unexpected costs or liabilities, as well as the risk of failing to realise operating benefits or synergies from completed transactions, may adversely affect the results of an acquisition.

We mitigate this risk by following systematic procedures for integrating acquisitions, applying strict financial criteria to any potential acquisition, and through close monitoring and review by internal audit and the Board.

Implementing our strategy depends on attracting and retaining key management personnel across all our businesses.

We operate in a number of industry segments in which there is intense competition for experienced and highly qualified individuals. We cannot predict the future availability of good people, hence we place significant emphasis on succession planning and developing and retaining management talent. During 2005 we have put in place two new incentive schemes, the Performance Share Plan and Bonus Investment Plan, to attract and motivate key senior management.

We are dependent on publishing advertising for a significant portion of revenue.

Advertising and other marketing spend tends to be cyclical, with companies spending significantly less, particularly on advertising, in times of economic slowdown or recession. In addition there is increasing competition for advertising revenues from competitors including search companies such as Google and Yahoo.

We are addressing this risk by migrating CMP’s businesses from their traditional print base to incorporate a higher proportion of event and online revenue.

Our exhibitions businesses may be adversely affected by outbreaks of disease, such as Avian flu or Severe Acute Respiratory Syndrome (‘SARS’).

UBM’s exhibitions businesses contributed 31% of the Group’s revenue in 2005, and over 85% of CMP Asia’s revenue (on a proforma basis). Outbreaks or fears of an outbreak of disease in particular locations may have an adverse effect on these businesses as a result of reduced attendance at public gatherings, particularly if supported by government recommendations or regulation. However our experience from the 2003 SARS outbreak in Asia, showed that whilst revenues were impacted in the year of the outbreak, they bounced back strongly as the demand for events was greater to compensate for the prior year.

Changes in government legislation may affect the pharmaceutical industry.

Changes in government health policies, for example on the use of generic drugs or reimbursement prices, could adversely impact pharmaceutical companies. This could lead to reduced spending by pharmaceutical companies on advertising. Regulatory pressures may also affect pharmaceutical companies’ ability or willingness to sponsor continuing medical education events. We monitor developments in public policy in all our major markets and work with our customers to ensure we can deliver the best possible media product while meeting all regulatory obligations.

Fluctuations in exchange rates may affect our reported results.

UBM’s financial statements are expressed in pounds sterling and are therefore subject to movements in exchange rates on the translation of the financial information of businesses with different operational currencies. The United States is our most important market and accordingly significant fluctuations in U.S. dollar / sterling exchange rates could affect our reported results from year to year.

Future tax payments may exceed recorded liabilities.

While the Group’s taxation creditor of £219.4m represents our prudent assessment of the potential tax liability for prior tax years across different geographical areas, we have necessarily made judgments as to the outcome of matters not yet concluded.

We seek to manage this risk by regularly assessing the potential tax liability of the Group with the help of external advisors. We consider the current provision to be adequate.

The cost of providing pension benefits to existing and former employees is subject to changes in pension fund values and changing demographics.

UBM operates a number of pension plans that provide defined benefits. While the UK plan is closed to new employees, the U.S. plan, which has some of the features of a defined benefits plan, continues and the cost of providing these benefits to existing and former employees is subject to changes in pension fund values and changing demographics, including longer life expectancy of beneficiaries. We believe that sustained declines in equity markets and reductions in bond yields have and may continue to have a material adverse effect on the value of our pension funds. We may therefore be required to recognise additional charges to our profit and loss account to the extent that the pension fund values are less than the total anticipated liability under the plans. There is an exposure in the event that asset returns are insufficient to cover changes in the schemes’ liabilities over time. This has been mitigated by active management of the investment portfolio and additional contributions have been made to the UK schemes. The Group has acted to close its defined benefit schemes to new members and neither the CEO or CFO are members of such a scheme.