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
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
IR BQLLFVEFFBBV
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