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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Euromoney Institutional Investor Plc | LSE:ERM | London | Ordinary Share | GB0006886666 | ORD 0.25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,460.00 | 1,458.00 | 1,460.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMERM
RNS Number : 3498O
Euromoney Institutional InvestorPLC
17 May 2018
Euromoney
Institutional
Investor PLC
Interim Financial Report 2018
Euromoney Institutional Investor PLC
Interim Results
17 May 2018
Hot Features
Premium
H1 2018 H1 2017 Change
Adjusted results
-- Total revenue GBP209.6 m GBP203.2 m 3%
-- Adjusted operating profit GBP53.5 m GBP49.0 m 9%
-- Adjusted profit before tax GBP52.0 m GBP49.1 m 6%
-- Adjusted diluted earnings per share 38.4 p 32.7 p 17%
Statutory results
-- Revenue GBP189.1 m GBP182.3 m 4%
-- Operating profit GBP122.7 m GBP9.4 m
-- Profit before tax GBP121.1 m GBP9.3 m
-- Diluted earnings per share 101.8 p 11.4 p
Net debt (GBP37.0) m(GBP83.6) mGBP46.6m
Interim dividend 10.2 p 8.8 p 16%
A detailed reconciliation of the Group's adjusted(1) and underlying(2)
results is set out in the appendix to this statement.
-----------------------------------------------------------------------------
-- Strategy on track, good first-half performance
-- Total revenues up 3%, underlying revenues up 4%
-- Adjusted profit before tax up 6% to GBP52.0m
-- Statutory profit before tax reflects an exceptional credit of GBP86.8m (primarily profit on disposal of businesses)
-- Benefits from prior year strategic actions driving growth across the Group, particularly in pricing, data & market intelligence.
-- Strong growth from events businesses across all sectors, mainly from large, annual events
-- Weak asset management performance, largely driven by clients' reduction in research spend and accelerated by MiFID II
-- Significant reduction in net debt since year-end, reflecting the impact of M&A activity and continued strong operating cash flows
-- Global Markets Intelligence Division disposal in April expected to generate further net cash of GBP103m in the second half
-- Active portfolio management continues:
o Secured two acquisitions: TowerXchange and Extel
o Completed five disposals: Adhesion, World Bulk Wine Exhibition, Dealogic minority stake, Institutional Investor Journals and Global Markets Intelligence Division
-- Interim dividend increased by 16% to 10.2p in line with the new dividend policy announced last year
(1) Adjusted measures include the results of continuing and discontinued operations and exclude the impact of amortisation of acquired intangible assets, exceptional items, share of associates' and joint ventures' acquired intangibles amortisation, exceptional items and the tax effects of these items, and net movements in deferred consideration and acquisition commitments.
(2) Underlying measures reported in 2017 included the adjusted results of continuing and discontinued operations and are stated at constant exchange rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences. In 2018, the underlying measures are on the same basis but exclude discontinued operations. This means that the 2018 underlying measures reflect the performance of the continuing businesses.
Commenting on the results, Andrew Rashbass, CEO, said:
"These interim results demonstrate further progress with implementing our strategy: investing around big themes; creating a best-of-both-worlds operating model; and active portfolio management. Our continued investment in price discovery has been one of the drivers of growth in the period, both organically in Metal Bulletin and through the successful integration of RISI. Improved banking and commodity markets together with our focus on large events have helped to mitigate the impact of the challenges facing our investment research businesses, particularly BCA. We continued to sell businesses where we believe we are not the best owners, including the Global Markets Intelligence Division, and secured two bolt-on acquisitions. Overall, we have delivered a good first half performance and the progress we are seeing gives us confidence that we will meet the Board's expectations for the full 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.
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.
Operating and Financial Review
Total revenue for the period increased by 3% to GBP209.6m, and underlying revenue increased by 4%, largely due to the strong performance of the events portfolio. The adverse impact of the weakness of the US dollar was largely offset by net M&A activity.
Statutory revenue, which excludes discontinued operations, increased by 4% to GBP189.1m.
Subscriptions/
Total revenue (GBPm)* Content Advertising Events Other Total
------------- --------- ---------- -----------
Asset management 59.9 (6%) 5.7 (10%) 6.4 3% 0.0 72.0 (5%)
Pricing, data & market intelligence 64.0 12% 5.5 (2%) 18.7 9% 0.5 88.7 10%
Banking & finance 4.1 5% 3.8 (4%) 22.7 12% 0.5 31.1 8%
Commodity events N/A N/A 15.2 15% 0.3 15.5 15%
-------- ------ ----- ------ ---- --- --- ----- ----- ----
128.0 1% 15.0 (5%) 63.0 11% 1.3 (23%) 207.3 -
Businesses sold/closed in
the period 1.8 -
Foreign exchange gains on
forward contracts 0.5 -
----- ----
Total revenue 209.6 4%*
------------------------------------ -------- ------ ----- ------ ---- --- --- ----- ----- ----
* Figures are total revenues for the period; percentages are underlying growth rates compared to the same period in 2017.
The Group's businesses focussed on pricing, data & market intelligence performed strongly, benefitting from the strategic actions taken last year. The commodity events and banking & finance segments also performed well, reflecting the Group's focus on building large, high margin events. The asset management segment continued to be a drag on the Group's performance, largely driven by the reduction in clients' research spend which has been accelerated by the MiFID II regulations.
The second quarter's performance closely followed that of the first, with the events businesses being the main driver of growth.
Underlying revenue change 2017 2018
by quarter
(year-on-year % change)
----------
Q1 Q2 Q3 Q4 Q1 Q2
----- ----- ---- ----- ---- ----
Subscriptions and content 1% 2% 1% 1% 2% 1%
Advertising (16%) (10%) (5%) (3%) (5%) (5%)
Sponsorship (14%) 5% 5% (6%) 15% 15%
Delegates (14%) 1% 2% (11%) 5% 9%
----- ----- ---- ----- ---- ----
Total (5%) 1% 2% (2%) 3% 4%
-------------------------- ----- ----- ---- ----- ---- ----
2017 and 2018 percentages include other revenues but exclude revenues from sold/closed businesses. In 2018 only, discontinued operations are excluded from percentages for both quarters.
Underlying subscriptions and content revenues increased by 1% in the first half. As highlighted in the first quarter trading update, the divergence in subscriptions growth rates between the pricing, data & market intelligence and asset management segments has continued. Pricing, data & market intelligence subscription revenues increased by an underlying 12%, mainly due to excellent performances from Metal Bulletin and Insurance Insider, and strong growth from RISI since its acquisition in April 2017. The headwinds facing the asset management segment from the reduction in clients' research spend have been accelerated by MiFID II, particularly for BCA, and resulted in subscription revenues from this segment declining by 6% on an underlying basis. Strategic actions are underway to tackle these challenges. The 5% decline in underlying advertising revenues during the period is consistent with the recent trend.
Underlying event revenues increased by 11% (sponsorship by 15% and delegates by 7%), with strong growth across all segments, particularly from large 'must attend' annual events. The Group's largest event, Mining Indaba, and events run by the wholesale telecoms business, TelCap, and structured and real estate finance business, IMN, performed particularly well.
Adjusted results
The adjusted operating margin increased from 24.1% to 25.5%, largely due the improved events performance and a favourable currency mix. This improvement was partly offset by the impact, mostly in the first quarter, of the Group's investment in central functions following the DMGT sell down in January last year.
Adjusted operating profit increased by 9% to GBP53.5m. Adjusted profit before tax grew by 6% to GBP52.0m, reflecting the increased financing costs following last year's DMGT sell down. Adjusted diluted earnings per share increased by 17% to 38.4p (2017: 32.7p), including an additional quarter's benefit from the reduction in the number of shares in issue following last year's share buyback.
The Group's Global Markets Intelligence Division (GMID) has been treated as a discontinued operation in these results. The disposal of this business, which was first announced in February 2018, was completed at the end of April. Further details of this disposal and its impact on the Group's adjusted results are set out in note 9 to this statement.
Statutory results
The statutory profit before tax of GBP121.1m is significantly higher than the adjusted profit before tax, largely due to an exceptional credit of GBP86.8m reflecting the profits from the disposals in the period of Adhesion, World Bulk Wine Exhibition, Institutional Investor Journals and the associate investment in Dealogic. The statutory profit before tax excludes the profit before tax of GMID, which is reported as a discontinued operation. The disposal of GMID incurred exceptional costs of GBP2m in the first half, with further exceptional costs of GBP5m expected to be incurred in the second half. 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 for the first half was 20% (2017: 21%) and the full-year rate is expected to be 20% (2017:19%). The Group continues to benefit from reductions in the UK corporate tax rate and the tax effects of acquisitions in the US. The tax rate in each year depends mainly on the geographic mix of profits and applicable local tax rates. The Group's statutory effective tax rate reduced to 12% compared to 13% in 2017. The breakdown of tax expense on profit, a description of the Group's uncertain tax positions and a description of the impact of US Tax Reform for the first half of 2018, are all set out in note 6 to this statement.
US Tax Reform is not expected to have a material impact on the adjusted effective tax rate for 2018. However, a number of legislative changes, including the anti-hybrid legislation and new interest restriction rules enacted as part of US Tax Reform are expected to increase the adjusted effective tax rate for the Group by approximately 3% from 2019.
Net debt and cash flow
Net debt at 31 March was GBP37.0m compared with net debt of GBP154.6m at year end. This decrease in net debt largely reflects the impact of net M&A activity in the period, including the disposal of the minority equity stake in Dealogic, the sales of Adhesion, World Bulk Wine Exhibition and Institutional Investor Journals, the acquisitions of TowerXchange and Extel, and the purchase of the remaining 15% minority interest in Ned Davis Research.
The Group's underlying operating cash conversion rate for the 12 months to 31 March 2018 was 108% (2017: 120%). The decrease from a year ago largely reflects the prior year benefit from the recovery in event revenues and one-off improvement in working capital management.
Following last year's share buyback, the Group arranged new five-year external borrowing facilities comprising term-loans of US$100m and GBP40m and a GBP130m multi-currency revolving credit facility (RCF). The term-loans and drawings under the RCF bear interest charged at LIBOR plus a margin, the applicable margin being based on the Group's ratio of adjusted net debt to EBITDA. At 31 March 2018, the Group's ratio of adjusted net debt to EBITDA was 0.31 times and the committed undrawn facility available to the Group was GBP130m.
On 15 May 2018, the Group repaid its term-loans of US$100m and GBP40m, and transferred the funding commitment into the existing, lower cost, RCF. This has increased the committed undrawn facility available to the Group to GBP240m.
Dividend
Last year, the Board announced a new, progressive dividend policy including an increase in the dividend pay-out ratio from 33% to 40% and an interim dividend based on 33% of the previous year's total dividend, subject to the capital needs of the Group. The increase in the pay-out ratio combined with the benefit from last year's share buyback has enabled the Board to approve a 16% increase in the interim dividend to 10.2p (2017: 8.8p), to be paid to shareholders on 21 June 2018.
Currency
The Group generates approximately three-quarters of both its revenues, including approximately a third of its UK revenues, and operating profits 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 favourable impact of currency on last year's results has reversed, with an average sterling-US dollar rate for the six months to 31 March 2018 of $1.36 (2017: $1.25). The average sterling-US dollar rate for the second half of 2017 was $1.29 which compares to a current rate of $1.35. Each one cent movement in the US dollar rate has an impact on profits on translation of approximately GBP0.7m on a rolling 12-month basis. In the first half the unfavourable impact of foreign exchange movements on translation was mitigated by the absence of hedging losses realised in the same period last year. The Group also retranslates its non-sterling denominated balance sheet items, which resulted in a loss of GBP1.0m (2017: GBP0.2m gain).
Outlook
We continue to expect a divergence in subscriptions performance between our pricing, data & market intelligence and asset management segments. The outlook for the asset management businesses remains tough, particularly for BCA, and we are taking strategic actions to tackle these challenges. Our events should continue to perform well in the second half, although prior year comparatives will become tougher. The drag from our accelerated investment in central functions following the DMGT sell down last year is expected to slow in the second half. Overall, we have delivered a good first-half performance and the strategic progress we are seeing gives us confidence that we will meet the Board's expectations for the full year.
Board Changes
As announced on 19 April 2018, Wendy Pallot will join the Board as Chief Financial Officer on 16 August 2018. Ms Pallot will succeed Colin Jones, the Company's Finance Director, who is retiring from the Board and the Company on 15 June 2018 after 22 years' service.
Further to the announcement made on 5 March 2018, the Company announces that David Pritchard, Acting Chairman, stepped down from his position as Chair of the Audit Committee on 16 May 2018 and is succeeded by Colin Day, Non-Executive Director. Mr Pritchard will remain a member of the Audit Committee.
Further trading updates
Further coverage of these interim results will be provided to analysts at a presentation starting at 9:00am on 17 May 2018 at the offices of UBS. The Group intends to provide a brief third-quarter trading update on 19 July 2018.
Definitions
Total revenue - includes the revenues of continuing and discontinued operations.
Adjusted measures - include the results of continuing and discontinued operations and exclude the impact of amortisation of acquired intangible assets, exceptional items, share of associates' and joint ventures' acquired intangibles amortisation, exceptional items and the tax effect of these items, and net movements in deferred consideration and acquisition commitments.
Underlying measures - Underlying measures reported in 2017 included the adjusted results of continuing and discontinued operations and are stated at constant exchange rates, including pro forma prior year comparatives for acquisitions and excluding disposals and significant event timing differences. In 2018, the underlying measures are on the same basis but exclude discontinued operations. This means that the 2018 underlying measures reflect the performance of the continuing businesses.
Adjusted effective tax rate - the adjusted effective tax rate is based on the adjusted profit before tax and excluding deferred tax movements on intangible assets, prior year items, exceptional items and US Tax Reform.
For further information, please contact: Euromoney Institutional Investor PLC Colin Jones, Finance Director: +44 20 7779 8666; cjones@euromoneyplc.com FTI Consulting Charles Palmer / Emma Hall: +44 20 3727 1400; euromoney@fticonsulting.com
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.
CAUTIONARY STATEMENT
This Interim Financial Report (IFR) is prepared for and addressed only to the Company's shareholders as a whole and to no other person. The Company, its Directors, employees, agents and advisers accept and assume no liability to any person in respect of this IFR save as would arise under English law. Statements contained in this IFR are based on the knowledge and information available to the Company's Directors at the date it was prepared and therefore facts stated, and views expressed, may change after that date.
This document and any materials distributed in connection with it may include forward-looking statements, beliefs, opinions or statements concerning risks and uncertainties, including statements with respect to the Group's business, financial condition and results of operations. Those statements and statements which contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the Company's Directors' beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and which may cause results and developments to differ materially from those expressed or implied by those statements and forecasts. No representation is made that any of those statements or forecasts will come to pass or that any forecast results will be achieved. You are cautioned not to place any reliance on such statements or forecasts. Those forward-looking and other statements speak only as at the date of this IFR. The Group undertakes no obligation to release any update of, or revisions to, any forward-looking statements, opinions (which are subject to change without notice) or any other information or statement contained in this IFR. Furthermore, past performance of the Group cannot be relied on as a guide to future performance.
No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Euromoney Institutional Investor PLC share for the current or future financial years would necessarily match or exceed the historical published earnings per Euromoney Institutional Investor PLC share.
Nothing in this document is intended to constitute an invitation or inducement to engage in investment activity. This document does not constitute or form part of any offer for sale or subscription of, or any solicitation of any offer to purchase or subscribe for, any securities nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract, commitment or investment decision in relation thereto. This document does not constitute a recommendation regarding any securities.
LEI Number: 213800PZU2RGHMHE2S67
Appendix to Interim Statement
Reconciliation of Consolidated Income Statement to adjusted results for the six months ended 31 March 2018
The Directors believe that the adjusted measures provide additional useful information for shareholders to evaluate and compare the performance of the business from period to period. These measures are used by management for budgeting, planning and monthly reporting purposes and are the basis on which executive management is incentivised. The non-IFRS measures also enable the Group to track more easily and consistently the underlying operational performance by separating out the following types of exceptional income, charges and non-cash items.
Total revenue represents the combined reported revenue from continuing and discontinued operations.
Adjusted results include continuing and discontinued operations. The discontinued operations for the Global Markets Intelligence Division (GMID) have been included in the adjusted results as it was owned and managed as part of the Group for the period to 30 April 2018 and to aid year-on-year comparability of the Group's results.
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 adjusted as the premium paid relative to the net assets on the balance sheet of the acquired business is classified as either goodwill or as an intangible asset arising on a business combination and is recognised on the Group's balance sheet. This differs to organically developed businesses where assets such as employee talent and customer relationships are not recognised on the balance sheet. Impairment and amortisation of intangible assets and goodwill arising on acquisitions are excluded from adjusted results as they are balance sheet items that relate to historical M&A activity rather than the trading performance of the business.
Exceptional items are items of income or expense considered by the Directors, either individually or if a similar type in aggregate as being significant. The accounting policy for exceptional items can be found in note 1 to the Group's 2017 Annual Report.
It is Group policy to treat, as exceptional, earn-out payments required by IFRS to be recognised as a compensation cost. IFRS requires that earn-out payments to selling shareholders retained in the acquired business for a contractual time period are treated as a compensation cost. Given that these payments are in substance part of the cost of an investment and will not recur once the earn-out payments have been made, they have been excluded from adjusted profit.
Adjusted share of results in associates and joint ventures excludes the share of exceptional items that relates to restructuring and earn-out costs in Dealogic, which was sold in December 2017.
In respect of earnings, adjusted amounts reflect a tax rate that includes the current tax effect of 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. Since the year-end, there have been changes to US tax rules as a result of US Tax Reform (note 6). The federal tax rate has reduced to 21% from 35% from 1 January 2018, and the US group has a hybrid federal tax rate for the year of 24.5%. As a consequence of this change, the revaluation of the Group's US deferred tax assets and liabilities has resulted in a one-off deferred tax credit of GBP4.7m that is excluded from adjusted effective tax. In addition, there is a one-time deemed repatriation tax charge of GBP2.7m related to unremitted foreign earnings, expected to be payable over eight years. As a result of the change in attribution rules that dictate which entities are treated as a controlled foreign corporation (CFC) for US income tax purposes, the disposal of shares in Diamond Topco Limited (Dealogic) crystallised a gain that is subject to US tax. The exceptional tax charge on this gain is GBP7.0m.
Further analysis of the adjusting items is presented in notes 2, 4, 5, 6, 11 and 12 to the Consolidated Condensed Interim Financial Report.
The Group has consistently applied this definition of adjusted measures, except for the adjustment in respect of US tax reform, 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 that the Directors consider necessary to provide useful and comparable information about the Group's trading performance.
Unaudited six months ended Unaudited six months ended
31 March 2018 31 March 2017
Adjusted Adjusted
discontinued Restated Restated discontinued
Statutory Adjustments operations Adjusted statutory adjustments operations Adjusted
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Total revenue 2 189,136 - 20,475 209,611 182,324 - 20,895 203,219
Adjusted
operating
profit 2 47,124 - 6,365 53,489 42,632 - 6,352 48,984
Acquired
intangible
amortisation 12 (11,204) 11,204 - - (8,707) 8,707 - -
Exceptional
items 4 86,781 (86,781) - - (24,559) 24,559 - -
--------- ----------- ------------ -------- --------- ----------- ------------ --------
Operating profit 122,701 (75,577) 6,365 53,489 9,366 33,266 6,352 48,984
Share of results
in associates
and joint
ventures 11 (27) 874 - 847 (1,106) 2,274 - 1,168
Finance income 5 2,008 (1,821) 24 211 2,312 (2,171) 38 179
Finance expense 5 (3,624) 1,110 (11) (2,525) (1,251) - - (1,251)
----------- --------
Net finance
(costs)/income 5 (1,616) (711) 13 (2,314) 1,061 (2,171) 38 (1,072)
--------- ----------- ------------ -------- --------- ----------- ------------ --------
Profit before
tax 121,058 (75,414) 6,378 52,022 9,321 33,369 6,390 49,080
Tax expense on
profit 6 (14,464) 5,300 (1,251) (10,415) (1,212) (8,205) (826) (10,243)
----------- ------------ ----------- --------
Profit for the
period 106,594 (70,114) 5,127 41,607 8,109 25,164 5,564 38,837
--------- ----------- ------------ -------- --------- ----------- ------------ --------
Attributable to:
Equity holders
of the parent 106,265 (70,114) 5,127 41,278 7,828 25,164 5,564 38,556
Equity
non-controlling
interests 329 - - 329 281 - - 281
106,594 (70,114) 5,127 41,607 8,109 25,164 5,564 38,837
--------- ----------- ------------ -------- --------- ----------- ------------ --------
Diluted earnings
per share 8 101.83p 38.37p 11.35p 32.72p
--------- ----------- ------------ -------- --------- ----------- ------------ --------
Audited year ended 30 Sept 2017
Adjusted
discontinued
Statutory Adjustments operations Adjusted
Notes GBP000 GBP000 GBP000 GBP000
Total revenue 386,923 - 41,490 428,413
Adjusted operating profit 95,253 - 11,886 107,139
Acquired intangible amortisation 12 (20,566) 20,566 - -
Exceptional items 4 (31,253) 31,253 - -
--------- ----------- ------------ --------
Operating profit 43,434 51,819 11,886 107,139
Share of results in associates and
joint ventures 11 (1,890) 5,183 - 3,293
Finance income 5 3,290 (3,147) 107 250
Finance expense 5 (4,146) - (74) (4,220)
----------- --------
Net finance (costs)/income 5 (856) (3,147) 33 (3,970)
--------- ----------- ------------ --------
Profit before tax 40,688 53,855 11,919 106,462
Tax expense on profit 6 (3,390) (14,236) (2,219) (19,845)
----------- --------
Profit for the year 37,298 39,619 9,700 86,617
--------- ----------- ------------ --------
Attributable to:
Equity holders of the parent 36,829 39,619 9,700 86,148
Equity non-controlling interests 469 - - 469
37,298 39,619 9,700 86,617
--------- ----------- ------------ --------
Diluted earnings per share 8 37.91p 76.44p
--------- ----------- ------------ --------
Underlying measures
When assessing the performance of our businesses, the Board considers the adjusted results. The year-on-year change in adjusted results may not, however, be a fair like-for-like comparison as there are a number of factors which can influence growth rates but which do not reflect underlying performance.
When calculating underlying growth, adjustments are made to give a like-for-like comparison. For example, the adjusted results in 2018 were adversely impacted from the weakening of the US dollar relative to sterling. To calculate underlying growth, the prior year comparatives are restated using 2018 exchange rates. Similarly, adjustments are made to exclude disposals from both years. In 2018, discontinued operations have been treated the same as a disposal, as the sale of the GMID completes during the current financial year. This is a change from the treatment in 2017 where GMID was included in the underlying results. 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. There were no significant event timing differences in the current or prior periods.
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 statutory to underlying for revenues and profit before tax:
Unaudited Unaudited
six months six months
ended ended
31 March 31 March
2018 2017
Change
Total Total %
GBP000 GBP000
Statutory revenue 189,136 182,324 4%
Discontinued operations 20,475 20,895
----------- ----------- ------
Total revenue 209,611 203,219 3%
Discontinued operations (20,475) (19,838)
M&A (1,835) 2,167
Foreign exchange - (4,729)
Underlying revenue 187,301 180,819 4%
----------- ----------- ------
Statutory profit before tax 121,058 9,321
Adjustments (75,414) 33,369
Discontinued operations 6,378 6,390
----------- -----------
Adjusted profit before tax 52,022 49,080 6%
Discontinued operations (6,378) (5,892)
M&A (1,609) (796)
Foreign exchange - 326
Underlying profit before tax 44,035 42,718 3%
----------- ----------- ------
Cash conversion
Cash conversion measures the percentage by which cash generated from operations covers adjusted operating profit.
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Adjusted operating profit 53,489 48,984 107,139
----------- ----------- --------
Cash generated from operations 67,764 67,280 118,201
Exceptional items (2,090) 6,432 12,375
Other working capital movements (325) (3,055) (4,551)
Underlying cash generated from operations 65,349 70,657 126,025
----------- ----------- --------
Adjusted cash conversion % 127% 137% 110%
Underlying 12-month rolling cash conversion
% 108% 120% 118%
The underlying basis is after adjusting for significant timing differences affecting the movement on working capital and exceptional items. For the period ended 31 March 2018, exceptional items largely consist of cash payments for the legal and professional fees in relation to acquisitions and disposals net of the favourable settlement of a legal dispute. For the period ended 31 March 2017 and year ended 30 September 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 in 2018 and 2017 are largely the result of the landlord's contribution to the fit-out of the New York office which will be amortised over the period of the lease and the rent-free period of the London and New York offices. At the interim period, an underlying 12-month cash conversion percentage is used to eliminate any seasonality.
As cash generated from operations in the Consolidated Statement of Cash Flows includes those from discontinued operations, the statutory cash conversion rate has not been provided as it would not give a fair indication of the Group's cash conversion performance.
Net debt
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Net (debt)/cash at beginning of period (154,621) 83,782 83,782
Net increase in cash and cash equivalents 61,687 24,547 4,459
Decrease/(increase) in borrowings 55,025 (119,940) (178,504)
Deposit received with DMGT group company - (73,618) (73,618)
Redemption of loan notes - 185 185
Effect of foreign exchange rate movements 944 1,402 9,075
Net debt at end of period (36,965) (83,642) (154,621)
----------- ----------- ---------
Net debt comprises:
Cash at bank and in hand 63,786 37,371 4,426
Bank overdrafts - (2,050) -
Classified as held for sale 9,796 - 9,846
----------- ----------- ---------
Total cash and cash equivalents 73,582 35,321 14,272
Borrowings (110,547) (118,963) (168,893)
Net debt (36,965) (83,642) (154,621)
Average exchange rate adjustment (452) 4,614 (2,188)
Adjusted net debt (37,417) (79,028) (156,809)
----------- ----------- ---------
12-month 12-month 12-month
rolling rolling rolling
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Adjusted operating profit 111,644 103,604 107,139
Share of results in associates and joint ventures 2,972 2,713 3,293
Add back:
Intangible amortisation of licences and software 3,486 3,989 3,965
Depreciation of property plant and equipment 3,237 2,947 3,202
Share of associates interest, depreciation and
amortisation 3,055 4,237 4,632
M&A annualised adjustment (4,135) - 3,913
Adjusted EBITDA 120,259 117,490 126,143
----------- ----------- ---------
Adjusted net debt to EBITDA ratio 0.31 0.67 1.24
The Group's borrowing facilities contain certain covenants, including adjusted net debt to EBITDA. The amounts and foreign exchange rates used in the covenant calculations are subject to adjustments as defined under the terms of the arrangement. The facility's covenant requires the Group's net debt to be no more than three times adjusted EBITDA and requires minimum levels of interest cover of three times on a rolling 12-month basis.
The bank covenant ratio uses an average exchange rate in the calculation of net debt and includes an annualised adjustment attributable to acquisitions and disposals in the calculation of adjusted EBITDA. When businesses are acquired after the beginning of the financial year, the calculation of adjusted EBITDA includes EBITDA attributable to the business as if the acquisition had been completed on the first day of the financial year. The calculation excludes the EBITDA of any businesses disposed of during the year.
Condensed Consolidated Income Statement
for the six months ended 31 March 2018
Restated
Unaudited unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Notes GBP000 GBP000 GBP000
CONTINUING OPERATIONS
Revenue 2 189,136 182,324 386,923
Operating profit before acquired intangible
amortisation and exceptional items 2 47,124 42,632 95,253
Acquired intangible amortisation 12 (11,204) (8,707) (20,566)
Exceptional items 4 86,781 (24,559) (31,253)
------------------------------------------------- ----- ----------- ----------- --------
Operating profit 2 122,701 9,366 43,434
Share of results in associates and joint
ventures 11 (27) (1,106) (1,890)
Finance income 5 2,008 2,312 3,290
Finance expense 5 (3,624) (1,251) (4,146)
Net finance (costs)/income 5 (1,616) 1,061 (856)
----------- ----------- --------
Profit before tax 2 121,058 9,321 40,688
Tax expense on profit 6 (14,464) (1,212) (3,390)
Profit for the period from continuing operations 2 106,594 8,109 37,298
----------- ----------- --------
DISCONTINUED OPERATIONS
Profit for the period from discontinued
operations 9 3,282 5,541 5,889
----------- ----------- --------
PROFIT FOR THE PERIOD 109,876 13,650 43,187
----------- ----------- --------
Attributable to:
Equity holders of the parent 109,547 13,369 42,718
Equity non-controlling interests 329 281 469
109,876 13,650 43,187
----------- ----------- --------
Earnings per share
From continuing operations
Basic 8 98.97p 6.65p 32.74p
Diluted 8 98.78p 6.64p 32.68p
From continuing and discontinued operations
Basic 8 102.03p 11.36p 37.98p
Diluted 8 101.83p 11.35p 37.91p
Dividend per share (including proposed
dividends) 7 10.20p 8.80p 30.60p
A detailed reconciliation of the Group's statutory results to the adjusted and underlying results is set out in the appendix to the Interim Statement on pages 5 to 8.
Following the Group's decision to dispose of the Global Markets Intelligence Division (GMID), these businesses have met the recognition criteria of discontinued operations under IFRS 5 'Non-current assets held for sale and discontinued operations' and are therefore presented as such throughout this report. In order to comply with this presentation, the Income Statement disclosures for the period ended 31 March 2017 have been re-presented separating continuing and discontinued operations (note 9).
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 31 March 2018
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Profit for the period 109,876 13,650 43,187
------------ ------------ ---------
Items that may be reclassified subsequently
to profit or loss:
Change in fair value of cash flow hedges 3,800 (904) 2,408
Transfer of (gains)/losses on cash flow hedges
from fair value reserves to Income Statement:
Foreign exchange (gains)/losses in total revenue (201) 5,901 9,334
Foreign exchange gains in operating profit (230) (33) (72)
Net exchange differences on translation of
net investments in overseas subsidiary undertakings (23,947) 28,241 (4,875)
Net exchange differences on foreign currency
loans 8,249 (14,589) (799)
Translation reserves recycled to Income Statement 1,701 (285) (285)
Tax on items that may be reclassified (458) (869) (1,955)
Items that will not be reclassified to profit
or loss:
Actuarial (losses)/gains on defined benefit
pension schemes (544) 5,201 (320)
Tax credit/(charge) on actuarial losses/gains
on defined benefit pension schemes 92 (884) 54
Other comprehensive (expense)/income for the
period (11,538) 21,779 3,490
------------ ------------ ---------
Total comprehensive income for the period 98,338 35,429 46,677
------------ ------------ ---------
Continuing operations 96,100 28,727 41,364
Discontinued operations 2,238 6,702 5,313
------------ ------------ ---------
Total comprehensive income for the period 98,338 35,429 46,677
------------ ------------ ---------
Attributable to:
Equity holders of the parent 97,982 34,806 46,399
Equity non-controlling interests 356 623 278
98,338 35,429 46,677
------------ ------------ ---------
Movements in cash flow hedges have been reclassified between categories for the period ended 31 March 2017 in order to ensure consistent presentation with the period ended 31 March 2018. This reclassification has been explained in note 1.
Condensed Consolidated Statement of Financial Position
as at 31 March 2018
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 Sept
2018 2017 2017
Notes GBP000 GBP000 GBP000
Non-current assets
Intangible assets
Goodwill 12 388,225 381,162 399,971
Other intangible assets 12 180,803 149,299 193,991
Property, plant and equipment 16,423 17,438 17,235
Investment in associates 11 543 29,802 26,820
Investment in joint ventures 11 - 190 -
Available-for-sale investments 11 3,546 5,835 3,546
Convertible loan note 2,396 - 2,503
Deferred consideration 17 533 1,515 1,570
Deferred tax assets 1,411 1,059 1,549
Other non-current assets 798 - 929
Derivative financial instruments 2,128 36 662
596,806 586,336 648,776
---------- ---------- ----------
Current assets
Trade and other receivables 61,814 71,652 64,483
Deferred consideration 17 1,086 1,554 419
Current income tax assets 5,101 7,871 5,112
Cash and cash equivalents (excluding bank
overdrafts) 63,786 37,371 4,426
Derivative financial instruments 3,615 468 2,686
Total assets of businesses held for sale 9 46,353 - 50,671
181,755 118,916 127,797
---------- ---------- ----------
Current liabilities
Acquisition commitments 17 (715) (9,086) (9,904)
Deferred consideration 17 (1,449) - (350)
Trade and other payables (28,222) (26,277) (28,070)
Current income tax liabilities (13,689) (20,861) (16,117)
Group relief payable - (172) (387)
Accruals (55,385) (64,571) (67,819)
Deferred income 13 (129,741) (138,512) (113,487)
Bank overdrafts - (2,050) -
Derivative financial instruments (277) (5,499) (1,001)
Provisions (791) (2,122) (337)
Total liabilities of businesses held for
sale 9 (23,013) - (29,998)
---------- ---------- ----------
(253,282) (269,150) (267,470)
---------- ---------- ----------
Net current liabilities (71,527) (150,234) (139,673)
---------- ---------- ----------
Total assets less current liabilities 525,279 436,102 509,103
Non-current liabilities
Acquisition commitments 17 (1,412) (1,082) (3,221)
Deferred consideration 17 (261) - -
Borrowings 15 (110,547) (118,963) (168,893)
Other non-current liabilities (486) (485) (486)
Deferred income 13 (3,041) (5,947) (3,491)
Deferred tax liabilities (23,727) (4,099) (23,431)
Net pension deficit (10,176) (4,641) (9,954)
Derivative financial instruments (59) (70) (230)
Provisions (3,538) (2,979) (2,600)
---------- ---------- ----------
(153,247) (138,266) (212,306)
Net assets 372,032 297,836 296,797
---------- ---------- ----------
Shareholders' equity
Called up share capital 16 273 273 273
Share premium account 103,687 103,042 103,147
Other reserve 64,981 64,981 64,981
Capital redemption reserve 56 56 56
Own shares (20,461) (21,005) (21,005)
Reserve for share-based payments 38,664 37,873 38,395
Fair value reserve (19,702) (29,777) (23,071)
Translation reserve 77,702 108,062 89,269
Retained earnings 125,157 26,108 35,594
---------- ---------- ----------
Equity shareholders' surplus 370,357 289,613 287,639
Equity attributable to non-controlling
interests 1,675 8,223 9,158
Total equity 372,032 297,836 296,797
---------- ---------- ----------
Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 March 2018
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 30 September
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
year - - - - - - - - 42,718 42,718 469 43,187
Other
comprehensive
income/(expense)
for the year - - - - - - 11,670 (5,768) (2,221) 3,681 (191) 3,490
------- ------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Total
comprehensive
income/(expense)
for the year - - - - - - 11,670 (5,768) 40,497 46,399 278 46,677
Recognition of
acquisition
commitments - - - - - - - - (4,997) (4,997) - (4,997)
Non-controlling
interest
recognised
on acquisition - - - - - - - - - - 1,525 1,525
Adjustment
arising from
change in
non-controlling
interest - - - - - - - - (234) (234) (560) (794)
Credit for
share-based
payments - - - - - 1,061 - - - 1,061 - 1,061
Cash dividend
paid - - - - - - - - (30,200) (30,200) (598) (30,798)
Exercise of share
options - 312 - - - - - - - 312 - 312
Share buyback (48) - - 48 - - - - (193,465) (193,465) - (193,465)
Tax relating to
items taken
directly
to equity - - - - - - - - (225) (225) - (225)
------- ------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
At 30 September
2017 273 103,147 64,981 56 (21,005) 38,395 (23,071) 89,269 35,594 287,639 9,158 296,797
------- ------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Profit for the
period - - - - - - - - 109,547 109,547 329 109,876
Other
comprehensive
income/(expense)
for the period - - - - - - 3,369 (14,024) (910) (11,565) 27 (11,538)
------- ------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Total
comprehensive
income/(expense)
for the period - - - - - - 3,369 (14,024) 108,637 97,982 356 98,338
De-recognition of
non-controlling
interest and
related
liabilities on
disposal - - - - - - - - 317 317 (170) 147
Adjustment
arising from
change in
non-controlling
interest - - - - - - - 2,457 4,788 7,245 (7,245) -
Credit for
share-based
payments - - - - - 719 - - - 719 - 719
Cash dividend
paid - - - - - - - - (23,401) (23,401) (424) (23,825)
Exercise of share
options - 540 - - 544 (450) - - (94) 540 - 540
Tax relating to
items taken
directly
to equity - - - - - - - - (684) (684) - (684)
------- ------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
At 31 March 2018 273 103,687 64,981 56 (20,461) 38,664 (19,702) 77,702 125,157 370,357 1,675 372,032
------- ------- ------- ------- -------- ------- -------- -------- --------- --------- --------- ---------
Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 March 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 30 September
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 31 March 2017 273 103,042 64,981 56 (21,005) 37,873 (29,777) 108,062 26,108 289,613 8,223 297,836
------- ------- ------- ------- -------- ------- -------- ------- --------- --------- --------- ---------
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 Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Number of shares held:
Euromoney Employees' Share Ownership Trust 58,976 58,976 58,976
Euromoney Employee Share Trust 1,656,575 1,700,777 1,700,777
Total 1,715,551 1,759,753 1,759,753
----------- ----------- ---------
Nominal cost per share (p) 0.25 0.25 0.25
Historical cost per share (GBP) 11.93 11.94 11.94
Market value (GBP000) 20,998 18,706 20,607
Condensed Consolidated Statement of Cash Flows
for the six months ended 31 March 2018
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Cash flow from operating activities
Operating profit from continuing operations 122,701 9,366 43,434
Operating profit from discontinued operations 5,571 6,235 9,200
------------ ------------ ----------
Operating profit 128,272 15,601 52,634
Long-term incentive expense 719 539 985
Acquired intangible amortisation 11,204 8,824 20,815
Licences and software amortisation 1,322 1,801 3,965
Depreciation of property, plant and equipment 1,505 1,470 3,202
Loss on disposal of property, plant and equipment - 1 15
Impairment charge 3,048 27,360 29,649
Profit on disposal of businesses/joint ventures/associates (86,817) (4,838) (2,931)
Increase/(decrease) in provisions 1,078 (270) (528)
------------ ------------ ----------
Operating cash flows before movements in working
capital 60,331 50,488 107,806
(Increase)/decrease in receivables (944) 6,250 3,483
Increase in payables 8,377 10,542 6,912
------------ ------------ ----------
Cash generated from operations 67,764 67,280 118,201
Income taxes paid (18,268) (13,029) (21,791)
Group relief tax paid (409) - -
Net cash generated from operating activities 49,087 54,251 96,410
------------ ------------ ----------
Investing activities
Interest received 215 42 254
Purchase of intangible assets (1,043) (912) (1,987)
Purchase of property, plant and equipment (946) (8,338) (10,928)
Proceeds from disposal of property, plant and
equipment 3 3 3
Purchase of business/subsidiary undertaking,
net of cash acquired (7,096) - (102,700)
Proceeds from disposal of businesses 12,168 4,358 4,217
Payments to dispose of discontinued operation (2,007) - -
Purchase of associates and joint venture - (552) (553)
Proceeds from disposal of associate 100,142 - -
Receipt of deferred consideration 987 326 1,386
Payment of deferred consideration - (465) (833)
Purchase of convertible loan note - - (2,503)
Net cash from/(used in) investing activities 102,423 (5,538) (113,644)
------------ ------------ ----------
Financing activities
Dividends paid (23,401) (20,755) (30,200)
Dividends paid to non-controlling interests (424) (477) (598)
Interest paid (2,681) (2,131) (5,027)
Issue of new share capital 540 207 312
Share buyback - (193,657) (193,465)
(Repayment)/increase in borrowings (55,025) 119,940 178,504
Purchase of additional interest in subsidiary
undertakings (8,832) (726) (1,266)
Redemption of loan notes - (185) (185)
DMGT financing facility receipts - 73,618 73,618
------------ ------------ ----------
Net cash (used in)/from financing activities (89,823) (24,166) 21,693
------------ ------------ ----------
Net increase in cash and cash equivalents 61,687 24,547 4,459
Cash and cash equivalents at beginning of period
(including held for sale) 14,272 10,328 10,328
Effect of foreign exchange rate movements (2,377) 446 (515)
------------ ------------ ----------
Cash and cash equivalents at end of period
(including held for sale) 73,582 35,321 14,272
Cash and cash equivalents classified as held
for sale (9,796) - (9,846)
------------ ------------ ----------
Cash and cash equivalents at end of period 63,786 35,321 4,426
------------ ------------ ----------
Cash and cash equivalents include bank overdrafts. This statement includes discontinued operations (note 9).
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 16 May 2018.
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 30 September 2017 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.
Following the Group's decision to sell the Global Markets Intelligence Division (GMID), these businesses have met the recognition criteria of a discontinued operation under IFRS 5 'Non-current assets held for sale and discontinued operations' and are therefore presented as such throughout this report. In order to comply with this presentation, the Income Statement disclosures for the period ended 31 March 2017 have been re-presented separating continuing and discontinued operations.
The Consolidated Statement of Comprehensive Income for the period ended 31 March 2017 has been revised to ensure the comparatives are consistent and the appropriate classifications are in line with the disclosure for the period ended 31 March 2018. This reclassification has no impact on the total comprehensive income but decreases the change in fair value of cash flow hedges by GBP11.7m from a gain of GBP10.8m to a loss of GBP0.9m with a corresponding adjustment to the transfer of gains on cash flow hedges from fair value reserves to the Income Statement from a gain of GBP5.9m to a loss of GBP5.9m.
Relevant new standards, amendments and interpretations issued but effective subsequent to the period end
The Group will adopt IFRS 9 and IFRS 15 with effect from 1 October 2018 and IFRS 16 with effect from 1 October 2019. The process of evaluating IFRS 9 and IFRS 15 is well progressed and the impact will be disclosed in the 2018 Annual Report. Other than IFRS 16, the adoption of these standards, amendments and interpretations is not expected to have a material impact on the Group's financial statements.
IFRS 9: Adopting IFRS 9 'Financial Instruments' will impact hedge accounting and receivables provisioning. The basis of documentation and effectiveness testing of hedges under the new standard will be linked more closely to the risk management objectives, which may generate different levels of ineffectiveness than the current testing under IAS 39. Receivables provisioning will move from an incurred to an expected loss model. The Group's largest exposure is trade receivables, which had a gross value of GBP49.7m at 31 March 2018 (30 September 2017: GBP50.9m). No material impact is anticipated for high credit quality balances settled on agreed terms. However, the new model could impact the timing and value of provision recognition on higher risk balances. The Group has available-for-sale financial assets recognised at cost and is evaluating the impact of IFRS 9 on this treatment.
IFRS 15: Management is evaluating the impact of IFRS 15 'Revenue from Contracts with Customers' at contract level to confirm the full impact of adopting this standard. The implementation of IFRS 15 is complex due to the Group's large number of revenue streams. IFRS 15 could impact the timing of revenue recognition due to enhanced guidance around performance obligations and timing of revenue recognition. Management favours the modified retrospective transition method. This method recognises the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance sheet in the period of initial application and comparative periods would not be adjusted.
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.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.
Retirement benefit schemes
The Group operates the Metal Bulletin plc Pension Scheme and participates in the Harmsworth Pension Scheme, defined benefit schemes, both of 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 increasing the net pension deficit from GBP10.0m at 30 September 2017 to GBP10.2m at 31 March 2018.
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 pages 1 to 4.
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 31 March 2018 the Group's net debt position was GBP37.0m, comprising GBP110.5m of borrowings and GBP73.5m of cash and cash equivalents including cash balances classified as held for sale. 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 requires 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 31 March 2018 the Group's net debt to adjusted EBITDA covenant was 0.31 times and the committed undrawn facility available was GBP130.0m.
The Group's forecasts and projections, looking out to September 2021 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 33 to 38 of the 2017 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 from a legal, regulatory or behavioural issue arising from operational activities
- Disruption to business operations
- 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
- Failure to implement the strategy effectively due to a loss of key staff
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 2017 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 segments and reflects the Group's management and internal reporting structure. The Group is organised into four segments: 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 31 March 2018, the Group sold Adhesion, World Bulk Wine and Institutional Investor Journals (note 10). As a result segment information for these businesses has been reclassified as sold businesses and the comparative split of segmental revenues, revenue by type, operating profits, acquired intangible amortisation, exceptional items and depreciation and amortisation has been restated.
The Global Markets Intelligence Division (GMID) has been classified as discontinued operations (note 9) and therefore presented as such throughout this report. The Income Statement disclosures for the period ended 31 March 2017 have been re-presented separating continuing and discontinued operations. These businesses are reported within the Pricing, data & market intelligence segment.
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 31 March
Subscriptions
and content Advertising Sponsorship Delegates Other Total revenue
2018 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
by segment and type:
Asset management 59,810 5,732 5,787 626 20 71,975
Pricing, data & market
intelligence 64,044 5,472 9,178 9,481 548 88,723
Banking & finance 4,145 3,754 11,751 10,935 544 31,129
Commodity events - - 3,622 11,563 232 15,417
------------- ----------- ----------- --------- ------ -------------
127,999 14,958 30,338 32,605 1,344 207,244
Sold/closed businesses - - - - 1,836 1,836
Foreign exchange gains
on forward contracts - - - - 531 531
------------- ----------- ----------- --------- ------ -------------
Total revenue 127,999 14,958 30,338 32,605 3,711 209,611
------------- ----------- ----------- --------- ------ -------------
Continuing operations 107,568 14,958 30,338 32,605 3,667 189,136
Discontinued operations 20,431 - - - 44 20,475
------------- ----------- ----------- --------- ------ -------------
Total revenue 127,999 14,958 30,338 32,605 3,711 209,611
------------- ----------- ----------- --------- ------ -------------
Unaudited six months ended 31 March
Subscriptions
and content Advertising Sponsorship Delegates Other Total revenue
2017 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
by segment and type:
Asset management 68,938 6,802 6,125 640 26 82,531
Pricing, data & market
intelligence 51,005 5,032 6,809 8,839 575 72,260
Banking & finance 4,165 4,087 10,043 10,881 618 29,794
Commodity events 1 4 3,549 9,844 348 13,746
------------- ----------- ----------- --------- ------- -------------
124,109 15,925 26,526 30,204 1,567 198,331
Sold/closed businesses - - - - 11,863 11,863
Foreign exchange losses
on forward contracts - - - - (6,975) (6,975)
------------- ----------- ----------- --------- ------- -------------
Total revenue 124,109 15,925 26,526 30,204 6,455 203,219
------------- ----------- ----------- --------- ------- -------------
Continuing operations 103,236 15,925 26,526 30,204 6,433 182,324
Discontinued operations 20,873 - - - 22 20,895
------------- ----------- ----------- --------- ------- -------------
Total revenue 124,109 15,925 26,526 30,204 6,455 203,219
------------- ----------- ----------- --------- ------- -------------
Unaudited six months ended 31 March
United Kingdom North America Rest of World Eliminations Total
2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
by segment and source:
Asset management 1,263 1,214 69,888 80,313 925 1,066 (101) (62) 71,975 82,531
Pricing, data & market
intelligence 50,987 47,752 21,213 10,175 16,875 16,396 (352) (2,063) 88,723 72,260
Banking & finance 18,448 17,102 11,118 11,226 1,814 1,683 (251) (217) 31,129 29,794
Commodity events 14,180 12,546 - - 1,241 1,200 (4) - 15,417 13,746
Sold/closed businesses - 2,429 1,074 4,329 762 5,238 - (133) 1,836 11,863
Foreign exchange
gains/(losses)
on forward contracts 531 (6,975) - - - - - - 531 (6,975)
------- ------- ------- ------- ------- ------ ------ ------- ------- -------
Total revenue 85,409 74,068 103,293 106,043 21,617 25,583 (708) (2,475) 209,611 203,219
------- ------- ------- ------- ------- ------ ------ ------- ------- -------
Continuing operations 83,149 71,881 99,210 101,773 7,485 11,145 (708) (2,475) 189,136 182,324
Discontinued operations 2,260 2,187 4,083 4,270 14,132 14,438 - - 20,475 20,895
------- ------- ------- ------- ------- ------ ------ ------- ------- -------
Total revenue 85,409 74,068 103,293 106,043 21,617 25,583 (708) (2,475) 209,611 203,219
------- ------- ------- ------- ------- ------ ------ ------- ------- -------
Total revenue by destination 28,538 19,724 92,705 94,884 88,368 88,611 - - 209,611 203,219
------- ------- ------- ------- ------- ------ ------ ------- ------- -------
Unaudited six months ended 31 March
United Kingdom North America Rest of World Total
2018 2017 2018 2017 2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Adjusted operating profit(1)
by segment and source:
Asset management 248 65 26,627 28,789 222 99 27,097 28,953
Pricing, data & market intelligence 18,371 13,470 7,569 4,701 4,589 4,809 30,529 22,980
Banking & finance 2,852 744 3,819 3,389 (141) (5) 6,530 4,128
Commodity events 7,667 5,521 - - 714 779 8,381 6,300
Sold/closed businesses - 83 334 389 273 698 607 1,170
Unallocated corporate costs (17,578) (12,089) (1,500) (1,663) (577) (795) (19,655) (14,547)
-------- -------- ------- -------- ------- ------- -------- --------
Operating profit(1) 11,560 7,794 36,849 35,605 5,080 5,585 53,489 48,984
Discontinued operations 163 504 1,720 (1,982) (8,248) (4,874) (6,365) (6,352)
-------- -------- ------- -------- ------- ------- -------- --------
Continuing operations 11,723 8,298 38,569 33,623 (3,168) 711 47,124 42,632
Acquired intangible amortisation
(note 12) (3,751) (3,607) (7,434) (5,050) (19) (50) (11,204) (8,707)
Exceptional items (note 4) (3,437) (3,454) 76,089 (19,862) 14,129 (1,243) 86,781 (24,559)
-------- --------
Operating profit/(loss) 4,535 1,237 107,224 8,711 10,942 (582) 122,701 9,366
-------- -------- ------- -------- ------- -------
Share of results in associates
and joint ventures (note 11) (27) (1,106)
Finance income (note 5) 2,008 2,312
Finance expense (note 5) (3,624) (1,251)
-------- --------
Profit before tax 121,058 9,321
Tax expense on profit (note 6) (14,464) (1,212)
-------- --------
Profit for the period from continuing operations 106,594 8,109
-------- --------
(1) Operating profit including discontinued operations before acquired intangible amortisation and exceptional items. 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 5 to 6.
Unaudited six months ended 31 March
Depreciation
Acquired intangible Exceptional and
amortisation items amortisation
2018 2017 2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Other segmental information
by segment:
Asset management (5,392) (4,824) 3,401 (28,514) (445) (924)
Pricing, data & market intelligence (4,281) (2,286) (3,437) (1,089) (356) (5)
Banking & finance (110) (120) - - - -
Commodity events (1,285) (1,337) - - (56) (70)
Sold/closed businesses (136) (140) 86,817 4,749 - (1)
Unallocated corporate income/(costs) - - - 295 (1,970) (2,055)
----------- -------- ------- -------- ------- -------
Continuing operations (11,204) (8,707) 86,781 (24,559) (2,827) (3,055)
Discontinued operations - (117) (2,024) - - (216)
----------- -------- ------- -------- ------- -------
Total (11,204) (8,824) 84,757 (24,559) (2,827) (3,271)
----------- -------- ------- -------- ------- -------
United Kingdom North America Rest of World Total
Unaudited Audited Unaudited Audited Unaudited Audited Unaudited Audited
six months year six months year six months year six months year
ended ended ended ended ended ended ended ended
31 March 30 Sept 31 March 30 Sept 31 March 30 Sept 31 March 30 Sept
2018 2017 2018 2017 2018 2017 2018 2017
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non-current assets
(excluding derivative
financial instruments,
deferred consideration
and deferred tax
assets)
by location:
Goodwill 104,845 103,715 276,381 289,079 6,999 7,177 388,225 399,971
Other intangible
assets 60,760 61,024 119,510 132,416 533 551 180,803 193,991
Property, plant
and equipment 5,714 5,913 10,077 10,724 632 598 16,423 17,235
Investments 543 26,820 3,546 3,546 - - 4,089 30,366
Non-current assets 171,862 197,472 409,514 435,765 8,164 8,326 589,540 641,563
----------- -------- ----------- -------- ----------- -------- ----------- --------
Additions to property,
plant and equipment (425) (337) (654) (9,834) (267) (757) (1,346) (10,928)
----------- -------- ----------- -------- ----------- -------- ----------- --------
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 30 September 2017 the Group earned 47% of its continuing and discontinued revenues and adjusted operating profits in the first six months of the year (2016: 47%).
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 adjusted trading performance of the Group.
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Notes GBP000 GBP000 GBP000
Profit on disposal of businesses/joint
ventures/associates a 86,817 4,838 2,931
Impairment charges b (3,048) (27,360) (29,649)
Release for overseas sales tax c - 3,888 3,868
Restructuring and other exceptional income/(costs) d 3,012 (5,925) (8,403)
------------ ------------ ---------
Continuing operations 86,781 (24,559) (31,253)
Exceptional items from discontinued operation (794) - (2,437)
Costs to sell the discontinued operation (1,230) - -
------------ ------------ ---------
Discontinued operations e (2,024) - (2,437)
Total 84,757 (24,559) (33,690)
------------ ------------ ---------
a. During the period ended 31 March 2018, the Group sold three businesses, Adhesion (profit GBP9.8m), World Bulk Wine (profit GBP0.9m), Institutional Investor Journals (profit GBP4.4m) and its associate investment in Dealogic (profit GBP71.7m) (note 10 and note 11). For the period ended 31 March 2017 and 30 September 2017, the profit on disposal mainly comprised of the sale of LatinFinance and II Intelligence.
b. The impairment charge relates to a goodwill impairment of GBP3.0m for Layer123 Events and Training Limited (Layer123). The impairment of Layer123 is the result of a disappointing financial performance of the business. In 2017, the impairment principally related to a goodwill impairment of Ned Davis Research (NDR).
c. For the period ended 31 March 2017 and 30 September 2017, an element of the provision for overseas sales tax was released following settlement of the sales tax exposure (including interest) resulting in a credit of GBP3.9m.
d. Restructuring and other exceptional income/costs for the period ended 31 March 2018 consist of the favourable settlement of the legal dispute with the previous owners of Centre for Investor Education (CIE); and the recognition of the earn-out payment for the acquisition of Site Seven Media Ltd (TowerXchange), treated as compensation costs. 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.
For the period ended 31 March 2017 and 30 September 2017 the costs comprised of professional fees associated with the placement element of the share buyback transaction with Daily Mail and General Trust plc; professional fees from the CIE legal dispute; incremental costs relating to the relocation of the New York office; and the acquisition-related costs of RISI US (Holdco) Inc, (RISI). These costs for RISI were treated as exceptional due to the significance of the acquisition. Acquisition costs for smaller acquisitions have not been treated as exceptional. No severance costs have been treated as exceptional items in 2017 or 2018.
e. The discontinued operations have incurred exceptional costs as a result of the disposal and costs to engage with advisors to sell the Global Markets Intelligence Division (GMID). These exceptional costs for the period ended 31 March 2018 of GBP2.0m (September 2017: GBP2.4m) have been disclosed separately (note 9). The total costs are estimated to be GBP9m and are all expected to be incurred by 30 September 2018.
The Group's tax charge includes a related tax charge on continuing operations exceptional items of GBP1.3m (March 2017: GBP9.6m credit, September 2017: GBP10.1m credit) (note 6). There is no related tax charge or credit treated as exceptional on the discontinued operations at 31 March 2018 (March 2017: GBPnil, September 2017: GBP1.1m charge) (note 6). There is a further tax charge in relation to US tax reform that is considered exceptional of GBP5.0m (March 2017: GBPnil; September 2017: GBPnil).
5 Finance income and expense
Restated
Unaudited unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Finance income
Interest on cash deposit with DMGT group company - 137 137
Interest receivable from short-term investments 100 4 6
Movements in acquisition commitments 1,821 2,077 2,970
Movements in deferred consideration - 94 177
Interest on tax 87 - -
2,008 2,312 3,290
------------ ------------ ---------
Finance expense
Interest payable on committed borrowings with
DMGT group company - (152) (152)
Interest payable on borrowings (2,391) (920) (3,656)
Net interest expense on defined benefit liability (123) (101) (202)
Movements in deferred consideration (1,110) - -
Interest on tax - (78) (136)
------------ ------------ ---------
(3,624) (1,251) (4,146)
------------ ------------ ---------
Continuing operations net finance (costs)/income (1,616) 1,061 (856)
Discontinued operations net finance income 13 38 33
------------ ------------ ---------
Total net finance (costs)/income (1,603) 1,099 (823)
------------ ------------ ---------
Restated
Unaudited unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Reconciliation of net finance (costs)/income
in Income Statement to adjusted net finance
costs
Continuing operations net finance costs in
Income Statement (1,616) 1,061 (856)
Add back:
Movements in acquisition commitments (1,821) (2,077) (2,970)
Movements in deferred consideration 1,110 (94) (177)
------------ ------------ ---------
(711) (2,171) (3,147)
------------ ------------ ---------
Continuing operations adjusted net finance
costs (2,327) (1,110) (4,003)
Discontinued operations net finance income 13 38 33
------------ ------------ ---------
Total adjusted net finance costs (2,314) (1,072) (3,970)
------------ ------------ ---------
The reconciliation of net finance (costs)/income 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 trading.
6 Tax expense on profit
Unaudited six months ended Unaudited six months ended
31 March 2018 31 March 2017
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Current tax expense
UK corporation tax
expense 1,516 - 1,516 1,184 - 1,184
Foreign tax expense 12,855 1,251 14,106 7,800 829 8,629
Adjustments in respect
of prior periods 309 (179) 130 1,727 (71) 1,656
----------- ------------ ------ ----------- ------------ -------
14,680 1,072 15,752 10,711 758 11,469
Deferred tax expense
Current year (442) - (442) (9,586) (21) (9,607)
Adjustments in respect
of prior periods 226 - 226 87 (5) 82
----------- ------------
(216) - (216) (9,499) (26) (9,525)
----------- ------------ ------ ----------- ------------ -------
Total tax expense in
Income Statement 14,464 1,072 15,536 1,212 732 1,944
----------- ------------ ------ ----------- ------------ -------
Effective tax rate 12% 25% 12% 13% 12% 12%
Audited year ended 30 Sept
2017
Continuing Discontinued
operations operations Total
GBP000 GBP000 GBP000
Current tax expense
UK corporation tax expense 478 44 522
Foreign tax expense 13,899 2,193 16,092
Adjustments in respect of prior years (2,193) 105 (2,088)
----------- ------------ -------
12,184 2,342 14,526
Deferred tax expense
Current year (8,543) 1,003 (7,540)
Adjustments in respect of prior years (251) (1) (252)
(8,794) 1,002 (7,792)
----------- ------------ -------
Total tax expense in Income Statement 3,390 3,344 6,734
----------- ------------ -------
Effective tax rate 8% 36% 13%
Unaudited six months ended Unaudited six months ended
31 March 2018 31 March 2017
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Reconciliation of tax
expense in Income Statement
to adjusted tax expense
Total tax expense in
Income Statement 14,464 1,072 15,536 1,212 732 1,944
Add back:
Tax on acquired intangible
amortisation 2,445 - 2,445 2,018 - 2,018
Tax on exceptional
items (1,312) - (1,312) 9,550 - 9,550
US Tax reform (5,004) - (5,004) - - -
Tax on deductible goodwill
and intangible amortisation (1,148) - (1,148) (1,899) 18 (1,881)
Share of tax on associates
and joint ventures 254 - 254 350 - 350
Adjustments in respect
of prior periods (535) 179 (356) (1,814) 76 (1,738)
(5,300) 179 (5,121) 8,205 94 8,299
----------- ------------ ------- ----------- ------------ -------
Adjusted tax expense 9,164 1,251 10,415 9,417 826 10,243
----------- ------------ ------- ----------- ------------ -------
Adjusted profit before
tax (refer to the appendix
to the Interim Statement) 52,022 49,080
Adjusted effective
tax rate 20% 21%
----------- ------------ ------- ----------- ------------ -------
Audited year ended 30 Sept
2017
Continuing Discontinued
operations operations Total
GBP000 GBP000 GBP000
Reconciliation of tax expense in Income Statement
to adjusted tax expense
Total tax expense in Income Statement 3,390 3,344 6,734
Add back:
Tax on acquired intangible amortisation 5,327 44 5,371
Tax on exceptional items 10,088 (1,065) 9,023
Tax on deductible goodwill and intangible amortisation (4,611) - (4,611)
Share of tax on associates and joint ventures 988 - 988
Adjustments in respect of prior years 2,444 (104) 2,340
14,236 (1,125) 13,111
----------- ------------ -------
Adjusted tax expense 17,626 2,219 19,845
----------- ------------ -------
Adjusted profit before tax (refer to the appendix
to the Interim Statement) 106,462
Adjusted effective tax rate 19%
----------- ------------ -------
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 GBP1.1m 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 adjusted effective tax rate for the 2018 interim period is 20% (2017: 21%). The forecast adjusted effective tax rate for the 2018 full year is 20% (2017: 19%).
The reported tax rate for the period ended 31 March 2018 is 12% compared with 13% for the period ended 31 March 2017. The reduction in the reported rate is driven by the tax on disposal of shares in Diamond Topco Limited and repatriation tax, that is partially offset by the revaluation of deferred tax liabilities that resulted in an exceptional tax credit of GBP4.7m, as a consequence of the reduction in the US Federal tax rate enacted by the Tax Cuts and Jobs Act (TCJA) in the United States (US).
US Tax Reform
On 22 December 2017, the Tax Cuts and Jobs Act was enacted in the US. The Act is complex and wide-ranging and in these financial statements the impact has been estimated and may be further refined as more clarity and guidance becomes available.
The legislation includes a reduction in the federal tax rate from 35% to 21%. As a consequence of this change, the revaluation of the Group's US deferred tax assets and liabilities has resulted in a one-off deferred tax credit of GBP4.7m that is excluded from adjusted effective tax. In addition, there is a one-time deemed repatriation tax charge of GBP2.7m related to unremitted foreign earnings, expected to be payable over eight years. As a result of the change in attribution rules that dictate which entities are treated as a controlled foreign corporation for US income tax purposes, the disposal of shares in Diamond Topco Limited (Dealogic) crystallised a gain that is subject to US tax. The exceptional tax charge on this gain is GBP7.0m.
The Group follows the accounting policy to recognise the revaluation of deferred tax balances from changes in rates immediately and excludes the impact of these changes from the forecast adjusted effective tax rate used to accrue tax.
A number of legislative changes, including the anti-hybrid legislation and new interest restriction rules enacted as part of US Tax Reform are expected to increase the adjusted effective tax rate by approximately 3% in 2019.
Uncertain tax positions
At March 31 2018 the Group held provisions for uncertain tax of GBP5.3m (September 2017: GBP10.2m) 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 (CRA) and the Quebec Tax Authorities (Revenu Quebec) on a foreign currency trade in 2009, which has a maximum exposure of approximately 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 approximately 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.
On 23 October 2017, the CRA issued a Notice of Reassessment to BCA Research Inc ('BCA') based on the CRA view that the loss sustained by BCA on an intra-group derivative transaction cannot be deducted in computing income. Based on external legal advice, management is confident that BCA will be able to overturn these reassessments through the normal litigation process, which has already begun. The Company filed a notice of objection with the CRA in November 2017 and a notice of appeal with the Tax Court of Canada in March 2018. BCA has provided satisfactory security for payment to the CRA for 50% of the tax being contested of GBP3.5m. Revenu Quebec issued a Notice of Reassessment to BCA in December 2017 based on the CRA view that the loss sustained by BCA cannot be deducted in computing income. BCA is obligated either to pay one-half of the tax owing amounting to GBP3.2m or to provide security for payment satisfactory to Revenu Quebec.
In February 2018, HMRC indicated that they will be pursuing the maximum tax exposure of GBP11m on the Group's Dealogic transaction. Management has sought legal advice and is confident that the provision of GBP2.8m is appropriate and the most likely cash outflow. The Group is awaiting closure notices from HMRC, which will be appealed to the Tribunal.
EU Commission investigation into state aid
In October 2017, the European Commission opened a state aid investigation into the Group Financing Exemption in the UK controlled foreign company rules. The Group Financing Exemption was introduced in legislation by the UK government in 2013. In common with other UK-based international companies whose arrangements are in line with current UK CFC legislation, the Group may be affected by the outcome of this investigation and is monitoring developments. If the preliminary findings of the European Commission's investigation are upheld, the estimated maximum potential liability is approximately GBP7m. Based on the current assessment, no provision is being made in respect of this issue.
7 Dividends
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Amounts recognisable as distributable to equity
holders in period
Final dividend for the year ended 30 September
2017 of 21.80p (2016: 16.40p) 23,784 21,044 21,043
Interim dividend for the year ended 30 September
2017 of 8.80p - - 9,600
------------ ------------ ---------
23,784 21,044 30,643
Employee share trust dividends (383) (289) (443)
23,401 20,755 30,200
------------ ------------ ---------
Interim dividend for the period ended 31 March
2018 of 10.20p (2017: 8.80p) 11,135 9,600
Employee share trust dividends waived (175) (155)
10,960 9,445
------------ ------------
The final dividend for the year to 30 September 2017 was approved by shareholders at the AGM held on 1 February 2018 and paid on 15 February 2018.
It is anticipated that the interim dividend of 10.20p (2017: 8.80p) per share will be paid on 21 June 2018 to shareholders on the register on 25 May 2018. It is expected that the shares will be marked ex-dividend on 24 May 2018. 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
Restated
Unaudited unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Profit for the period from continuing operations 106,594 8,109 37,298
Non-controlling interest (329) (281) (469)
----------- ----------- --------
Earnings from continuing operations 106,265 7,828 36,829
Adjustments (70,114) 25,164 39,619
----------- ----------- --------
Adjusted earnings from continuing operations 36,151 32,992 76,448
Profit for the period from discontinued operations 3,282 5,541 5,889
Adjustments (note 9) 1,845 23 3,811
----------- ----------- --------
Adjusted earnings from discontinued operations 5,127 5,564 9,700
Total adjusted earnings 41,278 38,556 86,148
----------- ----------- --------
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Number Number Number
000 000 000
Weighted average number of shares 109,120 119,436 114,252
Shares held by the employee share trusts (1,751) (1,760) (1,760)
----------- ----------- --------
Weighted average number of shares 107,369 117,676 112,492
Effect of dilutive share options 212 159 213
Diluted weighted average number of shares 107,581 117,835 112,705
----------- ----------- --------
Pence Pence Pence
Earnings per share from continuing operations
Basic 98.97 6.65 32.74
Diluted 98.78 6.64 32.68
Earnings per share from discontinued operations
Basic 3.06 4.71 5.24
Diluted 3.05 4.71 5.23
Total earnings per share
Basic 102.03 11.36 37.98
Diluted 101.83 11.35 37.91
Total adjusted earnings per share
Basic 38.44 32.76 76.58
Diluted 38.37 32.72 76.44
The adjusted earnings per share figures have been disclosed since the Directors consider it necessary in order to give an indication of the adjusted trading performance reflecting the performance both of the Group's continuing and discontinued operations. A detailed reconciliation of the Group's statutory results to the adjusted and underlying results is set out in the appendix to the Interim Statement.
9 Discontinued operations and disposal groups classified as held for sale
The Group announced on 12 February 2018 that it has entered into an agreement to sell its Global Markets Intelligence Division (GMID). This division meets the IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations' criteria to be classified as held for sale and treated as a discontinued operations at 31 March 2018. This is consistent with the disclosure at 30 September 2017. The disposal completed as planned on 30 April 2018 (note 20).
The assets and liabilities of GMID have been disclosed separately on the face of the Consolidated Statement of Financial Position. The assets and liabilities held for sale are recorded at the lower of their carrying value and fair value less costs to sell. No impairment of these net assets has been identified at 31 March 2018 (30 September 2017: GBPnil). GMID meets the IFRS 5 criteria to be treated as discontinued operations due to its size and the fact that the businesses constitute a major line of the Group's business. GMID is therefore presented as discontinued operations throughout this report and the Income Statement disclosures for the period ended 31 March 2017 have been re-presented separating continuing and discontinued operations.
The results of the discontinued operations are as follows:
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Total revenue 20,475 20,895 41,490
Operating profit before acquired intangible
amortisation and exceptional items 6,365 6,352 11,886
Acquired intangible amortisation - (117) (249)
Exceptional items (794) - (2,437)
------------------------------------------------------- ----------- ----------- --------
Operating profit 5,571 6,235 9,200
Finance income 24 38 107
Finance expense (11) - (74)
----------- ----------- --------
Net finance income 13 38 33
----------- ----------- --------
Profit before tax 5,584 6,273 9,233
Tax expense on profit (1,072) (732) (3,344)
----------- ----------- --------
Profit after tax from discontinued operations 4,512 5,541 5,889
Costs to sell the discontinued operation - exceptional
items (note 4) (1,230) - -
----------- ----------- --------
Profit for the period from discontinued operations 3,282 5,541 5,889
----------- ----------- --------
Total comprehensive income from discontinued operations related to GBP3.3m of profit for the period (March 2017: GBP5.5m, September 2017: GBP5.9m) offset by GBP1.1m of exchange loss in overseas net assets recorded in other comprehensive income (March 2017: GBP1.2m gain, September 2017: GBP0.6m loss).
Reconciliation of profit for the period from discontinued operations in Income Statement to adjusted discontinued operations:
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Profit for the year from discontinued operations 3,282 5,541 5,889
Add back:
Acquired intangible amortisation - 117 249
Exceptional items from discontinued operation
(note 4) 794 - 2,437
Exceptional items - costs to sell the discontinued
operation (note 4) 1,230 - -
Tax expense on acquired intangible amortisation,
exceptional items and adjustments in respect
of prior years (179) (94) 1,125
----------- ----------- --------
1,845 23 3,811
Adjusted discontinued operations profit for
the period 5,127 5,564 9,700
----------- ----------- --------
The impact of the discontinued operations on the cash flows is as follows:
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Operating cash flows 1,587 4,607 10,935
Investing cash flows (2) (80) (158)
Financing cash flows (14) (1) (161)
Total cash flows 1,571 4,526 10,616
----------- ----------- --------
The main classes of assets and liabilities comprising the businesses classified as held for sale are set out in the table below. These assets and liabilities are recorded at the lower of their carrying value and fair values less costs to sell.
Unaudited
as at
31 March
2018
GBP000
Goodwill 25,227
Acquired intangible assets 1,990
Licences and software 369
Property, plant and equipment 672
Trade and other receivables 6,185
Current income tax assets 2,114
Cash and cash equivalents 9,796
Total assets of businesses held for sale 46,353
---------
Trade and other payables (892)
Current income tax liabilities (691)
Accruals (6,885)
Deferred income (13,122)
Deferred tax liabilities (1,423)
Total liabilities of businesses held for sale (23,013)
---------
Net assets 23,340
---------
10 Acquisitions and disposals
INCREASE IN EQUITY HOLDINGS
Ned Davis Research (NDR)
The non-controlling interest of NDR exercised their put options over the remaining 15% stake in NDR. A cash consideration of GBP7.8m on 22 December 2017 and a further GBP1.0m on 12 January 2018 was paid by the Group (note 17). The Group's equity shareholding in NDR increased to 100%.
PURCHASE OF BUSINESS
Site Seven Media Ltd (TowerXchange)
On 1 December 2017, the Group acquired 100% of the equity share capital of TowerXchange for GBP6.5m. TowerXchange is a fast-growing information and events business which has become the leading source of information on the tower market, the infrastructure supporting the growth of the mobile telecoms market. Acquiring TowerXchange is part of the Group's telecoms strategy to facilitate industry collaboration and trading in areas ranging from pricing to standards across the telecoms ecosystem. TowerXchange is included in the Pricing, data & market intelligence segment.
For the TowerXchange acquisition, an earn-out payment of GBP0.4m has been treated as compensation costs (note 4) in accordance with IFRS 3 and a deferred consideration of GBP0.1m has been recognised (note 17).
The acquisition accounting is set out below and is provisional pending final determination of the fair value of the assets and liabilities acquired:
Fair value Provisional
Book value adjustments fair value
GBP000 GBP000 GBP000
Intangible assets - 3,036 3,036
Property, plant and equipment 4 - 4
Trade and other receivables 994 - 994
Trade and other payables (1,320) (516) (1,836)
Cash and cash equivalents 2,123 - 2,123
1,801 2,520 4,321
---------- ----------- -----------
Net assets acquired (100%) 4,321
Goodwill 2,307
Total consideration 6,628
-----------
Consideration satisfied by:
Cash 6,517
Deferred consideration 111
6,628
-----------
Net cash outflow arising on acquisition:
Cash consideration 6,517
Less: cash and cash equivalent balances acquired (2,123)
4,394
-----------
Intangible assets represent customer relationships of GBP2.1m and the brand of GBP0.9m, for which amortisation of GBP0.1m has been charged for the year. The customer relationships will be amortised over their expected useful economic lives of ten years. The brand will be amortised over its expected useful life of 20 years. The fair value adjustment within trade and other payables represents a deferred tax liability of GBP0.5m on the acquired intangible assets.
Goodwill arises from the anticipated profitability and future operating synergies from integrating the acquired operations within the Group.
TowerXchange contributed GBP0.8m to the Group's revenue, GBP0.2m to the Group's operating profit and GBP0.1m to the Group's profit after tax for the period between the date of acquisition and 31 March 2018. If the acquisition had been completed on the first day of the financial year, TowerXchange would have contributed GBP1.6m to the Group's revenue and GBP0.7m to the Group's operating profit.
Extel
On 8 March 2018, the Group acquired 100% of the business of Extel for a cash consideration of GBP2.7m and a deferred consideration of GBP0.1m. Extel runs the annual independent survey of quality across the European equities investment community. The acquisition of Extel fits within the Group's strategy of investing in its main themes, specifically asset management.
The acquisition accounting is set out below and is provisional pending final determination of the fair value of the assets and liabilities acquired:
Fair value Provisional
Book value adjustments fair value
GBP000 GBP000 GBP000
Intangible assets - 1,120 1,120
Trade and other payables - (190) (190)
- 930 930
---------- ----------- -----------
Net assets acquired (100%) 930
Goodwill 1,870
Total consideration 2,800
-----------
Consideration satisfied by:
Cash 2,702
Deferred consideration 98
2,800
-----------
Net cash outflow arising on acquisition:
Cash consideration 2,702
-----------
Intangible assets represent the brand of GBP1.1m. The brand will be amortised over its expected useful life of 20 years. The fair value adjustment within trade and other payables represents a deferred tax liability of GBP0.2m on the acquired intangible assets.
Goodwill arises from the anticipated profitability and future operating synergies from integrating the acquired operations within the Group.
The acquisition of Extel completed on 8 March 2018. The contribution to revenue and operating profit in the period to 31 March was not material.
SALE OF BUSINESSES
Adhesion Group S.A. and World Bulk Wine Exhibition, S.L. (Adhesion and World Bulk Wine)
On 30 October 2017, the Group sold its equity share capital of Adhesion (100%) and World Bulk Wine (74%), part of the Commodity Events segment, for EUR13.6m (GBP12.0m). The disposal of Adhesion and World Bulk Wine gave rise to a profit on disposal of EUR12.2m (GBP10.7m), after deducting disposal costs incurred, which were recognised as an exceptional item (note 4) in the Income Statement. In addition to the profit on disposal, the Group released the acquisition commitment liability of GBP0.3m relating to World Bulk Wine to equity (note 17).
Institutional Investor Journals (II Journals)
On 10 January 2018, the Group sold the trading assets and liabilities of II Journals, part of the Asset Management segment, for a consideration of US$3.8m (GBP2.8m). Deferred consideration receivable of US$0.8m (GBP0.6m) was recognised (note 17). The transaction gave rise to a profit on disposal of US$5.9m (GBP4.4m) after the release of deferred revenue of US$2.3m (GBP1.7m) and the deduction of disposal costs incurred, which were recognised as an exceptional item (note 4) in the Income Statement.
The assets and liabilities of these businesses sold were classified as held for sale and disclosed separately on the face of the Condensed Consolidated Statement of Financial Position for the year ended 30 September 2017.
The net assets of the businesses at the date of disposal were as follows:
World Bulk
Adhesion Wine II Journals Total
GBP000 GBP000 GBP000 GBP000
Net assets/(liabilities):
Goodwill - 463 - 463
Intangible assets - 730 - 730
Property, plant and equipment 30 6 - 36
Trade and other receivables 2,473 971 - 3,444
Cash and cash equivalents 1,095 540 - 1,635
Trade and other payables (1,626) (157) - (1,783)
Deferred income (1,667) (1,180) (1,687) (4,534)
305 1,373 (1,687) (9)
-------- ---------- ----------- -------
Net assets/(liabilities) disposed 305 1,373 (1,687) (9)
De-recognition of non-controlling
interest - (170) - (170)
Directly attributable costs 244 62 129 435
Recycled cumulative translation differences (500) (30) - (530)
Profit on disposal (note 4) 9,773 958 4,374 15,105
-------- ---------- ----------- -------
Total consideration 9,822 2,193 2,816 14,831
-------- ---------- ----------- -------
Consideration satisfied by:
Cash 9,822 2,193 2,223 14,238
Deferred consideration - - 593 593
9,822 2,193 2,816 14,831
-------- ---------- ----------- -------
Net cash inflow arising on disposal:
Cash consideration (net of directly
attributable costs paid) 9,578 2,131 2,094 13,803
Cash and cash equivalent balances
disposed (1,095) (540) - (1,635)
8,483 1,591 2,094 12,168
-------- ---------- ----------- -------
11 Investments
Investment Available-
Investment in joint for-sale
in associates ventures investments Total
GBP000 GBP000 GBP000 GBP000
At 30 September 2016 29,810 215 5,835 35,860
Additions 552 1 - 553
Impairment - - (2,289) (2,289)
Exchange difference (2,151) (2) - (2,153)
Provision against investment losses - 285 - 285
Share of losses after tax retained (1,391) (499) - (1,890)
------------- ---------- ----------- --------
At 30 September 2017 26,820 - 3,546 30,366
------------- ---------- ----------- --------
Disposals (26,194) - - (26,194)
Revaluation (81) - - (81)
Provisions against investment losses - 25 - 25
Share of losses after tax retained (2) (25) - (27)
------------- ---------- ----------- --------
At 31 March 2018 543 - 3,546 4,089
------------- ---------- ----------- --------
Investment Available-
Investment in joint for-sale
in associates ventures investments Total
GBP000 GBP000 GBP000 GBP000
At 30 September 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 31 March 2017 29,802 190 5,835 35,827
------------- ---------- ----------- -------
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
31 March 31 March 30 Sept
2018 2017 2017
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 (27) (1,106) (1,890)
Add back:
Share of tax on profits 254 350 988
Share of tax on acquired intangible amortisation
and exceptional items (266) (823) (1,798)
Share of acquired intangible amortisation 761 2,431 4,790
Share of exceptional items(1) 125 316 1,203
874 2,274 5,183
----------- ----------- --------
Adjusted share of results in associates and
joint ventures 847 1,168 3,293
----------- ----------- --------
(1) The share of exceptional items relates to restructuring and earn-out costs in Dealogic.
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 GBP0.3m (March 2017: GBP1.2m, September 2017: GBP2.5m).
Information on investment in associates, investment in joint ventures and available-for-sale investments:
Year Date of Type Group Registered
Principal activity ended acquisition of holding interest office
Investment in associates
Broadmedia Communications Events and publishing 30 Sept Mar 2017 Ordinary 49.0% 8 Bouverie
Limited (BroadGroup) business Street, London,
EC4Y 8AX, United
Kingdom
Investment in joint
ventures
Sanostro Institutional Hedge fund manager 31 Dec Dec 2014 Ordinary 50.0% Allmendstrasse
AG (Sanostro) trading signals 140, 8041 Zurich,
Switzerland
Available-for-sale investments
Estimize, Inc (Estimize) Financial estimates 31 Dec July 2015 Ordinary 10.0% 43 West 24th
platform Street, New
York , NY 10010,
United States
Zanbato, Inc (Zanbato) Private capital 31 Dec Sept 2015 Ordinary 9.9% 715 N Shoreline
placement and Boulevard,
workflow Mountain View
CA, 94043,
United States
The Group interests in the above investments remained unchanged since their respective dates of acquisition.
On 27 December 2017, the Group disposed of its minority equity stake of 15.5% in Diamond TopCo Limited (Dealogic) for US$135.0m (GBP100.1m). The disposal of the associate gave rise to a profit on disposal of GBP71.7m, after deducting disposal costs, which was recognised as an exceptional item (note 4) in the Income Statement.
12 Goodwill and other intangibles
Goodwill for the period 30 September 2017 to 31 March 2018 decreased by GBP11.7m. This movement relates to an impairment of GBP3.0m in Layer123 (note 4) and an adverse effect of currency translation of GBP12.9m, offset by the goodwill arising on acquisitions completed in the period (note 10), TowerXchange (GBP2.3m) and Extel (GBP1.9m).
The net carrying value of goodwill and other intangible assets is as follows:
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Goodwill 388,225 381,162 399,971
----------- ----------- --------
Trademarks and brands 108,025 101,298 114,309
Customer relationships 63,964 38,505 69,944
Databases 3,617 3,465 4,099
----------- ----------- --------
Total acquired intangible assets 175,606 143,268 188,352
Licences and software 3,875 4,633 3,615
Intangible assets in development 1,322 1,398 2,024
----------- ----------- --------
Total 569,028 530,461 593,962
----------- ----------- --------
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 2017 Annual Report.
Acquired intangible amortisation for the period ended 31 March 2018 is GBP11.2m (March 2017: GBP8.7m; September 2017: GBP20.6m).
13 Deferred income
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Deferred subscription income 98,583 106,722 92,605
Other deferred income 34,199 37,737 24,373
132,782 144,459 116,978
----------- ----------- --------
Within one year 129,741 138,512 113,487
In more than one year 3,041 5,947 3,491
132,782 144,459 116,978
----------- ----------- --------
14 Financial instruments
The Group's financial assets and liabilities are as follows:
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Financial assets
Derivative instruments in designated hedge accounting
relationships 5,556 504 3,110
Derivative instruments recognised at fair value
through profit and loss 187 - 238
Available-for-sale investments (note 11) 3,546 5,835 3,546
Convertible loan note - fair value through profit
and loss 2,396 - 2,503
Deferred consideration (note 17) - loans and
receivables 1,619 3,069 1,989
Loans and receivables (including cash at bank
and short-term deposits) 115,556 96,460 59,299
Classified as held for sale loans and receivables
(including cash at bank and short-term deposits) 14,529 - 18,987
143,389 105,868 89,672
----------- ----------- ---------
Financial liabilities
Derivative instruments in designated hedge accounting
relationships (336) (5,569) (1,231)
Deferred consideration (note 17) - borrowings
and payables (448) - (350)
Deferred consideration (note 17) - fair value
through profit and loss (1,262) - -
Acquisition commitments (note 17) - borrowings
and payables (2,127) (10,168) (13,125)
Borrowings and payables (including bank overdrafts) (194,154) (211,861) (264,782)
Classified as held for sale borrowings and payables
(including bank overdrafts) (7,777) - (10,002)
(206,104) (227,598) (289,490)
----------- ----------- ---------
Derivative instruments are classified as level 2 in the fair value hierarchy and acquisition commitments held at fair value through the profit and loss are classified as level 3. Available-for-sale investments are held at cost less any identified impairments as they do not have a quoted market price in an active market and the fair value cannot be reliably measured. No other financial assets or liabilities are held at fair value. The Directors consider that the carrying value amounts of financial assets and liabilities are equal to their fair value.
The convertible loan note is a fair value through profit and loss financial asset held at cost as it contains an embedded derivative of non-quoted equity for which the Group is unable to accurately determine a fair value.
Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined in accordance with IFRS 13 'Fair Value Measurement' 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.
-- Interest rate swaps are measured at the present value of future cash flows estimated and discounted based on the applicable yield curve derived from quoted interest rates.
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.
15 Borrowings
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Borrowings - non-current liabilities 110,547 118,963 168,893
--------- --------- --------
Undrawn available committed facilities 130,000 130,000 74,768
--------- --------- --------
The Group's principal source of borrowings is 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 GBP111.4m) and a GBP130m multi-currency revolving credit facility which was undrawn as at 31 March 2018. 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.
16 Called up share capital
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Allotted, called up and fully paid
109,168,010 ordinary shares of 0.25p each
(March 2017: 109,087,969 ordinary shares of
0.25p each)
(September 2017: 109,101,608 ordinary shares
of 0.25p each) 273 273 273
------------ ------------ ---------
During the period, 66,402 ordinary shares of 0.25p each with an aggregate nominal value of GBP166 were issued following the exercise of share options granted under the Company's share option schemes for a cash consideration of GBP539,722.
17 Acquisition commitments and deferred consideration
The Group is party to consideration arrangements in the form of acquisition commitments, acquisition deferred consideration payments and deferred consideration receipts on disposals. Acquisition commitments comprise of put options held by minority shareholders of acquired businesses which are held at amortised cost. Deferred consideration payments comprise of consideration contingent on the future performance of acquired businesses held at fair value and deferred consideration payable at a set amount in the future. These liabilities are recognised at the discounted present value and re-measured each period. The discount is unwound as a notional interest charge and the re-measurement of these liabilities is recognised in the Income Statement.
Acquisition commitments Deferred consideration payments
Unaudited Unaudited Audited Unaudited Unaudited Audited
six months six months year six months six months year
ended ended ended ended ended ended
31 March 31 March 30 Sept 31 March 31 March 30 Sept
2018 2017 2017 2018 2017 2017
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Liability
At 1 October (13,125) (11,771) (11,771) (350) (480) (480)
Additions from acquisitions
during the period - - (4,997) (209) - (700)
Disposals during the
period 317 - - - - -
Exercise of commitments 8,832 - 540 - - -
Payment during the
period - - - - 465 833
Net movements in finance
income and expense
during the period (note
5) 1,821 2,077 2,970 (1,151) 15 (3)
Exchange differences
to reserves 28 (474) 133 - - -
At end of period (2,127) (10,168) (13,125) (1,710) - (350)
----------- ----------- -------- ------------ ----------- --------
Within one year (715) (9,086) (9,904) (1,449) - (350)
In more than one year (1,412) (1,082) (3,221) (261) - -
(2,127) (10,168) (13,125) (1,710) - (350)
----------- ----------- -------- ------------ ----------- --------
Deferred consideration receipts
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Asset
At 1 October 1,989 526 526
Additions from disposals during the period 593 2,765 2,679
Receipts during the period (987) (326) (1,386)
Net movements in finance income and expense
during the period (note 5) 41 79 180
Exchange differences to reserves (17) 25 (10)
At end of period 1,619 3,069 1,989
------------ ----------- --------
Within one year 1,086 1,554 419
In more than one year 533 1,515 1,570
1,619 3,069 1,989
------------ ----------- --------
Reconciliation of finance income and expense (note 5):
Acquisition commitments Deferred consideration payments
Unaudited Unaudited Audited Unaudited Unaudited Audited
six months six months year six months six months year
ended ended ended ended ended ended
31 March 31 March 30 Sept 31 March 31 March 30 Sept
2018 2017 2017 2018 2017 2017
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Re-measurement during
the period 2,209 2,618 4,136 (1,151) 15 (3)
Imputed interest (388) (541) (1,166) - - -
Net movements in finance
income and expense
during the period 1,821 2,077 2,970 (1,151) 15 (3)
----------- ----------- -------- ------------ ----------- --------
Deferred consideration receipts
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Re-measurement during the period - - 79
Imputed interest 41 79 101
Net movements in finance income and expense
during the period 41 79 180
------------ ----------- --------
The non-controlling interest of Ned Davis Research (NDR) exercised their put options over the remaining 15% stake in NDR for a total consideration of GBP8.8m (note 10). The Group's equity shareholding in NDR increased to 100%.
18 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 83.4m (GBP15.4m). 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.
European Commission Inspection
In January 2018, the European Commission conducted an unannounced inspection at the Brussels office of RISI Sprl (RISI), a wholly-owned subsidiary within the Group, as part of an investigation into the sector of kraft paper and industrial paper sacks in the European Union/European Economic Area. Provision is made for the outcome of tax, legal and other disputes where it is both probable that the Group will suffer an outflow of funds and it is possible to make a reliable estimate of that outflow. No proceedings have been issued and the Group is unable to make a reliable estimate of any potential liability, therefore no provision has been recognised.
19 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) During the period the Group expensed services provided by Daily Mail and General Trust plc (DMGT), and other fellow group companies, as follows:
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Services expensed 43 209 379
----------- ----------- --------
(ii) The Group participates in the Harmsworth Pension Scheme (HPS), a defined benefit scheme operated by DMGT. The Group's share of the HPS deficit is:
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
GBP000 GBP000 GBP000
Surplus/(deficit) on defined benefit
scheme 91 (1,260) 26
----------- ----------- --------
(iii) During the period, the Group provided services to Risk Management Solutions Ltd, a DMGT subsidiary:
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
HKD HKD HKD
Services provided 60,791 - 1,046,608
----------- ----------- ---------
20 Events after the balance sheet date
GMID
On 30 April 2018, the Group announced the completion of the disposal of GMID, consisting of CEIC and EMIS, to a consortium led by the private equity arm of CITIC Capital Holdings Limited and Caixin Global, for an equity value of US$180.5m. This division meets the IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations' criteria to be classified as held for sale and treated as a discontinued operations for the period ended 31 March 2018, which is consistent with the disclosure at 30 September 2017. For the period ended 31 March 2018, GMID contributed GBP20.5m to the Group's revenue (March 2017: GBP20.9m, September 2017: GBP41.5m); and GBP5.6m to the Group's operating profit (March 2017: GBP6.2m, September 2017: GBP9.2m).
Layer123 Events & Training Limited (Layer123)
On 3 May 2018, the Group acquired the remaining 39% of Layer123 for GBP2.0m. The Group acquired 61% of the share capital of Layer123 in April 2017 for GBP6.3m and the remaining 39% was due to be acquired in three equal instalments based on the profits for the financial years 2018, 2019 and 2020.
Term-loans
On 15 May 2018, the Group repaid its term-loans of US$100m and GBP40m, transferring the funding commitment into the existing GBP130m multi-currency revolving credit facility (RCF). This has increased the RCF to GBP240m, which is entirely undrawn, allowing the Group to retain existing headroom whilst reducing the full-year 2018 financing costs. The impact of this is a matching reduction in gross cash and gross debt, with no impact to net debt.
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
16 May 2018
Colin Jones
Finance Director
16 May 2018
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 31 March 2018. 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 at 31 March 2018;
-- 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 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, 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
16 May 2018
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 Andrew Rashbass (Chief Executive Officer) Colin Jones (Finance Director) Non-executive Directors David Pritchard (Acting Chairman) -- ++ Jan Babiak ++ Andrew Ballingal Kevin Beatty ++ Tim Collier --++ Colin Day -- Tristan Hillgarth --++ Imogen Joss Sir Patrick Sergeant (President) Lorna Tilbian member of the Remuneration Committee ++ member of the Nominations Committee -- member of the Audit Committee
Shareholder Information
Financial calendar
2018 interim results announcement Thursday 17 May 2018 Interim dividend ex-dividend date Thursday 24 May 2018 Interim dividend record date Friday 25 May 2018 Payment of 2018 interim dividend Thursday 21 June 2018 Trading update Thursday 19 July 2018* 2018 final results announcement Thursday 22 November 2018* Final dividend ex-dividend date Thursday 29 November 2018* Final dividend record date Friday 30 November 2018* Trading update Friday 1 February 2019* 2019 AGM (approval of final dividend) Friday 1 February 2019* Payment of final dividend Thursday 14 February 2019*
* Provisional dates and subject to change.
Company Secretary and registered office
Tim Bratton
8 Bouverie Street
London
EC4Y 8AX
England registered number: 954730
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.
Advisors
Independent Auditor Broker Solicitor Registrars
PricewaterhouseCoopers UBS Cameron McKenna Equiniti
LLP 5 Broadgate Nabarro Olswang Aspect House
1 Embankment Place London LLP Spencer Road
London EC2M 2QS 78 Cannon Street Lancing
WC2N 6RH London West Sussex
EC4N 6AF BN99 6DA
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
May 17, 2018 02:01 ET (06:01 GMT)
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