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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 May 2019 to May 2024
TIDMERM
RNS Number : 4839F
Euromoney Institutional InvestorPLC
18 May 2017
Euromoney
Institutional
Investor PLC
Interim Financial Report 2017
Euromoney Institutional Investor PLC
Interim results
Strategy on track
May 18 2017
Hot Features
Premium
Highlights H1 2017 H1 2016 Change
Total revenue GBP203.2 m GBP194.2 m 5%
Adjusted results
-- Adjusted operating profit GBP49.0 m GBP46.8 m 5%
-- Adjusted profit before tax GBP49.1 m GBP46.9 m 5%
-- Adjusted diluted earnings a
share 32.7 p 29.9 p 9%
Statutory results
-- Operating profit GBP15.6 m GBP26.0 m
-- Profit before tax GBP15.6 m GBP23.4 m
-- Diluted earnings a share 11.4 p 13.4 p
Net (debt)/cash (GBP83.6) m GBP55.9 m (GBP139.5m)
Interim dividend 8.8 p 7.0 p 26%
A detailed reconciliation of the group's adjusted results
is set out in the appendix to this statement.
-- Strategy on track in this year of transition. The recent DMGT sell-down has allowed us to accelerate the strategy.
-- First-quarter revenues reflected, as expected, the continuation of the headwinds experienced last year. Second quarter shows some signs of the business turning.
-- Total revenues up 5%, underlying(1) revenues down 2%. -- Adjusted profit before tax up 5% to GBP49.1m. -- Results continued to be boosted by a strong dollar compared to last year.
-- Statutory profit before tax reflects exceptional items of GBP24.6m and acquired intangible amortisation of GBP8.8m.
-- Net debt at March 31 of GBP83.6m, from net cash position at year-end, following the GBP193.6m share buyback in January.
-- Strong 12-month cash conversion of 120% (2016: 107%) continues to strengthen the balance sheet.
-- Active portfolio management continues. Four businesses sold and one acquisition made in first half together with two more acquisitions in April, including the US$125m purchase of RISI.
-- New dividend policy: interim dividend increased by 26% to 8.8p.
(1) Underlying revenues are at constant exchange rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences as reconciled on page 8.
Commenting on the results, Andrew Rashbass, CEO, said:
"The first-half results reflect good progress with our strategy: investing in strategic themes; creating a best-of-both-worlds operating model which combines Euromoney's well-known entrepreneurial culture with the benefits of a more corporate approach; and active portfolio management. DMGT's sell-down has helped us accelerate this strategy. We are already seeing payback from our investments last year. During the first half we continued to invest for growth and to address the drag from cyclically and structurally challenged businesses. Although headwinds remain for our customers and therefore for us, particularly in asset management, the commodities and banking & finance markets are showing signs of improving. The progress we are seeing gives us confidence that we will meet the board's expectations for the full year. It is in this context that the board has changed its dividend policy to increase the dividend to approximately 40% of adjusted earnings each year."
Strategy
Our strategy is to manage a portfolio of businesses in markets where information, data and convening market participants are valued. We deliver products and services that support our clients' critical activities.
In particular, we look to serve markets which are semi-opaque; that is, where there is information which organisations need in order to operate effectively but the information is hard to find. Price discovery is a good example.
B2B 3.0: How information markets are evolving
We characterise the business models of B2B information companies into three generations, which we call B2B Media 1.0, 2.0 and 3.0. Their characteristics are typically as follows:
B2B Media > B2B Media 2.0 > B2B Media 3.0
1.0
Print > Digital > Embedded in workflow
/ platforms
Stand-alone > Networking events > Trading events
events / memberships
Monologue > Dialogue > Part of the customer
industry
Advertising > Subscriptions > Licensing
central
Product-centric > Customer-centric > Solution-centric
Euromoney has been successful in becoming a 2.0 business over the past 10 or more years. We are becoming a 3.0 business, pacing the transition to meet and anticipate our customers' needs.
Quadrants: As we manage our portfolio to achieve our strategy, we categorise our businesses into four quadrants:
Y axis = Structure
+
Top Left Quadrant ("Prepare Top Right Quadrant ("Invest")
for upturn")
-- Batten down the hatches -- New product development
-- Protect and enhance
competitive position -- Sales and marketing
-- Careful, selective investment
for when the cycle turns -- Acquisition
-- Opportunistic on revenue -- Fix any operational
opportunities deficit
-- Tight cost control
-- Fix any operational
deficit
X axis
- + = Cycle
Bottom Left Quadrant ("Disinvest") Bottom Right Quadrant ("Use
the time wisely")
-- Modest investment to
-- Maximise shorter-term move to top-right quadrant
profit and cash above
-- Maximise shorter-term
-- Divest profit and cash
-- Fix any operational
-- Prevent future build-up deficit
-- Consider divestment
-
Three pillars of strategic activity
This analysis results in three pillars of strategic activity:
1. Invest around big themes. These include price discovery, post-trade activities, asset management and telecoms. Some examples from the half year:
a. Price discovery: Following the acquisition of FastMarkets in September 2016 which confirmed Metal Bulletin as a leading metals price reporting agency, we purchased RISI in April 2017 for US$125m. RISI is the leading price reporting agency for the global forest-products market.
b. We continue to invest in new products at, for instance, CEIC, BCA and Institutional Investor.
2. Transform the operating model. There are two aspects to our model. One is our target business model:
Create once, Recurring revenues High price Low capital
sell many intensity
---------------- ---------------------- -------------- ---------------
Leads to
High operating leverage High margin
--------------------------- ---------------
Results in
Strong, sustained earnings and cash generation
--------------------------------------------------
The second is what we call a "best-of-both-worlds" operating model. Euromoney is known for its entrepreneurial culture - our people are creative, action-oriented, close to their customers, passionate about their brands, knowledgeable about the industries they serve and accountable for their results. Over the past six months, we have reorganised the business into seven divisions: price reporting, investment research, Institutional Investor, banking and finance, specialist information, events and data. Alongside, we are building strong central functions to support the businesses and to ensure we take advantage of Euromoney's scale, share best practice, operate strategically and create career paths for staff across the whole company.
3. Actively manage the portfolio. Acquisitions have always been, and remain, an important part of Euromoney's strategy. We have a record of identifying good businesses where our ownership adds value. In many cases, we buy founder-run businesses; and those founders often stay and grow their business within Euromoney. So far this year we have acquired the small telecoms events businesses BroadGroup (49% in March 2017) and Layer123 (61% in April 2017), as well as RISI (100% in April 2017)
We also sell businesses where we believe we are not the best owners, and to generate funds (alongside our strong cash-flows and debt capacity) to invest in the themes discussed above. During the period, we sold four businesses: HedgeFund Intelligence (December 2016), II Intelligence (December 2016), Euromoney Indices (March 2017) and LatinFinance (March 2017) for a combined exceptional profit on disposal of GBP4.8m.
Strategy overall. Our strategy is designed to develop the businesses we own and deliver strategic, timely, and well-executed acquisitions and disposals. We aim to allocate and recycle capital efficiently to good organic and inorganic opportunities via our "best-of-both-worlds" operating model. Our ambition is to generate consistent and meaningful returns for our shareholders at relatively low risk.
Outlook
The outlook for the commodities and banking markets is improving whereas the asset management sector is now facing headwinds. Currency remains a tailwind at the moment and we are seeing good progress from the strategic actions we are taking. Therefore, we expect to deliver a full year performance in line with the board's expectations.
Operating and Financial Review
Trading Review
Total revenue for the six months to March 31 increased by 5% to GBP203.2m. The group's businesses focused on price discovery, data and market intelligence improved. The commodity events and banking & finance segments, which together accounted for 24% of revenues, declined as we removed unprofitable events in the face of challenging trading conditions, particularly in the first quarter. Despite a tougher market outlook for asset management, the group modestly increased its subscription revenues from this segment, benefitting from the strategic actions initiated last year around new products, pricing and sales.
On a reported basis, the high-margin flow-through from the growth of the Invest quadrant and favourable exchange rates more than offset the drag from businesses in the Disinvest quadrant.
Subscriptions/
Revenue (GBPm)* Content Advertising Sponsorship Delegates Other Total
---------------- ------------- ------------- ----------- ---------- ------------
Asset management 69.1 1% 7.1 (8%) 6.1 4% 0.6 (99%) 0.0 62% 82.9 0%
Pricing, data
& market intelligence 52.5 3% 5.0 (23%) 6.8 10% 8.9 - 0.6 (23%) 73.8 1%
Banking & finance 4.2 (8%) 4.1 (1%) 10.0 (12%) 10.9 (13%) 0.6 (25%) 29.8 (11%)
Commodity events N/A N/A 4.0 (10%) 14.6 (7%) 0.4 1% 19.0 (10%)
------ ------ ------ ----- ----- ----- -----
125.8 1% 16.2 (14%) 26.9 (3%) 35.0 (6%) 1.6 (18%) 205.5 -
Sold/closed businesses 4.7 -
Foreign exchange
losses on forward
contracts (7.0) -
----- -----
Total revenue 203.2 (2%)^
----------------------- -------- ------ ----- ------ ----- ------ ---- ----- --- ----- ----- -----
* Figures are 2017 reported revenues and percentages are underlying growth rates.
^ Calculates the growth rate for underlying revenues of GBP198.5m for the six months to March 31 (i.e. total revenue of GBP203.2m less sold/closed businesses revenue of GBP4.7m) over the equivalent six month period in 2016.
Underlying revenue fell by 2% in the period, but with a marked difference in performance between the two quarters. After a 5% decline in the first quarter, underlying revenue increased by 1% in the second, with the return to growth largely due to a recovery in the events businesses, particularly in banking & finance and commodities (see table below).
Revenue change by 2016 2017
quarter
(underlying(#) )
year-on-year % change
-------------------------- ------------
Q1 Q2 Q3 Q4 Q1 Q2
----- ----- ----- ----- ----- -----
Subscriptions and
content 2% - 1% 2% 1% 2%
Advertising (2%) (16%) (14%) (12%) (16%) (10%)
Sponsorship (7%) (8%) 9% (7%) (14%) 5%
Delegates (18%) (17%) (9%) (12%) (14%) 1%
Total (6%) (6%) (1%) (4%) (5%) 1%
----------------------- ----- ----- ----- ----- ----- -----
(#) At constant exchange rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences.
Includes other revenues but excludes revenues from sold/closed businesses. Foreign exchange hedging losses restated in prior year at current year level.
Underlying subscriptions and content revenues increased by 1%. Despite the cost and fee pressures facing the asset management sector, subscription revenues from this segment increased by 1% on an underlying basis, with some of the strategic initiatives undertaken in 2016 starting to bring benefits. Pricing, data and market intelligence subscription revenues increased by an underlying 3%, mainly due to a strong performance from Metal Bulletin including the successful integration of last year's FastMarkets acquisition.
Underlying advertising revenues remained weak and decreased by 14%, but advertising now represents less than 10% of revenues.
Underlying event revenues fell by 5% (sponsorship fell by 3% and delegates by 6%), with the banking & finance and commodity events segments providing a significant drag. However, much of this revenue decline comes from strategic actions taken in 2016 to consolidate some of the group's event activities and cut out a significant number of low margin events and unprofitable training courses, which is now starting to improve profitability. There are also signs of a recovery in these segments as a first quarter revenue decline of 14% was followed by growth of 2% in the second quarter. Large events, particularly in the telecoms and structured finance sectors, have continued to perform well.
The adjusted operating margin was 24%, the same as last year, reflecting the benefit from the Invest quadrant businesses and the elimination of unprofitable events training courses, offset by some remaining drag from the Disinvest quadrant and increased costs attributable to the DMGT sell-down and the need to operate as a standalone group. Adjusted operating profit increased by 5% to GBP49.0m.
Adjusted and statutory results
Adjusted profit before tax increased by 5% to GBP49.1m, with an increase in financing costs following the share buyback offset by an improvement in profits from the group's equity interest in associates and joint ventures, principally Dealogic. Adjusted diluted earnings per share increased by 9% to 32.7p (2016: 29.9p), largely reflecting the benefit from the reduction in the number of shares in issue following the share buyback.
The statutory profit before tax of GBP15.6m is lower than the adjusted profit before tax due to exceptional items of GBP24.6m and acquired intangible amortisation of GBP8.8m. The exceptional items largely arise from a goodwill impairment charge for one of the group's asset management businesses, following its disappointing financial performance in the face of tough market conditions and recent management changes. A detailed reconciliation of the group's adjusted and statutory results is set out in the appendix to this statement.
Tax
The adjusted effective tax rate based on adjusted profit before tax and excluding deferred tax movements on intangible assets, prior year items and exceptional items is 21% (2016: 19%). The group continues to benefit from reductions in the UK corporate tax rate and the tax effects of acquisitions. The tax rate in each year depends mainly on the geographic mix of profits and applicable local tax rates. The group's reported effective tax rate decreased to 12% compared to 26% in 2016. A reconciliation of the tax rate and a description of the group's uncertain tax positions are set out in note 6 to this statement.
DMGT sell-down
In December 2016, DMGT announced its intention to reduce its equity interest in Euromoney from 68% to 49% through a combination of a 15% share buyback by Euromoney and a 10% placing with institutional shareholders, which was completed in early January. The sell-down gives Euromoney balance sheet independence from DMGT and will enable Euromoney to accelerate its active portfolio management strategy. The GBP193.6m share buyback was funded by a mix of cash and new borrowing facilities arranged by Euromoney, and its borrowing facility with DMGT was terminated.
Following the DMGT sell-down, Euromoney has been investing in its operating model, including replacing the functions previously provided by DMGT and building a strong centre to support its growth strategy as a stand-alone entity. Once complete, this investment is expected to increase costs by approximately GBP4m a year, of which GBP1m were incurred in the first half.
Net debt and cash flow
Net debt at March 31 2017 was GBP83.6m compared with net cash of GBP55.9m at March 31 2016 and net cash of GBP83.8m at the last year end. The move to a net debt position reflects the share buyback completed in early January at a cost of GBP193.6m, funded by GBP75.4m of the group's cash and new bank term-loans of GBP118.2m. This was partly offset by strong operating cash flows of GBP73.7m and net cash proceeds of GBP2.9m from M&A activity in the period. The completion of the RISI and Layer123 acquisitions in April increased net debt by a further GBP103.3m.
The group's new five-year external borrowing facilities comprise term-loans of US$100m and GBP40m (total GBP119m) and a GBP130m multi-currency revolving credit facility. There is a further accordion facility of GBP130m should the group wish to request it. The term-loans and drawings under the revolving credit facility bear interest charged at LIBOR plus a margin, the applicable margin being based on the group's ratio of net debt to adjusted EBITDA. At March 2017, the group's ratio of net debt to adjusted EBITDA was 0.7 times and the committed undrawn facility available to the group was GBP130m. Following completion of the RISI acquisition, the group's net debt increased to approximately 1.5 times adjusted EBITDA.
The group's underlying operating cash conversion for the 12 months to March was 120% (2016: 107%), reflecting better working capital management and an increase in deferred revenue.
Dividend
When the DMGT sell-down was announced in December 2016, the board committed to reviewing the company's dividend policy. Following this review, the board has approved a new, progressive dividend policy with an increase in the dividend pay-out ratio from approximately 33% to approximately 40% (a reduction in the dividend cover from 3.0 to 2.5 times earnings), subject to the capital needs of the business. The interim dividend will be paid at a rate of approximately 33% of the previous year's total dividend. The 15% reduction in the number of shares in issue following the share buyback, combined with the increase in the dividend pay-out ratio, has enabled the board to approve a 26% increase in the interim dividend to 8.8p per share (2016: 7.0p), to be paid to shareholders on June 22.
Currency
The group generates approximately two thirds of both its revenues, including approximately a third of its UK revenues, and profit before tax in US dollars. The exposure to US dollar revenues in its UK businesses is hedged using forward contracts to sell US dollars, which delays the impact of movements in exchange rates for at least a year. However, the group does not hedge the foreign exchange risk on the translation of overseas profits.
The average sterling-US dollar rate for the six months to March 31 was $1.25 (2016: $1.48). This improved headline revenue growth rates for the year by approximately ten percentage points and adjusted profit before tax by GBP6.4m. Each one cent movement in the US dollar rate has an impact on profits on translation of approximately GBP0.6m on an annualised basis. The group also benefitted from the revaluation of non-sterling denominated balance sheet items resulting in a gain of GBP0.2m (2016: GBP1.7m gain).
Further trading updates
Further coverage of these half-year results will be provided to analysts at a presentation starting at 9am on May 18 at the offices of UBS in London. The group intends to provide a brief third-quarter trading update on July 21.
For further information, please contact:
Euromoney Institutional Investor PLC
Colin Jones, Finance Director: +44 20 7779 8666; cjones@euromoneyplc.com
FTI Consulting
Charles Palmer: +44 20 3727 1400; euromoney@fticonsulting.com
CAUTIONARY STATEMENT
This Interim Financial Report (IFR) has been prepared solely to provide additional information to shareholders to assess the Euromoney group's results and strategy and the potential for that strategy to succeed. The IFR should not be relied on by any other party for any other purpose. This IFR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
NOTE TO EDITORS
Euromoney Institutional Investor PLC (www.euromoneyplc.com) is listed on the London Stock Exchange and is a member of the FTSE 250 share index. It is an international business-information group covering asset management, price discovery, data & market intelligence, and banking & finance under brands including Euromoney, Institutional Investor, BCA Research, Ned Davis Research and Metal Bulletin. The group also runs an extensive portfolio of events for the telecoms, financial and commodities markets.
Appendix to Interim Statement
Reconciliation of Consolidated Income Statement to adjusted results for the six months ended March 31 2017
The directors believe that the adjusted profit and earnings per share measures provide additional useful information for shareholders to evaluate and to compare the performance of the business from period to period. These measures are used by management for budgeting, planning and monthly reporting purposes. The non-IFRS measures also enable the group to more easily and consistently track the underlying operational performance by separating out the following types of income, charges and non-cash items.
Adjusted figures are presented before the impact of amortisation of acquired intangible assets (comprising trademarks and brands, databases and customer relationships), exceptional items, share of associates and joint ventures' acquired intangibles amortisation, exceptional items and tax, and net movements in deferred consideration and acquisition commitments. The amortisation of acquired intangible assets is excluded to allow an easier comparison of the results of organically developed businesses with acquired businesses. In respect of earnings, adjusted amounts reflect a tax rate that includes the current tax effect of the 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. Further analysis of the adjusting items is presented in notes 2, 4, 5, 6, 8, 10 and 11 to the Consolidated Condensed Interim Financial Report.
The group has consistently applied this definition of adjusted measures as it has reported on its financial performance in the past and it is the group's intention to continue to consistently apply this definition in the future.
The reconciliation below sets out the adjusted results of the group and the related adjustments to the Condensed Consolidated Income Statement.
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
Adjust- 2017 Adjust- 2016 Adjust- 2016
Adjusted ments Total Adjusted ments Total Adjusted ments Total
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Total revenue 2 203,219 - 203,219 194,198 - 194,198 403,112 - 403,112
Adjusted operating
profit 2 48,984 - 48,984 46,830 - 46,830 101,450 - 101,450
Acquired intangible
amortisation 11 - (8,824) (8,824) - (7,850) (7,850) - (16,733) (16,733)
Exceptional
items 4 - (24,559) (24,559) - (12,940) (12,940) - (37,264) (37,264)
-------- -------- --------- -------- -------- --------- -------- -------- --------
Operating profit 48,984 (33,383) 15,601 46,830 (20,790) 26,040 101,450 (53,997) 47,453
Share of results
in associates
and joint ventures 10 1,168 (2,274) (1,106) 641 (1,936) (1,295) 2,186 (4,009) (1,823)
Finance income 5 175 2,171 2,346 164 - 164 694 - 694
Finance expense 5 (1,247) - (1,247) (763) (789) (1,552) (1,801) (601) (2,402)
-------- -------- --------- -------- -------- --------
Net finance
(costs)/income 5 (1,072) 2,171 1,099 (599) (789) (1,388) (1,107) (601) (1,708)
-------- -------- --------- -------- -------- --------- -------- -------- --------
Profit before
tax 49,080 (33,486) 15,594 46,872 (23,515) 23,357 102,529 (58,607) 43,922
Tax expense
on profit 6 (10,243) 8,299 (1,944) (8,897) 2,744 (6,153) (18,066) 5,157 (12,909)
-------- -------- --------- -------- -------- --------- -------- -------- --------
Profit for the
period 38,837 (25,187) 13,650 37,975 (20,771) 17,204 84,463 (53,450) 31,013
-------- -------- --------- -------- -------- --------- -------- -------- --------
Attributable
to:
Equity holders
of the parent 38,556 (25,187) 13,369 37,773 (20,771) 17,002 84,194 (53,450) 30,744
Equity
non-controlling
interests 281 - 281 202 - 202 269 - 269
38,837 (25,187) 13,650 37,975 (20,771) 17,204 84,463 (53,450) 31,013
-------- -------- --------- -------- -------- --------- -------- -------- --------
Diluted earnings
per share 8 32.72p (21.37)p 11.35p 29.86p (16.42)p 13.44p 66.51p (42.22)p 24.29p
Underlying results
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.
When calculating underlying growth, adjustments are made to give a like-for-like comparison. For example, the adjusted results in 2017 benefitted from the strengthening of the US dollar relative to sterling. To calculate underlying growth, the prior year comparatives are restated using 2017 exchange rates. Similarly, adjustments are made to exclude disposals from both years. When businesses are acquired, the prior year comparatives are adjusted to include the acquisition. The timing of events can also be a distortion. To give a fair like-for-like comparison when calculating underlying growth, significant timing event differences are excluded from the year in which they were held.
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 following table sets out the reconciliation from reported revenues to underlying revenues:
Unaudited
six Unaudited
months six months
ended ended
March March
31 31 Change
2017 2016 %
Total Total
GBP000 GBP000
Reported revenue 203,219 194,198 5%
M&A (4,716) (10,324)
Timing differences - (2,977)
Foreign exchange - 22,501
Underlying revenue 198,503 203,398 (2%)
--------- -----------
Cash conversion
Cash conversion measures the percentage by which cash generated from operations covers adjusted operating profit.
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Adjusted operating profit 48,984 46,830 101,450
--------- --------- -------
Cash generated from operations 67,280 53,317 103,764
Exceptional items 6,432 - 3,734
Other working capital movements (3,055) (567) (1,365)
Underlying cash generated from operations 70,657 52,750 106,133
--------- --------- -------
Cash conversion % 137% 114% 102%
Underlying 12-month rolling cash
conversion % 120% 107% 105%
The underlying basis is after adjusting for significant timing differences affecting the movement on working capital and exceptional items. For the period ended March 31 2017, exceptional items largely consist of cash payments for the 2016 restructuring costs, legal and professional fees and share buyback costs. The other working capital movements are largely the result of the landlord's one-off contribution to the fit-out of the New York office which will be amortised over the period of the lease. For the year ended September 30 2016, exceptional payments related to the strategic review in 2016 and the development of the group's new strategy. The other working capital movements in prior year related to the rent-free period of the new London offices. At the interim period an underlying 12-month rolling cash conversion percentage is used to eliminate any seasonality.
Condensed Consolidated Income Statement
for the six months ended March 31 2017
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
Notes GBP000 GBP000 GBP000
Total revenue 2 203,219 194,198 403,112
Operating profit before acquired
intangible amortisation and
exceptional items 2 48,984 46,830 101,450
Acquired intangible amortisation 11 (8,824) (7,850) (16,733)
Exceptional items 4 (24,559) (12,940) (37,264)
---------------------------------- ------ ---------- ---------- ---------
Operating profit 2 15,601 26,040 47,453
Share of results in associates
and joint ventures 10 (1,106) (1,295) (1,823)
Finance income 5 2,346 164 694
Finance expense 5 (1,247) (1,552) (2,402)
Net finance income/(costs) 5 1,099 (1,388) (1,708)
---------- ---------- ---------
Profit before tax 15,594 23,357 43,922
Tax expense on profit 6 (1,944) (6,153) (12,909)
Profit for the period 2 13,650 17,204 31,013
---------- ---------- ---------
Attributable to:
Equity holders of the parent 13,369 17,002 30,744
Equity non-controlling interests 281 202 269
13,650 17,204 31,013
---------- ---------- ---------
Basic earnings per share 8 11.36p 13.45p 24.31p
Diluted earnings per share 8 11.35p 13.44p 24.29p
Adjusted basic earnings per
share 8 32.76p 29.88p 66.57p
Adjusted diluted earnings per
share 8 32.72p 29.86p 66.51p
Dividend per share (including
proposed dividends) 7 8.80p 7.00p 23.40p
A detailed reconciliation of the group's statutory results to the adjusted results is set out in the appendix to the Interim Statement on pages 7 to 8.
Condensed Consolidated Statement of Comprehensive Income
for the six months ended March 31 2017
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Profit for the period 13,650 17,204 31,013
---------- ---------- ---------
Items that may be reclassified subsequently
to profit or loss:
Change in fair value of cash flow
hedges 10,832 (2,267) (5,202)
Transfer of gains on cash flow hedges
from fair value reserves to Income
Statement:
Foreign exchange losses in total
revenue (5,901) (1,457) (819)
Foreign exchange gains/(losses)
in operating profit 33 913 (1,214)
Net exchange differences on translation
of net investments in overseas subsidiary
undertakings 28,241 27,115 86,984
Net exchange differences on foreign
currency loans (14,589) (13,633) (43,401)
Translation reserves recycled to
Income Statement (285) - (636)
Tax on items that may be reclassified (869) 729 1,437
Items that will not be reclassified
to profit or loss:
Actuarial gains/(losses) on defined
benefit pension schemes 5,201 (1,565) (7,215)
Tax (charge)/credit on actuarial
losses/gains on defined benefit
pension schemes (884) 282 1,227
Other comprehensive income for the
period 21,779 10,117 31,161
---------- ---------- ---------
Total comprehensive income for the
period 35,429 27,321 62,174
---------- ---------- ---------
Attributable to:
Equity holders of the parent 34,806 26,924 60,575
Equity non-controlling interests 623 397 1,599
35,429 27,321 62,174
---------- ---------- ---------
Condensed Consolidated Statement of Financial Position
as at March 31 2017
Unaudited Unaudited Audited
as at as at as at
March March Sept
31 31 30
2017 2016 2016
Notes GBP000 GBP000 GBP000
Non-current assets
Intangible assets
Goodwill 11 381,162 377,072 396,105
Other intangible assets 11 149,299 146,248 155,034
Property, plant and equipment 17,438 9,852 10,472
Investment in associates 10 29,802 31,313 29,810
Investment in joint ventures 10 190 200 215
Available-for-sale investments 10 5,835 5,835 5,835
Deferred consideration 16 1,515 - 526
Deferred tax assets 1,059 3,159 3,886
Derivative financial instruments 36 122 9
586,336 573,801 601,892
---------- ---------- ----------
Current assets
Trade and other receivables 71,652 69,036 73,491
Deferred consideration 16 1,554 192 -
Current income tax assets 7,871 6,123 7,112
Group relief receivable - - 121
Cash deposit with DMGT group
company - 43,727 73,639
Cash and cash equivalents (excluding
bank overdrafts) 37,371 12,410 10,561
Derivative financial instruments 468 410 410
Total assets of businesses held
for sale 9 - 6,578 5,013
118,916 138,476 170,347
---------- ---------- ----------
Current liabilities
Acquisition commitments 16 (9,086) - (326)
Deferred consideration 16 - - (480)
Trade and other payables (26,277) (25,780) (23,866)
Current income tax liabilities (20,861) (17,576) (21,905)
Group relief payable (172) (787) -
Accruals (64,571) (44,347) (73,375)
Deferred income 12 (138,512) (125,285) (113,446)
Loan notes - (256) (185)
Bank overdrafts (2,050) - (233)
Derivative financial instruments (5,499) (5,265) (9,671)
Provisions (2,122) (285) (353)
Total liabilities of businesses
held for sale 9 - (1,917) (5,549)
---------- ---------- ----------
(269,150) (221,498) (249,389)
---------- ---------- ----------
Net current liabilities (150,234) (83,022) (79,042)
---------- ---------- ----------
Total assets less current liabilities 436,102 490,779 522,850
Non-current liabilities
Acquisition commitments 16 (1,082) (10,201) (11,445)
Borrowings 14 (118,963) - -
Other non-current liabilities (485) (567) (486)
Preference shares - (10) (10)
Deferred income 12 (5,947) (3,709) (5,340)
Deferred tax liabilities (4,099) (17,147) (14,179)
Net pension deficit (4,641) (3,316) (9,995)
Derivative financial instruments (70) (873) (778)
Provisions (2,979) (2,955) (3,116)
---------- ---------- ----------
(138,266) (38,778) (45,349)
Net assets 297,836 452,001 477,501
---------- ---------- ----------
Shareholders' equity
Called up share capital 15 273 320 321
Share premium account 103,042 102,749 102,835
Other reserve 64,981 64,981 64,981
Capital redemption reserve 56 8 8
Investment in own shares (21,005) (21,582) (21,005)
Reserve for share-based payments 37,873 37,750 37,334
Fair value reserve (29,777) (30,317) (34,741)
Translation reserve 108,062 66,707 95,037
Retained earnings 26,108 224,618 224,218
---------- ---------- ----------
Equity shareholders' surplus 289,613 445,234 468,988
Equity non-controlling interests 8,223 6,767 8,513
Total equity 297,836 452,001 477,501
---------- ---------- ----------
Condensed Consolidated Statement of Changes in Equity
for the six months ended March 31 2017
Reserve
for
Capital share- Non-
Share redemp- based Fair Trans- control-
Share premium Other tion Own pay- value lation Retained ling
capital account reserve reserve shares ments reserve reserve earnings Total interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At September 30
2015 320 102,557 64,981 8 (21,582) 37,169 (27,506) 53,420 228,823 438,190 6,754 444,944
Profit for the
year - - - - - - - - 30,744 30,744 269 31,013
Other
comprehensive
(expense)/income
for the year - - - - - - (7,235) 41,617 (4,551) 29,831 1,330 31,161
------- ------- ------- ------- -------- ------- -------- ------- --------- --------- --------- ---------
Total
comprehensive
income
for the year - - - - - - (7,235) 41,617 26,193 60,575 1,599 62,174
Recognition of
acquisition
commitments - - - - - - - - (665) (665) - (665)
Non-controlling
interest
recognised
on acquisition - - - - - - - - - - 363 363
Exercise of
acquisition
option
commitments - - - - - - - - 40 40 (40) -
Adjustment
arising from
change
in
non-controlling
interest - - - - - - - - (356) (356) 228 (128)
Charge for
share-based
payments - - - - - 742 - - - 742 - 742
Cash dividend
paid - - - - - - - - (29,592) (29,592) (391) (29,983)
Exercise of share
options 1 278 - - 577 (577) - - - 279 - 279
Tax relating to
items taken
directly to
equity - - - - - - - - (225) (225) - (225)
------- ------- ------- ------- -------- ------- -------- ------- --------- --------- --------- ---------
At September 30
2016 321 102,835 64,981 8 (21,005) 37,334 (34,741) 95,037 224,218 468,988 8,513 477,501
------- ------- ------- ------- -------- ------- -------- ------- --------- --------- --------- ---------
Profit for the
period - - - - - - - - 13,369 13,369 281 13,650
Other
comprehensive
income
for the period - - - - - - 4,964 13,025 3,448 21,437 342 21,779
------- ------- ------- ------- -------- ------- -------- ------- --------- --------- --------- ---------
Total
comprehensive
income
for the period - - - - - - 4,964 13,025 16,817 34,806 623 35,429
Adjustment
arising from
change
in
non-controlling
interest - - - - - - - - (423) (423) (436) (859)
Charge for
share-based
payments - - - - - 539 - - - 539 - 539
Cash dividend
paid - - - - - - - - (20,755) (20,755) (477) (21,232)
Exercise of share
options - 207 - - - - - - - 207 - 207
Share buyback (48) - - 48 - - - - (193,657) (193,657) - (193,657)
Tax relating to
items taken
directly to
equity - - - - - - - - (92) (92) - (92)
------- ------- ------- ------- -------- ------- -------- ------- --------- --------- --------- ---------
At March 31 2017 273 103,042 64,981 56 (21,005) 37,873 (29,777) 108,062 26,108 289,613 8,223 297,836
------- ------- ------- ------- -------- ------- -------- ------- --------- --------- --------- ---------
Condensed Consolidated Statement of Changes in Equity
for the six months ended March 31 2016
Reserve
for
Capital share- Non-
Share redemp- based Fair Trans- control-
Share premium Other tion Own pay- value lation Retained ling
capital account reserve reserve shares ments reserve reserve earnings Total interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At September 30
2015 320 102,557 64,981 8 (21,582) 37,169 (27,506) 53,420 228,823 438,190 6,754 444,944
Profit for the
period - - - - - - - - 17,002 17,002 202 17,204
Other
comprehensive
income/(expense)
for the period - - - - - - (2,811) 13,287 (554) 9,922 195 10,117
------- ------- ------- ------- -------- ------- -------- ------- -------- -------- --------- --------
Total
comprehensive
income
for the period - - - - - - (2,811) 13,287 16,448 26,924 397 27,321
Exercise of
acquisition
commitments - - - - - - - - (7) (7) 7 -
Charge for
share-based
payments - - - - - 581 - - - 581 - 581
Cash dividend
paid - - - - - - - - (20,737) (20,737) (391) (21,128)
Exercise of share
options - 192 - - - - - - - 192 - 192
Tax relating to
items taken
directly to
equity - - - - - - - - 91 91 - 91
------- ------- ------- ------- -------- ------- -------- ------- -------- -------- --------- --------
At March 31 2016 320 102,749 64,981 8 (21,582) 37,750 (30,317) 66,707 224,618 445,234 6,767 452,001
------- ------- ------- ------- -------- ------- -------- ------- -------- -------- --------- --------
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 (ESOT) and Euromoney Employee Share Trust (EEST). 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.
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
Number of shares held:
Euromoney Employees' Share Ownership Trust 58,976 58,976 58,976
Euromoney Employee Share Trust 1,700,777 1,747,631 1,700,777
Total 1,759,753 1,806,607 1,759,753
--------- --------- ---------
Nominal cost per share (p) 0.25 0.25 0.25
Historical cost per share (GBP) 11.94 11.95 11.94
Market value (GBP000) 18,706 17,018 19,516
Condensed Consolidated Statement of Cash Flows
for the six months ended March 31 2017
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Cash flow from operating activities
Operating profit 15,601 26,040 47,453
Long-term incentive expense 539 581 1,198
Acquired intangible amortisation 8,824 7,850 16,733
Licences and software amortisation 1,801 1,487 3,675
Depreciation of property, plant
and equipment 1,470 1,329 2,806
Loss/(profit) on disposal of property,
plant and equipment 1 (13) (4)
Goodwill impairment 27,360 12,940 26,987
Intangibles impairment - - 1,652
Investment in associate impairment - - 111
Recognition of deficit on defined
benefit scheme - - 1,249
Profit on disposal/closure of businesses (4,838) - (7,094)
Decrease in provisions (270) (528) (387)
---------- ---------- ---------
Operating cash flows before movements
in working capital 50,488 49,686 94,379
Decrease in receivables 6,250 2,643 1,719
Increase in payables 10,542 988 7,666
---------- ---------- ---------
Cash generated from operations 67,280 53,317 103,764
Income taxes paid (13,029) (6,967) (17,242)
Group relief tax received - 515 549
Net cash generated from operating
activities 54,251 46,865 87,071
---------- ---------- ---------
Investing activities
Dividends received from associate - - 83
Interest received 42 169 699
Purchase of intangible assets (912) (1,417) (2,402)
Purchase of property, plant and
equipment (8,338) (1,451) (3,231)
Proceeds from disposal of property,
plant and equipment 3 16 20
Purchase of subsidiary undertaking,
net of cash acquired - - (14,092)
Proceeds from disposal of businesses 4,358 - 10,796
Purchase of associates and joint
venture (552) (180) (180)
Proceeds from redemption of preference
share capital - 14,370 14,370
Net cash (used in)/generated from
investing activities (5,399) 11,507 6,063
---------- ---------- ---------
Financing activities
Dividends paid to equity holders (20,755) (20,737) (29,592)
Dividends paid to non-controlling
interests (477) (391) (391)
Interest paid (2,131) (294) (1,121)
Issue of new share capital 207 192 279
Share buyback (193,657) - -
Increase in borrowings 119,940 - -
(Payment)/receipt of deferred consideration (139) 406 662
Purchase of additional interest
in subsidiary undertakings (726) (239) (367)
Redemption of loan notes (185) (11) (82)
Deposit received/(repaid) with DMGT
group company 73,618 (33,834) (62,326)
---------- ---------- ---------
Net cash used in financing activities (24,305) (54,908) (92,938)
---------- ---------- ---------
Net increase in cash and cash equivalents 24,547 3,464 196
Cash and cash equivalents at beginning
of period 10,328 8,148 8,148
Effect of foreign exchange rate
movements 446 798 1,984
---------- ---------- ---------
Cash and cash equivalents at end
of period 35,321 12,410 10,328
---------- ---------- ---------
Cash and cash equivalents include bank overdrafts.
Note to the Condensed Consolidated Statement of Cash Flows
Net (debt)/cash
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Net cash at beginning of period 83,782 17,680 17,680
Net increase in cash and cash equivalents 24,547 3,464 196
Increase in borrowings (119,940) - -
Deposit (received)/repaid with DMGT
group company (73,618) 33,834 62,326
Redemption of loan notes 185 11 82
Effect of foreign exchange rate
movements 1,402 892 3,498
Net (debt)/cash at end of period (83,642) 55,881 83,782
---------- ---------- --------
Net (debt)/cash comprises:
Cash at bank and in hand 37,371 12,410 10,561
Bank overdrafts (2,050) - (233)
---------- ---------- --------
Total cash and cash equivalents 35,321 12,410 10,328
Cash deposit with DMGT group company - 43,727 73,639
Borrowings (118,963) - -
Loan notes - (256) (185)
---------- ---------- --------
Net (debt)/cash (83,642) 55,881 83,782
---------- ---------- --------
Notes to the Condensed Consolidated Interim Financial Report
1 Basis of preparation
Euromoney Institutional Investor PLC (the 'company') is a company incorporated in the United Kingdom.
The group financial statements consolidate those of the company and its subsidiaries (together referred to as the 'group') and equity-account the group's interest in joint ventures and associates.
This Interim Financial Report was approved by the board of directors on May 17 2017.
These condensed consolidated financial statements have been prepared in accordance with the disclosure and transparency rules of the Financial Conduct Authority and using accounting policies consistent with International Financial Reporting Standards as adopted by the European Union and in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting'.
The financial information for the year ended September 30 2016 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not draw attention to any matters by way of emphasis and did not contain statements under section 498(2) or 498(3) of the Companies Act 2006.
Accounting policies
The Condensed Consolidated Interim Financial Report has 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 condensed financial statements as were applied in the group's latest annual audited financial statements.
Retirement benefit schemes
The group operates the Metal Bulletin plc Pension Scheme and participates in the Harmsworth Pension Scheme, defined benefit schemes which are closed to new entrants. The assumptions for the discount rate and mortality rates have been reviewed and adjusted to reflect the latest market rates decreasing the net pension deficit from GBP10.0m at September 30 2016 to GBP4.6m at March 31 2017.
Going concern, debt covenants and liquidity
The results of the group's business activities, together with the factors likely to affect its future development, performance and financial position, are set out in the Interim Statement on page 1 to 6.
The financial position of the group, its cash flows and liquidity position are set out in detail in this Condensed Consolidated Interim Financial Report. At March 31 2017 the group's net debt position was GBP83.6m. In addition, the group has access to a committed GBP130m multi-currency revolving credit facility which is available until December 2021. The facility's covenant requires the group's net debt to be no more than three times adjusted EBITDA and require 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. At March 31 2017 the group's net debt to adjusted EBITDA covenant was 0.7 times and the committed undrawn facility available was GBP130m.
The group's forecasts and projections, looking out to September 2020 and taking account of reasonably possible changes in trading performance, show that the group should be able to operate within the level and covenants of its current and available borrowing facilities.
After making enquiries, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence. Accordingly, the directors continue to adopt the going concern basis in preparing this Condensed Consolidated Interim Financial Report.
Principal risks and uncertainties
The principal risks and uncertainties that affect the group are described in detail on pages 15 to 20 of the 2016 annual report available at www.euromoneyplc.com. In summary, they include:
- Downturn in key geographic region or market sector;
- Product and market transformation/disruption;
- Exposure to US dollar exchange rate;
- Information security breach resulting in challenge to data integrity;
- Reputational damage or legal/regulatory challenge arising from price, benchmark and index reporting activities;
- Disruption to operations from a business continuity failure;
- Catastrophic or high impact risk affecting key events or wider business;
- Acquisition or disposal fails to generate expected returns;
- Unforeseen tax liabilities or losses from treasury operations.
These are still considered to be the most relevant risks and uncertainties at this time. A number of these risks and uncertainties could have an impact on the group's performance over the remaining six months of the financial year and could cause actual results to differ from expected and historical results. Where a risk that was disclosed in the annual report is unchanged, or is not expected to have a specific impact in the remaining period, further disclosure in this report is considered unnecessary.
2 Segmental analysis
Segmental information is presented in respect of the group's business divisions and reflects the group's management and internal reporting structure. The group is organised into four business divisions: Asset management; Pricing, data & market intelligence; Banking & finance; and Commodity events.
Asset management and pricing, data & market intelligence consist primarily of subscription revenue. Banking & finance consists mainly of both sponsorship income and delegates revenue. Commodity events consists primarily of delegates revenue. A breakdown of the group's revenue by type is set out below.
During the period to March 31 2017, the group sold/closed HedgeFund Intelligence, II Intelligence, Euromoney Indices and LatinFinance (note 9). As a result segment information of these businesses has been reclassified as sold/closed businesses and the comparative split of divisional revenues, revenue by type and operating profits has been restated.
The period to March 31 2016 has been restated to reflect the changes in the group's operations following the implementation of the new group strategy in the 2016 Annual Report and Accounts.
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.
Unaudited six months ended March 31
Subscriptions Total
and content Advertising Sponsorship Delegates Other revenue
2017 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
by division and
type:
Asset management 69,081 7,066 6,117 640 26 82,930
Pricing, data &
market intelligence 52,507 5,032 6,817 8,839 575 73,770
Banking & finance 4,165 4,087 10,043 10,881 618 29,794
Commodity events 16 4 3,929 14,630 405 18,984
------------- ----------- ----------- --------- ------ --------
125,769 16,189 26,906 34,990 1,624 205,478
Sold/closed businesses 4,716
Foreign exchange
losses on forward
contracts (6,975)
Total revenue 203,219
--------
Unaudited six months ended March 31
Subscriptions Total
and content Advertising Sponsorship Delegates Other revenue
2016 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
by division and
type:
Asset management 58,376 6,628 5,012 293 15 70,324
Pricing, data &
market intelligence 43,434 5,412 5,150 7,767 691 62,454
Banking & finance 3,926 3,672 9,834 11,287 776 29,495
Commodity events 38 10 3,812 16,279 377 20,516
------------- ----------- ----------- --------- ------ --------
105,774 15,722 23,808 35,626 1,859 182,789
Sold/closed businesses 12,758
Foreign exchange
losses on forward
contracts (1,349)
Total revenue 194,198
--------
Unaudited six months ended March 31
United Rest of
Kingdom North America World Eliminations Total
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
by division and
source:
Asset management 1,214 1,310 80,830 68,524 1,066 902 (180) (412) 82,930 70,324
Pricing, data &
market intelligence 47,752 42,660 11,685 10,198 16,396 12,320 (2,063) (2,724) 73,770 62,454
Banking & finance 17,102 17,761 11,226 9,433 1,683 2,706 (217) (405) 29,794 29,495
Commodity events 12,546 13,470 - - 6,438 7,046 - - 18,984 20,516
Sold/closed businesses 2,429 6,297 2,302 6,718 - - (15) (257) 4,716 12,758
Foreign exchange
losses on forward
contracts (6,975) (1,349) - - - - - - (6,975) (1,349)
------- ------- ------- ------ ------ ------ ------- ------- ------- -------
Total revenue 74,068 80,149 106,043 94,873 25,583 22,974 (2,475) (3,798) 203,219 194,198
------- ------- ------- ------ ------ ------ ------- ------- ------- -------
Revenue by destination 19,724 25,366 94,884 86,909 88,611 81,923 - - 203,219 194,198
------- ------- ------- ------ ------ ------ ------- ------- ------- -------
Unaudited six months ended March
31
United Rest of
Kingdom North America World Total
2017 2016 2017 2016 2017 2016 2017 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Adjusted operating
profit
by division and
source:
Asset management 65 128 29,056 22,345 99 (424) 29,220 22,049
Pricing, data &
market intelligence 13,470 12,754 4,872 3,230 4,809 3,069 23,151 19,053
Banking & finance 744 (563) 3,389 3,078 (5) 79 4,128 2,594
Commodity events 5,889 5,665 - - 1,107 2,802 6,996 8,467
Sold/closed businesses 83 461 (48) 348 - - 35 809
Unallocated corporate
costs (12,089) (4,295) (1,117) (1,629) (1,340) (218) (14,546) (6,142)
-------- ------- -------- ------- ------- -------- -------- --------
Operating profit before acquired
intangible
amortisation and exceptional items 8,162 14,150 36,152 27,372 4,670 5,308 48,984 46,830
Acquired intangible
amortisation (note
11) (3,607) (3,173) (5,058) (4,569) (159) (108) (8,824) (7,850)
Exceptional items
(note 4) (3,454) - (19,862) - (1,243) (12,940) (24,559) (12,940)
-------- --------
Operating profit 1,101 10,977 11,232 22,803 3,268 (7,740) 15,601 26,040
-------- ------- -------- ------- ------- --------
Share of results
in associates and
joint ventures
(note 10) (1,106) (1,295)
Finance income
(note 5) 2,346 164
Finance expense
(note 5) (1,247) (1,552)
-------- --------
Profit before tax 15,594 23,357
Tax expense on
profit (note 6) (1,944) (6,153)
Profit for the
period 13,650 17,204
-------- --------
Unaudited six months ended March
31
Acquired Depreciation
intangible Exceptional and
amortisation items amortisation
2017 2016 2017 2016 2017 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Other segmental information
by division:
Asset management (4,824) (5,004) (28,514) - (924) (644)
Pricing, data & market
intelligence (2,403) (1,732) (1,089) - (221) (132)
Banking & finance (120) (101) - - - -
Commodity events (1,337) (869) (89) (12,940) (70) (19)
Sold/closed businesses (140) (144) 4,838 - (1) (17)
Unallocated corporate
income/(costs) - - 295 - (2,055) (2,004)
(8,824) (7,850) (24,559) (12,940) (3,271) (2,816)
------- ------- -------- -------- ------- -------
United Kingdom North America Rest of World Total
Unaudited Unaudited Unaudited Unaudited
six Audited six Audited six Audited six Audited
months year months year months year months year
ended ended ended ended ended ended ended ended
March Sept March Sept March Sept March Sept
31 30 31 30 31 30 31 30
2017 2016 2017 2016 2017 2016 2017 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non-current
assets (excluding
derivative
financial instruments,
deferred consideration
and deferred
tax assets)
by location:
Goodwill 99,786 99,751 273,586 288,680 7,790 7,674 381,162 396,105
Other intangible
assets 63,102 66,519 85,455 86,972 742 1,543 149,299 155,034
Property, plant
and equipment 6,337 6,894 10,029 2,785 1,072 793 17,438 10,472
Investments 35,827 35,860 - - - - 35,827 35,860
Non-current
assets 205,052 209,024 369,070 378,437 9,604 10,010 583,726 597,471
--------- ------- --------- ------- --------- ------- --------- -------
Additions to
property, plant
and equipment (102) (993) (7,722) (2,275) (514) (494) (8,338) (3,762)
--------- ------- --------- ------- --------- ------- --------- -------
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 Seasonality of results
The group's results are not materially affected by seasonal or cyclical trading. For the year ended September 30 2016 the group earned 47% of both its revenues and adjusted operating profits in the first six months of the year (2015: 49% of both its revenues and adjusted operating profits).
4 Exceptional items
Exceptional items are items of income or expense considered by the directors, either individually or if of a similar type in aggregate, as being significant and which require additional disclosure in order to provide an indication of the underlying trading performance of the group.
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
Note GBP000 GBP000 GBP000
Profit on disposal/closure of
businesses and recycled cumulative
translation differences a 4,838 - 7,094
Goodwill impairment b (27,360) (12,940) (26,987)
Intangibles impairment e - - (1,652)
Investment in associate impairment e - - (111)
Release/(provision) for overseas
sales tax c 3,888 - (7,851)
Recognition of deficit on defined
benefit scheme e - - (1,249)
Restructuring and other exceptional
costs d (5,925) - (6,508)
(24,559) (12,940) (37,264)
---------- ---------- ---------
a. During the period ended March 31 2017 the group sold/closed HedgeFund Intelligence (loss GBP4k), II Intelligence (profit GBP2.1m), Euromoney Indices (loss GBP0.9m) and LatinFinance (profit GBP3.6m), resulting in a net profit on disposal/closure of GBP4.8m (note 9). For the year ended September 30 2016, the group sold 100% of its equity shareholding of Gulf Publishing. and Petroleum Economist which gave rise to a profit on disposal of GBP7.1m.
b. The goodwill impairment charge consists of: - March 2017: Ned Davis Research (NDR) (GBP27.4m) - March 2016: Mining Indaba (GBP12.9m)
- September 2016: Total of GBP27m includes Mining Indaba (GBP12.9m), HedgeFund Intelligence (GBP5.9m) and Total Derivatives (GBP8.2m)
The impairment of NDR stems from a disappointing financial performance of the business in the face of tough market conditions and recent management changes.
c. For the period ended March 31 2017, an element of the provision for overseas sales tax was released resulting in a credit of GBP3.9m, following settlement of the sales tax exposure (including interest). For the year ended September 30 2016, the group recognised a provision of GBP7.9m following an adverse tax ruling in June 2016. Given that the provision was classified as exceptional in 2016, the release of the surplus provision has been consistently treated as exceptional in 2017.
d. Restructuring and other exceptional costs for the period ended March 31 2017 consist of professional fees associated with the share buyback transaction with Daily Mail and General Trust plc (DMGT); professional fees from the legal dispute with the previous owners of Centre for Investor Education (CIE); non-recurring costs relating to the relocation of the New York office; and one-off costs for the acquisition of RISI (note 19). For the year ended September 30 2016, the costs mostly comprised one-off costs incurred as a result of the strategic review undertaken during the year and professional fees from the CIE legal dispute.
e. For the year ended September 30 2016, the other exceptional items included an intangibles impairment charge of GBP1.7m for Euromoney Indices; the group increased its equity shareholding of World Bulk Wine to 57% whereby the transfer from associate to a subsidiary resulted in an impairment of associate of GBP0.1m; and the group recognised its share of the deficit in the Harmsworth Pension Scheme (HPS), a defined benefit scheme, of GBP1.2m.
The group's tax charge includes a related tax charge on exceptional items of GBP9.6m (March 2016: GBP2.4m, September 2016: GBP5.3m) (note 6).
5 Finance income and expense
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Finance income
Interest on cash deposit with DMGT
group company 137 81 391
Interest receivable from short-term
investments 38 83 303
Movements in acquisition commitments 2,077 - -
Movements in deferred consideration 94 - -
2,346 164 694
---------- ---------- --------
Finance expense
Interest payable on committed borrowings
with DMGT group company (152) (429) (1,346)
Interest payable on borrowings (920) - -
Net interest expense on defined
benefit liability (101) (32) (66)
Movements in acquisition commitments - (789) (601)
Interest on tax (74) (302) (389)
(1,247) (1,552) (2,402)
---------- ---------- --------
Net finance income/(costs) 1,099 (1,388) (1,708)
---------- ---------- --------
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Reconciliation of net finance income/(costs)
in Income Statement to adjusted
net finance costs
Total net finance income/(costs)
in Income Statement 1,099 (1,388) (1,708)
Add back:
Movements in acquisition commitments (2,077) 789 601
Movements in deferred consideration (94) - -
(2,171) 789 601
---------- ---------- --------
Adjusted net finance costs (1,072) (599) (1,107)
---------- ---------- --------
The reconciliation of net finance income/(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. Refer to the appendix to the Interim Statement.
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.
6 Tax expense on profit
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Current tax expense
UK corporation tax expense 1,184 1,898 2,350
Foreign tax expense 8,629 6,805 20,682
Adjustments in respect of prior
years 1,656 1,749 (14)
---------- ---------- ---------
11,469 10,452 23,018
Deferred tax expense
Current year (9,607) (3,973) (11,076)
Adjustments in respect of prior
years 82 (326) 967
(9,525) (4,299) (10,109)
---------- ---------- ---------
Total tax expense in Income Statement 1,944 6,153 12,909
---------- ---------- ---------
Effective tax rate 12% 26% 29%
As set out below the adjusted effective tax rate for the 2017 interim period is 21% (2016: 19%). The forecast adjusted effective tax rate for 2017 full year is 20% (2016: 18%).
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Reconciliation of tax expense in
Income Statement to adjusted tax
expense
Total tax expense in Income Statement 1,944 6,153 12,909
Add back:
Tax on acquired intangible amortisation 2,018 2,417 4,397
Tax on exceptional items 9,550 2,396 5,267
---------- ---------- --------
11,568 4,813 9,664
Tax on goodwill and intangible amortisation (1,881) (838) (4,210)
Share of tax on associates and joint
ventures 350 192 656
Adjustments in respect of prior
years (1,738) (1,423) (953)
8,299 2,744 5,157
---------- ---------- --------
Adjusted tax expense 10,243 8,897 18,066
---------- ---------- --------
Adjusted profit before tax (refer
to the appendix to the Interim Statement) 49,080 46,872 102,529
Adjusted effective tax rate 21% 19% 18%
The group presents the adjusted effective tax rate to help users of this report better understand its tax charge. In arriving at this rate, the group removes the tax effect of items which are adjusted for in arriving at the adjusted profit disclosed in the appendix to the Interim Statement. However, the current tax effect of goodwill and intangible items is not removed. The current tax benefit of tax deductible goodwill and intangibles amounting to GBP1.9m is recognised in the adjusted effective tax rate as the group considers that the resulting adjusted effective tax rate is more representative of its tax payable position, as the deferred tax effect on the goodwill and intangible items is not expected to crystallise. The deferred tax effect on goodwill and intangible items would only crystallise in the event of a disposal, and that is not the current intention. Adjustments in respect of prior years are excluded from the adjusted tax expense as they do not relate to current year trading.
The movement in net deferred tax liabilities since year-end is largely attributable to the impact of the NDR goodwill impairment (note 4).
Uncertain tax positions
At March 31 2017 the group held provisions for uncertain tax of GBP11.7m (September 2016: GBP12.5m) relating to permanent establishment risk and challenges by tax authorities. The maximum potential additional exposure for the group in relation to challenges by tax authorities not provided for is approximately GBP29m if all cases were to be settled at the maximum potential liability. These additional exposures include challenges by: the Canadian Revenue Agency on a foreign currency trade in 2009, which has a maximum exposure of GBP21m; and the UK's HMRC on a share-for-share exchange with the group's investment in Dealogic, which has a maximum exposure of GBP11m of which GBP2.8m has been provided. 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.
7 Dividends
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Amounts recognisable as distributable
to equity holders in period
Final dividend for the year ended
September 30 2016 of 16.40p (2015:
16.40p) 21,044 21,033 21,033
Interim dividend for the year ended
September 30 2016 of 7.00p - - 8,981
---------- ---------- --------
21,044 21,033 30,014
Employee share trust dividends (289) (296) (422)
20,755 20,737 29,592
---------- ---------- --------
Interim dividend for the period
ended March 31 2017 of 8.80p (2016:
7.00p) 9,600 8,980
Employee share trust dividends waived (155) (126)
9,445 8,854
---------- ----------
The final dividend for the year to September 30 2016 was approved by shareholders at the AGM held on January 26 2017 and paid on February 9 2017.
It is anticipated that the interim dividend of 8.80p (2016: 7.00p) per share will be paid on June 22 2017 to shareholders on the register on May 26 2017. It is expected that the shares will be marked ex-dividend on May 25 2017. The interim dividend has not been included as a liability in this Interim Financial Report in accordance with IAS 10 'Events after the Reporting Period'.
8 Earnings per share
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Basic earnings attributable to equity
holders of the parent 13,369 17,002 30,744
Adjustments (refer to the appendix
to the Interim Statement) 25,187 20,771 53,450
Adjusted earnings 38,556 37,773 84,194
---------- ---------- --------
Number Number Number
000 000 000
Weighted average number of shares 119,436 128,259 128,280
Shares held by the employee share
trusts (1,760) (1,807) (1,807)
------- ------- -------
Weighted average number of shares 117,676 126,452 126,473
Effect of dilutive share options 159 79 111
Diluted weighted average number of
shares 117,835 126,531 126,584
------- ------- -------
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
Pence Pence Pence
Basic earnings per share 11.36 13.45 24.31
Adjustments per share 21.40 16.43 42.26
--------- ------------------ ------------------
Adjusted basic earnings per share 32.76 29.88 66.57
--------- ------------------ ------------------
Diluted earnings per share 11.35 13.44 24.29
Adjustments per share 21.37 16.42 42.22
Adjusted diluted earnings per share 32.72 29.86 66.51
--------- ------------------ ------------------
The adjusted diluted earnings per share figure has been disclosed since the directors consider it necessary in order to give an indication of the underlying trading performance. Refer to the appendix to the Interim Statement.
All of the above earnings per share figures relate to continuing operations.
9 Acquisitions and disposals
INCREASE IN EQUITY HOLDINGS
Euromoney Consortium Limited
On December 8 2016, the group acquired 0.3% of the equity of Euromoney Consortium Limited for a cash consideration of GBP0.7m. This transaction was enacted by purchasing 7,258,408 Ordinary Class B shares of GBP0.10 each from DMG Charles Limited. The group's equity shareholding in Euromoney Consortium Limited increased to 100%.
SALE/CLOSURE OF BUSINESSES
HFI Media Limited (HedgeFund Intelligence)
On December 30 2016, the group sold 100% of the equity share capital of HedgeFund Intelligence, part of the asset management division, for a consideration of GBP2.2m, offset by a working capital settlement of GBP0.1m. At the date of disposal deferred consideration receivable of GBP1.9m was recognised which included the working capital settlement of GBP0.1m (note 16). The disposal of HedgeFund Intelligence gave rise to a loss on disposal of GBP4k, after deducting disposal costs incurred, which was recognised as an exceptional item (note 4) in the Income Statement.
Institutional Investor Intelligence (II Intelligence)
On December 30 2016, the group completed the sale of the assets of II Intelligence, part of the asset management division, for a consideration of US$0.9m (GBP0.7m). Deferred consideration receivable of US$0.5m (GBP0.4m) was recognised (note 16). The disposal gave rise to a profit on disposal of US$2.7m (GBP2.2m), after deducting disposal costs incurred, which was recognised as an exceptional item (note 4) in the Income Statement.
Euromoney Indices
On March 13 2017, the group completed the sale/closure of the Euromoney Indices business, part of the asset management division, for a consideration of GBP2.0m, offset by a working capital settlement of GBP0.1m. At the date of disposal deferred consideration receivable of GBP0.4m was recognised which included the working capital settlement of GBP0.1m (note 16). The disposal/closure of Euromoney Indices gave rise to a loss on disposal/closure of GBP0.9m, after deducting disposal/closure costs incurred which include the costs associated with the transitional service agreement. The loss on disposal/closure was recognised as an exceptional item (note 4) in the Income Statement.
Latin American Financial Publications, Inc. (LatinFinance)
On March 31 2017, the group sold 100% of the equity share capital of LatinFinance, which formed part of the banking & finance division. The consideration for this transaction was US$3.9m (GBP3.1m), offset by a working capital adjustment of US$0.9m (GBP0.7m) (note 16). The disposal of LatinFinance gave rise to a profit on disposal of US$4.5m (GBP3.6m), after deducting disposal costs incurred, which were recognised as an exceptional item (note 4) in the Income Statement.
The assets and liabilities of the businesses held for sale and disclosed separately on the face of the Condensed Consolidated Statement of Financial Position for the year ended September 30 2016, included HedgeFund Intelligence, II Intelligence and Euromoney Indices; and for the period ended March 31 2016, Gulf Publishing Company, Inc. and The Petroleum Economist Limited.
The net assets of the businesses at the date of disposal were as follows:
HedgeFund Euromoney Latin
Intelligence II Intelligence Indices Finance Total
GBP000 GBP000 GBP000 GBP000 GBP000
Net assets/(liabilities):
Goodwill 4,020 - - - 4,020
Intangible assets - - 294 - 294
Property, plant and
equipment - - - 2 2
Trade and other receivables 389 - 472 374 1,235
Cash at bank and in
hand/(bank overdraft) 46 - - (76) (30)
Trade and other payables (100) - (27) (158) (285)
Deferred income (2,232) (1,495) (445) (1,097) (5,269)
2,123 (1,495) 294 (955) (33)
------------ --------------- --------- ------- -------
Net assets/(liabilities)
disposed 2,123 (1,495) 294 (955) (33)
Directly attributable
costs 60 50 2,573 32 2,715
Recycled cumulative
translation differences - - - (285) (285)
(Loss)/profit on disposal/closure
(note 4) (4) 2,166 (931) 3,607 4,838
Total consideration 2,179 721 1,936 2,399 7,235
------------ --------------- --------- ------- -------
Consideration satisfied
by:
Cash 250 321 1,500 3,086 5,157
Deferred consideration 1,929 400 436 - 2,765
Working capital adjustments - - - (687) (687)
2,179 721 1,936 2,399 7,235
------------ --------------- --------- ------- -------
Net cash inflow arising
on disposal:
Cash consideration
(net of directly attributable
costs paid and working
capital adjustments) 190 271 1,500 2,367 4,328
Cash and cash equivalent
balances disposed (46) - - 76 30
144 271 1,500 2,443 4,358
------------ --------------- --------- ------- -------
10 Investments
Investment Available-
Investment in joint for-sale
in associates ventures investments Total
GBP000 GBP000 GBP000 GBP000
At September 30 2015 32,437 30 5,835 38,302
Repayment/additions (52) 180 - 128
Impairment (111) - - (111)
Transfer to subsidiary (629) - - (629)
Revaluation - 12 - 12
Provision against investment
losses - 64 - 64
Share of losses after tax retained (1,752) (71) - (1,823)
Dividends (83) - - (83)
------------- ---------- ----------- -------
At September 30 2016 29,810 215 5,835 35,860
------------- ---------- ----------- -------
Additions 552 - - 552
Revaluation 34 8 - 42
Provisions against investment
losses - 479 - 479
Share of losses after tax retained (594) (512) - (1,106)
------------- ---------- ----------- -------
At March 31 2017 29,802 190 5,835 35,827
------------- ---------- ----------- -------
Investment Available-
Investment in joint for-sale
in associates ventures investments Total
GBP000 GBP000 GBP000 GBP000
At September 30 2015 32,437 30 5,835 38,302
Additions - 180 - 180
Provisions against investment
losses - 167 - 167
Share of losses after tax
retained (1,124) (171) - (1,295)
Exchange difference - (6) - (6)
At March 31 2016 31,313 200 5,835 37,348
------------- ---------- --------------------- -------
All of the above investments in associates and joint ventures are accounted for using the equity method in these condensed consolidated financial statements.
Unaudited Unaudited Audited
six months six months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 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 (1,106) (1,295) (1,823)
Add back:
Share of tax on profits 350 192 656
Share of tax on acquired intangible
amortisation and exceptional items (823) (746) (1,437)
Share of acquired intangible amortisation 2,431 2,220 4,427
Share of exceptional items(1) 316 270 363
2,274 1,936 4,009
----------- ----------- -----------------------
Adjusted share of results in associates
and joint ventures 1,168 641 2,186
----------- ----------- -----------------------
(1) The share of exceptional items relates to one-off restructuring and earn-out costs in Dealogic. 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. These payments are in substance part of the cost of an investment and are thus excluded from the share of adjusted profit.
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. Refer to the appendix to the Interim Statement.
The share of losses after tax retained includes a finance expense of GBP1.2m (March 2016: GBP1.0m, September 2016: GBP2.1m).
Information on investment in associates, investment in joint ventures and available-for-sale investments:
Date Country
Year of Type Group of
Principal activity ended acquisition of holding interest incorporation
Investment in associates
Diamond TopCo Limited Capital market Dec Dec Ordinary 15.5% UK
(Dealogic) software solutions 31 2014
Broadmedia Communications Events and publishing Sep Mar Ordinary 49.0% UK
Limited (BroadGroup)(2) business 30 2017
Investment in joint
ventures
Institutional Investor Hedge fund manager Sep Nov Ordinary 50.0% UK
Zanbato Limited trading signals 30 2014
(II Zanbato)
Sanostro Institutional Hedge fund manager Dec Dec Ordinary 50.0% Switzerland
AG (Sanostro) trading signals 31 2014
EIIZ Discovery Private capital Sep Nov Ordinary 50.0% Delaware,
LLC placement and 30 2015 US
workflow
Available-for-sale
investments
Estimize, Inc (Estimize) Financial estimates Dec July Ordinary 10.0% Delaware,
platform 31 2015 US
Zanbato, Inc (Zanbato) Private capital Dec Sept Ordinary 9.9% California,
placement and 31 2015 US
workflow
(2) In March 2017 the group acquired 49% of the equity share capital of BroadGroup for a cash consideration of GBP0.6m.
The group interests in the above investments remained unchanged since their respective dates of acquisition.
11 Goodwill and other intangibles
Acquired intangible
assets
--------------------------------------------
Total Intangible
assets
Customer acquired in
Licences develop-
Trademarks relation- intangible &
As at March 2017 & brands ships Databases assets software ment Goodwill Total
2017 2017 2017 2017 2017 2017 2017 2017
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost/carrying
amount
At October 1
2016 193,879 116,759 14,773 325,411 17,715 980 464,313 808,419
Additions - - - - 236 676 - 912
Transfer - - - - 282 (282) - -
Exchange differences 5,697 3,124 388 9,209 376 24 13,450 23,059
At March 31 2017 199,576 119,883 15,161 334,620 18,609 1,398 477,763 832,390
---------- --------- --------- ---------- -------- ---------- -------- -------
Amortisation
and impairment
At October 1
2016 90,934 75,185 11,030 177,149 11,923 - 68,208 257,280
Amortisation
charge 4,433 4,113 278 8,824 1,801 - - 10,625
Impairment (note
4) - - - - - - 27,360 27,360
Exchange differences 2,911 2,080 388 5,379 252 - 1,033 6,664
At March 31 2017 98,278 81,378 11,696 191,352 13,976 - 96,601 301,929
---------- --------- --------- ---------- -------- ---------- -------- -------
Net book value/carrying
amount at March
31 2017 101,298 38,505 3,465 143,268 4,633 1,398 381,162 530,461
---------- --------- --------- ---------- -------- ---------- -------- -------
Acquired intangible
assets
--------------------------------------------
Total Intangible
assets
Customer acquired in
Licences
Trademarks relation- intangible & develop-
As at September
2016 & brands ships Databases assets software ment Goodwill Total
2016 2016 2016 2016 2016 2016 2016 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost/carrying
amount
At October
1 2015 171,861 102,777 12,616 287,254 15,165 - 429,272 731,691
Additions 3,834 6,874 886 11,594 1,445 957 8,919 22,915
Disposals - - - - (69) - - (69)
Balance at
disposal of
company - - - - (33) - (7,217) (7,250)
Exchange differences 19,387 10,477 1,271 31,135 1,207 23 45,155 77,520
Classified
as held-for-sale (1,203) (3,369) - (4,572) - - (11,816) (16,388)
September 30
2016 193,879 116,759 14,773 325,411 17,715 980 464,313 808,419
---------- --------- --------- ---------- -------- ---------- -------- --------
Amortisation
and impairment
At October
1 2015 73,510 63,147 8,769 145,426 7,607 - 47,279 200,312
Amortisation
charge 7,956 7,764 1,013 16,733 3,675 - - 20,408
Impairment
(note 4) 1,022 630 - 1,652 - - 26,987 28,639
Disposals - - - - (62) - - (62)
Balance at
disposal of
company - - - - (33) - (1,935) (1,968)
Exchange differences 9,649 6,700 1,248 17,597 736 - 3,673 22,006
Classified
as held-for-sale (1,203) (3,056) - (4,259) - - (7,796) (12,055)
September 30
2016 90,934 75,185 11,030 177,149 11,923 - 68,208 257,280
---------- --------- --------- ---------- -------- ---------- -------- --------
Net book value/carrying
amount at September
30 2016 102,945 41,574 3,743 148,262 5,792 980 396,105 551,139
---------- --------- --------- ---------- -------- ---------- -------- --------
Acquired intangible
assets
------------------------------------
Total
Customer acquired
Licences
Trademarks relation- intangible &
As at March software Goodwill
2016 & brands ships Databases assets Total
2016 2016 2016 2016 2016 2016 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost/carrying
amount
At October 1
2015 171,861 102,777 12,616 287,254 15,165 429,272 731,691
Additions - - - - 1,417 - 1,417
Disposals - - - - (68) - (68)
Exchange
differences 6,405 3,368 402 10,175 366 15,895 26,436
Classified as
held-for-sale - - - - (34) (7,475) (7,509)
At March 31
2016 178,266 106,145 13,018 297,429 16,846 437,692 751,967
-------------- --------- --------- ---------- -------- -------- -------
Amortisation
and impairment
At October 1
2015 73,510 63,147 8,769 145,426 7,607 47,279 200,312
Amortisation
charge 3,733 3,563 554 7,850 1,487 - 9,337
Disposals - - - - (62) - (62)
Impairment
(note
4) - - - - - 12,940 12,940
Exchange
differences 3,088 2,068 382 5,538 215 2,336 8,089
Classified as
held-for-sale - - - - (34) (1,935) (1,969)
At March 31
2016 80,331 68,778 9,705 158,814 9,213 60,620 228,647
-------------- --------- --------- ---------- -------- -------- -------
Net book
value/carrying
amount at
March
31 2016 97,935 37,367 3,313 138,615 7,633 377,072 523,320
-------------- --------- --------- ---------- -------- -------- -------
Intangible assets, other than goodwill, have a finite life and are amortised over their expected useful lives at the rates set out in the accounting policies in note 1 of the September 2016 annual report.
12 Deferred income
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Deferred subscription income 106,722 95,382 93,518
Other deferred income 37,737 33,612 25,268
144,459 128,994 118,786
--------- --------- -------
Within one year 138,512 125,285 113,446
In more than one year 5,947 3,709 5,340
144,459 128,994 118,786
--------- --------- -------
13 Financial instruments
The group's financial assets and liabilities are as follows:
Unaudited
six Unaudited Audited
months six months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Financial assets
Derivative instruments in designated
hedge accounting relationships 504 532 419
Available-for-sale investments (note
10) 5,835 5,835 5,835
Deferred consideration (note 16) 3,069 192 526
Loans and receivables (including
cash at bank and short-term deposits) 109,023 115,700 147,478
118,431 122,259 154,258
--------- ---------------- -------------------
Financial liabilities
Derivative instruments in designated
hedge accounting relationships (5,569) (6,138) (10,449)
Deferred consideration (note 16) - - (480)
Acquisition commitments (note 16) (10,168) (10,201) (11,771)
Borrowings and payables (including
bank overdrafts) (211,861) (70,383) (97,659)
(227,598) (86,722) (120,359)
--------- ---------------- -------------------
There have been no transfers of assets or liabilities between levels of the fair value hierarchy and there are no non-recurring fair value measurements.
The fair value of the financial assets and liabilities above are classified as level 2 in the fair value hierarchy other than acquisition commitments and deferred consideration (which are classified as level 3) and available-for-sale investments (which are measured at cost less any identified impairment losses as they do not have a quoted market price in an active market and the fair value cannot be reliably measured). The directors consider that the carrying value amounts of financial assets and liabilities are equal to their fair value.
Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined as follows:
Level 1
-- The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets is determined with reference to quoted market prices.
Level 2
-- The fair value of other financial assets and financial liabilities (excluding derivative instruments) is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments.
-- Foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts.
Level 3
-- If one or more significant inputs are not based on observable market data, the instrument is included in level 3.
Other financial instruments not recorded at fair value
The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values. Such financial assets and financial liabilities include cash and cash equivalents, receivables, accrued income, payables and loans.
14 Borrowings
Unaudited Unaudited Audited
as at as at as at
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Borrowings (118,963) - -
--------- --------- -------
Undrawn available committed facilities 130,000 111,266 122,954
--------- --------- -------
The group's principal source of borrowings are provided through committed bank facilities available to the group until December 2021. These syndicated facilities include two five-year term-loans of US$100m and GBP40m (total GBP119m) and a GBP130m multi-currency revolving credit facility which was undrawn as at March 31 2017. There is a further accordion facility of GBP130m should the group wish to request it. The term-loans and drawings under the revolving credit facility bear interest charged at LIBOR plus a margin, the applicable margin being based on the group's ratio of net debt to adjusted EBITDA. These facilities contain covenants based on a maximum 3.0 times net debt to adjusted EBITDA and a minimum interest cover ratio of 3.0 times. The amounts and foreign exchange rates used in the covenant calculations are subject to adjustments as defined under the terms of the arrangement. Management regularly monitors the covenants and prepares detailed cash flow forecasts to ensure that sufficient headroom is available and that the covenants are not close or potentially close to breach. At March 2017, the group's net debt to adjusted EBITDA was 0.7 times.
In 2016, the group had access to a committed multi-currency credit facility from DMGT. This facility was terminated as part of the share buyback transaction.
15 Called up share capital
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Allotted, called up and fully paid
109,087,969 ordinary shares of 0.25p
each
(March 2016: 128,289,086 ordinary
shares of 0.25p each)
(September 2016: 128,313,356 ordinary
shares of 0.25p each) 273 320 321
---------- ---------- --------
During the period, 21,786 ordinary shares of 0.25p each with an aggregate nominal value of GBP54 were issued following the exercise of share options granted under the company's share option schemes for a cash consideration of GBP207,211. On January 6 2017, the group completed the purchase for cancellation of 19,247,173 ordinary shares from its then majority shareholder DMG Charles Limited, a DMGT group company. The aggregate nominal value of the shares cancelled was GBP48,118.
16 Acquisition commitments and deferred consideration
The group is party to contingent consideration arrangements in the form of acquisition commitments, acquisition deferred consideration payments and deferred consideration receipts on disposals. The group recognises the discounted present value of the contingent consideration. This discount is unwound as a notional interest charge to the Income Statement. The group regularly performs a review of the underlying businesses to assess the impact on the fair value of the contingent consideration. Any resultant change in these fair values is reported as a finance income or expense in the Income Statement.
Deferred consideration
Acquisition commitments payments
Unaudited Unaudited Unaudited Unaudited
six six Audited six six Audited
months months year months months year
ended ended ended ended ended ended
March March Sept March March Sept
31 31 30 31 31 30
2017 2016 2016 2017 2016 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Liability
At October 1 (11,771) (9,171) (9,171) (480) - -
Net movements
in finance income
and expense during
the period (note
5) 2,077 (789) (601) 15 - -
Exercise of commitments - 239 239 - - -
Additions from
acquisitions during
the year - - (665) - - (480)
Payment during
the year - - - 465 - -
Exchange differences
to reserves (474) (480) (1,573) - - -
At end of period (10,168) (10,201) (11,771) - - (480)
--------- --------- -------- --------- --------- -------
Within one year (9,086) - (326) - - (480)
In more than one
year (1,082) (10,201) (11,445) - - -
(10,168) (10,201) (11,771) - - (480)
--------- --------- -------- --------- --------- -------
Deferred consideration
receipts
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Asset
At October 1 526 589 589
Additions from disposals during the
period 2,765 - 450
Net movements in finance income and
expense during the period (note 5) 79 - -
Receipts during the year (326) (406) (662)
Exchange differences to reserves 25 9 149
At end of period 3,069 192 526
--------- --------- -------
Within one year 1,554 192 -
In more than one year 1,515 - 526
3,069 192 526
--------- --------- -------
Reconciliation of finance income and expense (note 5):
Deferred consideration
Acquisition commitments payments
Unaudited Unaudited Unaudited Unaudited
six six Audited six six Audited
months months year months months year
ended ended ended ended ended ended
March March Sept March March Sept
31 31 30 31 31 30
2017 2016 2016 2017 2016 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Fair value adjustment 2,618 (375) 258 15 - -
Imputed interest (541) (414) (859) - - -
Net movements
in finance income
and expense during
the period 2,077 (789) (601) 15 - -
--------- --------- ------- --------- --------- -------
Deferred consideration
receipts
Unaudited Unaudited
six six Audited
months months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Fair value adjustment 79 - -
Net movements in finance income and
expense during the period 79 - -
--------- --------- -------
The non-controlling interest of Ned Davis Research (NDR) have exercised their put options over the remaining 15% stake in NDR. The liability has been re-measured using the contractual mechanism which has resulted in a fair value adjustment.
The value of the acquisition commitments, acquisition deferred consideration payments and deferred consideration receipts on disposal is subject to a number of assumptions. The potential undiscounted amount of all future payments that the group could be required to make under the acquisition contingent consideration arrangements is as follows:
Unaudited six Unaudited six Audited year
months ended months ended ended Sept
March 31 March 31 30
2017 2017 2016 2016 2016 2016
Maximum Minimum Maximum Minimum Maximum Minimum
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
NDR 48,277 - 41,912 - 46,314 -
World Bulk Wine 15,811 - - - 672 -
FastMarkets - - - - 480 -
ReSec 398 - - - - -
64,486 - 41,912 - 47,466 -
-------- -------- -------- -------- -------- --------
The potential undiscounted amount of all future receipts that the group could receive under the disposal contingent consideration arrangement is as follows:
Unaudited six Unaudited six Audited year
months ended months ended ended Sept
March 31 March 31 30
2017 2017 2016 2016 2016 2016
Maximum Minimum Maximum Minimum Maximum Minimum
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
II Newsletters - - 192 - 142 -
Gulf Publishing 312 - - - 312 -
Petroleum Economist 72 - - - 72 -
HFI 2,084 - - - - -
II Searches 303 - - - - -
Euromoney Indices 500 - - - - -
3,271 - 192 - 526 -
-------- -------- -------- -------- -------- --------
The discounted acquisition commitments, acquisition deferred consideration payments and deferred consideration receipts on disposal are based on predetermined multiples of future profits of the businesses, and have been estimated on an acquisition-by-acquisition basis using available performance forecasts.
A one percentage point increase or decrease in growth rate in estimating the expected profits, results in the acquisition commitment at March 31 2017 increasing or decreasing by GBP0.1m with the corresponding change to the value charged or credited to the Income Statement in future periods.
17 Contingent liabilities
Claims in Malaysia
Four writs claiming damages for libel were issued in Malaysia against the company and three of its employees in respect of an article published in one of the company's magazines, International Commercial Litigation, in November 1995. The writs were served on the company on October 22 1996. Two of these writs have been discontinued. The total outstanding amount claimed on the two remaining writs is Malaysian ringgits 83.1m (GBP15.1m). No provision has been made for these claims in these financial statements as the directors do not believe the company has any material liability in respect of these writs.
18 Related party transactions
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) The group had borrowings under a US$160m multi-currency facility with Daily Mail and General Holdings Limited (DMGH), a Daily Mail and General Trust plc (DMGT) group company:
Unaudited
six Unaudited Audited
months six months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Fees on the available facility
for the period 153 263 525
--------- ----------- -------
This facility was terminated on December 29 2016.
(ii) The group had a deposit agreement with DMGH and DMGB Limited, a DMGT group company:
Unaudited Unaudited Audited
as at as at as at
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Deposits at end of period - 43,727 73,639
--------- --------- -------
This agreement was terminated on January 6 2017.
(iii) During the period the group expensed services provided by DMGT, and other fellow group companies, as follows:
Unaudited
six Unaudited Audited
months six months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Services expensed 209 290 960
--------- ----------- -------
From January 2017 the services expensed include a charge under the transitional service agreement with DMGT signed on January 3 2017.
(iv) During the period DMGT group companies surrendered tax losses to Euromoney Consortium Limited under an agreement between the two groups. These tax losses are relievable against UK taxable profits of the group under HMRC's consortium relief rules:
Unaudited Unaudited Audited
as at as at as at
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Amounts payable 172 787 1,633
Tax losses with tax value 229 1,049 2,177
Amounts owed by DMGT group
at end of period 172 787 (121)
--------- --------- -------
(v) On January 6 2017, the group completed the off-market purchase of 19,247,173 ordinary shares from the DMGT group for cancellation at a price of GBP9.75 per share. The transaction was approved by shareholders at the company's general meeting held on December 29 2016.
(vi) The group participates in the Harmsworth Pension Scheme (HPS), a defined benefit scheme operated by DMGT, which up to September 30 2016 was accounted for as a defined contribution scheme. The scheme is now closed to new entrants. The group's share of the HPS deficit is:
Unaudited
six Unaudited Audited
months six months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
Deficit on defined benefit
scheme 1,260 - 1,249
--------- ----------- -------
(vii) During the period the group received dividends from its associate undertaking:
Unaudited
six Unaudited Audited
months six months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
GBP000 GBP000 GBP000
World Bulk Wine - - 83
----------- ------------ --------
(viii) During the period, Ned Davis Research (NDR), a subsidiary undertaking, leased office space at market rates from a separate entity, Bird Bay Properties, LLC, which is owned by a minority shareholder of NDR:
Unaudited
six Unaudited Audited
months six months year
ended ended ended
March March Sept
31 31 30
2017 2016 2016
US$000 US$000 US$000
Amount expensed 194 190 382
--------- ----------- -------
19 Events after the balance sheet date
Purchase of new business
RISI US (Holdco) Inc, (RISI)
On April 6 2017, the group acquired 100% of the equity share capital of RISI, the leading price reporting agency for the global forest products market, for US$125m (GBP100m).
Layer123 Events & Training Limited (Layer123)
On April 13 2017, the group acquired 61% of the ordinary share capital of Layer123, a content and sponsorship-led events business focusing on innovation in the rapidly-evolving space of telecoms network strategy. The initial consideration paid was GBP6.4m.
World Bulk Wine Exhibition, S.L (World Bulk Wine)
On May 3 2017, the group acquired a further 17% of the equity share capital of World Bulk Wine, increasing the group's equity shareholding to 74%, for a consideration of EUR0.6m (GBP0.5m).
Responsibility Statement
We confirm that to the best of our knowledge:
(a) these Condensed Consolidated Financial Statements have been prepared in accordance with IAS 34 'Interim Financial Reporting';
(b) this Interim Financial Report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
(c) this Interim Financial Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).
By order of the board,
Andrew Rashbass
Chief Executive
May 17 2017
Colin Jones
Finance Director
May 17 2017
Independent review report to Euromoney Institutional Investor PLC
Report on the condensed consolidated financial statements
Our conclusion
We have reviewed Euromoney Institutional Investor PLC's condensed consolidated financial statements (the "interim financial statements") in the Interim Financial Report of Euromoney Institutional Investor PLC for the six month period ended March 31 2017. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated statement of financial position as at March 31 2017;
-- the condensed consolidated income statement and condensed consolidated statement of comprehensive income for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; -- the condensed consolidated statement of cash flows for the period then ended; and -- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim Financial Report have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim Financial Report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Financial Report in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial statements in the Interim Financial Report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
What a review of the interim financial statements involves
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim Financial Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
May 17 2017
Notes:
(a) The maintenance and integrity of the Euromoney Institutional Investor PLC website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors
Executive Directors A Rashbass (Chief Executive Officer) ++ CR Jones (Finance Director) Non-executive Directors JC Botts (Chairman) ++-- The Viscount Rothermere ++ Sir Patrick Sergeant (President) ++ DP Pritchard -- ART Ballingal TP Hillgarth -- PA Zwillenberg ++ member of the remuneration committee ++ member of the nominations committee -- member of the audit committee
Shareholder Information
Financial calendar
2017 interim results announcement Thursday May 18 2017 Interim dividend ex-dividend date Thursday May 25 2017 Interim dividend record date Friday May 26 2017 Payment of 2017 interim dividend Thursday June 22 2017 Trading update Friday July 21 2017* 2017 final results announcement Thursday November 23 2017 Final dividend ex-dividend date Thursday November 30 2017* Final dividend record date Friday December 1 2017* Trading update Thursday January 25 2018* 2018 AGM (approval of final dividend) Thursday February 1 2018* Payment of final dividend Thursday February 15 2018*
* Provisional dates and subject to change.
Shareholder enquiries
Administrative enquiries about a holding of Euromoney Institutional Investor PLC shares should be directed in the first instance to the company's registrars, Equiniti.
Telephone: 0371 384 2951 Lines are open 8:30am to 5:30pm (UK time), Monday to Friday, excluding English public holidays.
Overseas Telephone: (00) 44 121 415 0246
A number of facilities are available to shareholders through the secure online site: www.shareview.co.uk.
Company secretary and registered office
Tim Bratton
8 Bouverie Street
London
EC4Y 8AX
England registered number: 954730
Advisors
Auditor Broker Solicitor Registrars PricewaterhouseCoopers UBS Nabarro Equiniti LLP 5 Broadgate 125 London Wall Aspect House 1 Embankment London London Spencer Road Place EC2M 2QS EC2Y 5AL Lancing London West Sussex WC2N 6RH BN99 6DA
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FDLLFDEFLBBB
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May 18, 2017 02:01 ET (06:01 GMT)
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