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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Euromoney Institutional Investor Plc | LSE:ERM | London | Ordinary Share | GB0006886666 | ORD 0.25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,460.00 | 1,458.00 | 1,460.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMERM
RNS Number : 1346U
Euromoney Institutional InvestorPLC
21 November 2019
Euromoney Institutional Investor PLC
('Euromoney')
Full Year Results
21 November 2019
Strong underlying profit growth
Euromoney Institutional Investor PLC (Euromoney), the global B2B information services provider of essential information to global and specialist markets, announces results for the year ended 30 September 2019.
Hot Features
Premium
2019 2018 (restated(2) Change Underlying(3)
GBP'm unless stated ) change
Adjusted(1)
-- Total revenue 401.7 390.3 3% 0%
-- Adjusted operating profit 105.4 101.6 4% 5%
-- Adjusted operating profit margin 26% 26% - 1ppt
-- Adjusted profit before tax 104.6 99.9 5% 9%
-- Adjusted diluted earnings per
share 77.6p 73.6p 5%
Statutory
-- Revenue 256.1 244.8 5%
-- Operating profit 30.6 107.9 (72%)
-- Operating profit margin 12% 44% (32ppt)
-- Profit before tax 29.5 106.8 (72%)
-- Diluted earnings per share 56.6p 181.3p (69%)
Net cash 50.1 78.3 (36%)
Total dividend per share 33.1p 32.5p 2%
A detailed reconciliation of the Group's adjusted and
underlying results is set out on pages 6 to 11 of this
statement
-------------
Strategic and operational highlights
-- Continued progress towards building a 3.0 business model
o Fastmarkets, the price reporting agency, was selected as the LME partner to develop the lithium benchmark
o Launch of new Fastmarkets platform for customers
-- Active portfolio management to drive higher growth
o BoardEx and The Deal integrated, performing well and supporting evolution of other Group companies
o Disposal of Mining Indaba
-- Strategic review of Asset Management segment continues
Financial highlights
-- Results slightly above Board expectations
-- Continuation of recent trends: Price, Data & Market Intelligence ('PDMI') grew strongly; Asset Management declined
-- Statutory revenue up 5% primarily due to the impact of acquisitions, revenues flat on an underlying basis
-- Fastmarkets underlying subscription revenue growth of 10%
-- Good profit growth: Underlying profit before tax of +9%, reflecting PDMI subscription revenue growth, lower central costs and interest expense
-- Statutory profit before tax reduced due to the non-recurring gain on the disposal of Dealogic in 2018
-- Highly cash generative: strong underlying cash conversion of 98% -- Total dividend up 2% -- Strong balance sheet with net cash from continuing and discontinued operations of GBP50.1m
Andrew Rashbass, CEO, said:
"We continue to evolve towards a 3.0 information-services business. Our performance in the 2019 financial year reflects a continuation of recent trends in our businesses, with good momentum for our pricing, data and market intelligence products offset by conditions in Asset Management markets. We were pleased that Fastmarkets was selected as the London Metal Exchange's partner to develop the lithium benchmark. We are continuing the strategic review of our Asset Management business.
We have a clear strategy, focused on services that are firmly embedded in the workflow of customers. The acquisition of BoardEx is a good example of this. We look forward to further progress in the year ahead."
(1) Adjusted measures include the results of continuing and discontinued operations and exclude the impact of the amortisation of acquired intangible assets, exceptional items and other adjusting items in accordance with the Group's policy. 2018 excludes the results of discontinued operations relating to GMID. A detailed reconciliation of the Group's adjusted and underlying results is set out on pages 6 to 11 of this statement.
(2) The 2018 comparatives have been restated to reflect the two prior year tax exposures and discontinued operations relating to Asset Management as outlined in
note 1.
(3) Underlying measures are the adjusted results stated at constant exchange rates, including pro forma prior year comparatives for acquisitions and new business launches and excluding disposals, business closures and significant event and publication timing differences.
Operating Review
Euromoney delivered strong underlying profit growth in the financial year, reflecting continued growth in PDMI revenue and good cost management. On an underlying basis, strong revenue growth in the Group's businesses that are 3.0 (or approaching 3.0) was offset by the ongoing challenges in our Asset Management businesses.
Euromoney has a well-established strategy to transition towards a 3.0 business-to-business information services Group, which is reflected in the Company's capital allocation. A 3.0 business is typically one which is embedded in its customers' workflows, providing significant operating leverage from "create one, sell many" services, in semi-opaque markets, with low capital requirements and high cash flow conversion.
M&A activity during the year was driven by this strategy, including the disposal of Mining Indaba and acquisition of BoardEx and The Deal. In this context, on 10 September 2019, Euromoney announced that it is conducting a strategic review of Asset Management, which is made up of Institutional Investor, BCA Research and NDR. Although still at a relatively early stage, the strategic review is progressing well. The segment is presented as discontinued operations and held for sale.
Total revenue for the year increased by 3% to GBP401.7m, supported by the contribution from the acquisition of BoardEx and The Deal. Statutory revenue from continuing operations, which excludes the Asset Management segment, increased by 5% to GBP256.1m. Underlying revenue was flat, with growth of 4% from the Pricing, Data & Market Intelligence ("PDMI") segment offset by continued challenges in the Asset Management segment. We continue to see the impact of the structural and cyclical issues facing the Asset Management segment, where underlying revenue declined by 4%. Revenue from Banking & Finance, which makes up 15% of the Group's total revenue, declined by 1% on an underlying basis.
Subscription revenue, which makes up 60% of total revenue, was unchanged year on year on an underlying basis, with continued strong growth of 8% in PDMI mainly offset by declines in the Asset Management segment.
Events revenue, which is 31% of total revenue, increased 2% on an underlying basis. Growth from events in the Asset Management and Banking & Finance segments was offset by the lack of growth in PDMI events due to the previously flagged delegate marketing challenges in the first half, although these events did return to growth in the second half. Advertising and other revenues, which represent only 10% of total revenue, declined by 4% on an underlying basis.
Adjusted operating profit of GBP105.4m increased by 5% on an underlying basis reflecting good cost management and subscription revenue growth in PDMI. The adjusted operating profit margin was 26%, a 1ppt increase compared to last year, on an underlying basis. Strong underlying growth in adjusted profit before tax of 9% reflects adjusted operating profit growth and lower interest costs. Adjusted diluted earnings per share increased by 5% to 77.6p (2018: 73.6p). Statutory operating profit was GBP30.6m (2018: GBP107.9m) and statutory profit before tax was GBP29.5m (2018: GBP106.8m), the decrease was mainly due to the gain on the disposal of Dealogic in the prior year.
Segmental Review
Adjusted results for the twelve months ended 30 September 2019
Total revenue Adjusted operating
profit
Subscriptions Events Advertising Total Total Margin
& Other
GBP'm Growth(1) GBP'm Growth(1) GBP'm Growth(1) GBP'm Growth(1) GBP'm Growth(1)
PDMI 115.5 8% 61.6 1% 19.3 (6%) 196.4 4% 69.4 5% 35%
Asset Management 117.9 (6%) 16.9 6% 10.8 2% 145.6 (4%) 62.1 0% 43%
Banking & Finance 7.2 (6%) 45.7 1% 8.2 (6%) 61.2 (1%) 13.7 (8%) 22%
----- --------- ----- --------- ----- --------- ----- --------- ------ --------- ------
240.6 0% 124.2 2% 38.3 (4%) 403.2 0% 145.2 2%
FX losses on
forward contracts (3.5) (3.5) (3.5)
Sold/closed
businesses 2.0 2.0 0.4
Central costs (36.7) 8%
----- --------- ----- --------- ----- --------- ----- --------- ------ --------- ------
Total 240.6 126.2 34.8 401.7 0% 105.4 5% 26%
----- --------- ----- --------- ----- --------- ----- --------- ------ --------- ------
(1) Values shown above are adjusted, growth percentages underlying and are compared to the restated 2018 results. Adjusted and underlying measures are explained on pages 6 to 11 of this statement.
Pricing, Data & Market Intelligence
The Group's PDMI businesses (49% of total revenue) generated underlying revenue growth of 4% and underlying operating profit growth of 5%. Subscription revenue, which accounts for the majority of PDMI revenue, increased by 8% on an underlying basis. In Fastmarkets, our price reporting agency, a number of factors helped drive adoption and increased use of our pricing benchmarks: including close engagement of the business with its clients and market; Fastmarkets being selected as the London Metals Exchange partner to develop the lithium benchmark; and the launch of the new Fastmarkets platform for customers. Our strong value proposition enabled us to reflect this through increased data licensing sales, which has resulted in excellent underlying subscription revenue growth in Fastmarkets of 10%.
As previously flagged, underlying events revenue declined by 4% in the first half of the year due to delegate marketing challenges, but recovered to grow by 1% for the year. There were strong performances from Coaltrans Asia, Capacity Europe and the Legal Media Group, which were offset by increased competitive pressure on our Real Asset Finance portfolio and a lack of growth at our flagship telecoms event in the US, ITW, which changed location in the year to Atlanta.
Following the $93.4m acquisition in February 2019 of BoardEx and The Deal, BoardEx, the executive profiling and relationship mapping platform, and The Deal, a source of data, news and intelligence on mergers and acquisitions, are now fully integrated and firmly aligned to our 3.0 strategy. BoardEx generated underlying growth of 11% in the year on a proforma basis.
New segmental structure
From 1 October 2019, Fastmarkets will be reported as a separate Pricing segment and the remainder of PDMI will combine with the Banking & Finance segment and be reported as the Data & Market Intelligence segment. For the next financial year, the Group will report under three new segments: Asset Management; Pricing; and Data & Market Intelligence.
Asset Management
Following the announcement of the strategic review in September 2019 and the update earlier in November 2019, Asset Management is reported as discontinued operations and held for sale in the Consolidated Financial Statements for the year.
Asset Management revenue (36% of total revenue) was down 4% on an underlying basis, in line with last year's decline, as growth in events (up 6%) and advertising (up 2%) was more than offset by continued decline in subscriptions (down 6%). Asset Management remains affected by structural and cyclical challenges and, whilst new sales in Europe continued to be impacted by uncertainty around the UK's exit from the EU, there was strong new sales growth in Asia. In addition, underlying revenues for Institutional Investor, where revenues are sourced from asset-management marketing rather than research budgets were flat year on year. The investment in professionalising sales and marketing in Investment Research continued with the new sales structure in place by the year end.
In response to continued market and performance challenges, Institutional Investor management took the decision to reshape the senior management and global sales teams, and close the Centre for Continuing Education ("CIE", an investment forum for asset management firms) at the end of 2019. As a result, CIE is shown as a closed business in the year.
Asset Management adjusted operating profit was flat on an underlying basis with adjusted operating profit margins increasing by 2ppt to 43%, reflecting the benefit of prior year restructuring and careful cost control, while investing in extra sales and marketing resource. As outlined at our capital markets event in July 2019, this investment is part of a four stage programme to support an improvement in our short and medium term performance, and position Asset Management for long-term growth through innovation and development of 3.0 products.
Banking & Finance
Revenue within Banking & Finance (15% of total revenue) declined by 1% on an underlying basis. A strong performance from IMN across 13 new events and key repeat events helped to offset the decline in Euromoney and Global Capital events. The global backdrop of trade and geopolitical tensions as well as financial market volatility put pressure on subscriptions and advertising revenues which both declined by 6% on an underlying basis in the year, although the decline in advertising revenue was, in part, offset by successful Euromoney @50 and Asiamoney @30 campaigns.
During the year, the Banking & Finance segment consolidated its structure into three brands, Global Capital, Euromoney and IMN, supported by an operational pillar, to deliver logistics and production efficiencies. Investment in employee costs relating to the new operating structure, together with investment in new events, drove a decline in underlying operating profit of 8%.
From 1 October 2019, Banking & Finance has been merged with the Specialist Information division to form the new Financial & Professional Services division, bringing together complementary markets and customers across financial and professional services. In addition, the annual ABS East event, which generated GBP3.3m revenue in the year, will move from September to October for 2020 onwards to reduce the risk of impact from hurricanes in Florida.
Other Financial Items
Exceptional items
An exceptional credit of GBP3.9m in the year principally comprises GBP17.0m of profit on disposal of Mining Indaba, as previously announced, offset, in part, by an impairment charge of GBP2.4m resulting from the closure of CIE, recognition of earn-out payments of GBP2.5m and acquisition related costs of GBP5.4m. In addition, it includes GBP2.5m for discontinued operations relating to costs for major restructuring within Asset Management and costs to engage with advisors in connection with the strategic review of the segment. Full details are included in note 3.
Tax
The adjusted effective tax rate is 20% (restated 2018: 21%) which is based on adjusted profit before tax and excludes deferred tax effects of intangible assets and goodwill, tax on exceptional items and prior year items. The tax rate in each year depends mainly on the geographic mix of profits and applicable tax rates. We expect that the adjusted effective tax rate for the next financial year will be in line with the current year rate.
The Group's statutory effective tax rate, which excludes discontinued operations, decreased to 32% compared to 39% in 2018. The rate in 2018 was largely driven by one-off items such as tax on disposal of shares in GMID and non-recoverable foreign withholding tax which did not recur in 2019. The rate in 2019 relates largely to expenses that are capital in nature and therefore not deductible for tax purposes. Significant reconciling items between the adjusted and statutory tax expense include tax on profit on disposal of Mining Indaba and prior year items.
The Group continues to have a number of uncertain tax positions, primarily the Canadian and UK exposures which have been highlighted in previous periods for which the maximum exposures are explained in note 5.
Dividend
The Group's dividend policy targets a dividend pay-out ratio of approximately 40% of adjusted diluted earnings per share, with the half year dividend based on 33% of the previous year's total dividend, subject to the capital needs of the Group. The Directors are recommending a final dividend of 22.3 pence per share, which is subject to Shareholder approval at our AGM on 28 January 2020 and, if approved, will be paid on 13 February 2020 to shareholders on the register at the close of business on 29 November 2019. Together with the interim dividend, this makes a total dividend for the year ended 30 September 2019 of 33.1 pence per share, a 2% increase on the 32.5 pence dividend for the year ended 30 September 2018.
Net cash and cash flow
Net cash from continuing and discontinued operations at 30 September 2019 was GBP50.1m, compared with GBP78.3m at 30 September 2018. The Group had strong underlying operating cash inflows of GBP103.5m. The overall decrease in net cash largely reflects a GBP67.8m net outflow from the acquisition of BoardEx and The Deal partially offset by the sale of Mining Indaba. Further outflows included dividend payments of GBP35.6m and net tax payments of GBP38.4m, which included a one-off non-recoverable withholding tax payment of GBP14.6m, as previously announced.
The Group is highly cash generative, with underlying operating cash conversion for the 12 months to September 2019 being 98% (2018: 102%). The slightly lower cash conversion rate largely resulted from timing differences associated with transitioning from a subscription to a data licensing model within Fastmarkets and falling subscription revenue in Asset Management.
Currency
The Group generates approximately 75% of its revenues in US dollars, including approximately 40% of its UK revenues and two thirds of the Group's operating profits. The exposure to US dollar revenues in our UK businesses is partially hedged using forward contracts to sell US dollars, which delays the impact of movements in exchange rates for at least a year.
The average sterling-US dollar rate for the year to 30 September 2019 was $1.28 (2018: $1.35). This improved headline revenue growth rates for the year by approximately three percentage points and adjusted profit before tax by GBP4.1m. Each one cent movement in the US dollar rate has an impact on translated profits, net of UK revenue hedging, of approximately GBP0.7m on an annualised basis. The Group also translates its non-sterling denominated balance sheet items resulting in a loss in 2019 of GBP0.6m (2018: GBP1.5m).
Impact of adopting new accounting standards
The adoption of IFRS 9 from 1 October 2018 has led to an increase to opening equity by GBP0.4m. In addition, the Group has adopted IFRS16 from 1 October 2019. As a result, major building leases and lease liabilities have come onto the balance sheet. We estimate this will reduce profits before tax by GBP1m for the year ending 30 September 2020.
Restatements
The financial statements include three areas of restatement, as detailed in note 1. As a result of the ongoing strategic review of Asset Management, this segment has been disclosed as discontinued operations and as held for sale. The other two restatements have arisen due to significant prior year tax exposures, which internal processes identified during the year. One is an under-payment of PAYE and NI to HMRC in respect of contractors. The second is in respect of the treatment of VAT on intra-group transactions. Management took immediate steps to improve controls as a result of these issues.
Outlook
We expect weakness in our Asset Management segment into 2020 but continued good growth in the Pricing segment. Euromoney continues to make progress towards a 3.0 business model guided by our clear strategy, underpinned by a strong balance sheet and excellent cash flow conversion.
Definitions
Total revenue includes the revenues of continuing and discontinued operations, but excludes the discontinued operations relating to GMID in 2018.
The 2018 comparatives have been restated to reflect the two prior year tax exposures as outlined in note 1 as well as the impact of Asset Management being reported as discontinued operations.
Adjusted measures include the results of continuing and discontinued operations and exclude the impact of amortisation of acquired intangible assets, exceptional items and other adjusting items in accordance with the Group's policy. 2018 excludes the results of discontinued operations relating to GMID. A detailed reconciliation of the Group's adjusted and underlying results is set out on pages 6 to 11 of this statement.
Underlying measures include the adjusted results stated at constant exchange rates, including pro forma prior year comparatives for acquisitions and new business launches and excluding disposals, business closures and significant event and publication timing differences.
The adjusted effective tax rate is based on the adjusted profit before tax and excluding deferred tax movements on intangible assets, prior year items, tax on exceptional items and other tax adjusting items, in accordance with the Group's policy.
For further information, please contact:
Euromoney Institutional Investor PLC
Wendy Pallot, Chief Financial Officer: +44 20 7779 8866; wendy.pallot@euromoneyplc.com Sarah Cooke, Head of Investor Relations: +44 20 7779 7363; sarah.cooke@euromoneyplc.com
FTI Consulting
Charles Palmer / Jamie Ricketts / Amy Hurnell / Jamille Smith: +44 20 3727 1000; euromoney@fticonsulting.com
NOTE TO EDITORS
Euromoney is a global information business providing essential B2B information to global and specialist markets. Euromoney provides discovery, market intelligence and events across our segments. Euromoney is listed on the London Stock Exchange and is a member of the FTSE 250 share index. (www.euromoneyplc.com)
CAUTIONARY STATEMENT
This Preliminary Statement ("Statement") is prepared for and addressed only to the Company's shareholders as a whole and to no other person. The Company, its Directors, employees, agents and advisers accept and assume no liability to any person in respect of this Statement save as would arise under English law. Statements contained in this Statement are based on the knowledge and information available to the Group's Directors at the date it was prepared and therefore facts stated and views expressed may change after that date.
This document and any materials distributed in connection with it may include forward-looking statements, beliefs, opinions or statements concerning risks and uncertainties, including statements with respect to the Group's business, financial condition and results of operations. Those statements and statements which contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the Company's Directors' beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and which may cause results and developments to differ materially from those expressed or implied by those statements and forecasts. No representation is made that any of those statements or forecasts will come to pass or that any forecast results will be achieved. You are cautioned not to place any reliance on such statements or forecasts. Those forward-looking and other statements speak only as at the date of this Statement. The Group undertakes no obligation to release any update of, or revisions to, any forward-looking statements, opinions (which are subject to change without notice) or any other information or statement contained in this Statement. Furthermore, past performance of the Group cannot be relied on as a guide to future performance.
No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Euromoney Institutional Investor PLC share for the current or future financial years would necessarily match or exceed the historical published earnings per Euromoney Institutional Investor PLC share.
Nothing in this document is intended to constitute an invitation or inducement to engage in investment activity. This document does not constitute or form part of any offer for sale or subscription of, or any solicitation of any offer to purchase or subscribe for, any securities nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract, commitment or investment decision in relation thereto. This document does not constitute a recommendation regarding any securities.
LEI Number: 213800PZU2RGHMHE2S67
Appendix to Preliminary Statement
Reconciliation of Consolidated Income Statement to adjusted results for the year ended 30 September 2019.
The Directors believe that the adjusted measures provide additional useful information for shareholders to evaluate and compare the performance of the business from period to period. These measures are used by management for budgeting, planning and monthly reporting purposes and are the basis on which executive management is incentivised. The non-IFRS measures also enable the Group to track more easily and consistently the underlying operational performance by separating out exceptional income, charges and non-cash items.
Total and segment revenue represents the combined reported revenue from continuing operations and discontinued operations revenue for Asset Management.
Adjusted results include continuing operations and discontinued operations for Asset Management. The discontinued operations for Asset Management have been included in the adjusted results as it was owned and managed as part of the Group for the entire period and to aid year-on-year comparability of the Group's results. This treatment is consistent with that of Global Markets Intelligence Division (GMID) when the strategic review was announced for that disposal in September 2017. In the period of the disposal and upon the chief operating decision maker (CODM) not considering the discontinued operation in the review of the business, the discontinued operation will then be excluded from the adjusted results.
The discontinued operations in 2018 relating to the disposal of GMID have been excluded in the adjusted results to reflect the basis on which the CODM reviews the business. The comparatives have been updated to reflect this change in management's adjusted measures in order to provide a more like-for-like view of continuing operations.
In December 2018, the Group engaged external advisors to undertake an independent review of the Group's compliance with the off-payroll working rules. As a result of the review, the Group has identified an underpayment of payroll taxes to HMRC for the years ended 30 September 2013 to 30 September 2018. A restatement has been made to recognise the historical exposure, consisting of payroll taxes underpaid, interest and penalties. These restatements are not excluded from adjusted measures as the costs incurred are in the ordinary course of business and will recur.
Adjusted figures are presented before the impact of amortisation of acquired intangible assets (comprising trademarks and brands, customer relationships, databases and software); exceptional items, share of associates' and joint ventures' acquired intangible asset amortisation and exceptional items; net movements in deferred consideration and acquisition commitments; fair value remeasurements; related tax items and other adjusting items described below.
The amortisation of acquired intangible assets is adjusted as the premium paid relative to the net assets on the balance sheet of the acquired business is classified as either goodwill or as an intangible asset arising on a business combination and is recognised on the Group's balance sheet. This differs to organically developed businesses where assets such as employee talent and customer relationships are not recognised on the balance sheet. Impairment and amortisation of intangible assets and goodwill arising on acquisitions are excluded from adjusted results as they are balance sheet items that relate to historical M&A activity rather than the trading performance of the business.
Exceptional items are items of income or expense considered by the Directors to be significant, non-recurring and not attributable to underlying trading. It is Group policy to treat as exceptional significant earn-out payments required by IFRS to be recognised as a compensation cost. IFRS requires that earn-out payments to selling shareholders retained in the acquired business for a contractual time period are treated as a compensation cost. Given that these payments are in substance part of the cost of an investment and will not recur once the earn-out payments have been made, they have been excluded from adjusted profit.
During the second half of the year, the Group discovered a VAT exposure relating to the understatement of VAT on intra-group transactions in respect of the four years ended 30 September 2018. This VAT exposure is considered by the Directors as being material and non-recurring. A restatement has been made to recognise the historical exposure and related interest. The 2018 VAT expense has been classified as an exceptional item and the related interest for 2018 and 2019 has been treated as an adjusted finance expense because these charges are not expected to recur.
Adjusted finance costs exclude interest arising on the uncertain tax provisions, as the provisions relate to tax adjusting items. In addition, for the year ended 2018, adjusted finance costs exclude a net gain realised on the close-out of interest rate swaps of GBP1.2m following the repayment of the Group's term-loan. The net gain had been excluded from adjusted finance costs as it would not have crystallised had the disposal of GMID not completed.
For the 2018 reporting period, adjusted share of results in associates and joint ventures excludes the share of exceptional items that relates to restructuring and earn-out costs in Dealogic, which was sold in December 2017.
In respect of earnings, adjusted amounts reflect a tax rate that includes the current tax effect of goodwill and intangible assets. Many of the Group's acquisitions, particularly in the US, give rise to significant tax savings as the amortisation of goodwill and intangible assets on acquisition is deductible for tax purposes. The Group considers that the resulting adjusted effective tax rate is therefore more representative of its tax payable position. Tax on exceptional items relates primarily to the gain that arose on the disposal of Mining Indaba which is fully taxable and nondeductible costs relating to the acquisition of BoardEx and The Deal. Prior year items primarily reflect true-up of deferred tax items. These items are excluded from the adjusted tax expense as they do not relate to current year underlying trading.
Further analysis of the adjusting items is presented in notes 2, 3, 4, 5, 8, 9 and 10 in the notes to the Preliminary Statement. Further details of the restatements are included in note 1 of the notes to the Preliminary Statement.
The Group has applied these principles in calculating adjusted measures and it is the Group's intention to continue to apply these principles in the future.
The reconciliation below sets out the adjusted results of the Group and the related adjustments to the statutory Income Statement that the Directors consider necessary to provide useful and comparable information about the Group's adjusted trading performance.
2019 2018
---------------- ----- ---------------------------------------------- ----------------------------------------------
Discontinued Restated Discontinued
Statutory operations Adjustments Adjusted Statutory operations Adjustments Adjusted
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Revenue 2 256,051 145,622 - 401,673 244,825 145,454 - 390,279
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Adjusted
operating
profit 2 38,514 66,929 - 105,443 39,945 61,660 - 101,605
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Acquired
intangible
amortisation 9 (14,215) (10,928) 25,143 - (11,990) (10,749) 22,739 -
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Exceptional
items 3 6,350 (812) (5,538) - 79,910 (3,850) (76,060) -
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Operating profit 30,649 55,189 19,605 105,443 107,865 47,061 (53,321) 101,605
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Operating profit
margin 12% 38% - 26% 44% 32% - 26%
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Share of results
in associates
and joint
ventures 10 (88) - (38) (126) 157 - 953 1,110
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Finance income 4 1,873 - (675) 1,198 5,248 84 (4,468) 864
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Finance expense 4 (2,983) (99) 1,214 (1,868) (6,454) - 2,757 (3,697)
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Net finance
(costs)/income 4 (1,110) (99) 539 (670) (1,206) 84 (1,711) (2,833)
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Profit before
tax 29,451 55,090 20,106 104,647 106,816 47,145 (54,079) 99,882
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Tax expense on
profit 5 (9,317) (12,349) 820 (20,846) (41,358) (8,802) 29,550 (20,610)
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Profit for the
year 20,134 42,741 20,926 83,801 65,458 38,343 (24,529) 79,272
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Profit for the
year from
discontinued
operations 8 41,059 (42,741) 1,682 - 129,685 (38,343) (91,342) -
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Profit for the
year 61,193 - 22,608 83,801 195,143 - (115,871) 79,272
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Attributable to:
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Equity holders
of the parent 60,929 - 22,586 83,515 195,004 - (115,871) 79,133
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Equity
non-controlling
interests 264 - 22 286 139 - - 139
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
61,193 - 22,608 83,801 195,143 - (115,871) 79,272
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Diluted earnings
per share 7 56.6p 77.6p 181.3p 73.6p
---------------- ----- --------- ------------ ----------- -------- --------- ------------ ----------- --------
Underlying measures
When assessing the performance of our businesses, the Board considers the adjusted results. The year-on-year change in adjusted results may not, however, be a fair like-for-like comparison as there are a number of factors which can influence growth rates but which do not reflect underlying performance.
Underlying results include the adjusted results of continuing operations and discontinued operations for Asset Management and are stated:
-- At constant exchange rates, with the prior year comparatives being restated using current year exchange rates;
-- Including pro forma prior year comparatives for acquisitions and new business launches and excluding all results for disposals or business closures;
-- Excluding events and publications which took place in the comparative period but did not take place in the current period and, including in the comparative period at the same amount events and publications which took place in the current period but did not take place in the comparative period.
For example, this means we adjust for:
-- Biennial events;
-- Events which run in one of the current or comparative periods due to changes in the event date; and
-- Cancelled events that did not take place in the current year.
The Group's adjusted and underlying measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with IFRS. The adjusted and underlying measures used by the Group are not necessarily comparable with those used by other companies.
The 2018 comparatives have been restated to reflect the two prior year tax exposures and discontinued operations as outlined in note 1 of the notes to the Preliminary Statement.
The following table sets out the reconciliation from statutory to underlying for revenue, operating profit and profit before tax:
Restated
2019 2018
GBP000 GBP000 Change %
------------------------------------------- ------- -------- --------
Statutory revenue 256,051 244,825 5%
------------------------------------------- ------- -------- --------
Discontinued operations - Asset Management 145,622 145,454
------------------------------------------- ------- -------- --------
Total revenue 401,673 390,279 3%
------------------------------------------- ------- -------- --------
Net M&A and closed businesses (1,997) 2,829
------------------------------------------- ------- -------- --------
Timing differences - (5,362)
------------------------------------------- ------- -------- --------
Foreign exchange - 11,438
------------------------------------------- ------- -------- --------
Underlying revenue 399,676 399,184 0%
------------------------------------------- ------- -------- --------
Statutory operating profit 30,649 107,865 (72%)
------------------------------------------- ------- -------- --------
Adjustments 19,605 (53,321)
------------------------------------------- ------- -------- --------
Discontinued operations - Asset Management 55,189 47,061
------------------------------------------- ------- -------- --------
Adjusted operating profit 105,443 101,605 4%
------------------------------------------- ------- -------- --------
Net M&A and closed businesses (443) (3,906)
------------------------------------------- ------- -------- --------
Timing differences - (2,228)
------------------------------------------- ------- -------- --------
Foreign exchange - 4,122
------------------------------------------- ------- -------- --------
Underlying operating profit 105,000 99,593 5%
------------------------------------------- ------- -------- --------
Statutory profit before tax 29,451 106,816 (72%)
------------------------------------------- ------- -------- --------
Adjustments 20,106 (54,079)
------------------------------------------- ------- -------- --------
Discontinued operations - Asset Management 55,090 47,145
------------------------------------------- ------- -------- --------
Adjusted profit before tax 104,647 99,882 5%
------------------------------------------- ------- -------- --------
Net M&A and closed businesses (443) (5,110)
------------------------------------------- ------- -------- --------
Timing differences - (3,408)
------------------------------------------- ------- -------- --------
Foreign exchange - 4,135
------------------------------------------- ------- -------- --------
Underlying profit before tax 104,204 95,499 9%
------------------------------------------- ------- -------- --------
Cash conversion
Cash conversion measures the percentage by which cash generated from operations covers adjusted operating profit.
Restated
2019 2018
GBP000 GBP000
---------------------------------------------------------------------- ------- --------
Adjusted operating profit 105,443 101,605
---------------------------------------------------------------------- ------- --------
Discontinued operations - GMID - 7,510
---------------------------------------------------------------------- ------- --------
Adjusted operating profit including discontinued operations 105,443 109,115
---------------------------------------------------------------------- ------- --------
Cash generated from continuing and discontinued operations 92,407 108,560
---------------------------------------------------------------------- ------- --------
Exceptional items 10,519 5,580
---------------------------------------------------------------------- ------- --------
Other working capital adjustments 627 (2,461)
---------------------------------------------------------------------- ------- --------
Underlying cash generated from continuing and discontinued operations 103,553 111,679
---------------------------------------------------------------------- ------- --------
Adjusted cash conversion % 88% 99%
---------------------------------------------------------------------- ------- --------
Underlying cash conversion % 98% 102%
---------------------------------------------------------------------- ------- --------
The underlying basis is after adjusting for significant timing differences affecting the movement on working capital and exceptional items. For the year ended 30 September 2019, exceptional items largely consist of cash payments for acquisition and disposal costs and deferred compensation costs in relation to acquisitions. For the year ended 30 September 2018, exceptional items largely consist of restructuring payments and cash payments for the legal and professional fees in relation to acquisitions and disposals, net of the favourable settlement of a legal dispute. The other working capital adjustments in 2019 and 2018 are largely the result of the landlord's contribution to the fit-out of the New York office which will be amortised over the period of the lease and the rent-free period of the London and New York offices, there is a further adjustment for payroll taxes in 2018.
As cash generated from operations in the Consolidated Statement of Cash Flows includes those from discontinued operations of Asset Management and GMID, the statutory cash conversion rate has not been provided as it would not give a fair indication of the Group's cash conversion performance.
The 2018 comparatives have been restated to reflect the two prior year tax exposures and discontinued operations as outlined in note 1 of the notes to the Preliminary Statement.
Net cash
2019 2018
GBP000 GBP000
------------------------------------------------------------------------------- -------- ---------
At 1 October 78,273 (154,621)
------------------------------------------------------------------------------- -------- ---------
Net increase in cash and cash equivalents (30,151) 57,875
------------------------------------------------------------------------------- -------- ---------
Decrease in borrowings - 167,740
------------------------------------------------------------------------------- -------- ---------
Other non-cash changes - (955)
------------------------------------------------------------------------------- -------- ---------
Effect of foreign exchange rate movements 1,956 8,234
------------------------------------------------------------------------------- -------- ---------
At 30 September 50,078 78,273
------------------------------------------------------------------------------- -------- ---------
Net cash comprises:
------------------------------------------------------------------------------- -------- ---------
Cash at bank and short-term deposits 49,751 78,273
------------------------------------------------------------------------------- -------- ---------
Classified as held for sale 327 -
------------------------------------------------------------------------------- -------- --------- Total cash and cash equivalents held by continuing and discontinued operations 50,078 78,273 ------------------------------------------------------------------------------- -------- --------- Net cash 50,078 78,273 ------------------------------------------------------------------------------- -------- --------- Average exchange rate adjustment (1,452) (2,216) ------------------------------------------------------------------------------- -------- --------- Adjusted net cash 48,626 76,057 ------------------------------------------------------------------------------- -------- --------- Adjusted operating profit 105,443 101,605 ------------------------------------------------------------------------------- -------- --------- Share of results in associates and joint ventures (126) 1,110 ------------------------------------------------------------------------------- -------- --------- Add back: ------------------------------------------------------------------------------- -------- --------- Intangible amortisation on licences and software 1,245 2,577 ------------------------------------------------------------------------------- -------- --------- Depreciation of property, plant and equipment 2,417 2,561 ------------------------------------------------------------------------------- -------- --------- Share of associates' interest, depreciation and amortisation - 721 ------------------------------------------------------------------------------- -------- --------- M&A annualised adjustment 2,425 (1,225) ------------------------------------------------------------------------------- -------- --------- Adjusted EBITDA 111,404 107,349 ------------------------------------------------------------------------------- -------- --------- Adjusted net cash to EBITDA ratio for continuing and discontinued operations 0.44 0.71 ------------------------------------------------------------------------------- -------- ---------
The Group's borrowing facilities have covenants requiring the Group's net debt to be no more than three times adjusted EBITDA and minimum levels of interest cover of three times on a rolling 12-month basis. The amounts and foreign exchange rates used in the covenant calculations are subject to adjustments as defined under the terms of the arrangement.
The bank covenant ratio uses an average exchange rate in the calculation of net debt and includes discontinued operations of Asset Management and GMID and an annualised adjustment attributable to acquisitions and disposals in the calculation of adjusted EBITDA. When businesses are acquired after the beginning of the financial year, the calculation of adjusted EBITDA includes EBITDA attributable to the business as if the acquisition had been completed on the first day of the financial year. The calculation excludes the EBITDA of any businesses disposed of during the year.
The 2018 comparatives have been restated to reflect the two prior year tax exposures and discontinued operations as outlined in note 1 of the notes to the Preliminary Statement.
Consolidated Income Statement
for the year ended 30 September 2019
Restated
2019 2018
Notes GBP000 GBP000
------------------------------------------------------------------------------- ----- -------- --------
CONTINUING OPERATIONS
------------------------------------------------------------------------------- ----- -------- --------
Revenue 2 256,051 244,825
------------------------------------------------------------------------------- ----- -------- --------
Operating profit before acquired intangible amortisation and exceptional items 2 38,514 39,945
------------------------------------------------------------------------------- ----- -------- --------
Acquired intangible amortisation 9 (14,215) (11,990)
------------------------------------------------------------------------------- ----- -------- --------
Exceptional items 3 6,350 79,910
------------------------------------------------------------------------------- ----- -------- --------
Operating profit 2 30,649 107,865
------------------------------------------------------------------------------- ----- -------- --------
Share of results in associates and joint ventures 10 (88) 157
------------------------------------------------------------------------------- ----- -------- --------
Finance income 4 1,873 5,248
------------------------------------------------------------------------------- ----- -------- --------
Finance expense 4 (2,983) (6,454)
------------------------------------------------------------------------------- ----- -------- --------
Net finance costs 4 (1,110) (1,206)
------------------------------------------------------------------------------- ----- -------- --------
Profit before tax 2 29,451 106,816
------------------------------------------------------------------------------- ----- -------- --------
Tax expense on profit 5 (9,317) (41,358)
------------------------------------------------------------------------------- ----- -------- --------
Profit for the year from continuing operations 2 20,134 65,458
------------------------------------------------------------------------------- ----- -------- --------
DISCONTINUED OPERATIONS
------------------------------------------------------------------------------- ----- -------- --------
Profit for the year from discontinued operations 8 41,059 129,685
------------------------------------------------------------------------------- ----- -------- --------
PROFIT FOR THE YEAR 61,193 195,143
------------------------------------------------------------------------------- ----- -------- --------
Attributable to:
------------------------------------------------------------------------------- ----- -------- --------
Equity holders of the parent 60,929 195,004
------------------------------------------------------------------------------- ----- -------- --------
Equity non-controlling interests 264 139
------------------------------------------------------------------------------- ----- -------- --------
61,193 195,143
------------------------------------------------------------------------------- ----- -------- --------
Earnings per share
------------------------------------------------------------------------------- ----- -------- --------
From continuing operations
------------------------------------------------------------------------------- ----- -------- --------
Basic 7 18.5p 60.8p
------------------------------------------------------------------------------- ----- -------- --------
Diluted 7 18.5p 60.7p
------------------------------------------------------------------------------- ----- -------- --------
From continuing and discontinued operations
------------------------------------------------------------------------------- ----- -------- --------
Basic 7 56.6p 181.5p
------------------------------------------------------------------------------- ----- -------- --------
Diluted 7 56.6p 181.3p
------------------------------------------------------------------------------- ----- -------- --------
Dividend per share (including proposed dividends) 6 33.1p 32.5p
------------------------------------------------------------------------------- ----- -------- --------
A detailed reconciliation of the Group's statutory results to the adjusted and underlying results is set out on pages 6 to 11.
The 2018 Income Statement has been restated as detailed in note 1.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2019
Restated
2019 2018
GBP000 GBP000
----------------------------------------------------------------------------------------------- ------- --------
Profit for the year 61,193 195,143
------------------------------------------------------------------------------------------------ ------- --------
Items that may be reclassified subsequently to profit or loss:
----------------------------------------------------------------------------------------------- ------- --------
Change in fair value of cash flow hedges (5,061) (711)
------------------------------------------------------------------------------------------------ ------- --------
Transfer of losses/(gains) on cash flow hedges from fair value reserves to Income Statement:
----------------------------------------------------------------------------------------------- ------- --------
Foreign exchange losses/(gains) in revenue 3,483 (1,037)
------------------------------------------------------------------------------------------------ ------- --------
Foreign exchange losses/(gains) in administrative expenses 361 (409)
------------------------------------------------------------------------------------------------ ------- --------
Gains on interest rate swaps to hedge interest on committed borrowings - (2,121)
------------------------------------------------------------------------------------------------ ------- --------
Net exchange differences on translation of net investments in overseas subsidiary undertakings 22,644 24,311
------------------------------------------------------------------------------------------------ ------- --------
Net exchange differences on foreign currency loans 1,524 (5,642)
------------------------------------------------------------------------------------------------ ------- --------
Translation reserves recycled to Income Statement - 8,250
------------------------------------------------------------------------------------------------ ------- --------
Fair value remeasurement 2,131 -
------------------------------------------------------------------------------------------------ ------- --------
Tax on items that may be reclassified - 630
------------------------------------------------------------------------------------------------ ------- --------
Items that will not be reclassified to profit or loss:
----------------------------------------------------------------------------------------------- ------- --------
Actuarial (losses)/gains on defined benefit pension schemes (5,175) 6,495
------------------------------------------------------------------------------------------------ ------- --------
Tax credit/(charge) on actuarial (losses)/gains on defined benefit pension schemes 880 (1,104)
------------------------------------------------------------------------------------------------ ------- --------
Other comprehensive income for the year 20,787 28,662
------------------------------------------------------------------------------------------------ ------- --------
Total comprehensive income for the year 81,980 223,805
------------------------------------------------------------------------------------------------ ------- --------
Continuing operations 7,629 130,584
------------------------------------------------------------------------------------------------ ------- --------
Discontinued operations 74,351 93,221
------------------------------------------------------------------------------------------------ ------- --------
Total comprehensive income for the year 81,980 223,805
------------------------------------------------------------------------------------------------ ------- --------
Attributable to:
----------------------------------------------------------------------------------------------- ------- --------
Equity holders of the parent 81,716 223,830
------------------------------------------------------------------------------------------------ ------- --------
Equity non-controlling interests 264 (25)
------------------------------------------------------------------------------------------------ ------- --------
81,980 223,805
----------------------------------------------------------------------------------------------- ------- --------
Consolidated Statement of Financial Position
as at 30 September 2019
Restated
Restated 1 October
2019 2018 2017
Notes GBP000 GBP000 GBP000
---------------------------------------------- ----- --------- --------- ----------
Non-current assets
---------------------------------------------- ----- --------- --------- ----------
Intangible assets
---------------------------------------------- ----- --------- --------- ----------
Goodwill 9 246,281 414,722 399,971
---------------------------------------------- ----- --------- --------- ----------
Other intangible assets 9 159,140 173,503 193,991
---------------------------------------------- ----- --------- --------- ----------
Property, plant and equipment 15,294 16,112 17,235
---------------------------------------------- ----- --------- --------- ----------
Investment in associates and joint ventures 10 5,271 715 26,820
---------------------------------------------- ----- --------- --------- ----------
Other equity investments 10 - 3,546 3,546
---------------------------------------------- ----- --------- --------- ----------
Convertible loan note 3,759 2,677 2,503
---------------------------------------------- ----- --------- --------- ----------
Deferred consideration - 470 1,570
---------------------------------------------- ----- --------- --------- ----------
Deferred tax assets 2,232 2,178 2,965
---------------------------------------------- ----- --------- --------- ----------
Retirement benefit asset 1,511 1,937 -
---------------------------------------------- ----- --------- --------- ----------
Other non-current assets 317 583 929
---------------------------------------------- ----- --------- --------- ----------
Derivative financial instruments 93 55 662
---------------------------------------------- ----- --------- --------- ----------
433,898 616,498 650,192
---------------------------------------------- ----- --------- --------- ----------
Current assets
---------------------------------------------- ----- --------- --------- ----------
Trade and other receivables 48,955 68,285 64,483
---------------------------------------------- ----- --------- --------- ----------
Contract assets 1,457 - -
---------------------------------------------- ----- --------- --------- ----------
Deferred consideration - 650 419
---------------------------------------------- ----- --------- --------- ----------
Current income tax assets 4,362 4,605 5,112
---------------------------------------------- ----- --------- --------- ----------
Cash and cash equivalents 49,751 78,273 4,426
---------------------------------------------- ----- --------- --------- ----------
Derivative financial instruments 219 131 2,686
---------------------------------------------- ----- --------- --------- ----------
Total assets of businesses held for sale 8 292,356 13,719 50,671
---------------------------------------------- ----- --------- --------- ----------
397,100 165,663 127,797
---------------------------------------------- ----- --------- --------- ----------
Current liabilities
---------------------------------------------- ----- --------- --------- ----------
Acquisition commitments (986) (97) (9,904)
---------------------------------------------- ----- --------- --------- ----------
Deferred consideration (138) (209) (350)
---------------------------------------------- ----- --------- --------- ----------
Trade and other payables (43,929) (44,931) (38,452)
---------------------------------------------- ----- --------- --------- ----------
Current income tax liabilities (16,564) (31,016) (16,117)
---------------------------------------------- ----- --------- --------- ----------
Group relief payable - - (387)
---------------------------------------------- ----- --------- --------- ----------
Accruals (48,562) (64,143) (67,819)
---------------------------------------------- ----- --------- --------- ----------
Deferred income and contract liabilities (87,150) (117,088) (113,487)
---------------------------------------------- ----- --------- --------- ----------
Derivative financial instruments (3,578) (2,424) (1,001)
---------------------------------------------- ----- --------- --------- ----------
Provisions (785) (248) (337)
---------------------------------------------- ----- --------- --------- ----------
Total liabilities of businesses held for sale 8 (71,534) (1,994) (29,998)
---------------------------------------------- ----- --------- --------- ----------
(273,226) (262,150) (277,852)
---------------------------------------------- ----- --------- --------- ----------
Net current assets / (liabilities) 123,874 (96,487) (150,055)
---------------------------------------------- ----- --------- --------- ----------
Total assets less current liabilities 557,772 520,011 500,137
---------------------------------------------- ----- --------- --------- ----------
Consolidated Statement of Financial Position
as at 30 September 2019 continued
Restated
Restated 1 October
2019 2018 2017
Notes GBP000 GBP000 GBP000
----------------------------------------- ------ -------- -------- ----------
Non-current liabilities
----------------------------------------- ------ -------- -------- ----------
Acquisition commitments (1,640) (175) (3,221)
------------------------------------------------- -------- -------- ----------
Deferred consideration - (125) -
------------------------------------------------- -------- -------- ----------
Borrowings - - (168,893)
------------------------------------------------- -------- -------- ----------
Other non-current liabilities (227) (1,348) (486)
------------------------------------------------- -------- -------- ----------
Deferred income and contract liabilities (1,278) (3,316) (3,491)
------------------------------------------------- -------- -------- ----------
Deferred tax liabilities (17,718) (27,553) (23,431)
------------------------------------------------- -------- -------- ----------
Retirement benefit obligations (7,723) (4,870) (9,954)
------------------------------------------------- -------- -------- ----------
Derivative financial instruments (293) (166) (230)
------------------------------------------------- -------- -------- ----------
Provisions (2,845) (3,872) (2,600)
------------------------------------------------- -------- -------- ----------
(31,724) (41,425) (212,306)
------------------------------------------------ -------- -------- ----------
Net assets 526,048 478,586 287,831
------------------------------------------------- -------- -------- ----------
Shareholders' equity
------------------------------------------------- -------- -------- --------
Called up share capital 12 273 273 273
------------------------------------------------- -------- -------- --------
Share premium account 104,306 103,790 103,147
------------------------------------------------- -------- -------- --------
Other reserve 64,981 64,981 64,981
------------------------------------------------- -------- -------- --------
Capital redemption reserve 56 56 56
------------------------------------------------- -------- -------- --------
Own shares (19,682) (20,462) (21,005)
------------------------------------------------- -------- -------- --------
Reserve for share-based payments 40,120 39,687 38,395
------------------------------------------------- -------- -------- --------
Fair value reserve (27,087) (27,616) (23,071)
------------------------------------------------- -------- -------- --------
Translation reserve 143,243 119,075 89,269
------------------------------------------------- -------- -------- --------
Retained earnings 218,795 198,802 26,628
------------------------------------------------- -------- -------- --------
Equity shareholders' surplus 525,005 478,586 278,673
------------------------------------------------- -------- -------- --------
Equity attributable to non-controlling interests 1,043 - 9,158
------------------------------------------------- -------- -------- --------
Total equity 526,048 478,586 287,831
------------------------------------------------- -------- -------- --------
The Consolidated Statements of Financial Position at 1 October 2017 and 30 September 2018 have been restated as detailed in note 1.
Approved by the Board of Directors on 21 November 2019.
Consolidated Statement of Changes in Equity
for the year ended 30 September 2019
Share Capital Reserve for Fair
Share premium Other redemption Own share-based value Translation Retained Non-controlling Total
capital account reserve reserve shares payments reserve reserve earnings Total interests equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
At 1 October 2017
(reported) 273 103,147 64,981 56 (21,005) 38,395 (23,071) 89,269 35,594 287,639 9,158 296,797
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Restatements
(note 1) - - - - - - - - (8,966) (8,966) - (8,966)
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
At 1 October 2017
(restated) 273 103,147 64,981 56 (21,005) 38,395 (23,071) 89,269 26,628 278,673 9,158 287,831
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Profit for the
year (restated) - - - - - - - - 195,004 195,004 139 195,143
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Other
comprehensive
(expense)/income
for the year - - - - - - (4,545) 27,349 6,022 28,826 (164) 28,662
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Total
comprehensive
(expense)/income
for the year - - - - - - (4,545) 27,349 201,026 223,830 (25) 223,805
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
De-recognition of
non-controlling
interest and
related
liabilities on disposal - - - - - - - - 317 317 (170) 147 ----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- -------- Adjustment arising from change in non-controlling interest - - - - - - - 2,457 6,082 8,539 (8,539) - ----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- -------- Credit for share-based payments - - - - - 1,741 - - - 1,741 - 1,741 ----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- -------- Cash dividend paid - - - - - - - - (34,361) (34,361) (424) (34,785) ----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- -------- Exercise of share options - 643 - - 543 (449) - - (94) 643 - 643 ----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- -------- Tax relating to items taken directly to equity - - - - - - - - (796) (796) - (796) ----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- -------- At 30 September 2018 (restated) 273 103,790 64,981 56 (20,462) 39,687 (27,616) 119,075 198,802 478,586 - 478,586 ----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Consolidated Statement of Changes in Equity
for the year ended 30 September 2019 continued
Share Capital Reserve for Fair
Share premium Other redemption Own share-based value Translation Retained Non-controlling Total
capital account reserve reserve shares payments reserve reserve earnings Total interests equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
At 30 September
2018 (restated) 273 103,790 64,981 56 (20,462) 39,687 (27,616) 119,075 198,802 478,586 - 478,586
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Impact of
adopting IFRS 9 - - - - - - (385) - 828 443 - 443
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
At 1 October 2018
(restated) 273 103,790 64,981 56 (20,462) 39,687 (28,001) 119,075 199,630 479,029 - 479,029
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Profit for the
year - - - - - - - - 60,929 60,929 264 61,193
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Other
comprehensive
income/(expense)
for the year - - - - - - 914 24,168 (4,295) 20,787 - 20,787
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Total
comprehensive
income for the
year - - - - - - 914 24,168 56,634 81,716 264 81,980
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Recognition of
acquisition
commitments - - - - - - - - (1,429) (1,429) - (1,429)
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Non-controlling
interest
recognised on
acquisition - - - - - - - - - - 779 779
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Credit for
share-based
payments - - - - - 883 - - - 883 - 883
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Cash dividend
paid - - - - - - - - (35,586) (35,586) - (35,586)
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Exercise of share
options - 516 - - 780 (450) - - (330) 516 - 516
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
Tax relating to
items taken
directly to
equity - - - - - - - - (124) (124) - (124)
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
At 30 September
2019 273 104,306 64,981 56 (19,682) 40,120 (27,087) 143,243 218,795 525,005 1,043 526,048
----------------- ------- ------- ------- ---------- -------- ----------- -------- ----------- -------- -------- --------------- --------
The other reserve represents the share premium arising on the shares issued for the purchase of Metal Bulletin plc in October 2006.
The investment in own shares is held by the Euromoney Employees' Share Ownership Trust and Euromoney Employee Share Trust.
The trusts waived the rights to receive dividends. Interest and administrative costs are charged to the profit and loss account of the trusts as incurred and included in the Consolidated Financial Statements.
2019 2018
Number Number
------------------------------------------- --------- ---------
Euromoney Employees' Share Ownership Trust 58,976 58,976
-------------------------------------------- --------- ---------
Euromoney Employee Share Trust 1,593,198 1,656,575
-------------------------------------------- --------- ---------
Total 1,652,174 1,715,551
-------------------------------------------- --------- ---------
Nominal cost per share (p) 0.25 0.25
-------------------------------------------- --------- ---------
Historical cost per share (GBP) 11.91 11.93
-------------------------------------------- --------- ---------
Market value (GBP000) 24,452 23,091
-------------------------------------------- --------- ---------
Consolidated Statement of Cash Flows
for the year ended 30 September 2019
Restated
2019 2018
Notes GBP000 GBP000
--------------------------------------------------------------------- ----- -------- --------
Cash flow from operating activities
--------------------------------------------------------------------- ----- -------- --------
Operating profit from continuing operations 2 30,649 107,865
--------------------------------------------------------------------- ----- -------- --------
Operating profit from discontinued operations 8 55,189 53,602
--------------------------------------------------------------------- ----- -------- --------
Operating profit 85,838 161,467
--------------------------------------------------------------------- ----- -------- --------
Long-term incentive expense 883 1,487
--------------------------------------------------------------------- ----- -------- -------- Acquired intangible amortisation 25,143 22,739 --------------------------------------------------------------------- ----- -------- -------- Licences and software amortisation 2,099 2,908 --------------------------------------------------------------------- ----- -------- -------- Depreciation of property, plant and equipment 2,744 3,356 --------------------------------------------------------------------- ----- -------- -------- Loss on disposal of property, plant and equipment 19 6 --------------------------------------------------------------------- ----- -------- -------- Loss on disposal of intangible assets - 432 --------------------------------------------------------------------- ----- -------- -------- Impairment charges 3 2,410 3,048 --------------------------------------------------------------------- ----- -------- -------- Amendment to defined benefit pension plan 3 (1,224) - --------------------------------------------------------------------- ----- -------- -------- Profit on disposal of businesses/associates 3 (16,998) (86,817) --------------------------------------------------------------------- ----- -------- -------- Cost of disposal of discontinued operations - exceptional items 3 (1,682) - --------------------------------------------------------------------- ----- -------- -------- (Decrease)/increase in provisions (552) 734 --------------------------------------------------------------------- ----- -------- -------- Profit on deemed disposal of associate (687) - --------------------------------------------------------------------- ----- -------- -------- Operating cash flows before movements in working capital 97,993 109,360 --------------------------------------------------------------------- ----- -------- -------- Decrease/(increase) in receivables 6,122 (7,498) --------------------------------------------------------------------- ----- -------- -------- (Decrease)/increase in payables (11,708) 6,698 --------------------------------------------------------------------- ----- -------- -------- Cash generated from operations 92,407 108,560 --------------------------------------------------------------------- ----- -------- -------- Income taxes paid (38,418) (38,692) --------------------------------------------------------------------- ----- -------- -------- Group relief tax paid - (229) --------------------------------------------------------------------- ----- -------- -------- Net cash generated from operating activities 53,989 69,639 --------------------------------------------------------------------- ----- -------- -------- Investing activities --------------------------------------------------------------------- ----- -------- -------- Interest received 1,128 950 --------------------------------------------------------------------- ----- -------- -------- Purchase of intangible assets (8,379) (3,262) --------------------------------------------------------------------- ----- -------- -------- Purchase of property, plant and equipment (1,637) (1,703) --------------------------------------------------------------------- ----- -------- -------- Proceeds from disposal of property, plant and equipment 14 74 --------------------------------------------------------------------- ----- -------- -------- Purchase of businesses/subsidiary undertakings, net of cash acquired 11 (68,101) (19,200) --------------------------------------------------------------------- ----- -------- -------- Proceeds from disposal of businesses 11 19,653 124,805 --------------------------------------------------------------------- ----- -------- -------- Dividends received from associate 197 - --------------------------------------------------------------------- ----- -------- -------- Proceeds from disposal of associate 10 - 100,142 --------------------------------------------------------------------- ----- -------- -------- Receipt of deferred consideration 9,671 1,607 --------------------------------------------------------------------- ----- -------- -------- Payment of deferred consideration (232) (1,470) --------------------------------------------------------------------- ----- -------- -------- Net cash (used in)/generated from investing activities (47,686) 201,943 --------------------------------------------------------------------- ----- -------- --------
Consolidated Statement of Cash Flows
for the year ended 30 September 2019 continued
Restated
2019 2018
Notes GBP000 GBP000
------------------------------------------------------------------------- ----- -------- ---------
Financing activities
------------------------------------------------------------------------- ----- -------- ---------
Dividends paid 6 (35,586) (34,361)
------------------------------------------------------------------------- ----- -------- ---------
Dividends paid to non-controlling interests - (424)
------------------------------------------------------------------------- ----- -------- ---------
Interest paid (1,287) (3,786)
------------------------------------------------------------------------- ----- -------- ---------
Cash settlement on interest rate swaps - 2,091
------------------------------------------------------------------------- ----- -------- ---------
Issue of new share capital 12 516 643
------------------------------------------------------------------------- ----- -------- ---------
Decrease in borrowings - (167,740)
------------------------------------------------------------------------- ----- -------- ---------
Purchase of additional interest in subsidiary undertakings 11 (97) (10,130)
------------------------------------------------------------------------- ----- -------- ---------
Net cash used in financing activities (36,454) (213,707)
------------------------------------------------------------------------- ----- -------- ---------
Net (decrease)/increase in cash and cash equivalents (30,151) 57,875
------------------------------------------------------------------------- ----- -------- ---------
Cash and cash equivalents at beginning of year (including held for sale) 78,273 14,272
------------------------------------------------------------------------- ----- -------- ---------
Effect of foreign exchange rate movements 1,956 6,126
------------------------------------------------------------------------- ----- -------- ---------
Cash and cash equivalents at end of year (including held for sale) 50,078 78,273
------------------------------------------------------------------------- ----- -------- ---------
Cash and cash equivalents classified as held for sale 8 (327) -
------------------------------------------------------------------------- ----- -------- ---------
Cash and cash equivalents at end of year 49,751 78,273
------------------------------------------------------------------------- ----- -------- ---------
This statement includes discontinued operations (note 8).
Notes to the Preliminary Statement
1. Basis of Preparation
While the financial information contained in this Preliminary Statement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as adopted by the European Union and interpretations issued by the IFRS Interpretations Committee (IFRS IC), this announcement does not itself contain sufficient information to comply with IFRS.
The information for the year ended 30 September 2019 does not constitute statutory accounts for the purposes of section 435 of the Companies Act 2006. A copy of the accounts for the year ended 30 September 2018 has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under section 498(2) or 498(3) of the Companies Act 2006. The accounts for the year ended 30 September 2019 have been audited and finalised on the basis of the financial information presented by the Directors in this Preliminary Statement and will be delivered to the Registrar of Companies following the Annual General Meeting.
Accounting Policies
The consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments.
The same accounting policies, presentation and methods of computation are followed in these financial statements as were applied in the Group's 2018 annual audited financial statements, except as described below.
-- IFRS 9 'Financial Instruments' - the mandatory effective date of implementation is 1 January 2018
-- IFRS 15 'Revenue from Contracts with Customers' - the mandatory effective date of implementation is 1 January 2018
The adoption and impact of these new pronouncements from 1 October 2018 have been disclosed within this note.
Certain changes to IFRS will be applicable to the Group Financial Statements in future years. Set out below are those which are considered to be most relevant to the Group.
Relevant new standards, amendments and interpretations issued but effective subsequent to the year end:
-- IFRS 16 'Leases' - the mandatory effective date of implementation is 1 January 2019
-- Amendment to IFRS 2 'Share-based Payments' - the mandatory effective date of implementation is 1 January 2019
-- IFRIC 22 'Foreign Currency Transactions and Advance Consideration' - the mandatory effective date of implementation is 1 January 2019
-- IFRIC 23 'Uncertainty over Income Tax Treatments' - the mandatory effective date of implementation is 1 January 2019
-- Amendments to IAS 28 'Investments in Associates' - the mandatory effective date of implementation is 1 January 2019
-- Amendments to IAS 19 'Employee Benefits' - the mandatory effective date of implementation is 1 January 2019
As at 30 September 2019, the following standards have not been endorsed by the European Union:
-- Amendment to definition of a business in IFRS 3 'Business Combinations' - the mandatory effective date of implementation is 1 January 2020
-- Amendments to Interest Rate Benchmark Reform - 'Financial Instruments' - IFRS 9, IAS 39 and IFRS 7 - the mandatory effective date of implementation is 1 January 2020
-- Amendments to IAS 1 'Presentation of Financial Statements'- the mandatory effective date of implementation is 1 January 2020
-- Amendments to IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' - the mandatory effective date of implementation is 1 January 2020
-- Amendments to the Conceptual framework - the mandatory effective date of implementation is 1 January 2020
IFRS 9 'Financial Instruments'
The Group adopted IFRS 9 'Financial Instruments' on 1 October 2018. Differences in the carrying amount of financial assets and liabilities resulting from the adoption of IFRS 9 have been recognised in opening reserves as at 1 October 2018 and comparatives have not been restated.
1 Basis of Preparation continued
Classification and measurement of financial assets
Under IFRS 9, financial assets are required to be measured at either amortised cost, fair value through other comprehensive income (FVTOCI) or fair value through profit or loss (FVTPL).
The impact of IFRS 9 on the Group's financial assets are as follows:
-- The Group has elected to classify as FVTOCI the equity financial asset which was previously classified as available-for-sale held at cost less any identified impairment losses in accordance with IAS 39. IFRS 9 allows for an irrevocable election on an instrument-by-instrument basis to classify equity financial assets as either FVTOCI or FVTPL. As a result, fair value movements are now recorded in other comprehensive income. Gains or losses will not be recycled to the income statement on disposal of the investments. The classification of future purchases of equity financial investments will be considered on an individual basis based on their merits. A fair value loss of GBP0.4m on transition has been recognised in opening fair value reserves.
-- The Group classified the convertible loan note asset as FVTPL as the contractual cash flows are not solely payments of principal and interest on the principal amount outstanding. This asset was previously measured at cost less any identified impairment losses in accordance with IAS 39. At the date of transition, there was no difference between the fair value and carrying value of the asset.
-- The Group has classified its investments in money market funds included in cash and cash equivalents as FVTPL as the contractual cash flows are not solely payments of principal and interest on the principal amount outstanding. These assets were previously classified as amortised cost financial assets under IAS 39. At the date of transition, there was no difference between the fair value and carrying value of the asset.
Trade debt provisions
IFRS 9 introduces a new impairment model which requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses, which was the case under IAS 39. The IFRS 9 impairment model recognises anticipated losses evidenced by both historical recovery rates and forward-looking indicators. The Group has applied the simplified approach for trade receivables and contract assets and recognised the loss allowance at an amount equal to lifetime expected credit losses. The reduction in expected credit loss allowance of GBP0.8m at 1 October 2018 has been recognised against opening retained earnings. Deferred consideration receivables are considered to have low credit risk and the loss allowance is therefore limited to 12 months expected losses and is not considered material.
Hedge accounting
IFRS 9 introduces a new hedge accounting model with a principles-based approach designed to align the accounting result with the economic hedging strategy. The Group uses cash flow hedge relationships to hedge its exposure to US dollar and euro revenues in its UK businesses and the operation's Canadian dollar cost base in Canada. The Group confirms that its existing hedge relationships continue to qualify as hedges upon the transition to IFRS 9.
Differences between the previous carrying amount and the restated carrying amount at 1 October 2018 are disclosed in the restatement table on page 24.
IFRS 15 'Revenue from Contracts with Customers'
The Group adopted IFRS 15 'Revenue from contracts with customers' on 1 October 2018 and adopted the modified retrospective method. This method recognises the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance sheet in the period of initial application and comparative periods will not be adjusted. There is no material impact on the timing of revenue recognition arising from the implementation of IFRS 15.
Vote revenue and best efforts revenue are treated as variable consideration under IFRS 15. This requires the Group to include an estimate of the variable consideration in the transaction price to the extent that it is highly probable that the related revenue, if recognised, would not be reversed. Any incremental amounts would be included in the transaction price once the confirmation of the vote or the best efforts revenue is given. The assessment of whether an amount of revenue is highly probable may require significant judgement. In some instances, the amount may not be highly probable until the Group has received specific notification of the amount from the customer or has received the payment. In other cases, established relationships, past patterns of behaviour or informal correspondence with the customer may provide sufficient evidence that at least an element of revenue is highly probable before the amount is formally confirmed.
Where multiple services are bundled within one contract, revenue is allocated to the different performance obligations on a relative standalone selling price basis and recognised separately when the performance obligation is satisfied. Where this occurs, the Group's treatment under IAS 18 was consistent with that under IFRS 15.
IFRS 15 requires revenue to be recognised over time where research is unique to a specific customer and where the customer is obligated to pay for the work performed should it terminate the contract. Limited cases of customised research are performed across the Group whereby revenue is recognised over time in line with the stage of completion.
1. Basis of Preparation continued
The Group recognises all costs and commissions to obtain contracts with a term of one year or less when incurred. Commissions which relate to multi-year contracts are recognised as an asset and amortised in line with the proportion of the contract's revenue recognised in the period. The Group does not have significant costs and commissions to obtain contracts with a term of more than one year.
The Group does not adjust the amount of consideration for the effects of a significant financing component if it expects that the period between when the customer pays and when the Group transfers the promised good or service will be one year or less.
Amounts recoverable on contracts relating to accrued income of GBP1.5m, previously included within trade and other receivables, have been reclassified to contract assets net of the loss allowance. Deferred income has been reclassified as a contract liability as at 1 October 2018.
Accounting policy for revenue
Revenue represents income from subscriptions, advertising, sponsorship and delegate fees, net of value added tax.
-- Subscription revenues for print and online publications and memberships are recognised in the Income Statement on a straight-line basis over the period of the subscription and the satisfaction of the performance obligation, reflecting the pattern over which the customer receives benefits. These revenues are due in advance on a monthly or annual basis.
-- Advertising revenues represent the fees that customers pay in advance to place an advertisement in one or more of the Group's publications, either in print or online, to commission ad hoc consulting and thought leadership projects and to purchase survey reports. Advertising revenues for print publications are recognised in the Income Statement when the publications have been delivered which is when the performance obligation is satisfied. This is the time at which the benefit becomes available to the customer. Revenue for online advertising is recognised on a straight-line basis over the period that the advert is run, reflecting the period over which the customer receives benefit.
-- Events revenues are received in advance and recognised in the Income Statement over the period the event is run.
-- Variable consideration is included in the transaction price to the extent that it is highly probable that the related revenue, if recognised, would not be reversed.
Revenues invoiced but relating to future periods are deferred and treated as contract liabilities in the Statement of Financial Position. The Group does not have individual long-term revenue contracts that are material.
Amounts recoverable on contracts relating to accrued income have been classified to contract assets net of any loss allowance.
IFRS 16 'Leases'
IFRS 16 comes into effect for accounting periods starting on or after 1 January 2019. Therefore for the Group, the standard will be applied from 1 October 2019.
The new standard will change the way in which leases will be recognised and disclosed in the Group's Financial Statements. It also brings into scope contracts which would not previously have been accounted for as leases. The Group also enters into agreements which gives it the rights to specific technology assets that in the future could be accounted for as leases under the new standard. This change in accounting policies will result in the recognition of 'right of use' assets and lease liabilities on the Statement of Financial Position, as well as having an impact on the Group's Income Statement, by replacing rental expense with depreciation and introducing a finance expense where the discount on lease liabilities is unwound.
Upon transition, the Group will apply the modified retrospective adoption of the standard. The right of use assets for the leases will be calculated using a mixture of the 'simplified' and 'asset' methods. Under the 'simplified' method the right of use asset is equal to the present value of future lease payments. Under the 'asset' method the right of use asset is estimated as if IFRS 16 had always been applied. The following practical expedients will be applied on transition:
-- On initial application, IFRS 16 will only apply to contracts that would have previously been classified as leases under IAS 17 'Leases';
-- The Group has relied on its onerous lease assessment instead of performing an impairment review; and
-- Initial direct costs will be excluded from the measurement of the right of use asset at the date of initial application
Following transition the Group will also apply the practical expedient to expense to the Income Statement leases with a term of 12 months or less; and for assets that would have cost less than $5,000.
1. Basis of Preparation continued
Based on the relevant contracts in place at 1 October 2019, an estimate of IFRS 16's impact on the Group's financial statements for the year ended 30 September 2020 is as follows:
Component of financial statements Estimated impact ------------------------------------------------------------------ -------------------- Consolidated Statement of Financial Position at 1 October 2019 ------------------------------------------------------------------ -------------------- Right of use assets Increase of GBP56m ------------------------------------------------------------------ -------------------- Lease liabilities Increase of GBP71m ------------------------------------------------------------------ -------------------- Deferred tax assets Increase of GBP1m ------------------------------------------------------------------ -------------------- Accruals Reduction of GBP12m ------------------------------------------------------------------ -------------------- Retained earnings Reduction of GBP2m ------------------------------------------------------------------ -------------------- Consolidated Income Statement for the year ended 30 September 2020 ------------------------------------------------------------------ -------------------- Depreciation Charge of GBP6m ------------------------------------------------------------------ -------------------- Finance expense Charge of GBP2m ------------------------------------------------------------------ -------------------- Operating profit Improvement of GBP1m ------------------------------------------------------------------ -------------------- Profit before tax Loss of GBP1m ------------------------------------------------------------------ --------------------
Restatements
Discontinued operations
Following the Group's decision to explore the strategic options for Asset Management, the segment has met the recognition criteria of discontinued operations under IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations' and is therefore presented as such throughout this report. In order to comply with this presentation, the 2018 Income Statement disclosures have been re-presented.
IFRS 9 'Financial Instruments'
The Group has adopted IFRS 9 using the modified retrospective approach. The adjustment on transition has therefore been recognised in opening reserves at 1 October 2018. The Group has applied the simplified approach for trade receivables and contract assets and recognised the loss allowance at an amount equal to lifetime expected credit losses. The reduction in the expected credit loss allowance of GBP0.8m at 1 October 2018 has been recognised against opening retained earnings. The Group has elected to classify as FVTOCI the equity financial asset which was previously classified as available-for-sale held at cost less any identified impairment losses in accordance with IAS 39. A fair value loss of GBP0.4m on transition has been recognised in opening fair value reserves. Further details for the adoption of IFRS 9 are on pages 20 and 21.
Payroll taxes
In December 2018, the Group engaged external advisors to undertake an independent review of the Group's compliance with the off-payroll working rules. As a result of the review, the Group has identified an underpayment of payroll taxes to HMRC for the six years to 30 September 2019. A restatement has been made to recognise a historical exposure of GBP6.6m prior to the current financial period, consisting of GBP5.4m of payroll taxes underpaid, GBP0.4m of interest and GBP0.8m of penalties. The Group notified HMRC that a voluntary disclosure will be made with respect to the Group's Pay as You Earn (PAYE) and National Insurance Contribution (NIC) obligations. This restatement is not excluded from adjusted measures, as defined on page 6, as the related charges are expected to recur.
Value Added Tax (VAT)
During the second half of the year, the Group discovered a VAT exposure in the UK relating to the understatement of VAT on supplies made between entities within the Group in respect of the four years ended 30 September 2018. Based on the current assessment, the exposure at the end of 2018 is GBP11.0m, consisting of GBP10.7m of VAT and GBP0.3m of interest. A further GBP0.3m of interest accrued in 2019. The 2018 VAT expense has been classified as an exceptional item and the interest has been treated as an adjusted finance expense. As a result, this restatement is excluded from adjusted measures, as defined on page 6, because these charges are not expected to recur.
1. Basis of Preparation continued
The below is a summary of the restatements:
Restatements
2017 2018
--------------------------------------------------- ----------------------------------------------------------------------------
IFRS 9
1 Restated transition
1 October 30 - 1 October Restated
Statements October Payroll 2017 2018 Payroll Discontinued September 2018 1 October
adjusted Line item 2017 taxes VAT restated reported taxes VAT operations 2018 restatement 2018
------------- ------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Operating
profit
before
acquired
intangible
amortisatio
Consolidated n and
Income exceptional
Statement items 103,198 (1,593) - (61,660) 39,945 - 39,945
-------------- ------------ -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Acquired intangible
amortisation (22,739) - - 10,749 (11,990) - (11,990)
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Exceptional items 81,396 - (5,336) 3,850 79,910 - 79,910
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Finance expense (6,034) (162) (174) (84) (6,454) - (6,454)
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Tax expense on profit (51,360) 294 906 8,802 (41,358) - (41,358)
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Profit for the year from
discontinued operations 91,342 - - 38,343 129,685 - 129,685
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Basic earnings per share 187.18 (1.36) (4.28) - 181.54
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Diluted earnings per share 186.96 (1.36) (4.28) - 181.32
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Consolidated
Statement of
Financial
Position and
Consolidated
Statement of Trade and
Changes in other
Equity receivables - - - - 68,285 - - 68,285 828 69,113
-------------- ------------ -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Net deferred tax
liability(1) (21,882) 506 910 (20,466) (27,191) - 1,816 (25,375) (25,375)
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Other equity investments - - - - 3,546 - - 3,546 (385) 3,161
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Current income tax
liabilities (16,117) - - (16,117) (31,816) 800 - (31,016) - (31,016)
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Trade and other payables (28,070) (4,913) (5,469) (38,452) (27,284) (6,668) (10,979) (44,931) - (44,931)
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Fair value reserve - - - - (27,616) - - (27,616) (385) (28,001)
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
Retained earnings 35,594 (4,407) (4,559) 26,628 213,833 (5,868) (9,163) 198,802 828 199,630
--------------------------- -------- ------- ------- -------- -------- ------- -------- ------------ --------- ----------- ---------
(1) At 1 October 2017, the Group's net deferred tax liabilities were split between deferred tax assets of GBP1.6m and deferred tax liabilities of GBP23.4m. The restatements increased the Group's deferred tax asset from GBP1.6m to GBP3.0m. At 30 September 2018, the Group's previously reported net deferred tax liabilities were split between deferred tax assets of GBP1.3m and deferred tax liabilities of GBP28.5m. Included within the Group's deferred tax liabilities at 30 September 2018 were UK deferred tax liabilities of GBP0.9m. The restatements resulted in a restated UK deferred tax asset of GBP0.8m. The Group's restated deferred tax assets and deferred tax liabilities at 30 September 2018 are GBP2.2m and GBP27.6m respectively.
Going concern
Having assessed the principal risks and the other matters discussed in connection with the viability statement, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing this Preliminary Statement.
2. Segmental analysis
Segmental information is presented in respect of the Group's segments and reflects the Group's management and internal reporting structure. The Group is organised into three segments: Asset Management; Pricing, Data & Market Intelligence; and Banking & Finance.
Revenues generated in the Asset Management and Pricing, Data & Market Intelligence segments are primarily from subscriptions. Banking & Finance revenues consist mainly of sponsorship income and delegates revenue. A breakdown of the Group's revenue by type is set out below.
Following the disposal of Mining Indaba (note 11) during the year, the Commodity Events segment has been incorporated into the Pricing, Data & Market Intelligence segment. The segment information for the Mining Indaba business has been reclassified as a sold business.
As a result of the closure of Centre for Investor Education (CIE), the segment information for this business has been reclassified from Asset Management to closed businesses.
Euromoney Financing Events and Thought Leadership have been moved from Banking & Finance to the Pricing, Data & Market Intelligence segment. Global Investor has also moved from Asset Management to the Pricing, Data & Market Intelligence segment. These movements are due to the realignment of how the businesses are managed internally.
The comparative split of segmental revenues, revenue by type, operating profits, acquired intangible amortisation, exceptional items and depreciation and amortisation has been restated to reflect Commodity Events, Euromoney Financing Events, Thought Leadership and Global Investor being incorporated into the Pricing, Data & Market Intelligence segment and Mining Indaba and CIE being reclassified as a sold/closed business.
The Asset Management segment has been classified as discontinued operations (note 8), therefore it is presented as such throughout this report and the 2018 Income Statement disclosures have been re-presented. In 2018, the Global Markets Intelligence Division (GMID) was classified as a discontinued operation and disposed of on 30 April 2018 and is therefore presented as such throughout this report.
Events revenue consists of sponsorship and delegates revenue.
Analysis of the Group's three main geographical areas is also set out to provide additional information on the trading performance of the businesses.
Inter-segment sales are charged at prevailing market rates and shown in the eliminations columns.
Advertising Total
and other Events revenue
2019 Subscriptions and content GBP000 GBP000 GBP000 GBP000
--------------------------------------------- -------------------------------- ----------- -------- ---------
Revenue by segment and type:
--------------------------------------------- -------------------------------- ----------- -------- ---------
Asset Management 117,891 10,789 16,942 145,622
--------------------------------------------- -------------------------------- ----------- -------- ---------
Pricing, Data & Market Intelligence 115,449 19,360 61,569 196,378
--------------------------------------------- -------------------------------- ----------- -------- ---------
Banking & Finance 7,248 8,173 45,738 61,159
--------------------------------------------- -------------------------------- ----------- -------- ---------
240,588 38,322 124,249 403,159
--------------------------------------------- -------------------------------- ----------- -------- ---------
Sold/closed businesses - - 1,997 1,997
--------------------------------------------- -------------------------------- ----------- -------- ---------
Foreign exchange losses on forward contracts - (3,483) - (3,483)
--------------------------------------------- -------------------------------- ----------- -------- --------- Segment revenue 240,588 34,839 126,246 401,673 --------------------------------------------- -------------------------------- ----------- -------- --------- Discontinued operations - Asset Management (117,891) (10,789) (16,942) (145,622) --------------------------------------------- -------------------------------- ----------- -------- --------- Continuing operations 122,697 24,050 109,304 256,051 --------------------------------------------- -------------------------------- ----------- -------- ---------
2. Segmental analysis continued
Advertising Total
Subscriptions and content and other Events revenue
2018 GBP000 GBP000 GBP000 GBP000
-------------------------------------------- ------------------------- ----------- -------- ---------
Revenue by segment and type:
-------------------------------------------- ------------------------- ----------- -------- ---------
Asset Management 118,876 11,216 15,362 145,454
-------------------------------------------- ------------------------- ----------- -------- ---------
Pricing, Data & Market Intelligence 92,489 19,408 56,126 168,023
-------------------------------------------- ------------------------- ----------- -------- ---------
Banking & Finance 7,496 8,641 47,581 63,718
-------------------------------------------- ------------------------- ----------- -------- ---------
218,861 39,265 119,069 377,195
-------------------------------------------- ------------------------- ----------- -------- ---------
Sold/closed businesses (excluding GMID) - - 11,826 11,826
-------------------------------------------- ------------------------- ----------- -------- ---------
Foreign exchange gains on forward contracts - 1,258 - 1,258
-------------------------------------------- ------------------------- ----------- -------- ---------
Segment revenue 218,861 40,523 130,895 390,279
-------------------------------------------- ------------------------- ----------- -------- ---------
Discontinued operations - Asset Management (118,876) (11,216) (15,362) (145,454)
-------------------------------------------- ------------------------- ----------- -------- ---------
Continuing operations 99,985 29,307 115,533 244,825
-------------------------------------------- ------------------------- ----------- -------- ---------
Continuing events revenue of GBP115.5m and print advertising of GBP13.2m are recognised at a point in time. The remaining subscription and online advertising revenue is recognised over time.
United Kingdom North America Rest of World Eliminations Total
---------------- -------------------- ---------------- ---------------- --------------------
2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------- ------- ------- --------- --------- ------- ------- ------- ------- --------- ---------
Revenue by segment
and source:
-------------------- ------- ------- --------- --------- ------- ------- ------- ------- --------- ---------
Asset Management - 884 145,696 144,660 - - (74) (90) 145,622 145,454
-------------------- ------- ------- --------- --------- ------- ------- ------- ------- --------- ---------
Pricing, Data &
Market Intelligence 139,295 124,425 53,482 37,924 6,565 6,568 (2,964) (894) 196,378 168,023
-------------------- ------- ------- --------- --------- ------- ------- ------- ------- --------- ---------
Banking & Finance 32,628 34,479 25,159 24,943 3,796 4,766 (424) (470) 61,159 63,718
-------------------- ------- ------- --------- --------- ------- ------- ------- ------- --------- ---------
Sold/closed
businesses
(excluding GMID) - 7,269 - 1,073 1,997 3,484 - - 1,997 11,826
-------------------- ------- ------- --------- --------- ------- ------- ------- ------- --------- ---------
Foreign exchange
(losses)/gains on
forward contracts (3,483) 1,258 - - - - - - (3,483) 1,258
-------------------- ------- ------- --------- --------- ------- ------- ------- ------- --------- ---------
Segment revenue 168,440 168,315 224,337 208,600 12,358 14,818 (3,462) (1,454) 401,673 390,279
-------------------- ------- ------- --------- --------- ------- ------- ------- ------- --------- ---------
Discontinued
operations - Asset
Management - (884) (145,696) (144,660) - - 74 90 (145,622) (145,454)
-------------------- ------- ------- --------- --------- ------- ------- ------- ------- --------- ---------
Continuing
operations 168,440 167,431 78,641 63,940 12,358 14,818 (3,388) (1,364) 256,051 244,825
-------------------- ------- ------- --------- --------- ------- ------- ------- ------- --------- ---------
Statutory revenue by
destination 41,695 36,347 105,456 90,480 108,900 117,998 - - 256,051 244,825
-------------------- ------- ------- --------- --------- ------- ------- ------- ------- --------- ---------
2. Segmental analysis continued
United Kingdom North America Rest of World Total
------------------ ------------------ ---------------- ------------------
2019 2018 2019 2018 2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Adjusted operating profit(1) by segment
and source:
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Asset Management 3 150 62,148 58,739 - - 62,151 58,889
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Pricing, Data & Market Intelligence 54,715 46,199 18,552 16,468 (3,860) (2,495) 69,407 60,172
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Banking & Finance 4,458 5,279 9,524 9,674 (313) 692 13,669 15,645
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Sold/closed businesses (excluding GMID) (134) 3,759 (7) 3,048 590 (908) 449 5,899
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Unallocated corporate costs (35,899) (33,909) (2,807) (3,168) (1,527) (1,923) (40,233) (39,000)
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Adjusted operating profit(1) 23,143 21,478 87,410 84,761 (5,110) (4,634) 105,443 101,605
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Discontinued operations - Asset
Management (3) (244) (66,926) (61,416) - - (66,929) (61,660)
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Continuing operations 23,140 21,234 20,484 23,345 (5,110) (4,634) 38,514 39,945
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Acquired intangible amortisation(2)
(note 9) (7,128) (7,609) (7,049) (4,343) (38) (38) (14,215) (11,990)
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Exceptional items (note 3) 15,861 (9,483) (6,739) 75,434 (2,772) 13,959 6,350 79,910
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Operating profit/(loss) 31,873 4,142 6,696 94,436 (7,920) 9,287 30,649 107,865
---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
Share of results in associates and joint
ventures (note 10) (88) 157 ---------------------------------------- -------- -------- -------- -------- ------- ------- -------- -------- Finance income (note 4) 1,873 5,248 ---------------------------------------- -------- -------- -------- -------- ------- ------- -------- -------- Finance expense (note 4) (2,983) (6,454) ---------------------------------------- -------- -------- -------- -------- ------- ------- -------- -------- Profit before tax 29,451 106,816 ---------------------------------------- -------- -------- -------- -------- ------- ------- -------- -------- Tax expense on profit (note 5) (9,317) (41,358) ---------------------------------------- -------- -------- -------- -------- ------- ------- -------- -------- Profit for the year from continuing operations 20,134 65,458 ---------------------------------------- -------- -------- -------- -------- ------- ------- -------- --------
1 Operating profit including discontinued operations of Asset Management before acquired intangible amortisation and exceptional items. A detailed reconciliation of the Group's statutory results to the adjusted and underlying results is set out on pages 6 to 11.
2 Acquired intangible amortisation represents amortisation of acquisition-related non-goodwill assets such as trademarks and brands, customer relationships, databases and software (note 9).
2. Segmental analysis continued
Acquired intangible amortisation Exceptional items Depreciation and amortisation
---------------------------------- ------------------- -------------------------------
2019 2018 2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- ---------------- ---------------- --------- -------- --------------- --------------
Other segmental information
by segment:
---------------------------- ---------------- ---------------- --------- -------- --------------- --------------
Asset Management (10,928) (10,749) (2,494) (3,850) (1,181) (1,126)
---------------------------- ---------------- ---------------- --------- -------- --------------- --------------
Pricing, Data & Market
Intelligence (11,283) (8,642) (7,916) (5,277) (907) (1,374)
---------------------------- ---------------- ---------------- --------- -------- --------------- --------------
Banking & Finance (234) (222) - - - -
---------------------------- ---------------- ---------------- --------- -------- --------------- --------------
Sold/closed businesses
(excluding GMID) (2,432) (2,853) 14,226 90,523 (9) (12)
---------------------------- ---------------- ---------------- --------- -------- --------------- --------------
Unallocated corporate costs (266) (273) 40 (5,336) (2,746) (3,752)
---------------------------- ---------------- ---------------- --------- -------- --------------- --------------
Continuing operations (25,143) (22,739) 3,856 76,060 (4,843) (6,264)
---------------------------- ---------------- ---------------- --------- -------- --------------- --------------
Discontinued operations -
Asset Management 10,928 10,749 2,494 3,850 1,181 1,126
---------------------------- ---------------- ---------------- --------- -------- --------------- --------------
Total (14,215) (11,990) 6,350 79,910 (3,662) (5,138)
---------------------------- ---------------- ---------------- --------- -------- --------------- --------------
The closing net book value of goodwill, other intangible assets, property, plant and equipment and investments is analysed by geographic area as follows:
United Kingdom North America Rest of World Total
---------------- ---------------- ---------------- ----------------
2019 2018 2019 2018 2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------ ------- ------- ------- ------- ------- ------- ------- -------
Goodwill 102,367 104,227 139,246 303,399 4,668 7,096 246,281 414,722
------------------------------ ------- ------- ------- ------- ------- ------- ------- -------
Other intangible assets 42,763 45,656 115,898 127,326 479 521 159,140 173,503
------------------------------ ------- ------- ------- ------- ------- ------- ------- -------
Property, plant and equipment 4,617 5,325 10,310 10,165 367 622 15,294 16,112
------------------------------ ------- ------- ------- ------- ------- ------- ------- -------
Investments 5,271 4,261 - - - - 5,271 4,261
------------------------------ ------- ------- ------- ------- ------- ------- ------- -------
Non-current assets 155,018 159,469 265,454 440,890 5,514 8,239 425,986 608,598
------------------------------ ------- ------- ------- ------- ------- ------- ------- -------
Additions to property,
plant and equipment (112) (602) (1,408) (1,006) (117) (370) (1,637) (1,978)
------------------------------ ------- ------- ------- ------- ------- ------- ------- -------
The Group has taken advantage of paragraph 23 of IFRS 8 'Operating Segments' and does not provide segmental analysis of net assets as this information is not used by the Directors in operational decision making or monitoring of business performance.
3. Exceptional items
Exceptional items are items of income or expense considered by the Directors as being significant, non-recurring and which require additional disclosure in order to provide an indication of the underlying trading performance of the Group.
Restated
2019 2018
GBP000 GBP000
------------------------------------------------------------------ ------- --------
Profit on disposal of businesses/associates 16,998 86,817
------------------------------------------------------------------ ------- --------
Impairment charges (2,410) (3,048)
------------------------------------------------------------------ ------- --------
Amendment to defined benefit pension scheme 1,224 -
------------------------------------------------------------------ ------- --------
VAT underpayments - (5,336)
------------------------------------------------------------------ ------- --------
Other exceptional (costs)/income (9,462) 1,477
------------------------------------------------------------------ ------- --------
Continuing operations 6,350 79,910
------------------------------------------------------------------ ------- --------
Exceptional items from discontinued operations - Asset Management (812) (3,850)
------------------------------------------------------------------ ------- --------
Cost of disposal of discontinued operations - Asset Management (1,682) -
------------------------------------------------------------------ ------- --------
3,856 76,060
------------------------------------------------------------------ ------- --------
For the year ended 30 September 2019, the Group recognised a continuing operations exceptional credit of GBP6.4m.
The Group sold Mining Indaba for a profit of GBP17.0m (note 11).
3. Exceptional items continued
The impairment charge relates to goodwill of GBP2.4m resulting from the closure of Centre for Investor Education (CIE). Costs associated with this closure are included in the other exceptional costs and restructuring.
The Trustees of the Metal Bulletin plc Pension Scheme, which is a defined benefit scheme, changed the scheme rules for the underlying index of deferred revaluation from RPI to CPI, which resulted in a GBP1.2m reduction in the net pension deficit.
Other exceptional (costs)/income consist of the recognition of the earn-out payments of GBP2.5m for the acquisitions of Site Seven Media Ltd (TowerXchange) and Random Lengths which are treated as compensation costs. It is Group policy to treat, as exceptional, significant earn-out payments required by IFRS to be recognised as a compensation cost. The acquisition-related costs of GBP5.4m for Random Lengths, BoardEx and The Deal (note 11) are treated as exceptional due to the magnitude of the costs associated with the acquisitions. Significant costs associated with an acquisition project that did not complete of GBP1.2m are treated as exceptional items. The remaining costs are as a result of a strategic review undertaken for the major restructuring of CIE have been treated as exceptional items. Normal restructuring costs are not treated as exceptional items.
The Group's tax charge includes a related tax charge on the continuing operations exceptional items of GBP2.8m (note 5).
The discontinued operations have incurred exceptional costs, including engaging with advisors to assist with the strategic review of Asset Management. These exceptional costs of GBP1.7m have been disclosed separately (note 8). The exceptional items incurred by the discontinued operation relate to a strategic review undertaken for the major restructuring of certain businesses. The Group's tax charge includes a related tax credit on the discontinued operations exceptional items of GBP0.2m (note 5).
For the year ended 30 September 2018, the Group recognised a continuing operations exceptional credit of GBP79.9m.
The Group sold Adhesion (profit GBP9.8m), World Bulk Wine (profit GBP0.9m) and Institutional Investor Journals (profit GBP4.4m) which resulted in a net profit of GBP15.1m. The disposal of the associate investment in Dealogic resulted in a profit of GBP71.7m.
The impairment charge related to a goodwill impairment of GBP3.0m for Layer123 Events and Training Limited (Layer123). The impairment of Layer123 was a result of its disappointing financial performance post acquisition.
Other exceptional (costs)/income consisted of restructuring costs, earn-out payments treated as compensation costs and acquisition related costs offset by the favourable settlement of the legal dispute with the previous owners of CIE. The acquisition related costs of Random Lengths were treated as exceptional due to the magnitude of the costs associated with the acquisition. Acquisition costs for smaller acquisitions were not treated as exceptional.
The 2018 exceptional charge has been restated for the VAT underpayment of GBP5.3m (note 1).
The Group's tax charge included a related tax charge on the continuing operations exceptional items of GBP12.1m (note 5).
The Asset Management discontinued operations exceptional items related to costs as a result of a strategic review undertaken for the major restructuring of certain businesses. Normal restructuring costs are not treated as exceptional items.
4. Finance income and expense
Restated
2019 2018
GBP000 GBP000
----------------------------------------------------- ------- --------
Finance income
----------------------------------------------------- ------- --------
Interest receivable from short-term investments 1,198 2,870
----------------------------------------------------- ------- --------
Movements in acquisition commitments - 2,378
----------------------------------------------------- ------- --------
Fair value remeasurement 675 -
----------------------------------------------------- ------- --------
1,873 5,248
----------------------------------------------------- ------- --------
Finance expense
----------------------------------------------------- ------- --------
Interest payable on borrowings (1,362) (4,201)
----------------------------------------------------- ------- --------
Net interest expense on defined benefit liability (100) (248)
----------------------------------------------------- ------- --------
Movements in acquisition commitments (1,022) -
----------------------------------------------------- ------- --------
Movements in deferred consideration (36) (1,122)
----------------------------------------------------- ------- --------
Interest on tax (463) (883)
----------------------------------------------------- ------- --------
(2,983) (6,454)
----------------------------------------------------- ------- --------
Continuing operations net finance costs (1,110) (1,206)
----------------------------------------------------- ------- --------
The 2018 finance expense has been restated for the payroll taxes (GBP0.2m) and VAT underpayments (GBP0.2m) to reflect the estimated interest related to these exposures as detailed in note 1.
Restated
2019 2018
GBP000 GBP000
-------------------------------------------------------------------------------------- ------- --------
Reconciliation of net finance costs in Income Statement to adjusted net finance costs
-------------------------------------------------------------------------------------- ------- --------
Continuing operations net finance costs in Income Statement (1,110) (1,206)
-------------------------------------------------------------------------------------- ------- --------
Add back:
-------------------------------------------------------------------------------------- ------- --------
Movements in acquisition commitments 1,022 (2,378)
-------------------------------------------------------------------------------------- ------- --------
Movements in deferred consideration 36 1,122
-------------------------------------------------------------------------------------- ------- --------
Fair value remeasurement (675) -
-------------------------------------------------------------------------------------- ------- --------
Other 156 (455)
-------------------------------------------------------------------------------------- ------- --------
539 (1,711)
-------------------------------------------------------------------------------------- ------- --------
Continuing operations adjusted net finance costs (571) (2,917)
-------------------------------------------------------------------------------------- ------- --------
Discontinued operations adjusted net finance income - Asset Management (99) 84
-------------------------------------------------------------------------------------- ------- --------
Total adjusted net finance costs (670) (2,833)
-------------------------------------------------------------------------------------- ------- --------
The reconciliation of net finance costs in the Income Statement has been provided since the Directors consider it necessary in order to provide an indication of the adjusted net finance costs (page 7).
Charges and credits relating to the movements in acquisition commitments and deferred consideration reflect future payments and receipts expected on historical transactions that do not directly relate to the current year results.
The Group's convertible loan note asset is measured at fair value through profit or loss (FVTPL) (note 1). The fair value remeasurement is an adjusting item as it relates to historical M&A activity rather than the current trading performance and is as a result of the revaluation of the convertible loan note as at 30 September 2019.
Other items in the adjusted net finance costs consist of interest income of GBP0.2m (September 2018: GBP0.6m charge) for movements in respect of uncertain tax positions. Finance costs of GBP0.3m (2018: GBP0.2m) as a result of the VAT underpayment are excluded as the related charge is not expected to recur. In addition, at 30 September 2018, the other items included a gain realised on the close-out of the interest rate swaps of GBP2.1m offset by the write-off of capitalised borrowing costs of GBP0.9m following the repayment of the Group's term loan. The net gain was excluded from adjusted finance costs as it would not have crystallised had the disposal of GMID not completed.
5 Tax expense on profit
Discontinued Discontinued operations
operations - -
Continuing operations Asset Management Continuing operations Asset Management
2019 2019 2018 2018
GBP000 GBP000 GBP000 GBP000
----------------------- --------------------- ---------------------- --------------------- -----------------------
Current tax expense
----------------------- --------------------- ---------------------- --------------------- -----------------------
UK corporation tax
expense 9,438 - 17,661 -
----------------------- --------------------- ---------------------- --------------------- -----------------------
Foreign tax expense 1,754 12,638 10,596 12,743
----------------------- --------------------- ---------------------- --------------------- -----------------------
Adjustments in respect
of prior years (959) (759) 8,063 (61)
----------------------- --------------------- ---------------------- --------------------- -----------------------
10,233 11,879 36,320 12,682
----------------------- --------------------- ---------------------- --------------------- -----------------------
Deferred tax
expense/(credit)
----------------------- --------------------- ---------------------- --------------------- -----------------------
Current year (1,821) 603 5,694 (3,880)
----------------------- --------------------- ---------------------- --------------------- -----------------------
Adjustments in respect
of prior years 905 (133) (656) -
----------------------- --------------------- ---------------------- --------------------- -----------------------
(916) 470 5,038 (3,880)
----------------------- --------------------- ---------------------- --------------------- -----------------------
Tax expense in Income
Statement 9,317 12,349 41,358 8,802
----------------------- --------------------- ---------------------- --------------------- -----------------------
Effective tax rate 32% 23% 39% 19%
----------------------- --------------------- ---------------------- --------------------- -----------------------
The adjusted effective tax rate for the year is set out below:
Discontinued Discontinued
operations - operations -
Continuing Asset Continuing Asset
operations Management Total adjusted operations Management Total adjusted
2019 2019 2019 2018 2018 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
Reconciliation
of tax expense
in Income
Statement to
adjusted tax
expense
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
Total tax
expense in
Income
Statement 9,317 12,349 21,666 41,358 8,802 50,160
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
Add back:
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
Deferred tax
on acquired
intangible
amortisation 2,258 - 2,258 3,668 1,364 5,032
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
Tax on
exceptional
items (2,837) 173 (2,664) (12,116) - (12,116)
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
Other tax
adjusting
items (479) - (479) (13,725) 1,313 (12,412)
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
Deferred tax
on goodwill
and
intangible
amortisation (843) - (843) (3,043) - (3,043)
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
Share of tax
on profits
of
associates
and joint
ventures (38) - (38) 333 - 333
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
Adjustments
in respect
of prior
years 54 892 946 (7,407) 61 (7,346)
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
(1,885) 1,065 (820) (32,290) 2,738 (29,552)
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
Adjusted tax
expense 7,432 13,414 20,846 9,068 11,540 20,608
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
Adjusted profit
before tax 104,647 99,882
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
Adjusted
effective tax
rate 20% 21%
---------------- ---------------- --------------- -------------- ---------------- --------------- --------------
The Group presents the above adjusted effective tax rate reconciliation to help users of this report better understand its tax charge. In arriving at this rate, the Group removes the tax effect of exceptional and adjusting items that reconcile statutory to adjusted profit. A detailed reconciliation of the Group's statutory results to the adjusted and underlying results is set out on pages 6 to 11. The Group excludes the deferred tax effects of intangible assets and goodwill, as the Group considers that this more accurately reflects its expected cash tax payable position. The deferred tax effects on goodwill and intangible items would only crystallise in the event of a disposal and that is not the current intention.
5. Tax expense on profit continued
Tax on exceptional items are excluded as exceptional items are adjusted in terms of the Group policy. For the year ended 30 September 2019, tax on exceptional items relates largely to tax on gain on the disposal of Indaba of GBP3.2m. Adjustments in respect of prior years are excluded on the basis that they relate mainly to finalisation of US tax reform related items which are one off in nature. Share of tax on profits of associates and joint ventures is calculated on the adjusted profits of associates and joint ventures and excludes tax on exceptional items consistent with the Group's historical approach and policy.
The actual tax expense for the year is different from the UK blended rate of 19% of profit before tax for the reasons set out in the following reconciliation:
Discontinued
operations - Asset Discontinued operations
Continuing operations Management Continuing operations - Asset Management
2019 2019 2018 2018
GBP000 GBP000 GBP000 GBP000
----------------------- --------------------- ---------------------- --------------------- -----------------------
Profit before tax 29,451 55,090 106,816 47,145
----------------------- --------------------- ---------------------- --------------------- -----------------------
Cost of disposal of
discontinued
operations - (1,682) - -
----------------------- --------------------- ---------------------- --------------------- -----------------------
29,451 53,408 106,816 47,145
----------------------- --------------------- ---------------------- --------------------- -----------------------
Tax at 19.0% (2018:
19.0%) 5,596 10,148 20,295 8,958
----------------------- --------------------- ---------------------- --------------------- -----------------------
Factors affecting tax
charge:
----------------------- --------------------- ---------------------- --------------------- -----------------------
Different tax rates of
subsidiaries operating
in overseas
jurisdictions 27 4,635 1,330 4,164
----------------------- --------------------- ---------------------- --------------------- -----------------------
Share of tax on
associates and joint
ventures 38 - (67) -
----------------------- --------------------- ---------------------- --------------------- -----------------------
Non-taxable income - (9) 13 (2,257)
----------------------- --------------------- ---------------------- --------------------- -----------------------
Goodwill and
intangibles - - 1,401 (181)
----------------------- --------------------- ---------------------- --------------------- -----------------------
Disallowable
expenditure 1,613 404 1,601 789
----------------------- --------------------- ---------------------- --------------------- -----------------------
Disposal of businesses - - (3,227) -
----------------------- --------------------- ---------------------- --------------------- -----------------------
Other timing
differences 83 - - -
----------------------- --------------------- ---------------------- --------------------- -----------------------
Other items deductible
for tax purposes 1,915 (1,915) (1,746) (2,202)
----------------------- --------------------- ---------------------- --------------------- -----------------------
US tax reform - - 3,169 -
----------------------- --------------------- ---------------------- --------------------- -----------------------
Non-recoverable
withholding tax - - 14,553 905
----------------------- --------------------- ---------------------- --------------------- -----------------------
Impact of change in
rate 99 (22) (3,371) (1,313)
----------------------- --------------------- ---------------------- --------------------- -----------------------
Adjustments in respect
of prior years (54) (892) 7,407 (61)
----------------------- --------------------- ---------------------- --------------------- -----------------------
Total tax expenses for
the year 9,317 12,349 41,358 8,802
----------------------- --------------------- ---------------------- --------------------- -----------------------
The Group's effective tax rate depends mainly on the geographic mix of profits and applicable tax rates. Different tax rates of subsidiaries operating in overseas jurisdictions of GBP4.7m (2018: GBP5.5.m) reflects higher profits earned in jurisdictions which have a higher tax rate than the UK.
Disallowable expenditure of GBP2.0m (2018: GBP2.4m) relates largely to expenses that are capital in nature and therefore not deductible for tax purposes.
Other items deductible for tax purposes reflects the tax impact of allocating group interest expense between continuing operations and discontinued operations on a proportionate basis. There is no net impact on the total tax expense for the year.
Adjustments in respect of prior years of GBP0.9m (2018: GBP7.3m) relate to adjustments made to US tax reform related items following the release of certain final regulations during the current period and a reassessment of temporary differences.
In addition to the amount charged to the Income Statement, the following amounts relating to tax have been directly recognised in other comprehensive income and equity:
Other comprehensive income Equity
---------------------------- ----------------
2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000
------------- ------------- ------------- ------- -------
Deferred tax (880) 474 124 796
------------- ------------- ------------- ------- -------
5. Tax expense on profit continued
European Commission investigation into state aid
On 2 April 2019, the EC concluded its state aid investigation into the Group Financing Exemption (GFE) in the UK controlled foreign company rules on the GFE and ruled that the GFE is only justified where there are no UK activities involved in generating the finance profits. The UK government has decided to appeal against the EC decision but an aid recovery process has also commenced as this is required under EU law.
The estimated maximum liability is approximately GBP8.0m. On the basis that the UK government has appealed against the EC decision, and the Group's own analysis, no provision is being made in respect of this issue as management judges that it is not probable that the Group will suffer an outflow of funds.
Uncertain tax positions
The Group considers each uncertain tax matter on the technical merits of the case law, taking into account all relevant evidence, including the known attitude of tax authorities in making an assessment of the likelihood a matter will crystallise. The provisions for uncertain tax are calculated by determining the Directors' best estimate of the single most likely cash flow for each issue.
The Group has fully provided for an exposure relating to an HMRC enquiry, which has a maximum exposure of GBP10.7m. This matter is now proceeding to litigation. The outcome of the litigation is binary. The Group received HMRC's statement of case in May 2019 and responded with its witness statements in September 2019. A court hearing date will be advised in due course and it is expected that the hearing will take place in mid to late 2020. No adjustment to the provision is being made at this time.
The maximum additional exposure for the Group in relation to challenges by tax authorities not provided for is approximately GBP20m which is for the challenge by the Canadian Revenue Agency (CRA) and the Quebec Tax Authorities (Revenu Quebec) on a foreign currency trade in 2009. The CRA views that the loss sustained by BCA on an intra-group derivative transaction cannot be deducted in computing income has not changed. The case will be heard in the Tax Court of Canada, Ottawa in June 2020. BCA has provided satisfactory security for payment to the CRA for 50% of the tax being contested of GBP3.5m and to Revenu Quebec for 50% of the tax owing amounting to GBP3.2m. The outcome of the case is binary. No provision is recognised based on external counsel's opinion that the Group's case should ultimately prevail.
The Group reviews and assesses other indirect tax exposures across the Group and a GBP4.6m provision is the Group's best estimate of the most probable outflow relating to these exposures, excluding the VAT and payroll tax exposures outlined below. This provision relates largely to US sales tax.
Payroll taxes and VAT
During the year, the Group has identified an underpayment of PAYE and NIC to HMRC in respect of contractors. The Group has notified HMRC that a voluntary disclosure will be made and is currently in the process of finalising this voluntary disclosure. The Group will seek to engage with HMRC to agree a settlement during the first half of 2020. As such, the provision recognised in the current period is subject to ongoing discussion with HMRC. The Group considered the most probably outcome at this stage is a cash outflow of GBP8.2m. A provision of GBP1.5m, including interest and penalties, has been recognised in the current year. The prior year has been restated to reflect the exposure up to the opening Balance Sheet position in October 2017 and a provision of GBP1.8m (including interest and penalties) for 2018.
During the second half of the year, the Group discovered a VAT exposure relating to the understatement of VAT on intra-group transactions in respect of the four years ended 30 September 2018. The Group notified HMRC as soon as the exposure was identified in September 2019. A protective assessment was subsequently issued by HMRC in respect of the year ended 30 September 2015. Details of the exposure will be discussed and finalised with HMRC during the first half of the 2020 financial year. The Group considered that the most probable outcome at this stage is a cash outflow of GBP11.3m, including GBP0.3m of interest accrued in 2019. A prior year provision of GBP11.0m has been recognised and due to the amount being considered material the 2018 comparative financial information has been restated. The VAT element of the provision has been treated as an exceptional item in line with the Group's accounting policy because it is material and is not expected to recur. The interest element is excluded from the adjusted results as it relates directly to the exceptional item.
6. Dividends
2019 2018
GBP000 GBP000
----------------------------------------------------------------------------- ------- -------
Amounts recognisable as distributable to equity holders in the year
----------------------------------------------------------------------------- ------- -------
Final dividend for the year ended 30 September 2018 of 22.30p (2017: 21.80p) 24,348 23,784
----------------------------------------------------------------------------- ------- -------
Interim dividend for year ended 30 September 2019 of 10.80p (2018: 10.20p) 11,799 11,136
----------------------------------------------------------------------------- ------- -------
36,147 34,920
----------------------------------------------------------------------------- ------- -------
Employee share trusts dividend (561) (559)
----------------------------------------------------------------------------- ------- -------
35,586 34,361
----------------------------------------------------------------------------- ------- -------
Proposed final dividend for the year ended 30 September 24,363 24,347
----------------------------------------------------------------------------- ------- -------
Employee share trusts dividend (368) (383)
----------------------------------------------------------------------------- ------- -------
23,995 23,964
----------------------------------------------------------------------------- ------- -------
The proposed final dividend of 22.30p (2018: 22.30p) is subject to approval at the AGM on 28 January 2020 and has not been included as a liability in these Financial Statements in accordance with IAS 10 'Events after the Reporting Period'.
7. Earnings per share
Restated
2019 2018
GBP000 GBP000
------------------------------------------------- ------- ---------
Profit for the year from continuing operations 20,134 65,458
------------------------------------------------- ------- ---------
Non-controlling interests (264) (139)
------------------------------------------------- ------- ---------
Earnings from continuing operations 19,870 65,319
------------------------------------------------- ------- ---------
Profit for the year from discontinued operations 41,059 129,685
------------------------------------------------- ------- ---------
Total earnings 60,929 195,004
------------------------------------------------- ------- ---------
Adjustments 22,586 (115,871)
------------------------------------------------- ------- ---------
Total adjusted earnings 83,515 79,133
------------------------------------------------- ------- ---------
7. Earnings per share continued
2019 2018
Number Number
000 000
------------------------------------------------ ------- -------
Weighted average number of shares 109,226 109,148
------------------------------------------------ ------- -------
Shares held by the employee share trusts (1,667) (1,733)
------------------------------------------------ ------- -------
Weighted average number of shares 107,559 107,415
------------------------------------------------ ------- -------
Effect of dilutive share options 95 131
------------------------------------------------ ------- -------
Diluted weighted average number of shares 107,654 107,546
------------------------------------------------ ------- -------
Pence Pence
------------------------------------------------ ------- -------
Earnings per share from continuing operations
------------------------------------------------ ------- -------
Basic 18.5 60.8
------------------------------------------------ ------- -------
Diluted 18.5 60.7
------------------------------------------------ ------- -------
Earnings per share from discontinued operations
------------------------------------------------ ------- -------
Basic 38.1 120.7
------------------------------------------------ ------- -------
Diluted 38.1 120.6
------------------------------------------------ ------- -------
Total earnings per share
------------------------------------------------ ------- -------
Basic 56.6 181.5
------------------------------------------------ ------- -------
Diluted 56.6 181.3
------------------------------------------------ ------- -------
Total adjusted earnings per share
------------------------------------------------ ------- -------
Basic 77.6 73.7
------------------------------------------------ ------- -------
Diluted 77.6 73.6
------------------------------------------------ ------- -------
The adjusted earnings per share figures have been disclosed since the Directors consider it necessary in order to give an indication of the adjusted trading performance reflecting the performance both of the Group's continuing and discontinued operations. A detailed reconciliation of the Group's statutory results to the adjusted and underlying results is set out on pages 6 to 11.
8. Discontinued operations and disposal groups classified as held for sale
Following the announcement on 10 September 2019 that the Group was to explore strategic options for Asset Management, the Group has engaged with advisors to assess its options and the segment is being actively marketed. The Asset Management segment meets the IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations' criteria to be classified as held for sale at 30 September 2019. The assets and liabilities of Asset Management have been disclosed separately on the face of the Consolidated Statement of Financial Position. The assets and liabilities held for sale are recorded at the lower of their carrying value and fair value less costs to sell. No impairment of these net assets has been identified at 30 September 2019. The segment also meets the IFRS 5 criteria to be treated as discontinued operations due to its size and the fact that it constitutes a major line of the Group's business. Asset Management is therefore presented as discontinued operations throughout this report and the 2018 Income Statement disclosures have been re-presented.
On 30 April 2018, the Group completed the disposal of GMID. This division met the IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations' criteria to be treated as discontinued operations at 30 September 2018.
The results of the discontinued operations are as follows:
Asset Management Asset Management GMID Total
2019 2018 2018 2018
GBP000 GBP000 GBP000 GBP000
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Total revenue 145,622 145,454 23,815 169,269
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Operating profit before acquired intangible amortisation and
exceptional items 66,929 61,660 7,510 69,170
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Acquired intangible amortisation (10,928) (10,749) - (10,749)
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Exceptional items (812) (3,850) (969) (4,819)
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Operating profit 55,189 47,061 6,541 53,602
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Finance income - 84 43 127
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Finance expense (99) - (11) (11)
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Net finance income (99) 84 32 116
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Profit before tax 55,090 47,145 6,573 53,718
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Tax (expense)/credit on profit (12,349) (8,802) 200 (8,602)
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Profit after tax from discontinued operations 42,741 38,343 6,773 45,116
--------------------------------------------------------------- ---------------- ---------------- ------- --------
(Cost of)/profit on disposal of discontinued operation -
exceptional items (1,682) - 91,263 91,263
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Tax expense on cost of/(profit on) disposal - - (6,694) (6,694)
--------------------------------------------------------------- ---------------- ---------------- ------- --------
(Cost of)/profit after tax on disposal of discontinued
operations (1,682) - 84,569 84,569
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Profit for the year from discontinued operations 41,059 38,343 91,342 129,685
--------------------------------------------------------------- ---------------- ---------------- ------- --------
Asset
Reconciliation of profit before tax from discontinued operations in Income Statement to Asset Management Management
adjusted 2019 2018
discontinued operations: GBP000 GBP000
--------------------------------------------------------------------------------------- ---------------- -----------
Profit before tax for the year from discontinued operations 55,090 47,145
--------------------------------------------------------------------------------------- ---------------- -----------
Add back:
--------------------------------------------------------------------------------------- ---------------- -----------
Acquired intangible amortisation 10,928 10,749
--------------------------------------------------------------------------------------- ---------------- -----------
Exceptional items 812 3,850
--------------------------------------------------------------------------------------- ---------------- -----------
Adjusted discontinued operations profit before tax for the year 66,830 61,744
--------------------------------------------------------------------------------------- ---------------- -----------
8. Discontinued operations and disposal groups classified as held for sale continued
The impact of the discontinued operations on the cash flows is as follows:
Asset Management Asset Management GMID Total
2019 2018 2018 2018
GBP000 GBP000 GBP000 GBP000
--------------------- ---------------- ---------------- ------- -------
Operating cash flows 35,388 58,347 (2,520) 55,827
--------------------- ---------------- ---------------- ------- -------
Investing cash flows (887) (2,594) 112,639 110,045
--------------------- ---------------- ---------------- ------- -------
Financing cash flows 86 (424) (14) (438)
--------------------- ---------------- ---------------- ------- -------
Total cash flows 34,587 55,329 110,105 165,434
--------------------- ---------------- ---------------- ------- -------
The main classes of assets and liabilities comprising the businesses classified as held for sale are set out in the table below. These assets and liabilities are recorded at the lower of their carrying value and fair values less costs to sell.
Asset Management
2019
GBP000
------------------------------------------------------------ ----------------
Goodwill 213,030
------------------------------------------------------------ ----------------
Acquired intangible assets 50,165
------------------------------------------------------------ ----------------
Licenses and software including internally generated assets 2,821
------------------------------------------------------------ ----------------
Property, plant and equipment 604
------------------------------------------------------------ ----------------
Trade and other receivables 20,383
------------------------------------------------------------ ----------------
Deferred consideration receivable 185
------------------------------------------------------------ ----------------
Contract assets 1,450
------------------------------------------------------------ ----------------
Derivative financial instruments 23
------------------------------------------------------------ ----------------
Current income tax assets 3,368
------------------------------------------------------------ ----------------
Cash and cash equivalents 327
------------------------------------------------------------ ----------------
Total assets of the businesses held for sale 292,356
------------------------------------------------------------ ----------------
Trade and other payables (661)
------------------------------------------------------------ ----------------
Accruals (13,769)
------------------------------------------------------------ ----------------
Contract liabilities (44,853)
------------------------------------------------------------ ----------------
Derivative financial instruments (106)
------------------------------------------------------------ ----------------
Deferred tax liabilities (12,145)
------------------------------------------------------------ ----------------
Total liabilities of the businesses held for sale (71,534)
------------------------------------------------------------ ----------------
Net assets 220,822
------------------------------------------------------------ ----------------
9. Goodwill and other intangible assets
Goodwill for the period 30 September 2018 to 30 September 2019 decreased by GBP168.4m. This movement relates to goodwill arising on the acquisition of BoardEx and The Deal of GBP27.6m (note 11) and favourable effect of currency translation of GBP19.4m, offset by impairment of CIE goodwill of GBP2.4m and assets classified as held for sale of GBP213.0m.
The net carrying value of goodwill and other intangible assets is as follows:
2019 2018
GBP000 GBP000
--------------------------------------- ------- -------
Goodwill 246,281 414,722
--------------------------------------- ------- -------
Trademarks and brands 53,471 100,464
--------------------------------------- ------- -------
Customer relationships 88,650 64,135
--------------------------------------- ------- -------
Databases and software 7,425 3,245
--------------------------------------- ------- -------
Total acquired intangible assets 149,546 167,844
--------------------------------------- ------- -------
Internally generated intangible assets 9,594 5,659
--------------------------------------- ------- -------
Total intangible assets 159,140 173,503
--------------------------------------- ------- -------
Total 405,421 588,225
--------------------------------------- ------- -------
Intangible assets, other than goodwill, have a finite life and are amortised over their expected useful lives.
Acquired intangible asset amortisation for the year for continuing operations is GBP14.2m (2018: GBP12.0m).
10. Investments
Investment in associates Investment in joint Other equity investments Total
GBP000 ventures GBP000 GBP000 GBP000
-------------------------- ------------------------ -------------------------- -------------------------- --------
At 1 October 2017 26,820 - 3,546 30,366
-------------------------- ------------------------ -------------------------- -------------------------- --------
Disposals (26,194) - - (26,194)
-------------------------- ------------------------ -------------------------- -------------------------- --------
Exchange difference (81) - - (81)
-------------------------- ------------------------ -------------------------- -------------------------- --------
Provision against
investment losses - 13 - 13
-------------------------- ------------------------ -------------------------- -------------------------- --------
Share of profits/(losses)
after tax 170 (13) - 157
-------------------------- ------------------------ -------------------------- -------------------------- --------
At 30 September 2018 715 - 3,546 4,261
-------------------------- ------------------------ -------------------------- -------------------------- --------
Impact of adopting IFRS 9 - - (385) (385)
-------------------------- ------------------------ -------------------------- -------------------------- --------
At 1 October 2018
(restated) 715 - 3,161 3,876
-------------------------- ------------------------ -------------------------- -------------------------- --------
Disposals 100 - - 100
-------------------------- ------------------------ -------------------------- -------------------------- --------
Fair value remeasurements - - 2,131 2,131
-------------------------- ------------------------ -------------------------- -------------------------- --------
Transfer from other equity
to associate investment 5,292 - (5,292) -
-------------------------- ------------------------ -------------------------- -------------------------- --------
Share of losses after tax (88) - - (88)
-------------------------- ------------------------ -------------------------- -------------------------- --------
Dividends (197) - - (197)
-------------------------- ------------------------ -------------------------- -------------------------- --------
Transfer to subsidiary (551) - - (551)
-------------------------- ------------------------ -------------------------- -------------------------- --------
At 30 September 2019 5,271 - - 5,271
-------------------------- ------------------------ -------------------------- -------------------------- --------
In accordance with IFRS 9 'Financial Instruments', other equity investments are classified as financial assets measured at fair value through other comprehensive income. The 'Available-for-sale investments' category has changed to 'Other equity investments' with effect 1 October 2018.
All of the above investments in associates and joint ventures are accounted for using the equity method in these consolidated financial statements.
10. Investments continued
2019 2018
GBP000 GBP000
------------------------------------------------------------------------------------------- ------- -------
Reconciliation of share of results in associates and joint ventures in Income Statement to
adjusted share of results in associates and joint ventures
------------------------------------------------------------------------------------------- ------- -------
Total share of results in associates and joint ventures in Income Statement (88) 157
------------------------------------------------------------------------------------------- ------- -------
Add back:
------------------------------------------------------------------------------------------- ------- -------
Share of tax on profits (38) 333
------------------------------------------------------------------------------------------- ------- -------
Share of tax on acquired intangible amortisation and exceptional items - (266)
------------------------------------------------------------------------------------------- ------- -------
Share of acquired intangible amortisation - 761
------------------------------------------------------------------------------------------- ------- -------
Share of exceptional items1 - 125
------------------------------------------------------------------------------------------- ------- -------
(38) 953
------------------------------------------------------------------------------------------- ------- -------
Adjusted share of results in associates and joint ventures (126) 1,110
------------------------------------------------------------------------------------------- ------- -------
1 The share of exceptional items related to restructuring and earn-out costs in Dealogic, which was disposed of in December 2017.
The reconciliation of share of results in associates and joint ventures in the Income Statement has been provided since the Directors consider it necessary in order to provide an indication of the adjusted share of results in associates and joint ventures. A detailed reconciliation of the Group's statutory results to the adjusted and underlying results is set out on pages 6 to 11. The share of profit after tax in 2018 included a finance expense of GBP0.3m (none in 2019).
For the year ended 30 September 2018, the Group disposed of its minority equity stake of 15.5% in Diamond TopCo Limited (Dealogic) for $135.0m (GBP100.1m) on 27 December 2017. The disposal of the associate with a net book value of GBP26.2m gave rise to a profit on disposal of GBP71.7m, after deducting disposal costs, which was recognised as an exceptional item (note 3) in the Income Statement. The Group's share of the trading profit of Dealogic was GBP83k.
Information on investment in associates, investment in joint ventures and other equity investments:
Year Date of
Principal activity ended acquisition Type of holding Group interest Registered Office
------------------ ------------------ ------ ------------------ --------------- -------------- -----------------
Investment in
associates
------------------ ------------------ ------ ------------------ --------------- -------------- -----------------
Zanbato, Inc Private capital 30 Sep Sept 2015 Ordinary 9.9% 715 N Shoreline
(Zanbato) placement and Boulevard,
workflow Mountain View CA,
94043, United
States
------------------ ------------------ ------ ------------------ --------------- -------------- -----------------
Investment in
joint ventures
------------------ ------------------ ------ ------------------ --------------- -------------- -----------------
Sanostro Hedge fund manager 31 Dec Dec 2014 Ordinary 50.0% Allmendstrasse
Institutional AG trading signals 140, 8041 Zurich,
(Sanostro) Switzerland
------------------ ------------------ ------ ------------------ --------------- -------------- -----------------
Other equity
investments
------------------ ------------------ ------ ------------------ --------------- -------------- -----------------
Estimize, Inc Financial 31 Dec July 2015 Ordinary 10.0% 43 West 24th
(Estimize) estimates platform Street, New York,
NY 10010, United
States
------------------ ------------------ ------ ------------------ --------------- -------------- -----------------
The Group previously held an associate interest of 49% of the equity share capital of Broadmedia Communications Limited (BroadGroup). On 12 April 2019, the Group acquired an additional 17% of the equity share capital of BroadGroup and is subsequently accounted for as a subsidiary (note 11).
It has been determined that the Group has significant influence over Zanbato from 26 July 2019. The Group has therefore used the equity method to account for its 9.9% equity investment in Zanbato.
The Group interests in Sanostro and Estimize have remained unchanged since their respective dates of acquisition.
11. Acquisitions and disposals
Purchase of businesses
The Deal, LLC (BoardEx and The Deal)
On 14 February 2019, the Group acquired 100% of the equity share capital of The Deal LLC, comprising BoardEx, an executive profiling and relationship-mapping platform, and The Deal, a trusted source of data, news and intelligence on mergers and acquisitions, activist investing, private equity and restructuring, for $93.4m (GBP72.5m). Both products are highly complementary to the Group's existing portfolio, serving a number of shared customer groups, particularly investors, banks and professional services firms. BoardEx and The Deal are included in the Pricing, Data & Market Intelligence segment.
The acquisition accounting is set out below and is provisional pending final determination of the fair value of the assets and liabilities acquired:
Book Provisional
value fair value
GBP000 Fair value adjustments GBP000 GBP000
------------------------------------------------- -------- ----------------------------- -----------
Net assets/(liabilities):
------------------------------------------------- -------- ----------------------------- -----------
Intangible assets 1,414 43,945 45,359
------------------------------------------------- -------- ----------------------------- -----------
Property, plant and equipment 285 - 285
------------------------------------------------- -------- ----------------------------- -----------
Deferred tax assets 1,335 (547) 788
------------------------------------------------- -------- ----------------------------- -----------
Trade and other receivables 5,585 - 5,585
------------------------------------------------- -------- ----------------------------- -----------
Trade and other payables (3,411) - (3,411)
------------------------------------------------- -------- ----------------------------- -----------
Contract liabilities (10,645) 2,180 (8,465)
------------------------------------------------- -------- ----------------------------- -----------
Cash and cash equivalents 4,777 - 4,777
------------------------------------------------- -------- ----------------------------- -----------
(660) 45,578 44,918
------------------------------------------------- -------- ----------------------------- -----------
Net assets acquired (100%) 44,918
------------------------------------------------- -------- ----------------------------- -----------
Goodwill 27,619
------------------------------------------------- -------- ----------------------------- -----------
Total consideration 72,537
------------------------------------------------- -------- ----------------------------- -----------
Consideration satisfied by:
------------------------------------------------- -------- ----------------------------- -----------
Cash 72,472
------------------------------------------------- -------- ----------------------------- -----------
Working capital adjustment 65
------------------------------------------------- -------- ----------------------------- -----------
72,537
------------------------------------------------- -------- ----------------------------- -----------
Net cash outflow arising on acquisition:
------------------------------------------------- -------- ----------------------------- -----------
Cash consideration 72,537
------------------------------------------------- -------- ----------------------------- -----------
Less: cash and cash equivalent balances acquired (4,777)
------------------------------------------------- -------- ----------------------------- -----------
67,760
------------------------------------------------- -------- ----------------------------- -----------
Intangible assets represent customer relationships of $47.4m (GBP36.8m), brands of $3.8m (GBP3.0m), databases of $5.4m (GBP4.2m) and software of $1.8m (GBP1.4m) for which amortisation of $2.8m (GBP2.2m) has been charged for the period ended 30 September 2019. The intangible assets will be amortised over their respective expected useful economic lives; customer relationships of between four and 22 years, databases of between one and 10 years, software of three years and brands of 10 years.
Goodwill arises from the anticipated future operating synergies from integrating the acquired operations within the Group and the acquired workforce. Goodwill recognised in respect of the US business is expected to be deductible for US income tax purposes.
The $2.8m (GBP2.2m) fair value adjustment to contract liabilities relates to an adjustment to reduce the deferred revenue balance. The related deferred tax liability of $0.7m (GBP0.5m) has been recognised as a fair value adjustment against deferred tax assets.
The fair value of the assets acquired includes gross trade receivables of $4.1m (GBP3.2m) and are expected to be fully collectable.
BoardEx and The Deal contributed $14.8m (GBP11.6m) to the Group's revenue, $1.4m (GBP1.1m) to the Group's operating profit and $1.4m (GBP1.1m) to the Group's profit before tax for the period between the date of acquisition and 30 September 2019. If the acquisition had been completed on the first day of the financial year, BoardEx and The Deal would have contributed $24.6m (GBP19.2m) to the Group's revenue and $2.8m (GBP2.2m) to the Group's operating profit.
11. Acquisitions and disposals continued
Transfer to subsidiary
Broadmedia Communications Limited (BroadGroup)
On 12 April 2019, the Group acquired an additional 17% shareholding in BroadGroup for a cash consideration of GBP0.4m, bringing the Group's total shareholding to 66%. The Group previously held an associate interest of 49% of the equity share capital. The Group accounts for its increased equity shareholding in BroadGroup of 66% as a subsidiary. At the acquisition date, the non-controlling interest of 34% is measured using the proportion of net assets method. BroadGroup is included in the Pricing, Data & Market Intelligence segment.
On the date that the additional 17% shareholding was acquired, there was a revaluation gain of GBP0.6m on the associate investment, bringing the fair value of the associate when disposed of to GBP1.1m.
The remaining interest in BroadGroup is subject to put and call options under an earn-out agreement, in two instalments, based on the profits of BroadGroup for its years ended 30 September 2020 and 2021. At acquisition, the total amount that the Group expected to pay under this option agreement was GBP1.4m and was recognised as an acquisition commitment.
The acquisition accounting is set out below and is provisional pending final determination of the fair value of the assets and liabilities acquired:
Book Provisional
value fair value
GBP000 Fair value adjustments GBP000 GBP000
------------------------------------------------- ------- ----------------------------- -----------
Net assets/(liabilities):
------------------------------------------------- ------- ----------------------------- -----------
Intangible assets - 2,865 2,865
------------------------------------------------- ------- ----------------------------- -----------
Trade and other receivables 3,364 - 3,364
------------------------------------------------- ------- ----------------------------- -----------
Trade and other payables (3,503) - (3,503)
------------------------------------------------- ------- ----------------------------- -----------
Deferred tax liabilities - (487) (487)
------------------------------------------------- ------- ----------------------------- -----------
Cash and cash equivalents 54 - 54
------------------------------------------------- ------- ----------------------------- -----------
(85) 2,378 2,293
------------------------------------------------- ------- ----------------------------- -----------
Net assets acquired (66%) 1,514
------------------------------------------------- ------- ----------------------------- -----------
Goodwill 20
------------------------------------------------- ------- ----------------------------- -----------
Total consideration 1,534
------------------------------------------------- ------- ----------------------------- -----------
Consideration satisfied by:
------------------------------------------------- ------- ----------------------------- -----------
Cash 395
------------------------------------------------- ------- ----------------------------- -----------
Fair value of associate 1,139
------------------------------------------------- ------- ----------------------------- -----------
1,534
------------------------------------------------- ------- ----------------------------- -----------
Net cash outflow arising on acquisition:
------------------------------------------------- ------- ----------------------------- -----------
Cash consideration 395
------------------------------------------------- ------- ----------------------------- -----------
Less: cash and cash equivalent balances acquired (54)
------------------------------------------------- ------- ----------------------------- -----------
341
------------------------------------------------- ------- ----------------------------- -----------
Intangible assets represent customer relationships of GBP1.4m and the brand of GBP1.4m for which amortisation of GBP0.1m has been charged for the year. The customer relationships will be amortised over their expected useful economic lives of 15 years. The brand will be amortised over its expected useful life of 15 years.
Goodwill arises from the anticipated future operating synergies from integrating the acquired operations within the Group and the acquired workforce.
The fair value of the assets acquired includes net trade receivables of GBP3.0m, all of which are contracted and are expected to be collectable.
BroadGroup contributed GBP2.5m to the Group's revenue, GBP0.8m to the Group's operating profit and GBP0.8m to the Group's profit after tax for the period between the date of acquisition and 30 September 2019. If the acquisition had been completed on the first day of the financial year, BroadGroup would have contributed GBP3.5m to the Group's revenue and GBP0.7m to the Group's operating profit (excluding exceptional costs).
11. Acquisitions and disposals continued
Increase in equity holdings
Reinsurance Security (Consultancy).Co.Uk (ReSec)
On 19 December 2018, the Group made an earn-out payment of GBP0.1m to increase its equity shareholding in ReSec. The payment increased the Group's holding from 83% to 88%.
Sale of business
Mining Indaba
On 23 October 2018, the Group completed the sale of Mining Indaba. The gross consideration for the sale was GBP30.1m, with GBP20.0m payable on completion and net deferred consideration of GBP8.7m received in June 2019. The settlement of the deferred consideration has been offset against a working capital adjustment in favour of the buyer. The sale resulted in a pre-tax profit of GBP17.0m after transaction costs of GBP0.3m, which was recognised as an exceptional item (note 3). The assets and liabilities of this business sold were classified as held for sale and disclosed separately on the face of the Consolidated Statement of Financial Position for the year ended 30 September 2018.
The net assets of the businesses at the date of disposal were as follows:
Indaba
GBP000
------------------------------------------------------------- -------
Net assets:
------------------------------------------------------------- -------
Intangible assets 12,783
------------------------------------------------------------- -------
Trade and other receivables 1,211
------------------------------------------------------------- -------
Deferred income (2,620)
------------------------------------------------------------- -------
11,374
------------------------------------------------------------- -------
Net assets disposed 11,374
------------------------------------------------------------- -------
Directly attributable costs 347
------------------------------------------------------------- -------
Profit on disposal (note 3) 16,998
------------------------------------------------------------- -------
Total consideration 28,719
------------------------------------------------------------- -------
Consideration satisfied by:
------------------------------------------------------------- -------
Cash 20,000
------------------------------------------------------------- -------
Deferred consideration (net of working capital adjustments) 8,719
------------------------------------------------------------- -------
28,719
------------------------------------------------------------- -------
Cash inflow arising on disposal:
------------------------------------------------------------- -------
Cash consideration (net of directly attributable costs paid) 19,653
------------------------------------------------------------- -------
Receipt of deferred consideration 8,719
------------------------------------------------------------- -------
Total cash inflow 28,372
------------------------------------------------------------- -------
12. Called up share capital
2019 2018
GBP000 GBP000
-------------------------------------------------------------------------------------------- ------- -------
Allotted, called up and fully paid
-------------------------------------------------------------------------------------------- ------- -------
109,249,352 ordinary shares of 0.25p each (2018: 109,180,729 ordinary shares of 0.25p each) 273 273
--------------------------------------------------------------------------------------------- ------- -------
During the year, 68,623 ordinary shares of 0.25p each (2018: 79,121 ordinary shares) with an aggregate nominal value of GBP172 (2018: GBP198) were issued following the exercise of share options granted under the Company's share option schemes for a cash consideration of GBP516,126 (2018: GBP642,612).
13. Contingent liabilities
Claims in Malaysia
Four writs claiming damages for libel were issued in Malaysia against the Group and three of its employees in respect of an article published in one of the Group's magazines, International Commercial Litigation, in November 1995. The writs were served on the Group on 22 October 1996. Two of these writs were discontinued. The total outstanding amount claimed on the two remaining writs was Malaysian ringgit 83.4m (GBP15.5m) at 30 September 2018. As the limitation period for enforcing these claims has passed, the case has closed during the year.
European Commission (EC) Inspection
In January 2018, the EC conducted an unannounced inspection at the Brussels office of RISI Sprl (RISI), a wholly-owned subsidiary within the Group, as part of an investigation into the sector of kraft paper and industrial paper sacks in the European Union/European Economic Area. On 10 May 2019, the Group received confirmation that this case has been closed.
EC investigation into state aid
On 2 April 2019, the EC concluded their state aid investigation into the Group Financing Exemption (GFE) in the UK controlled foreign company rules on the GFE and ruled that the GFE is only justified where there are no UK activities involved in generating the finance profits. The UK government has decided to appeal against the EC decision but an aid recovery process has also commenced as this is required under EU law. The maximum exposure is GBP8.0m.
14. Related party transactions
Daily Mail & General Trust plc (DMGT) shareholders approved distribution of DMGT's shares in Euromoney Institutional Investor PLC, amounting to approximately 49% of the issued share capital of the Group, to its participating shareholders, following a review by the DMGT Board. There is no direct accounting impact of the transaction for the Group. The relationship deed entered into between DMGT and the Group in December 2016 has terminated and DMGT's representative Directors on the Board have stepped down. This was effective from 2 April 2019. The related party transactions with DMGT below are up to this effective date.
The Group has taken advantage of the exemption allowed under IAS 24 'Related Party Disclosures' not to disclose transactions and balances between group companies that have been eliminated on consolidation. Other related party transactions and balances are detailed below:
(i) During the year ended 30 September 2019, the Group expensed services recharged by DMGT and other fellow group companies of GBP57k (2018: GBP64k).
(ii) The Group participates in the Harmsworth Pension Scheme (HPS), a defined benefit scheme operated by DMGT. The Group's share of the HPS surplus is GBP1.5m (2018: GBP1.9m).
(iii) During the year, the Group provided services to Risk Management Solution Ltd, a DMGT subsidiary, for HKD713,337 (2018: HKD1,336,936).
(iv) During the year the Group charged BroadGroup for services when it was accounted for as an associate of GBP48k (2018:40k). In addition, the Group received dividends of GBP197k (2018: nil).
(v) The Directors who served during the year received dividends of GBP0.1m (2018: GBP0.2m) in respect of ordinary shares held in the Company.
(vi) During the year ended 30 September 2018, the Group's equity shareholding in NDR increased to 100%.
(vii) During the year ended 30 September 2018, the Group sold sponsorship revenue to Trepp LLC, a DMGT subsidiary, 2018: $60k.
15. Events after the balance sheet date
The Directors propose a final dividend of 22.30p per share (2018: 22.30p) totalling GBP24.0m (2018: GBP24.0m) for the year ended 30 September 2019. The dividend will be submitted for approval by shareholders at the AGM to be held on 28 January 2020. In accordance with IAS 10 'Events after the Reporting Period', these Financial Statements do not reflect this dividend payable which will be accounted for in shareholders' equity as an appropriation of retained earnings in the year ending 30 September 2020.
There were no other events after the balance sheet date.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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November 21, 2019 02:01 ET (07:01 GMT)
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