TIDMERM
RNS Number : 2137Z
Euromoney Institutional InvestorPLC
20 May 2021
Euromoney Institutional Investor PLC
Half Year Results
20 May 2021
Good growth in Pricing and Data & Market Intelligence
subscriptions with Asset Management turnaround progressing ahead of
plan
Euromoney Institutional Investor PLC ("Euromoney" or "The
Group"), the global B2B information services provider of price
discovery, essential market intelligence and events, announces
results for the six months ended 31 March 2021.
Financial summary
Underlying
2021 2020 Change change
GBPm GBPm
------------------------------------- ----- ----- ------ ----------
Revenue 155.5 186.3 (17%) (20%)
Statutory operating profit 19.5 37.4 (48%)
Adjusted operating profit (1) 36.8 41.1 (10%) (15%)
Adjusted operating profit margin (1) 24% 22% +2ppt
Statutory profit before tax 17.5 37.4 (53%)
Adjusted profit before tax (1) 35.2 39.3 (10%)
Statutory diluted earnings per share 7.6p 37.5p (80%)
Adjusted diluted earnings per share
(1) 26.1p 29.7p (12%)
Adjusted cash conversion (2) 133% 75% +58ppt
Net cash (1) 24.8 8.1 +16.7
Half year dividend per share 5.7p - na
------------------------------------- ----- ----- ------ ----------
Highlights:
-- Group revenue reflects:
o Good underlying subscriptions growth in Pricing (+6%) and in
Data & Market Intelligence ("DMI") (+5%)
o Covid-19 impact on physical events, partly offset by
successful delivery of virtual events (40% of H1 2020
events revenue)
-- Increase in adjusted operating margin reflecting good cost
control while continuing to invest for future growth
-- Strong cash generation and balance sheet with net cash of GBP24.8m as at 31 March 2021
-- Interim dividend of 5.7p
-- Building momentum as we continue to execute 3.0 strategy:
o Improving subscriptions Book of Business(3) ("BoB")
year-on-year growth trend: +3.5% at 31 March 2021 (30 September
2020: +0.5%). Good underlying growth in Pricing and DMI
subscriptions revenue expected in H2 2021
o Highly complementary 3.0 acquisitions within Pricing - The
Jacobsen, and People Intelligence - WealthEngine
o Asset Management - BCA Research and NDR turnaround progressing
ahead of plan
o Events - strong community engagement and well positioned for
recovery in physical events
Andrew Rashbass, CEO, said:
"Our strong, majority-subscription business delivered a
resilient performance in the first half. Both Pricing and Data
& Market Intelligence delivered good growth in subscriptions
driven by increasing demand for our commodity price reporting,
essential data and specialist insights. Within Asset Management we
are continuing to make good progress with the turnaround of BCA
Research and NDR.
"We have managed our costs carefully but also invested
organically in each of our businesses. We have also added scale to
Fastmarkets Agriculture and People Intelligence, through highly
complementary bolt-on acquisitions. The backdrop for events has
been challenging but the team has delivered great virtual
experiences for our customers. We are well positioned as physical
events start to return in the second half of the year and
beyond.
"We continue in our progress towards being a fast-growing,
high-margin, 3.0, information-services subscription business."
Adjusted measures exclude the impact of the amortisation of acquired
intangible assets, exceptional items and other adjusting items in
accordance with the Group's policy. A detailed reconciliation of the
Group's adjusted and underlying results, adjusted cash conversion
1 and net cash is set out on pages 11 to 15 of this statement.
2 Adjusted 12-month rolling cash conversion % as set out on page 14.
Book of business ("BoB") is the annual contracted values for subscriptions.
Like for like growth is calculated by adjusting prior periods with
3 a constant GBP/$ rate and the pro-forma impact of net M&A.
Results presentation
A results presentation and Q&A will be hosted today, at
09.00 (UK time), for analysts and investors. A live audio webcast
of the presentation and Q&A will be available via the Investors
section of our website at www.euromoneyplc.com, and subsequently
available on demand.
Our next announcement will be a trading update for the nine
months ended 30 June 2021 on 21 July 2021.
For further information, please contact:
Euromoney Institutional Investor PLC
Wendy Pallot, Chief Financial Officer: +44 20 7779 8866;
wendy.pallot@euromoneyplc.com
Christian Cowley, Investor Relations: +44 (0)7408 863420;
christian.cowley@euromoneyplc.com
FTI Consulting
Jamie Ricketts / Tom Blundell / Lucy Highland: +44 20 3727 1000;
euromoney@fticonsulting.com
NOTE TO EDITORS
Euromoney Institutional Investor PLC ("Euromoney") is a global
B2B information services business providing essential information
in price discovery, market intelligence and events across our
segments. Euromoney is listed on the London Stock Exchange and is a
member of the FTSE 250 share index. ( www.euromoneyplc.com )
Group summary
The Group delivered a resilient performance in the first half of
the year against the ongoing backdrop of the global pandemic. We
continue to execute our strategy to become a fast-growing,
high-margin, 3.0, information-services subscription business.
Euromoney is a majority-subscriptions business. 73% of Group
revenue during the half was generated from subscriptions which grew
by 6% on a reported basis and by 2% on an underlying basis.
Underlying subscriptions revenue growth in Pricing and DMI was 6%
and 5% respectively in the half. Within Asset Management, the
turnaround of the Investment Research Division is progressing well
and is ahead of plan. Across the Group, our subscriptions revenue
continues to achieve high renewal rates.
Events revenue, which accounted for 17% of Group revenue during
the half, declined by GBP38.4m or 60% reflecting the reduction in
physical events compared to the prior year period which had not yet
experienced severe covid-related disruption. Following our
successful introduction of virtual events last year, we hosted 206
virtual events during the period. This has enabled us to stay close
to our customers and keep our communities engaged and connected as
well as generating revenue. The Group plans to resume physical
events in the second half subject to the easing of government and
company restrictions and successfully held a physical event in
Dubai on 18-19 May.
Overall, Group revenue during the period declined by GBP30.8m or
17%. The Group benefited during the period from the restructuring
and cost-reduction programme announced in September 2020 which
mainly focused on our events businesses and delivered GBP15m of
annualised savings, before investment in other areas.
As a result of the good cost control during the period, adjusted
operating profit and adjusted pre-tax profit reduced by 10%
compared to the revenue decline of 17%. Cash generation and
conversion during the period were strong. After the completion of
two acquisitions and the payment of the final dividend during the
period, net cash at 31 March 2021 was GBP24.8m (31 March 2020:
GBP8.1m).
Continued progress in delivering 3.0 strategy
Our strategy is to actively manage a portfolio of businesses
that provide information services embedded in clients' critical
workflow, in markets where information, data and convening market
participants are highly valued. We serve markets which are
semi-opaque, that is, where information which organisations need to
operate effectively exists but is hard to find. These are
characterised by resilient and robust recurring subscriptions
revenue, and when applied to events, large deal-making events or
membership models. The strength of our business model and the
resilience of the Group is clear, having been put to the test
during the last year.
At the full year results in 2020, the Group identified five
priorities to enable the delivery of the 3.0 strategy:
1) Organic investment in 3.0 businesses to drive growth and improve resilience
2) Bolt-on acquisitions to accelerate the 3.0 strategy
3) Returning Investment Research Division ("IRD") to growth
4) Post covid-19, delivering strong blended events moving to a 3.0 membership model
5) Supporting scale, efficiency, inclusion and diversity by the
roll-out of further standardised platforms and processes
The following section provides updates on each of the five
priorities:
1) Organic investment in 3.0 businesses to drive growth and improve resilience
In Pricing following investment in the Fastmarkets platform, we
have accelerated the rollout of the platform to Metals and Mining
customers. We continue to invest in new products such as short-term
forecasts, and market data from commodities exchanges. These
products complement our daily price assessments. We also added two
cash-settled contracts on the CME: cobalt in March and lithium
hydroxide in May. We have four more contracts settled against
Fastmarkets' benchmarks due to be launched on exchanges: two China
pulp futures on the Norexeco Exchange in June, and a lithium
hydroxide and an aluminium premium contract in July on the London
Metal Exchange. Since 2017, Fastmarkets has been externally audited
for its compliance with the IOSCO Principles for price reporting
agencies, with 43 prices accredited this year, up from 32 in FY
2020 . In February 2021, Fastmarkets received its authorisation to
operate as a benchmark administrator in accordance with the EU
Benchmarks Regulation (BMR) authorisation, providing additional
assurance about the strength of its methodologies and pricing
processes.
In DMI we continued to simplify the organisational structure,
invest in sales and marketing and new product (for example in our
Insurance Insider business). We have also made further progress
with the rollout of our common platforms across the different
brands in this segment.
In Asset Management we have invested in sales and marketing, new
products and new back-office systems. We appointed our first CEO of
Asset Management, Fran Cashman, who will be responsible for
Institutional Investor, BCA Research and NDR. Fran joined the
business in May 2021 having held senior sales and marketing roles
at Legg Mason.
2) Bolt-on acquisitions to accelerate the 3.0 strategy
Acquisitions are a core part of the Group's strategy. We further
strengthened our People Intelligence business with the acquisition
of WealthEngine in December 2020. WealthEngine is highly
complementary to BoardEx, a leader in executive profiling and
relationship-mapping which enables cross-sell opportunities, and
Wealth-X, the market-leading provider of data-driven intelligence
on the world's wealthiest individuals. The acquisition of
AgriCensus in March 2020 established Fastmarkets Agriculture, in
addition to Fastmarkets Metals and Mining and Fastmarkets Forest
Products. The acquisition of The Jacobsen, a price reporting
agency, in January 2021 has added further prices to Fastmarkets
Agriculture in markets such as animal fats, feeds and vegetable
oils as well as low-carbon fuels such as bio-diesel.
3) Returning IRD to growth
We have continued to make good progress with the turnaround of
IRD which consists of BCA Research and Ned Davis Research. The rate
of decline in the Asset Management BoB improved by 7.0 percentage
points over the last 12 months to -2.1% at 31 March 2021 (non-vote
IRD BoB improved by 6.3 percentage points to -1.2% over the same
period). The improvement was driven by a higher renewal rate
following investment in the sales team and in auto-renewals,
integration of sales teams to drive cross-selling and new research
products. We maintain our target to return the non-vote IRD
subscription BoB to growth by the end of the full year 2022, which
will result in revenue growth during 2023. We continue to see
further opportunities for our Asset Management businesses to work
more closely together.
4) Post covid-19, delivering strong blended events moving to a 3.0 membership model
We believe the future of events will be blended with physical
and virtual elements complementing one another. We expect to host a
number of physical events in H2 2021 and through the virtual events
we have hosted over the last year we have been able to reach an
even wider audience. We are also using more of our data and
insights to engage with our specialist communities.
At Institutional Investor we already have a successful events
membership model, where members pay an annual fee to attend a
number of events of their choice over the course of a year. By
increasing the value and the number of engagement opportunities
with customers (such as data and industry insights, networking and
peer intelligence), we are beginning to introduce the membership
model more widely in the Group. In Fastmarkets for example, we plan
to launch a series of content-rich networked customer communities
to drive new membership-based revenue and support the adoption and
usage of our prices.
5) Supporting scale, efficiency, inclusion and diversity by the
roll-out of further standardised platforms and processes
We continue to use the Group's scale to support our businesses
by rolling out standardised platforms. During the half we continued
our implementation of cloud-based solutions such as NetSuite,
Salesforce and Cvent (events management software). In addition, we
have launched our event operations centre of excellence which will
centralise procurement, logistics and other shared event activities
in the future.
Our ESG focus areas are integral to our strategy
Euromoney is a people and data business and our ESG focus areas
reflect this and are integral to our strategy. We are committed to
embedding ESG frameworks into our business during FY2021, focusing
on the following four areas:
1) Workforce inclusion, diversity and well-being
2) Data and information security and privacy
3) Transparency, ethics, governance, and risk management
4) Encouraging strong ESG practices in the markets we serve
Alongside these focus areas we are working towards being carbon
neutral and remain committed to high standards in our supply
chain.
Outlook
Demand for price reporting and essential market intelligence
remains strong with good visibility for Pricing and DMI
subscriptions. In Asset Management, the turnaround of IRD is
progressing ahead of plan. The Group BoB, which is a key leading
indicator for our subscriptions revenue, improved to 4.4% at 30
April 2021 (30 September 2020 restated*: 0.5%) and included Pricing
BoB growth of 10.2%.
We expect physical events to return but the exact timing is
uncertain, and it will vary by geography. In H2 2021 we are
planning to host physical events though they will be regional and
national rather than international events. We expect events revenue
to be about GBP40m in H2 2021, however if physical events do not
return, events revenue will be similar to H1 2021. We have
identified cost mitigation measures to limit the impact of any
cancellations on the FY 2021 profit outturn. There is further
summary guidance for FY 2021 on page 9.
* See explanation of recategorised Institutional Investor's
events-based membership in Note 2 to the Condensed Consolidated
Interim Financial Statements
Operating and financial review
When reviewing performance, the Board considers a number of
adjusted performance measures, as set out on pages 11 to 15.
The Group reports under three segments: Pricing, Data &
Market Intelligence and Asset Management. In the Asset Management
segment, we have recategorised Institutional Investor's
events-based memberships from subscriptions to events revenue. This
simplifies reporting and aligns it more closely with the substance
of those events revenues. The vast majority of the remaining
subscriptions revenue within Asset Management now relates to BCA
Research and Ned Davis Research which gives greater visibility on
the turnaround of these businesses.
For our underlying growth measures in events we will continue to
adjust for material events that move across reporting dates,
material biennial events, currency and M&A but are no longer
adjusting for cancellations or new events, given the difficulty in
making those assessments following the proliferation of events
formats as result of the covid-19 pandemic. The new methodology
also aligns reported and underlying metrics more closely.
The following segmental analysis reflects these changes and
revenue restatements for FY 2020, H1 2020, FY 2019 and H1 2019 are
provided on pages 16 to 17.
Pricing: 26% of Group Revenue
Pricing consists of Fastmarkets, Euromoney's price reporting
agency. Fastmarkets provides commodity price benchmarks and
analysis critical for our clients' business processes and workflows
as well as commodity-related events. Fastmarkets is active in the
metals and mining, forest-products and agriculture sectors. Pricing
is a 3.0 business and its business model benefits from high
barriers to entry. It operates in markets with significant
opportunity for long-term growth.
2021 2020 Change Underlying(1)
change
---- ----
Revenue GBPm GBPm
Subscriptions 37.6 36.1 +4% +6%
Events 1.3 6.4 (80%) (79%)
Advertising & other 1.3 1.8 (28%) (28%)
Total 40.2 44.3 (9%) (8%)
---- ----
Adjusted operating profit (1) 15.2 17.3 (12%) (7%)
Adjusted operating profit margin %
(1) 38% 39% (1ppt)
----------------------------------- ---- ---- ------ -------------
Pricing revenue declined by 9% on a reported basis with a good
performance in subscriptions offset by the covid-19 impact on
events. On an underlying basis revenue decreased by 8%.
Subscriptions revenue, which is 94% of segment revenue, grew by
4% on a reported basis and 6% on an underlying basis, from good
data-licensing sales during the first half. The subscription BoB,
which is a key leading growth indicator, grew by 8.2% year-on-year
at 31 March 2021. This represents a strong improvement on the 4.2%
year-on-year growth at 30 September 2020.
Events revenue, which is 3% of segment revenue declined 80% on a
reported and 79% on an underlying basis, reflecting the impact of
covid-19. Advertising and other revenue, which is 3% of segment
revenue, declined 28% on a reported and underlying basis.
Adjusted operating profit reduced by 12% and by 7% on an
underlying basis reflecting the impact of the decrease in events
revenue, depreciation of investment in the Fastmarkets platform,
and investment in new products.
The Pricing segment continues to invest in future growth through
the roll-out of the new Fastmarkets technology platform which is
delivering enhanced value to customers with a better customer
interface. The acquisition of AgriCensus in March 2020 established
agricultural commodities as Fastmarkets' third commodity vertical
(Fastmarkets Agriculture), in addition to its leading market
position in forest products and metals and mining. The acquisition
of The Jacobsen in January 2021 has added further scale to
Fastmarkets Agriculture in markets such as animal fats, feeds and
vegetable oils as well as low-carbon intensive fuels such as
bio-diesel.
Data & Market Intelligence (DMI): 38% of Group Revenue
Data & Market Intelligence brings together complementary
brands that deliver market intelligence, embedded workflow
solutions, including deal-making events, and business development
services. We continue to invest in growth including product
management and sales and marketing to create efficiency and scale
across the segment. To improve organisational efficiency within the
segment, the Telecoms division was merged into the Financial &
Professional Services ("FPS") division from 1 October 2020. The FPS
division has four pillars: People Intelligence, NextGen,
Derivatives, and Events.
2021 2020 Change Underlying(1)
change
---- ----
Revenue GBPm GBPm
Subscriptions 41.4 33.6 +23% +5%
Events 9.1 33.9 (73%) (75%)
Advertising & other 7.8 8.6 (9%) (7%)
Total 58.3 76.1 (23%) (31%)
---- ----
Adjusted operating profit (1) 9.5 13.4 (29%) (42%)
Adjusted operating profit margin %
(1) 16% 18% (2ppt)
----------------------------------- ---- ---- ------ -------------
DMI revenue decreased by 23% on a reported basis and by 31% on
an underlying basis driven by the impact of covid-19 on physical
events.
Subscriptions revenue, which is 71% of segment revenue,
increased by 23% on a reported basis helped by the acquisitions of
WealthEngine and Wealth-X. On an underlying basis revenue increased
by 5%, benefiting from good growth in the People Intelligence and
NextGen pillars, including brands such as Insurance Insider.
Renewal rates for the segment remained high during the period at
around 90%, demonstrating the essential nature of the data,
specialist insight and solutions we provide. The subscription BoB
grew by 4.2% year-on-year at 31 March 2021 or by 6.2% excluding
WealthEngine.
Events revenue, which is 16% of segment revenue, was down 73% on
a reported basis. DMI ran 142 virtual events during H1 2021 in
comparison with 118 physical events in H1 2020. Major virtual
events during the period included Capacity Europe, ABS East, Single
Family Rental Investment (West), Metro Connect, the Central &
Eastern European Forum and SRP Europe Conference. Other revenue,
which consist of advertising, consultancy and thought leadership,
and is 13% of segment revenue decreased by 9% on a reported
basis.
Adjusted operating profit reduced by 29% and by 42% on an
underlying basis, mainly due to the reduction in events revenue,
continued investment in the business, partly offset by the benefits
of the restructuring announced in H2 2020, and further good cost
control during the period.
We have further strengthened our People Intelligence business
with the acquisition of WealthEngine in December 2020. WealthEngine
is a SaaS platform providing data--driven intelligence and
predictive analytics to wealth managers, luxury brands and
not--for--profit organisations. Revenue is derived predominantly
from subscriptions, which attract high renewal levels.
WealthEngine is highly complementary to BoardEx, a leader in
executive profiling and relationship-mapping and Wealth-X, the
market-leading provider of data-driven intelligence on the world's
wealthiest individuals.
Asset Management: 36% of Group revenue
Asset Management includes our brands and businesses that serve
the global asset management industry: BCA Research, Ned Davis
Research and Institutional Investor. This segment provides
independent research that enables our clients to make informed
investment decisions, runs networks and conferences that bring
asset allocators and asset managers together in an effective and
efficient way and provides news and data that are critical for the
industry to stay informed and make deals.
2021 2020 Change Underlying(1)
change
---- ----
Revenue GBPm GBPm
Subscriptions 33.9 36.9 (8%) (5%)
Events - restated* 15.4 23.9 (36%) (35%)
Advertising & other 6.7 5.6 +20% +31%
Total 56.0 66.4 (16%) (13%)
---- ----
Adjusted operating profit (1) 22.8 26.1 (13%) (9%)
Adjusted operating profit margin %
(1) 41% 39% +2ppt
----------------------------------- ---- ---- ------ -------------
* See explanation of recategorised Institutional Investor's
events-based membership in Note 2 to the Condensed Consolidated
Interim Financial Statements
Asset Management revenue declined 16% on a reported basis and by
13% on an underlying basis, driven largely by the reduction in
events revenue.
Subscriptions revenue, which is 61% of segment revenue,
decreased by 8% on a reported basis and by 5% on an underlying
basis. This was an improvement compared to FY 2020 when
subscriptions revenue declined by 8% on an underlying basis. The
turnaround of IRD, which consists of BCA Research and Ned Davis
Research, is progressing ahead of plan, with subscriptions renewal
rates continuing to improve during the half. The 12-month moving
average renewal rate as at 31 March 2021 was 89% (31 March 2020:
85%).
The rate of decline in the Asset Management BoB improved by 7.0
percentage points over the last 12 months to -2.1% at 31 March 2021
(non-vote IRD BoB improved by 6.3 percentage points to -1.2% over
the same period). The improvement was driven by a higher renewal
rate following investment in the sales team and in auto-renewals,
integration of sales teams to drive cross-selling and new research
products.
IRD Investment Solutions, which embeds our data and intellectual
property into investment decision making processes, has continued
to grow its assets under advisement (AUA) to $1.6bn as at 31 March
2021 (31 March 2020: $1.1bn).
Events revenue, which is 27% of segment revenue decreased by
36%, reflecting the impact of covid-19 but also the relative
resilience of the Institutional Investor brand and its events
based-membership model. Advertising and other revenue, which is 12%
of segment revenue, grew strongly driven by Institutional Investor
research reports and media.
Asset Management adjusted operating profit fell 13% and by 9% on
an underlying basis driven by the decrease in revenue partly
mitigated by good cost control.
Group adjusted operating profit and pre-tax profit
2021 2020 Change Underlying(1)
change
------ ------ ------
Adjusted operating profit GBPm GBPm
Pricing 15.2 17.3 (12%) (7%)
Data & Market Intelligence 9.5 13.4 (29%) (42%)
Asset Management 22.8 26.1 (13%) (9%)
--------------------------------------- ------ ------ ------ -------------
Segmental adjusted operating profit 47.5 56.8 (16%) (18%)
--------------------------------------- ------ ------ ------ -------------
FX gains/(losses) on forward contracts 1.0 (0.5)
Central costs (11.7) (15.2) +23%
--------------------------------------- ------ ------ ------ -------------
Group adjusted operating profit (1) 36.8 41.1 (10%) (15%)
Group adjusted operating profit margin
% (1) 24% 22% +2ppt
Associates and JVs 0.1 (0.3)
Net finance costs (1.7) (1.5)
Adjusted pre-tax profit 35.2 39.3 (10%)
------ ------ ------
Group adjusted operating profit decreased by 10% to GBP36.8m and
by 15% on an underlying basis, driven by the GBP38.4m reduction in
events revenue which was partly offset by growth in Pricing and DMI
subscriptions, strong cost control and lower central costs.
Adjusted profit before tax declined 10% to GBP35.2m, reflecting
lower operating profit and higher interest costs. Adjusted diluted
earnings per share declined 12% to 26.1p (H1 2020: 29.7p).
Statutory profit before tax was GBP17.5m (H1 2020: GBP37.4m).
In September 2020, the Group announced a restructuring and cost
reduction programme, mainly focused on our events businesses. We
remain on track to deliver the gross savings, before investment in
other areas of approximately GBP15m in a full year. During 2021, we
continue to invest in growth opportunities focused on the 3.0
subscription businesses. These investments include an additional
GBP5m in people and increased technology spend (FY 2021: capex
forecast GBP13m). New technology will result in a GBP2m increase in
depreciation in FY 2021. In H2 2021 we also expect increases in
staff costs as a result of pay increases and higher bonuses, and
travel and expense costs. Central costs during the period included
the benefit of a one-off GBP2.5m insurance claim as well as lower
travel and expenses costs, so are expected to be higher in H2
2021.
Other financial items
Exceptional items
For the period ended 31 March 2021, exceptional items include
GBP2.3m of costs from the major restructuring across the Group at
the beginning of the period.
Net foreign exchange losses of GBP1.2m on quasi-equity loans and
net investment hedging that had been deferred to equity in previous
years have been recognised in exceptional items as the entities
they relate to are no longer part of the Group.
Other exceptional costs of GBP4.5m consist of expenditure
associated with the acquisition of Wealth-X, AgriCensus,
WealthEngine and The Jacobsen, which is treated as exceptional due
to its magnitude. The recognition of the earn-out payments for the
acquisitions of AgriCensus are treated as compensation costs and
included in exceptional items. Also included are costs incurred to
support the strategic review of Asset Management.
Tax
The adjusted effective tax rate for the period ended 31 March
2021 is 20% (31 March 2020: 19%) which is based on adjusted profit
before tax and excludes deferred tax movements on intangible
assets, tax on exceptional items, prior year items and other tax
adjusting items as described below. The tax rate in each year
depends mainly on the geographic mix of profits as well as on
applicable tax rates and although the tax charge involves a level
of estimate, we currently expect it to be 19% for the full year
ending 30 September 2021.
The Group's statutory effective tax rate is 53% for the period
ended 31 March 2021 compared to -8% in the first half of 2020. The
increase is largely driven by a GBP4m deferred tax charge in
respect of the transfer of certain intangible assets from Singapore
to the US, a related write off for tax losses in Singapore and
disallowable costs in relation to acquisitions made in the first
half. Excluding the impact of these, the group statutory rate is
approximately 27%.
The basis for the calculation of both effective tax rates and
further information can be found in note 6.
During the period the Group has progressed several outstanding
tax matters:
* As previously noted, we have resolved all historical
Canadian tax issues relating to the exposure
identified in 2020 and a tax refund of C$10.5m
(GBP6.1m) was received in May 2021.
* The Group has historically provided for a GBP12.3m UK
tax exposure relating to the disposal of an
investment in the "Capital Data" business during the
year ended 30 September 2015. The Group received a
favourable judgement from the first-tier tax tribunal
hearing held in May 2020, which HM Revenue and
Customs ("HMRC") intend to appeal at the Upper Tier
Tribunal. We do not consider the initial judgement to
have sufficiently changed our view of the potential
future cash flows to the extent necessary to warrant
any adjustment to the provision at this time.
* In the 2020 Annual Report the Group disclosed a
contingent tax liability of GBP8.9m in relation to
the European Commission investigation into the UK
Controlled Foreign Company legislation. HMRC have now
confirmed that this matter is now closed and
therefore there is no longer any contingent
liability.
Dividend
The Board has declared an interim dividend of 5.7p per share (H1
2020: no dividend) reflecting the strong balance sheet, cash
generative nature of the business and confidence in the future.
This follows the final dividend for the financial year 2020 of 11.4
pence per share. Our dividend policy is to pay out approximately
40% of full year adjusted diluted earnings per share, subject to
the capital needs of the business.
Net cash and cash flow
A reconciliation of free cash flow, an alternative performance
measure, and cash generated from operations and net cash flow, the
nearest statutory measures, is set out below:
2021 2020 Change
GBPm GBPm GBPm
-------------------------------- ------- ------- -------
Cash generated from operations 42.3 27.0 15.3
Capex (5.7) (6.1) 0.4
Leases and interest (5.3) (3.2) (2.1)
Taxation (1.2) (10.4) 9.2
------- ------- -------
Free cash flow 30.1 7.3 22.8
------- ------- -------
Dividends paid (12.3) (24.0) 11.7
Net M&A (20.2) (24.1) 3.9
------- ------- -------
(2.4) (40.8) 38.4
------- ------- -------
Opening net cash 28.1 50.1 (22.0)
Currency translation (0.9) (1.2) 0.3
------- ------- -------
Closing net cash 24.8 8.1 16.7
-------------------------------- ------- ------- -------
Net cash at 31 March 2021 was GBP24.8m, excluding lease
liabilities, compared with GBP28.1m as at 30 September 2020. This
decrease in net cash for the half year largely reflects payments
for acquisitions in the year totalling GBP20.2m and the payment of
the 2020 final dividend of GBP12.3m. Strong operating cash flows of
GBP42.3m were underpinned by significant improvements in working
capital reflecting the growth in subscriptions and strong
collections. Free cash flow increased by GBP22.8m to GBP30.1m.
The Group's adjusted cash conversion for the 12 months to 31
March 2021 was 133% (2020: 75%). See page 14 for the calculation.
The Group has a strong and consistent record of high cash
conversion reflecting the robust nature of the Group's subscription
businesses and the relatively capital light business model.
Management of balance sheet and liquidity risk and financing
The Group regularly reviews the level of cash and debt
facilities required to fund its activities. In May 2021, the Group
refinanced and increased its existing bank facility. It now has a
committed multi-currency revolving credit facility of GBP190m which
is available to the Group until May 2024, with two additional
one-year extension options available. An additional GBP130m
uncommitted accordion facility also remains available.
Currency
The Group generates approximately 75% of its revenue in US
dollars, including approximately 40% of its UK revenue and c.70% of
the Group's operating profit. The exposure to US dollar revenue in
the UK businesses is partially hedged using forward contracts to
sell US dollars, which delays the impact of movements in exchange
rates for at least a year.
The average sterling-US dollar rate for the six months to 31
March 2021 was $1.34 (2020: $1.29). This reduced headline revenue
growth rates for the half year by approximately two percentage
points and adjusted profit before tax by GBP1.2m. Each one cent
movement in the US dollar rate has an impact on translated profits,
net of UK revenue hedging, of approximately GBP0.6m on an
annualised basis. The Group also translates its non-sterling
denominated balance sheet items, which resulted in a loss in 2021
of GBP0.1m (2020: GBP0.2m gain).
Definitions
Adjusted measures exclude the impact of amortisation of acquired
intangible assets, exceptional items and other adjusting items in
accordance with the Group's policy. A detailed reconciliation of
the Group's adjusted and underlying results is set out on pages 11
to 15 of this statement.
Underlying measures are the adjusted results stated at constant
exchange rates, including pro forma prior year comparatives for
acquisitions and new business launches and excluding disposals,
business closures and significant event and publication timing
differences, including proforma prior year adjustments for the
application of new accounting standards.
Summary of guidance for FY 2021
Income statement:
-- Revenue outlook
- Pricing and DMI subscriptions - continued good underlying growth expected in H2 2021
- Asset Management - continued progress in the rate of decline at IRD
- Events revenue in H2 2021 expected to be c.GBP40m (including
II events memberships) assuming physical events return
-- Costs
- September 2020 restructuring benefits on track (annualised savings of c.GBP15m)
- GBP5m increase in people costs reflecting investment to drive subscriptions growth;
GBP2m increase in depreciation reflecting investment in
technology
- H2 2021 cost weighting reflecting pay increases, bonuses, travel and expenses
- Central costs in H1 2021 included one-off GBP2.5m insurance claim
- Cost mitigation measures identified if physical events do not return in H2 2021
-- Tax rate
- Group adjusted effective tax rate expected to be c.19% (FY 2020: 20%)
Cash flow:
- Capital expenditure - capex of GBP13m reflecting continued investment in technology
- Tax - GBP6.1m refund received in H2 2021 in relation to the
closure of a Canadian tax enquiry (previously announced in
2020)
CAUTIONARY STATEMENT
This Half Year Report ("Statement") is prepared for and
addressed only to the Company's shareholders as a whole and to no
other person. The Company, its Directors, employees, agents and
advisers accept and assume no liability to any person in respect of
this Statement save as would arise under English law. Statements
contained in this Statement are based on the knowledge and
information available to the Group's Directors at the date it was
prepared and therefore facts stated and views expressed may change
after that date.
This document and any materials distributed in connection with
it may include forward-looking statements, beliefs, opinions or
statements concerning risks and uncertainties, including statements
with respect to the Group's business, financial condition and
results of operations. Those statements and statements which
contain the words "anticipate", "believe", "intend", "estimate",
"expect" and words of similar meaning, reflect the Company's
Directors' beliefs and expectations and involve risk and
uncertainty because they relate to events and depend on
circumstances that will occur in the future and which may cause
results and developments to differ materially from those expressed
or implied by those statements and forecasts. No representation is
made that any of those statements or forecasts will come to pass or
that any forecast results will be achieved. You are cautioned not
to place any reliance on such statements or forecasts. Those
forward-looking and other statements speak only as at the date of
this Statement. The Group undertakes no obligation to release any
update of, or revisions to, any forward-looking statements,
opinions (which are subject to change without notice) or any other
information or statement contained in this Statement. Furthermore,
past performance of the Group cannot be relied on as a guide to
future performance.
No statement in this document is intended as a profit forecast
or a profit estimate and no statement in this document should be
interpreted to mean that earnings per Euromoney Institutional
Investor PLC share for the current or future financial years would
necessarily match or exceed the historical published earnings per
Euromoney Institutional Investor PLC share.
Nothing in this document is intended to constitute an invitation
or inducement to engage in investment activity. This document does
not constitute or form part of any offer for sale or subscription
of, or any solicitation of any offer to purchase or subscribe for,
any securities nor shall it or any part of it nor the fact of its
distribution form the basis of, or be relied on in connection with,
any contract, commitment or investment decision in relation
thereto. This document does not constitute a recommendation
regarding any securities.
LEI Number: 213800PZU2RGHMHE2S67
Appendix to Half Year Report
Reconciliation of Condensed Consolidated Income Statement to
adjusted results for the six months ended 31 March 2021
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.
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
and exceptional items; net movements in deferred consideration and
acquisition commitments; fair value remeasurements; related tax
items and other adjusting items described below.
The amortisation of acquired intangible assets is adjusted as
the premium paid relative to the net assets on the balance sheet of
the acquired business is classified as either goodwill or as an
intangible asset arising on a business combination and is
recognised on the Group's balance sheet. This differs to
organically developed businesses where assets such as employee
talent and customer relationships are not recognised on the balance
sheet. Impairment and amortisation of intangible assets and
goodwill arising on acquisitions are excluded from adjusted results
as they are balance sheet items that relate to historical M&A
activity.
Exceptional items are items of income or expense considered by
the Directors as being significant, non-recurring and not
attributable to underlying trading. It is Group policy to treat, as
exceptional, significant earn-out payments required by IFRS to be
recognised as a compensation cost. IFRS requires that earn-out
payments to selling shareholders retained in the acquired business
for a contractual time period are treated as a compensation cost.
Given that these payments are 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. The accounting policy for
exceptional items can be found in note 1 to the Group's 2020 Annual
Report.
Adjusted finance costs exclude interest arising on any uncertain
tax provisions, as these provisions are not in the ordinary course
of business and relate to tax adjusting items.
In respect of earnings, adjusted amounts reflect a tax rate that
includes the current tax effect of goodwill and intangible assets.
Many of the Group's acquisitions, particularly in the US, give rise
to significant tax savings as the amortisation of goodwill and
intangible assets on acquisition is deductible for tax purposes.
The Group considers that the resulting adjusted effective tax rate
is therefore more representative of its tax payable position. Tax
on exceptional items are excluded as these items are adjusted in
accordance with Group policy. Adjustments in respect of prior years
are also removed from the adjusted tax expense as they do not
relate to current year underlying trading.
Further analysis of the adjusting items is presented in notes 2,
4, 5, 6, and 10 to the Condensed Consolidated Interim Financial
Statements.
The Group has applied these principles in calculating adjusted
measures and it is the Group's intention to continue to apply these
principles in the future.
The reconciliation below sets out the adjusted results of the
Group and the related adjustments to the Condensed Consolidated
Income Statement that the Directors consider necessary to provide
useful and comparable information about the Group's adjusted
trading performance.
Unaudited six months Unaudited six months
ended ended
31 March 2021 31 March 2020
Statutory Adjustments Adjusted Statutory Adjustments Adjusted
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 2 155,495 - 155,495 186,277 - 186,277
Adjusted operating profit 2 36,825 - 36,825 41,073 - 41,073
Acquired intangible amortisation 11 (9,401) 9,401 - (12,091) 12,091 -
Exceptional items 4 (7,974) 7,974 - 8,416 (8,416) -
Operating profit 19,450 17,375 36,825 37,398 3,675 41,073
Operating profit margin 13% - 24% 20% - 22%
Share of results in associates
and joint ventures 10 (74) 151 77 (191) (82) (273)
Finance income 5 18 - 18 2,083 (1,830) 253
Finance expense 5 (1,890) 175 (1,715) (1,884) 167 (1,717)
------------ ---------
Net finance (expense)/income 5 (1,872) 175 (1,697) 199 (1,663) (1,464)
---------- ------------ --------- ---------- ------------ ---------
Profit before tax 17,504 17,701 35,205 37,406 1,930 39,336
Tax (expense)/income on
profit 6 (9,316) 2,390 (6,926) 2,873 (10,278) (7,405)
------------ ------------ ---------
Profit for the period 8,188 20,091 28,279 40,279 (8,348) 31,931
---------- ------------ --------- ---------- ------------ ---------
Attributable to:
Equity holders of the
parent 8,188 20,091 28,279 40,358 (8,380) 31,978
Equity non-controlling
interests - - - (79) 32 (47)
8,188 20,091 28,279 40,279 (8,348) 31,931
---------- ------------ --------- ---------- ------------ ---------
Diluted earnings per share 8 7.6p 26.1p 37.5p 29.7p
---------- ------------ --------- ---------- ------------ ---------
Audited year ended 30 Sept 2020
Statutory Adjustments Adjusted
Notes GBP000 GBP000 GBP000
Revenue 335,256 - 335,256
Adjusted operating profit 61,481 - 61,481
Acquired intangible amortisation 11 (23,039) 23,039 -
Exceptional items 4 (4,811) 4,811 -
Operating profit 33,631 27,850 61,481
Operating profit margin 10% - 18%
Share of results in associates and
joint ventures 10 (495) 154 (341)
Finance income 5 4,141 (3,850) 291
Finance expense 5 (4,368) 307 (4,061)
------------------------ ---------
Net finance expense 5 (227) (3,543) (3,770)
---------- ------------------------ ---------
Profit before tax 32,909 24,461 57,370
Tax expense on profit 6 (2,125) (9,432) (11,557)
------------------------ ---------
Profit for the year 30,784 15,029 45,813
---------- ------------------------ ---------
Attributable to:
Equity holders of the parent 30,978 14,968 45,946
Equity non-controlling interests (194) 61 (133)
30,784 15,029 45,813
---------- ------------------------ ---------
Diluted earnings per share 8 28.8p 42.7p
---------- ------------------------ ---------
Underlying measures
When assessing the performance of our businesses, the Board
considers the adjusted results. The year-on-year change in adjusted
results may not, however, be a fair like-for-like comparison as
there are a number of factors which can influence growth rates but
which do not reflect underlying performance.
Underlying results include adjusted results and are stated:
-- at constant exchange rates, with the prior year comparatives being
restated using current year exchange rates;
-- including pro forma prior year comparatives for acquisitions and
new business launches and excluding all results for disposals or
business closures;
-- including adjustments for events which run in one of the current
or comparative periods due to changes in the event date. For example,
this means we adjust for biennial events; and
-- including proforma prior year adjustments for the application of
new accounting standards.
Underlying measures previously also excluded events and
publications which took place in the comparative period but did not
take place in the current period (for example due to cancellations
or changes in event format); with events and publications which
took place in the current period but did not take place in the
comparative period, being added into the comparative period at the
same amount. The covid-19 pandemic has changed the event industry,
with virtual and blended events now firmly established, as a result
of the restrictions on holding physical events. This proliferation
of formats means that it is significantly more difficult to assess
whether an event is new or cancelled compared with the event that
ran in the comparative period. The new methodology also aligns
reported and underlying metrics more closely.
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 revenue, operating profit and profit before
tax:
Unaudited Unaudited
six months six months
ended ended
31 March 31 March
2021 2020
Total Total Change %
GBP000 GBP000
Statutory revenue 155,495 186,277 (17%)
Net M&A and closed businesses - 7,099
Timing differences - 4,310
Foreign exchange - (3,652)
Underlying revenue 155,495 194,034 (20%)
------------ --------------------- ---------
Statutory operating profit 19,450 37,398 (48%)
Adjustments(1) 17,375 3,675
Adjusted operating profit 36,825 41,073 (10%)
Net M&A and closed businesses - 324
Timing differences - 3,094
Foreign exchange - (1,203)
Underlying operating profit 36,825 43,288 (15%)
------------ --------------------- ---------
Statutory profit before tax 17,504 37,406 (53%)
Adjustments(1) 17,701 1,930
Adjusted profit before tax 35,205 39,336 (11%)
Net M&A and closed businesses - 430
Timing differences - 3,094
Foreign exchange - (1,190)
Underlying profit before tax 35,205 41,670 (16%)
------------ --------------------- ---------
(1) Adjustments methodology detailed on page 11.
Cash conversion
Cash conversion measures the percentage by which cash generated
from operations covers adjusted operating profit. Cash conversion
is a measure of the quality of the Group's earnings.
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
GBP000 GBP000 GBP000
Adjusted operating profit 36,825 41,073 61,481
Cash generated from operations 42,290 27,005 57,368
Exceptional items 9,099 9,934 14,646
Capital expenditure (5,701) (6,147) (10,570)
Adjusted cash generated from operations 45,688 30,792 61,444
------------ ------------ ---------
Adjusted 12-month rolling cash conversion % 133% 75% 100%
Adjusted cash generated from operations is after adjusting for
the cash impact relating to exceptional items and capital
expenditure. For the period ended 31 March 2021, exceptional cash
payments largely consist of integration and transaction costs of
newly acquired businesses and to support the restructure and cost
reduction programme announced in September 2020. For the period
ended 31 March 2020 and year ended 30 September 2020, exceptional
cash payments largely consisted of integration and transaction
costs of acquired businesses and to support the strategic review of
Asset Management. At the half year, an adjusted 12-month cash
conversion percentage is used to eliminate any seasonality.
Net cash
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
GBP000 GBP000 GBP000
Net cash at beginning of period 28,093 50,078 50,078
Net increase/(decrease) in cash and cash equivalents 47,657 27,101 (19,601)
(Increase)/decrease in borrowings (50,000) (67,857) 880
Effect of foreign exchange rate movements (939) (1,240) (3,264)
Net cash at end of period 24,811 8,082 28,093
------------ ------------ ---------
Net cash comprises:
Cash at bank and short-term deposits 74,811 76,656 28,093
Borrowings (50,000) (68,574) -
------------ ------------ ---------
Total cash and cash equivalents net of borrowings 24,811 8,082 28,093
------------ ------------ ---------
Net cash 24,811 8,082 28,093
Average exchange rate adjustment 1,168 (328) 619
Adjusted net cash 25,979 7,754 28,712
------------ ------------ ---------
12-month 12-month 12-month
rolling rolling rolling
31 March 31 March 30 Sept
2021 2020 2020
GBP000 GBP000 GBP000
Adjusted operating profit 57,233 100,297 61,481
Share of results in associates and joint ventures 9 (306) (341)
Add back:
Intangible amortisation of licences and software 3,761 2,071 2,860
Depreciation of property, plant and equipment 2,598 2,847 2,908
Depreciation and impairment of right of use assets 8,198 2,902 7,785
Share of associates interest, depreciation and amortisation 241 - 163
IFRS 16 adjustments (8,282) (3,554) (7,711)
M&A annualised adjustment 1,098 (23) (136)
Adjusted EBITDA 64,856 104,234 67,009
------------ ------------ ---------
Adjusted net cash to EBITDA ratio 0.40 0.07 0.43
The Group's borrowing facilities contain certain covenants,
including the ratio of 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 covenants required the Group's net debt
to be no more than three times adjusted EBITDA and required 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 discontinued operations and an
annualised adjustment attributable to acquisitions and disposals in
the calculation of adjusted EBITDA. When businesses are acquired
after the beginning of the financial year, the calculation of
adjusted EBITDA includes EBITDA attributable to the business as if
the acquisition had been completed on the first day of the
financial year. The calculation excludes the EBITDA of any
businesses disposed of during the year.
The bank covenant ratio is adjusted to remove the impact of IFRS
16. This means that the adjusted EBITDA for covenant compliance
calculations includes an entry for the rental expense which would
have been recognised for the Group's leases had the transition to
IFRS 16 not taken place. To be consistent with the bank covenant
calculations, net cash is defined to exclude lease liabilities.
Segment reporting change
From the 1 October 2020, the Group has simplified revenue
reporting, to align with the Group's strategic objectives, and
within Asset Management has re-categorised Institutional Investor's
events-based memberships from subscriptions to events revenue. In
addition, there has been a reclassification of some revenues in
Data & Market Intelligence from subscriptions to advertising
& other revenue, to reflect the primary nature of the revenue
type.
The tables below reflect the comparative financial information
for these changes, for the six months ended 31 March 2020 and 2019,
and the full year ended 30 September 2020 and 2019. They are
provided for information and are unaudited.
These restatements do not impact the total reported historical
consolidated results of the Group.
Year ended 30 September 2020, restated and unaudited
GBPm Subscriptions Events Advertising & Other Total
----------------------------------------- ----------------- -------------- ---------------------- --------------
Pricing 73.9 7% 6.6 (57%) 3.2 (45%) 83.7 (7%)
--------- ------ ------ ------ ---------- ---------- ------ ------
Data & Market Intelligence 71.2 5% 41.3 (56%) 21.6 (9%) 134.1 (28%)
--------- ------ ------ ------ ---------- ---------- ------ ------
Asset Management 74.4 (8%) 33.1 (39%) 11.3 14% 118.8 (18%)
========================================= --------- ------ ---------- ---------- ------ ------
Sub-total 219.5 0% 81.0 (50%) 36.1 (8%) 336.6 (20%)
========================================= ========= ====== ====== ====== ========== ========== ====== ======
FX loss on forward contracts (1.3) (1.3)
========================================= ================= ============== ========== ========== ====== ======
Adjusted Revenue 219.5 81.0 34.8 335.3
========================================= ========= ====== ====== ====== ========== ========== ====== ======
Six months ended 31 March 2020, restated and unaudited
GBPm Subscriptions Events Advertising & Other Total
----------------------------------------- ----------------- -------------- ---------------------- --------------
Pricing 36.1 8% 6.4 (26%) 1.8 (33%) 44.3 (1%)
--------- ------ ------ ------ ---------- ---------- ------ ------
Data & Market Intelligence 33.6 5% 33.9 (18%) 8.6 12% 76.1 (6%)
--------- ------ ------ ------ ---------- ---------- ------ ------
Asset Management 36.9 (9%) 23.9 (3%) 5.6 16% 66.4 (5%)
========================================= --------- ------ ---------- ---------- ------ ------
Sub-total 106.6 1% 64.2 (14%) 16.0 5% 186.8 (5%)
========================================= ========= ====== ====== ====== ========== ========== ====== ======
FX loss on forward contracts (0.5) (0.5)
========================================= ================= ============== ========== ========== ====== ======
Adjusted Revenue 106.6 64.2 15.5 186.3
========================================= ========= ====== ====== ====== ========== ========== ====== ======
Year ended 30 September 2019, restated and unaudited
GBPm Subscriptions Events Advertising & Other Total
----------------------------------------- ----------------- -------------- ---------------------- --------------
Pricing 68.9 10% 15.4 (4%) 5.7 2% 90.0 7%
--------- ------ ------ ------ ---------- ---------- ------ ------
Data & Market Intelligence 52.1 3% 91.9 2% 23.6 (6%) 167.6 1%
--------- ------ ------ ------ ---------- ---------- ------ ------
Asset Management 80.8 (8%) 54.0 1% 10.8 2% 145.6 (4%)
========================================= --------- ------ ---------- ---------- ------ ------
Sub-total 201.8 0% 161.3 2% 40.1 (4%) 403.2 0%
========================================= ========= ====== ====== ====== ========== ========== ====== ======
FX loss on forward contracts (3.5) (3.5)
--------------
Sold/closed businesses 2.0 2.0
========================================= ================= ====== ====== ========== ========== ====== ======
Adjusted Revenue 201.8 163.3 36.6 401.7
========================================= ========= ====== ====== ====== ========== ========== ====== ======
Six months ended 31 March 2019, restated and unaudited
Subscriptions Events Advertising & Other Total
------------------------------------- ---------------- ------------ -------------------------------- -------------
Pricing 33.3 12% 8.6 (6%) 2.7 10% 44.6 8%
------- ------- ----- ----- ------------------------ ------ ------ -----
Data & Market Intelligence 22.3 1% 40.1 4% 7.5 (16%) 69.9 0%
------- ------- ----- ----- ------------------------ ------ ------ -----
Asset Management 40.5 (8%) 24.6 3% 5.5 9% 70.6 (3%)
===================================== ------- ----- ------------------------ ------ ------ -----
Sub-total 96.1 0% 73.3 2% 15.7 (5%) 185.1 1%
===================================== ======= ======= ===== ===== ======================== ====== ====== =====
FX loss on forward contracts (1.3) (1.3)
------------ ------
Sold/closed businesses 1.1 - 1.1
===================================== ===== ===== ======================== ====== =====
Adjusted Revenue 96.1 74.4 14.4 184.9
===================================== ======= ======= ===== ===== ======================== ====== ====== =====
Percentages represent underlying year on year change
Principal risks and uncertainties
An overall stable risk trend
The principal risks and uncertainties that affect the Group are
described in detail on pages 42 to 56 of the 2020 Annual Report
available at www.euromoneyplc.com . They are:
(1) Covid-19 continues to have a significant impact on the
Group's business activities, particularly events
(2) Recession or poor business economic conditions in major
markets hinder organic revenue growth
(3) Compliance and Controls: complex global regulations and a
litigious environment causes reputational, legal or financial
damage
(4) Inability to execute M&A strategy or integrate
acquisitions successfully into the Group on a timely basis prevents
delivery of the strategy
(5) Geopolitical upheaval has a major impact on the business environment
(6) Cyber security and information security threats compromise
data integrity or result in a loss of key data
(7) Inadequate investment in technology creates competitor risk
and slows execution of the 3.0 strategy
(8) Inadequate ability of the business to manage talent churn
effectively results in the loss of key personnel in critical
roles
(9) Uncertain tax liabilities lead to material cash outflows
(10) Existing and emerging competitor activity creates product
and pricing pressures, as well as potentially eroding margins
(11) Support systems implementations and obsolescence do not meet business needs, resulting in inefficiencies and increased cost
(12) Exposure to USD exchange rate leads to unexpected swings in reported results
(13) Changing customer needs, new technology, or disruptive new
entrants into the market cause structural changes in markets,
reducing the value delivered by our products and services
Covid-19 continues to impact the Group's staff, customers,
shareholders and suppliers as well as the Group's financial
performance. While capital is generally more available than this
time last year at the start of the pandemic, borrowing costs have
increased and the Group's revenues have reduced, therefore cash
management remains a priority. Our investors continue to be
impacted through share price volatility.
While covid-19 and its consequences mean that the Company
continues to operate in a heightened risk environment than
pre-pandemic, the mitigating actions taken by the Company combined
with the length of time for which the Company has operated in this
environment means that the overall risk trend for the Group is
stable.
Disruption to business operations, coupled with downturn and
disruption in the events sector
The impact of the covid-19 pandemic continues to disrupt
business operations, particularly in events, although the
subscription businesses have shown resilience during this period.
Despite effective vaccines being manufactured and distributed
around the world, the roll-out of vaccination programs is
inconsistent across countries, resulting in further localised
lockdowns, and continued restrictions on both large gatherings and
travel. It is anticipated that these restrictions will be lifted
once a critical mass of the population is vaccinated, with travel
passports or other compulsory proof of immunity, or negative
testing being required to restart large-scale international travel
again.
Therefore, the majority of in-person events continue to be
cancelled or postponed until restrictions are lifted, causing a
material impact on the Group's performance, despite an increase in
digital or blended events. The covid-19 pandemic has changed the
event industry, with virtual and blended events now firmly
established but the long-term split between virtual, blended and
physical event forms is currently uncertain.
Euromoney staff continue to substantially work from home, with a
handful of offices being reopened partially or in full, only if
permissible by local regulations and following a thorough risk
assessment.
Ability to manage key employee attrition
As the major markets start to slowly recover from the impact of
the pandemic, there is a latent risk of higher than average
attrition of employees, as staff begin to see restrictions loosened
and consider changes in employer or work location, to improve
flexibility and better fit personal needs. There is a risk that
critical personnel may choose to leave the business, resulting in a
loss of institutional knowledge and a gap in certain specialisms.
The risk is being managed by ensuring that there is succession
planning for key roles, as well as more work-related flexibility
for staff.
Information security risk also on the increase
Covid-19 resulted in an upward trend for Risk (6) (Information
security breach) with phishing attacks, criminal cyber-activity and
other scams reportedly increasing as home-workers are targeted.
Controls were strengthened in this area at the start of the
pandemic, primarily through online training and guidance on how to
securely work from home, as well as frequent online training on
cyber and information security risks for all staff. Senior
management, including the Chief Executive Officer, Chief
Information Officer and Chief Information Security Officer,
continue to monitor this closely. Therefore, while the trend is
increasing, we do not believe it is sufficiently large to require a
change in the position of this risk on the Group's risk matrix.
Reduction in unforeseen tax risks
The potential impact of tax risks having a material impact on
cash outflows has significantly reduced. The Group has reduced
potential tax liabilities by GBP8.9m as a result of the positive
outcomes of certain tax proceedings and assessments. In addition,
the Group has implemented an improved controls environment in this
area. While governments may raise tax rates in the future to fund
pandemic-related expenditure, sufficient notice is usually provided
and therefore the risk is manageable.
The Board continues to prioritise the management of risk
The Board is focused on taking the steps necessary to navigate
the Company through this crisis and mitigating its impact, which
will include a regular and robust assessment and management of the
Company's risks.
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.
The risk matrix is available from the link below and shows the
relative likelihood of the principal risks crystallising and their
potential impact on the Group, and highlights changes made to the
matrix at the half-year point for two of the Group's principal
risks. The risks are shown as post-mitigation residual risks.
The risk matrix can be accessed here
http://www.rns-pdf.londonstockexchange.com/rns/2137Z_1-2021-5-19.pdf
Condensed Consolidated Income Statement
for the six months ended 31 March 2021
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
Notes GBP000 GBP000 GBP000
Revenue 2 155,495 186,277 335,256
Operating profit before acquired
intangible amortisation and exceptional
items 2 36,825 41,073 61,481
Acquired intangible amortisation 11 (9,401) (12,091) (23,039)
Exceptional items 4 (7,974) 8,416 (4,811)
Operating profit 2 19,450 37,398 33,631
Share of results in associates and
joint ventures 10 (74) (191) (495)
Finance income 5 18 2,083 4,141
Finance expense 5 (1,890) (1,884) (4,368)
Net finance (expense)/income 5 (1,872) 199 (227)
------------ ------------ ----------
Profit before tax 2 17,504 37,406 32,909
Tax (expense)/income on profit 6 (9,316) 2,873 (2,125)
Profit for the period 2 8,188 40,279 30,784
------------ ------------ ----------
Attributable to:
Equity holders of the parent 8,188 40,358 30,978
Equity non-controlling interests - (79) (194)
8,188 40,279 30,784
------------ ------------ ----------
Earnings per share
Basic 8 7.6p 37.5p 28.8p
Diluted 8 7.6p 37.5p 28.8p
Dividend per share (including proposed
dividends) 7 5.7p - 11.4p
A detailed reconciliation of the Group's statutory results to
the adjusted results is set out in the appendix to the Half Year
Report on pages 11 to 13.
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 31 March 2021
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
GBP000 GBP000 GBP000
Profit for the period 8,188 40,279 30,784
------------ ------------ ---------
Items that may be reclassified subsequently to profit or loss:
Change in fair value of cash flow hedges 4,489 (282) 1,838
Transfer of (gains)/losses on cash flow hedges from fair value reserves to
Income Statement:
Foreign exchange (gains)/losses in revenue (980) 473 1,300
Foreign exchange (gains)/losses in administrative expenses (133) 81 523
Net exchange differences on translation of net investments in overseas
subsidiary undertakings (26,867) (2,427) (17,437)
Net exchange differences on foreign currency loans 34 (1,209) (3,781)
Translation reserves recycled to Income Statement 1,183 - -
Items that will not be reclassified to profit or loss:
Actuarial gains on defined benefit pension schemes 2,109 4,623 3,005
Tax charge on actuarial gains on defined benefit pension schemes (401) (763) (468)
Other comprehensive (expense)/income for the period (20,566) 496 (15,020)
------------ ------------ ---------
Total comprehensive (expense)/income for the period (12,378) 40,775 15,764
------------ ------------ ---------
Attributable to:
Equity holders of the parent (12,378) 40,854 15,958
Equity non-controlling interests - (79) (194)
(12,378) 40,775 15,764
------------ ------------ ---------
Condensed Consolidated Statement of Financial Position
as at 31 March 2021
Unaudited Audited
as at as at
31 March 30 Sept
2021 2020
Notes GBP000 GBP000
Non-current assets
Intangible assets
Goodwill 11 448,367 456,343
Other intangible assets 11 199,155 201,713
Property, plant and equipment 12,864 14,454
Right of use asset 12 50,134 53,404
Investment in associates and joint ventures 10 8,762 8,836
Deferred tax assets 3,510 4,018
Retirement benefit asset 1,066 566
Other non-current assets 259 422
Derivative financial instruments 264 307
724,381 740,063
---------- ----------
Current assets
Trade and other receivables 67,902 71,428
Contract assets 2,211 1,454
Current income tax assets 7,264 10,602
Cash and cash equivalents (excluding bank overdrafts) 74,811 28,093
Derivative financial instruments 3,507 782
155,695 112,359
---------- ----------
Current liabilities
Acquisition commitments (54) (15)
Trade and other payables (31,747) (27,885)
Lease liabilities 13 (9,331) (9,142)
Current income tax liabilities (15,812) (15,824)
Accruals (44,127) (44,013)
Contract liabilities (137,089) (132,615)
Derivative financial instruments (298) (914)
Provisions (3,217) (7,272)
(241,675) (237,680)
---------- ----------
Net current liabilities (85,980) (125,321)
---------- ----------
Total assets less current liabilities 638,401 614,742
Non-current liabilities
Borrowings 15 (50,000) -
Lease liabilities 13 (56,376) (60,999)
Other non-current liabilities (203) (216)
Contract liabilities (2,205) (1,936)
Deferred tax liabilities (31,523) (28,104)
Retirement benefit obligation (1,075) (3,130)
Derivative financial instruments (52) (134)
Provisions (2,919) (2,848)
---------- ----------
(144,353) (97,367)
Net assets 494,048 517,375
---------- ----------
Condensed Consolidated Statement of Financial Position
continued
as at 31 March 2021
Unaudited Audited
as at as at
31 March 30 Sept
2021 2020
Notes GBP000 GBP000
Shareholders' equity
Called up share capital 16 273 273
Share premium account 104,636 104,636
Other reserve 64,981 64,981
Capital redemption reserve 56 56
Own shares (14,101) (14,592)
Reserve for share-based payments 38,524 38,686
Fair value reserve (19,646) (23,528)
Translation reserve 96,236 122,427
Retained earnings 223,089 224,436
---------
Total equity 494,048 517,375
---------- ---------
Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 March 2021
Reserve
for
Called Capital share- Non-
up 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 1 October 2019 273 104,306 64,981 56 (19,682) 40,120 (27,087) 143,243 216,806 523,016 1,043 524,059
Profit for the
year - - - - - - - - 30,978 30,978 (194) 30,784
Other
comprehensive
income/(expense)
for the year - - - - - - 3,661 (21,218) 2,537 (15,020) (15,020)
-------- -------- -------- -------- --------- -------- --------- --------- --------- --------- ---------- ---------
Total
comprehensive
income for the
year - - - - - - 3,661 (21,218) 33,515 15,958 (194) 15,764
Share-based
payments - - - - - (729) - - 2,992 2,263 - 2,263
Cash dividend
paid - - - - - - - - (23,994) (23,994) - (23,994)
Exercise of
acquisition
option
commitments - - - - - - - - 849 849 (849) -
Exercise of share
options - 330 - - 5,090 (705) - - (4,385) 330 - 330
Reclassification
of reserves - - - - - - (102) 402 (300) - - -
Tax relating to
items taken
directly to
equity - - - - - - - - (1,047) (1,047) - (1,047)
-------- -------- -------- -------- --------- -------- --------- --------- --------- --------- ---------- ---------
At 30 September
2020 273 104,636 64,981 56 (14,592) 38,686 (23,528) 122,427 224,436 517,375 - 517,375
-------- -------- -------- -------- --------- -------- --------- --------- --------- --------- ---------- ---------
Profit for the
period - - - - - - - - 8,188 8,188 - 8,188
Other
comprehensive
income/(expense)
for the period - - - - - - 3,882 (26,191) 1,743 (20,566) - (20,566)
-------- -------- -------- -------- --------- -------- --------- --------- --------- --------- ---------- ---------
Total
comprehensive
income/(expense)
for the period - - - - - - 3,882 (26,191) 9,931 (12,378) - (12,378)
Share-based
payments - - - - - 213 - - - 213 - 213
Cash dividend
paid - - - - - - - - (12,318) (12,318) - (12,318)
Exercise of share
options - - - - 491 (375) - - (116) - - -
VAT on share
buyback - - - - - - - - 532 532 - 532
Tax relating to
items taken
directly to
equity - - - - - - - - 624 624 - 624
At 31 March 2021 273 104,636 64,981 56 (14,101) 38,524 (19,646) 96,236 223,089 494,048 - 494,048
-------- -------- -------- -------- --------- -------- --------- --------- --------- --------- ---------- ---------
Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 March 2020
Reserve
for
Called Capital share- Non-
up 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 1 October 2019 273 104,306 64,981 56 (19,682) 40,120 (27,087) 143,243 216,806 523,016 1,043 524,059
Profit for the
period - - - - - - - - 40,358 40,358 (79) 40,279
Other
comprehensive
income/(expense)
for the period - - - - - - 272 (3,636) 3,860 496 - 496
-------- -------- -------- -------- --------- -------- --------- -------- --------- --------- ---------- ---------
Total
comprehensive
income/(expense)
for the period - - - - - - 272 (3,636) 44,218 40,854 (79) 40,775
Share-based
payments - - - - - (241) - - - (241) - (241)
Cash dividend
paid - - - - - - - - (23,994) (23,994) - (23,994)
Exercise of share
options - 330 - - - - - - - 330 - 330
Tax relating to
items taken
directly to
equity - - - - - - - - (171) (171) - (171)
At 31 March 2020 273 104,636 64,981 56 (19,682) 39,879 (26,815) 139,607 236,859 539,794 964 540,758
-------- -------- -------- -------- --------- -------- --------- -------- --------- --------- ---------- ---------
The other reserve represents the share premium arising on the
shares issued for the purchase of Metal Bulletin plc in October
2006.
The investment in own shares is held by the Euromoney Employees'
Share Ownership Trust and Euromoney Employee Share Trust.
The trusts waived the rights to receive dividends. Interest and
administrative costs are charged to the profit and loss account of
the trusts as incurred and included in the Consolidated Financial
Statements.
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
Number of shares held:
Euromoney Employees' Share Ownership Trust 58,976 58,976 58,976
Euromoney Employee Share Trust 1,139,807 1,593,198 1,179,662
Total 1,198,783 1,652,174 1,238,638
------------ ------------ ----------
Nominal cost per share (p) 0.25 0.25 0.25
Historical cost per share (GBP) 11.76 11.91 11.78
Market value (GBP000) 11,436 13,383 9,946
Condensed Consolidated Statement of Cash Flows
for the six months ended 31 March 2021
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
Notes GBP000 GBP000 GBP000
Cash flow from operating activities
Operating profit 19,450 37,398 33,631
Long-term incentive expense/(credit) 213 (241) 2,261
Acquired intangible amortisation 11 9,401 12,091 23,039
Licences and software amortisation 2,087 1,186 2,860
Depreciation of property, plant and equipment 1,160 1,470 2,908
Depreciation and impairment of right of use assets 3,315 2,902 7,785
Loss on disposal of property, plant and equipment 1 2 115
Impairment charge 4 - - 1,727
Recycling of foreign exchange 4 1,183 - -
(Decrease)/increase in provisions (3,908) (320) 6,389
------------ ------------ ---------
Operating cash flows before movements in working capital 32,902 54,488 80,715
Decrease/(increase) in receivables 2,038 (1,485) 1,752
Increase/(decrease) in payables 7,350 (25,998) (25,099)
------------ ------------ ---------
Cash generated from operations 42,290 27,005 57,368
Income taxes paid (1,702) (10,420) (7,139)
Net cash generated from operating activities 40,588 16,585 50,229
------------ ------------ ---------
Investing activities
Interest received 12 260 310
Purchase of intangible assets (5,481) (4,650) (9,110)
Purchase of property, plant and equipment (220) (1,497) (1,967)
Proceeds from disposal of property, plant and equipment - 1 507
Purchase of business/subsidiary undertaking, net of cash acquired 9 (20,171) (24,046) (23,999)
Receipt of deferred consideration - 176 176
Payment of deferred consideration - - (134)
Net cash used in investing activities (25,860) (29,756) (34,217)
------------ ------------ ---------
Financing activities
Dividends paid 7 (12,318) (23,994) (23,994)
Interest paid (517) (611) (2,130)
Capital element of lease repayments (3,855) (2,278) (6,071)
Interest element of lease repayments (913) (926) (1,985)
Issue of new share capital 16 - 330 330
Increase in borrowings 15 50,000 67,857 67,857
Repayment of borrowings - - (68,737)
Recovery of VAT on share buy-back costs 532 - -
Purchase of additional interest in subsidiary undertakings 9 - (106) (883)
Net cash used in financing activities 32,929 40,272 (35,613)
------------ ------------ ---------
Net increase/(decrease) in cash and cash equivalents 47,657 27,101 (19,601)
Cash and cash equivalents at beginning of period 28,093 50,078 50,078
Effect of foreign exchange rate movements (939) (523) (2,384)
------------ ------------ ---------
Cash and cash equivalents at end of period 74,811 76,656 28,093
------------ ------------ ---------
Notes to the Condensed Consolidated Interim Financial
Statements
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 Half Year Report was approved by the Board of Directors on
19 May 2021.
These condensed consolidated interim 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 2020
does not constitute statutory accounts as defined in section 434 of
the Companies Act 2006. A copy of the statutory accounts for that
year has been delivered to the Registrar of Companies. The
auditor's report on those accounts was not qualified, did not draw
attention to any matters by way of emphasis and did not contain
statements under section 498(2) or 498(3) of the Companies Act
2006.
Accounting policies
The Condensed Consolidated Interim Financial Statements 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 consolidated interim
financial statements as were applied in the Group's latest annual
audited financial statements.
Taxes on income in the half year are accrued using the tax rate
that would be applicable to expected total annual profit or
loss.
Going concern, debt covenants and liquidity
At 31 March 2021, the Group's unlevered, net cash position
excluding lease liabilities was GBP24.8m comprising cash and cash
equivalents, less amounts borrowed through the Group's revolving
credit facility. At 31 March 2021, the Group had access to a
committed GBP188m multi-currency revolving credit facility, of
which GBP50m had been drawn down, and available until December
2022. On 11 May 2021, the Group refinanced and increased its
existing bank facility. It now has a committed multi-currency
revolving credit facility of GBP190m which is available to the
Group until May 2024, with two additional one-year extension
options available. The facility's covenants require the Group's net
debt to be no more than three times adjusted 12-month EBITDA though
this can increase to three and a half times for certain periods in
the event of an acquisition and requires minimum levels of interest
cover of three and a half times on a 12-month basis. The values and
foreign exchange rates used in the covenant calculations are
subject to adjustments from the statutory numbers as defined under
the terms of the facility agreement.
The uncertainty as to the future impact on the Group of the
covid-19 outbreak has been considered as part of the Group's
adoption of the going concern basis. The Group has not identified
any material uncertainties in its going concern assessment.
Taking into account reasonably possible changes in trading
performance, the Group's forecasts and projections, out to the
going concern assessment period of at least 12 months from the date
of signing this Half Year Report, show that the Group should be
able to operate within the level and covenants of its current and
available borrowing facilities.
In making the going concern assessment, the Directors have also
modelled a severe but plausible downside that assumes no physical
events in the year ending 30 September 2022 and a fall of 10% in
non-events businesses versus the plan. Under this scenario, the
Group maintains sufficient liquidity and is projected to satisfy
covenants required by the RCF after taking measures to preserve
cash.
Based on the Group's cash flow forecasts and projections, the
Board is satisfied that the Group will be able to operate for a
period extending to at least 12 months from the date of signing of
this Half Year Report, including the impact of any potential
transactions that are planned or expected to complete within this
period. For this reason, the Group continues to adopt the going
concern basis in preparing its financial statements.
2 Segmental analysis
Segmental information is presented in respect of the Group's
segments and reflects the Group's management and internal reporting
structure. The Group is organised into three segments: Pricing;
Data & Market Intelligence; and Asset Management.
Revenues generated in the Pricing segment are primarily from
subscriptions. Data & Market Intelligence and Asset Management
revenues consist mainly of subscriptions and events. A breakdown of
the Group's revenue by type is set out below.
From the 1 October 2020, the Group has simplified revenue
reporting, to align with the Group's strategic objectives, and
within Asset Management has re-categorised Institutional Investor's
events-based memberships from subscriptions to events revenue. In
addition, there has been a reclassification of some revenues in
Data & Market Intelligence from subscriptions to advertising
& other revenue, to reflect the primary nature of the revenue
type. The comparative split of segmental revenues and revenue by
type have been restated to reflect these reclassifications. Refer
to page 16 for a summary of the segment reporting change.
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.
Subscriptions Events Advertising and other Total revenue
2021 GBP000 GBP000 GBP000 GBP000
Revenue
by segment and type:
Pricing 37,640 1,322 1,282 40,244
Data & Market Intelligence 41,379 9,099 7,805 58,283
Asset Management 33,916 15,388 6,684 55,988
112,935 25,809 15,771 154,515
Foreign exchange gains on forward contracts - - 980 980
-------------- ------- ---------------------- --------------
Segment Revenue 112,935 25,809 16,751 155,495
-------------- ------- ---------------------- --------------
Events revenue of GBP13.0m (2020: GBP45.1m) and print
advertising of GBP2.5m (2020: GBP4.8m) are recognised at a point in
time. The remaining subscription, events-based memberships and
online advertising revenue is recognised over time.
Restated(1) advertising
Restated(1) subscriptions Restated(1) events and other Total revenue
2020 GBP000 GBP000 GBP000 GBP000
Revenue
by segment and type:
Pricing 36,161 6,368 1,776 44,305
Data & Market
Intelligence 33,618 33,926 8,495 76,039
Asset Management 36,897 23,952 5,558 66,407
106,676 64,246 15,829 186,751
Foreign exchange losses
on forward contracts - - (474) (474)
-------------------------- ------------------- ------------------------- --------------
Segment Revenue 106,676 64,246 15,355 186,277
-------------------------- ------------------- ------------------------- --------------
(1) For the six months ended 31 March 2020, GBP19.1m of revenue
previously classified as subscriptions within Asset Management has
been reclassified as events revenue. In addition to this, GBP0.8m
of subscriptions revenue previously reported within Data &
Market Intelligence has been reclassified as advertising and other
revenue. The reclassification has not changed total revenue for the
period.
2 Segmental analysis continued
Unaudited six months ended 31 March
United Kingdom North America Rest of World Eliminations Total
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
by segment and
source:
Pricing 17,927 19,800 21,607 22,237 773 2,337 (63) (69) 40,244 44,305
Data & Market
Intelligence 39,878 57,503 18,369 18,545 3,788 4,442 (3,752) (4,451) 58,283 76,039
Asset
Management - - 55,990 66,433 - - (2) (26) 55,988 66,407
Sold/closed
businesses - - - - - - - - - -
Foreign
exchange
gains/(losses)
on forward
contracts 980 (474) - - - - - - 980 (474)
------- ------- ------- -------- ------- ------- -------- -------- -------- --------
Segment revenue 58,785 76,829 95,966 107,215 4,561 6,779 (3,817) (4,546) 155,495 186,277
------- ------- ------- -------- ------- ------- -------- -------- -------- --------
Statutory
revenue by
destination 24,255 28,100 83,821 95,587 47,419 62,590 - - 155,495 186,277
------- ------- ------- -------- ------- ------- -------- -------- -------- --------
Unaudited six months ended 31 March
United Kingdom North America Rest of World Total
2021 2020 2021 2020 2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Adjusted operating profit(1)
by segment and source:
Pricing 6,979 8,866 11,382 10,737 (3,160) (2,302) 15,201 17,301
Data & Market Intelligence 6,776 11,378 5,261 4,066 (2,503) (2,061) 9,534 13,383
Asset Management - - 22,781 26,105 - - 22,781 26,105
Sold/closed businesses - - - - - (42) - (42)
Unallocated corporate
costs (10,236) (15,073) (102) (252) (353) (349) (10,691) (15,674)
--------- --------- -------- -------- -------- -------- --------- ---------
Adjusted operating
profit/(loss)(1) 3,519 5,171 39,322 40,656 (6,016) (4,754) 36,825 41,073
--------- --------- -------- -------- -------- -------- --------- ---------
Acquired intangible
amortisation(2) (note
11) (2,079) (2,343) (7,303) (9,730) (19) (18) (9,401) (12,091)
Exceptional items (note
4) (4,217) 13,877 (3,757) (5,461) - - (7,974) 8,416
--------- ---------
Operating (loss)/ profit (2,777) 16,705 28,262 25,465 (6,035) (4,772) 19,450 37,398
--------- --------- -------- -------- -------- -------- --------- ---------
Share of results in associates
and joint ventures (note 10) (74) (191)
Finance income (note
5) 18 2,083
Finance expense (note
5) (1,890) (1,884)
--------- ---------
Profit before tax 17,504 37,406
Tax (expense)/income
on profit (note 6) (9,316) 2,873
--------- ---------
Profit for the period 8,188 40,279
--------- ---------
(1) Operating profit 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 Half Year Report on pages 11 to 13.
(2) Acquired intangible amortisation represents amortisation of
acquisition-related non-goodwill assets such as trademarks and
brands, customer relationships, databases and software (note 11).
Following a review of balances, the comparatives have been
represented to correct the geographic areas classification, moving
GBP0.5m of the total amortisation from United Kingdom to North
America.
2 Segmental analysis continued
Unaudited six months ended 31 March
Acquired intangible Exceptional Depreciation and
amortisation items amortisation
2021 2020 2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Other segmental information
by segment:
Pricing (3,346) (3,345) (1,340) (178) (1,128) (594)
Data & Market Intelligence (3,803) (3,459) (3,244) (1,646) (1,006) (478)
Asset Management (2,252) (5,190) (475) (3,932) (265) (414)
Unallocated corporate costs - (97) (2,915) 14,172 (4,163) (4,072)
Total (9,401) (12,091) (7,974) 8,416 (6,562) (5,558)
---------- ---------- -------- -------- --------- --------
The closing net book value of goodwill, other intangible assets,
property, plant and equipment, right of use assets and investments
is analysed by geographic area as follows(1) :
United Kingdom North America Rest of World Total
Restated Restated Restated
Unaudited Restated Unaudited audited Unaudited audited Unaudited audited
six audited six year six year six year
months year months ended months ended months ended
ended ended ended 30 ended 30 ended 30
31 March 30 Sept 31 March Sept 31 March Sept 31 March Sept
2021 2020 2021 2020 2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Goodwill 110,974 110,972 332,920 340,601 4,473 4,770 448,367 456,343
Other intangible
assets 44,110 43,277 154,642 157,988 403 448 199,155 201,713
Property, plant
and equipment 3,814 4,109 8,629 9,756 421 589 12,864 14,454
Right of use
assets 20,490 21,906 26,895 28,632 2,749 2,866 50,134 53,404
Investments 8,762 8,836 - - - - 8,762 8,836
Non-current
assets 188,150 189,100 523,086 536,977 8,046 8,673 719,282 734,750
---------- --------- ---------- --------- ---------- --------- ---------- ---------
Additions to
property,
plant and
equipment (27) (251) (26) (1,886) (508) (446) (561) (2,582)
---------- --------- ---------- --------- ---------- --------- ---------- ---------
Additions to
right
of use assets - (1,914) - (1,860) (530) (789) (530) (4,564)
---------- --------- ---------- --------- ---------- --------- ---------- ---------
(1) Following a review of balances, the comparatives have been
represented to correct the geographic areas classification. This
resulted in the reclassification of GBP15.9m of non-current assets
from United Kingdom to North America (GBP13.7m) and Rest of World
(GBP2.2m). Of the GBP15.9m, GBP14.0m of other intangible assets
were reclassified from United Kingdom to North America.
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 usually not materially affected by
seasonal or cyclical trading. For the year ended 30 September 2020,
the Group earned 56% of its revenue and 67% of its adjusted
operating profits in the first six months of the year (2019: 46% of
its revenue and 44% of its adjusted operating profit in the six
months of the year). However, as covid-19 led to a number of event
cancellations in the second half of the 2020, a higher proportion
of that year's profits were earned in the first half, compared to
recent years.
4 Exceptional items
Exceptional items are items of income or expense considered by
the Directors as being significant, non-recurring and which require
additional disclosure in order to provide an indication of the
underlying trading performance of the Group.
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
Notes GBP000 GBP000 GBP000
Restructuring a (2,257) - (8,954)
Recycling of foreign exchange b (1,183) - -
Other exceptional costs c (4,534) (8,384) (10,906)
Release of provision for VAT d - 10,633 10,633
Release of provision for payroll taxes e - 6,167 6,143
Impairment charges f - - (1,727)
------------ ------------ ---------
Exceptional items (7,974) 8,416 (4,811)
------------ ------------ ---------
a. For the period ended 31 March 2021, costs of GBP2.3m (September 2020:
GBP9.0m) as a result of the major restructuring across the Group
are included in exceptional items. The costs comprise severance costs
and professional costs associated with the restructuring. Normal
restructuring costs of GBP0.1m (September 2020: GBP0.6m) are not
treated as exceptional items.
b. For the period ended 31 March 2021, GBP1.2m of foreign exchange gains/losses
were recycled from equity to exceptional items. This relates to foreign
exchange gains/losses on quasi-equity loans and net investment hedging
that had been deferred to equity in previous years. These amounts
have been recycled because the net investment or party to the quasi-equity
loan is no longer part of the Group. As these items are not material,
no restatement has been made.
c. For the period ended 31 March 2021, other exceptional costs of GBP4.5m
consist of expenditure associated with acquisition related costs,
mainly for Wealth-X, AgriCensus, WealthEngine (note 9) and The Jacobsen
(note 9), treated as exceptional due to the magnitude of the costs.
Also included are costs incurred to support the strategic review
of Asset Management. The recognition of the earn-out payments for
the acquisitions of AgriCensus are treated as compensation costs
and included in exceptional items. A recovery of VAT is also included
relating to a reclaim in respect of share buy-back related expenditure
previously recorded in exceptional items.
For the periods ended 31 March 2020 and 30 September 2020, other
exceptional costs consisted of expenditure associated with the acquisition
of BoardEx and The Deal, Wealth-X and AgriCensus, treated as exceptional
due to the magnitude of the costs. Also included are costs incurred
to support the strategic review of Asset Management as well as significant
costs associated with an acquisition that did not complete. The recognition
of the earn-out payments for the acquisitions of Site Seven Media
Ltd (TowerXchange) and AgriCensus are treated as compensation costs
and included in exceptional items.
d. For the periods ended 31 March 2020 and 30 September 2020, the Group
released a provision of GBP10.6m originally recognised in the 2019
Financial Statements in respect of UK VAT on supplies between UK
Group companies for the four years ended 30 September 2018. The potential
exposure was identified during the second half of 2019 financial
year and after discussing the matter with HMRC during the first half
of 2020, the Group was notified on 11 May 2020 by HMRC that no VAT
was due on these supplies.
e. For the periods ended 31 March 2020 and 30 September 2020, the Group
released GBP6.1m of the GBP8.2m provision held in respect of payroll
taxes with an additional GBP0.6m release for interest as an adjusted
finance item (note 6). This provision was originally recognised in
the 2019 Annual Report and Accounts with a restatement for previously
unidentified liabilities for payroll taxes covering the six years
to 30 September 2019. Following a meeting with HMRC in February 2020,
a settlement amount of GBP1.2m was agreed in April 2020 and the Group
incurred GBP0.3m of professional fees.
f. For the period ended 30 September 2020, an impairment of GBP1.7m
was recognised relating to the customer relationships of Broadmedia
and Layer123 due to lower than expected retention rates.
5 Finance income and expense
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
GBP000 GBP000 GBP000
Finance income
Interest receivable from short-term investments 18 253 291
Movements in acquisition commitments - 428 1,728
Fair value remeasurements - 130 130
Interest on tax - 1,256 1,988
Movements in deferred consideration - 16 4
18 2,083 4,141
------------ ------------ ---------
Finance expense
Interest payable on borrowings (617) (698) (1,813)
Interest on lease liabilities (913) (926) (1,985)
Net interest expense on defined benefit pension liability (67) (48) (136)
Movements in acquisition commitments (39) - -
Interest on tax (254) (212) (434)
(1,890) (1,884) (4,368)
------------ ------------ ---------
Net finance (expense)/income (1,872) 199 (227)
------------ ------------ ---------
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
GBP000 GBP000 GBP000
Reconciliation of net finance (expense)/income in the Income Statement to
adjusted net finance
expense
Net finance (expense)/income in the Income Statement (1,872) 199 (227)
Add back:
Movements in acquisition commitments 39 (428) (1,728)
Movements in deferred consideration - (16) (4)
Fair value remeasurements - (130) (130)
Interest on tax 136 (1,089) (1,681)
175 (1,663) (3,543)
------------ ------------ ---------
Adjusted net finance expense (1,697) (1,464) (3,770)
------------ ------------ ---------
The reconciliation of net finance (expense)/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 expense. Refer to the appendix to the Half Year Report for
a detailed reconciliation of the Group's statutory results to the
adjusted results.
Charges and credits relating to the movements in acquisition
commitments and deferred consideration reflect future payments and
receipts expected on historical transactions that do not directly
relate to the current year results.
During the year ended 30 September 2020, the Group's convertible
loan note asset was measured at fair value through profit or loss
(FVTPL), until it was converted to equity. The fair value
remeasurement was an adjusting item as it relates to historical
M&A activity rather than the current trading performance and is
as a result of the revaluation of the convertible loan note as at
30 September 2019 and up to its conversion on 24 January 2020.
Interest on tax excluded from the adjusted net finance expense
consist of an interest charge of GBP0.1m (31 March 2020: GBP0.2m
charge; 30 September 2020: GBP0.5m income) for movements in respect
of uncertain tax positions. At 31 March 2020 and 30 September 2020,
finance income of GBP1.2m from the release of a provision for
interest on payroll taxes amounting to GBP0.6m and interest on VAT
liabilities of GBP0.6m were excluded as the related charge is not
expected to recur.
6 Tax expense on profit
Unaudited six months ended Unaudited six months ended Audited year ended 30
31 March 2021 31 March 2020 September 2020
GBP000 GBP000 GBP000
Current tax expense
UK corporation tax expense 76 1,662 2,121
Foreign tax expense 4,355 5,443 8,254
Adjustments in respect of
prior periods - (8,088) (6,859)
---------------------------- ---------------------------- ----------------------------
4,431 (983) 3,516
Deferred tax
expense/(credit)
Current year 5,025 (1,694) (2,594)
Impact of change in rate on
deferred tax - (278) (30)
Adjustments in respect of
prior periods (140) 82 1,233
----------------------------
4,885 (1,890) (1,391)
---------------------------- ---------------------------- ----------------------------
Total tax expense/(income)
in Income Statement 9,316 (2,873) 2,125
---------------------------- ---------------------------- ----------------------------
Effective tax rate 53% (8%) 6%
Unaudited six months ended Unaudited six months ended
31 March 31 March Audited year ended 30 Sept
2021 2020 2020
GBP000 GBP000 GBP000
Reconciliation of tax
expense/(income) in Income
Statement to adjusted tax
expense
Total tax expense/(income)
in Income Statement 9,316 (2,873) 2,125
Add back:
Tax on acquired
intangible amortisation 1,434 2,042 4,011
Tax on exceptional items 860 (3,210) 76
Other tax adjusting items 7 4,296 1,408
Transfer of deferred tax
liabilities (1,526) - -
Derecognition of deferred
tax assets (2,600) - -
Deferred tax on goodwill
and intangible
amortisation (720) (774) (1,624)
Share of tax on profits
of associates and joint
ventures 15 (82) (65)
Adjustments in respect of
prior periods 140 8,006 5,626
(2,390) 10,278 9,432
--------------------------- --------------------------- ----------------------------
Adjusted tax expense 6,926 7,405 11,557
--------------------------- --------------------------- ----------------------------
Adjusted profit before tax
(refer to the appendix to
the Half Year Statement) 35,205 39,336 57,370
Adjusted effective tax rate 20% 19% 20%
--------------------------- --------------------------- ----------------------------
Factors affecting the tax expense
The statutory effective tax rate for the period ended 31 March
2021 is 53% compared with -8% for the period ended 31 March 2020.
The forecast statutory effective tax rate for the 2021 full year is
41% (2020 full year: 6%).
As set out in note 30 to the 2020 Annual Report and Accounts,
the current year effective rate includes a deferred tax charge of
GBP1.5m arising on the transfer on 1 October 2020 of intangible
assets from Wealth-X Pte Limited (Singapore) to its direct
subsidiary, Wealth-X LLC (USA). The tax charge arises due to the
higher corporation tax rate in the US.
The effective tax rate also includes a GBP2.6m charge arising in
Singapore on the derecognition of deferred tax assets held on tax
losses that were offsetting the above deferred tax liabilities as
it is not probable that the tax losses will be utilised in the
future. As a result of the derecognition of these losses, the Group
now has unrecognised deferred tax assets arising from Singapore
trading losses of SGD 30m (GBP16.5m). These assets are not
recognised because it is not probable that appropriate taxable
profits will be generated to enable the Group to utilise these
losses.
6 Tax expense on profit continued
Following the Group's change to filing combined state tax
returns in New York City (NYC) and New York State (NYS) in the
prior year, a tax enquiry was opened during the current year by the
NYS Department of Taxation and Finance. In March 2021, the Group
received a proposed offer of settlement, which has now been
accepted. This has resulted in the derecognition of $7.6m (GBP5.4m)
of recognised NYS State tax losses (resulting in a $0.4m (GBP0.3m)
deferred tax charge) and the forfeit of $90m (GBP64m) of
unrecognised NYS tax losses.
As a result of improved forecasted results, the group has also
recognised additional state tax losses of $10m (GBP6m) in NYC,
resulting in a GBP0.5m deferred tax credit as it is now probable
that the Group will be able to be utilise these losses.
As at 31 March 2021, the Group has state tax losses carried
forward in New York City and New York State of GBP84m (30 September
2020: GBP174m) of which GBP80m (30 September 2020: GBP169m) expires
in 2025 and GBP4m (30 September 2020: GBP5m) expires in 2037. The
amount of state losses on which a deferred tax asset is recognised
is GBP47m (30 September 2020: GBP56m) and on which a deferred tax
asset is not recognised is GBP37m (30 September 2020: GBP118m).
Taking into account state rates and apportionment factors, the
value of the amount recognised is GBP3.0m (30 September 2020:
GBP3.2m).
On 6 April 2021, the State of New York Senate passed the 2022
Budget and announced the corporate tax rate in NYS would increase
from 6.5% to 7.25% for accounting periods starting on or after 1
January 2021. The legislation to implement the revised rates was
not substantively enacted on the balance sheet date and therefore
this has not been reflected in the recognised deferred tax assets
as at 31 March 2021. The legislation will result in a GBP0.2m
deferred tax credit in the second half of the year, and a net
GBP0.2m additional recognised deferred tax asset in NYS.
Other drivers of the effective tax rate for the period were tax
charges arising on legal and professional fees incurred in respect
of the acquisition of WealthEngine in December 2020 and The
Jacobsen in January 2021 (note 9). On acquisition, a deferred tax
asset of $1.3m (GBP1.0m) was recognised for US tax losses brought
forward with a gross value of $6m (GBP4m). In addition to the
recognised tax losses, WealthEngine also had unrecognised losses of
$17m (GBP12m) as at the date of acquisition. These losses are not
recognised due to restrictions in place on a change of ownership
which means that it is not probable that the losses will be used
before they expire
Reconciliation of tax expense in Income Statement to adjusted
tax expense
The adjusted effective tax rate for the 2021 half year is 20%
(2020: 19%). The forecast adjusted effective tax rate for the 2021
full year is 19% (2020: 20%).
Tax on exceptional items are excluded as these items are
adjusted in accordance with Group policy. Adjustments in respect of
prior years are also removed from the adjusted tax expense as they
do not relate to current year underlying trading. Share of tax on
profits of associates and joint ventures is calculated on the
adjusted profits of associates and joint ventures and excludes tax
on exceptional items consistent with the Group's approach and
policy.
The Group excludes the deferred tax impact of amortisation of
intangibles and goodwill as any deferred tax on these items would
only crystallise in the event of a disposal and that is not the
current intention. The Group also excludes the tax impact of the
transfer of the Singapore intangible assets as this relates to
group restructuring activities and not current year underlying
trading.
Factors affecting the tax expense in future years and other tax
matters
On 3 March 2021, the UK Government announced the UK Corporation
Tax rate would increase from 19% to 25% on 1 April 2023. The
legislation to implement the revised rates was not substantively
enacted on the balance sheet date and therefore there are no
changes to the UK deferred tax assets and liabilities as at 31
March 2021. It is expected that the legislation will be
substantively enacted during the second half of the year which,
based on the estimated deferred tax assets and liabilities as at 1
April 2023, will result in a GBP0.2m deferred tax credit,
comprising a GBP1.9m deferred tax charge and a GBP2.1m deferred tax
credit.
The Group holds a full provision in respect of a UK tax exposure
relating to an enquiry by HMRC into the tax treatment of the
disposal of an investment in the "Capital Data" business during the
year ended 30 September 2015. This has a maximum exposure of
GBP10.7m, plus estimated interest of GBP1.6m. Following a
first-tier tax tribunal (FTT) hearing held in May 2020, the Group
received a judgement in its favour allowing its appeal on 4 March
2021. HMRC intend to appeal this judgement at the Upper Tier
Tribunal and the Group currently anticipates that the case will be
held in early to mid-2022. The Group's assessment after seeking
professional advice is that there has been no change to the
likelihood of HMRC ultimately prevailing and therefore no
adjustment to the provision is being made at this time.
Following the Canada Revenue Agency's acceptance in 2020 of the
Group's appeal against a previously disclosed, but not provided
for, Canadian tax exposure, on 6 May 2021 a repayment of C$10.5m
(GBP6.1m) was received from the Canada Revenue Agency.
7 Dividends
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
GBP000 GBP000 GBP000
Amounts recognisable as distributable to equity holders in period
Final dividend for the year ended 30 September 2020 of 11.4p (2019: 22.30p) 12,459 24,362 24,362
No interim dividend for year ended 30 September 2020 - - -
------------ ------------ ---------
12,459 24,362 24,362
Employee share trust dividends waived (141) (368) (368)
12,318 23,994 23,994
------------ ------------ ---------
The final dividend for the year to 30 September 2020 was
approved by shareholders at the AGM held on 11 February 2021 and
paid on 16 February 2021.
It is anticipated that the half year dividend of 5.7p (2020: no
interim dividend) per share will be paid on 24 June 2021 to
shareholders on the register on 28 May 2021. It is expected that
the shares will be marked ex-dividend on 27 May 2021. The half year
dividend has not been included as a liability in this Half Year
Financial Statement in accordance with IAS 10 'Events after the
Reporting Period'.
8 Earnings per share
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
GBP000 GBP000 GBP000
Profit for the period 8,188 40,279 30,784
Non-controlling interest - 79 194
------------ --------------- ---------------
Total earnings 8,188 40,358 30,978
Adjustments 20,091 (8,380) 14,968
------------ --------------- ---------------
Total adjusted earnings 28,279 31,978 45,946
------------ --------------- ---------------
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
Number Number Number
000 000 000
Weighted average number of shares 109,289 109,261 109,275
Shares held by the employee share trusts (1,216) (1,652) (1,605)
-------------------- ----------------- -----------------
Weighted average number of shares 108,073 107,609 107,670
Effect of dilutive share options 199 62 -
Diluted weighted average number of shares 108,272 107,671 107,670
-------------------- ----------------- -----------------
Pence Pence Pence
Earnings per share
Basic 7.6 37.5 28.8
Diluted 7.6 37.5 28.8
Adjusted earnings per share
Basic 26.2 29.7 42.7
Diluted 26.1 29.7 42.7
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 of the Group. A detailed reconciliation of the Group's
statutory results to the adjusted results is set out in the
appendix to the Half Year Report.
9 Acquisitions and disposals
PURCHASE OF BUSINESS
WealthEngine
On 4 December 2020, the Group acquired 100% of the equity share
capital of WealthEngine Inc and its subsidiary for $16.3m
(GBP12.3m). WealthEngine is a SaaS platform providing data-driven
intelligence and predictive analytics to wealth managers, luxury
brands and not-for-profit organisations. It is a workflow tool
which profiles US individuals and is used by its clients for
prospecting potential donors or customers. WealthEngine is included
in the Data and Market Intelligence segment.
The acquisition accounting is set out below and is provisional
pending final determination of the fair value of the assets and
liabilities acquired:
Fair value Provisional
Book value adjustments fair value
GBP000 GBP000 GBP000
Intangible assets - 12,238 12,238
Right of use assets 1,543 - 1,543
Trade and other receivables 1,918 - 1,918
Trade and other payables (902) - (902)
Lease liabilities (1,543) - (1,543)
Deferred tax liabilities (1) (2,231) (2,232)
Contract liabilities (6,459) 873 (5,586)
Cash and cash equivalents 1,287 - 1,287
(4,157) 10,880 6,723
----------- ------------ ------------
Net assets acquired (100%) 6,723
Goodwill 5,533
Total consideration 12,256
------------
Consideration satisfied by:
Cash 10,895
Working capital adjustments 1,361
12,256
------------
Net cash outflow arising on acquisition:
Cash consideration 12,256
Less: cash and cash equivalent balances
acquired (1,287)
10,969
------------
Intangible assets represent customer relationships of $11.3m
(GBP8.5m), brands of $1.6m (GBP1.2m), a technology platform of
$3.0m (GBP2.3m) and databases of $0.4m (GBP0.3m) for which
amortisation of $0.8m (GBP0.6m) has been charged for the period
ended 31 March 2021. The intangible assets will be amortised over
their respective expected useful economic lives; customer
relationships of 7 years, brand of 10 years, technology platform of
5 years and database of 10 years.
Goodwill arises from the anticipated future operating synergies
from integrating the acquired operations within the Group and the
acquired workforce.
The $1.2m (GBP0.9m) fair value adjustment to contract
liabilities relates to an adjustment to reduce the deferred revenue
balance. The fair value adjustment to deferred tax of $3.0m
(GBP2.2m) represents the deferred tax impact of the acquisition
accounting, most significantly the recognition of acquired
intangible assets.
WealthEngine contributed GBP3.5m to the Group's revenue and
GBP0.2m to the Group's operating profit and profit before tax
between the date of acquisition and 31 March 2021. If the
acquisition had been completed on the first day of the financial
year, WealthEngine would have contributed GBP6.0m to the Group's
revenue and GBP1.1m to the Group's operating profit and profit
before tax.
9 Acquisitions and disposals continued
By-Products Interactive (The Jacobsen)
On 29 January 2021, the Group acquired 100% of the equity share
capital of By-Products Interactive, Inc. for $12.7m (GBP9.3m). The
Jacobsen is a Price Reporting Agency that produces news and price
assessments on agricultural feedstocks for biofuels, animal fats,
feed, vegetable oils, hides and leather. It is predominantly a
subscriptions business with some additional consulting and events
revenue. The Jacobsen is included in the Pricing segment.
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 - 1,483 1,483
Trade and other receivables 75 - 75
Trade and other payables (25) - (25)
Deferred tax liabilities - (415) (415)
Contract liabilities (691) - (691)
Cash and cash equivalents 67 - 67
(574) 1,068 494
----------- ------------ ------------
Net assets acquired (100%) 494
Goodwill 8,775
Total consideration 9,269
------------
Consideration satisfied by:
Cash 9,269
9,269
------------
Net cash outflow arising on acquisition:
Cash consideration 9,269
Less: cash and cash equivalent balances
acquired (67)
9,202
------------
Intangible assets represent customer relationships of $2.0m
(GBP1.5m), for which amortisation of $0.1m (GBP0.1m) has been
charged for the period ended 31 March 2021. The intangible asset
will be amortised over its expected useful economic life of 10
years.
Goodwill arises from the anticipated future operating synergies
from integrating the acquired operations within the Group and the
acquired workforce. The fair value adjustment to the deferred tax
liability of $0.6m (GBP0.4m) relates to the deferred tax liability
recognised on the acquired intangible asset.
The Jacobsen contributed GBP0.3m to the Group's revenue and
GBP0.1m to the Group's operating profit and profit before tax
between the date of acquisition and 31 March 2021. If the
acquisition had been completed on the first day of the financial
year, The Jacobsen would have contributed GBP1.0m to the Group's
revenue and GBP0.1m to the Group's operating profit and profit
before tax.
10 Investments
Investment
in associates
GBP000
At 1 October 2019 5,271
Additions 4,060
Share of losses after tax (495)
At 30 September 2020 8,836
--------------
Share of losses after tax (74)
At 31 March 2021 8,762
--------------
The above investment in associates is accounted for using the
equity method in these condensed consolidated interim financial
statements.
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
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 (74) (191) (495)
Add back:
Share of tax on profits (15) (82) (212)
Share of acquired intangible amortisation 166 - 366
151 (82) 154
------------ ------------ ---------
Adjusted share of results in associates and joint ventures 77 (273) (341)
------------ ------------ ---------
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 Half Year Report.
10 Investments continued
Information on investment in associates, investment in joint
ventures and other equity investments:
Year Date of Type Group Registered
Principal activity ended acquisition of holding interest office
Investment in
associates
Zanbato, Inc Private capital 30 Sept Sept 2015 Preferred 11.8% 715 N Shoreline
(Zanbato) placement and Boulevard,
workflow Mountain
View CA,
94043, United
States
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
Other equity
investments
Estimize, Inc Financial estimates 31 Dec July 2015 Ordinary 10.0% 43 West
(Estimize) platform 24th Street,
New York
, NY 10010,
United States
The Group's investment holding in Zanbato decreased from 12.3%
to 11.8% during the period due to changes to Zanbato's total
diluted shareholding. The Group interests in the remaining
investments were unchanged since their respective dates of
acquisition.
11 Goodwill and other intangibles
There was a decrease in goodwill in the six months to 31 March
2021 of GBP8.0m. This movement relates to exchange differences of
GBP22.3m offset by increases of GBP5.5m arising on the acquisition
of WealthEngine and GBP8.8m on the acquisition of The Jacobsen
(note 9). Acquired intangible assets reduced by GBP5.6m due to
exchange differences of GBP9.9m and GBP9.4m of amortisation, offset
by new acquisitions in the period amounting to GBP13.7m (note
9).
The net carrying value of goodwill and other intangible assets
is as follows:
Unaudited Audited
as at as at
31 March 30 Sept
2021 2020
GBP000 GBP000
Goodwill 448,367 456,343
---------- ---------
Trademarks and brands 81,132 88,649
Customer relationships 79,594 77,783
Databases and software 17,033 16,937
---------- ---------
Total acquired intangible assets 177,759 183,369
Internally generated intangible assets 21,396 18,344
---------- ---------
Total intangible assets 199,155 201,713
---------- ---------
Total 647,522 658,056
---------- ---------
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 2020 Annual Report and
Accounts.
Acquired intangible amortisation for the period ended 31 March
2021 is GBP9.4m (March 2020: GBP12.1m; September 2020:
GBP23.0m).
The Group assesses, at each reporting period, whether there is
an indication that an asset might be impaired, and if such
indication exists, estimate the asset's recoverable amount. For the
period ended 31 March 2021 the Group considered, amongst other
factors, the performance of assets and groups of cash generating
units in the first half compared to the forecasts used in the
year-end impairment tests as well as the Group's latest expectation
of future cash flows. No indicators of impairment were
identified.
12 Right of use assets
Right of use assets recognised by the Group are for leasehold
premises, predominately used as office space.
The table below shows the movements in right of use assets
during the year.
Leasehold office space
2021 GBP000
Cost
At 1 October 2020 61,174
Balance at acquisition of company 1,543
Additions 530
Disposals (143)
Exchange differences (2,388)
-----------------------
At 31 March 2021 60,716
-----------------------
Depreciation and impairments
At 1 October 2020 7,770
Depreciation 3,315
Disposals (148)
Exchange differences (355)
-----------------------
At 31 March 2021 10,582
-----------------------
Net book value at 31 March 2021 50,134
-----------------------
Leasehold office space
2020 GBP000
Cost
Transition to IFRS 16 on 1 October 2019 56,732
Additions 3,277
Balance at acquisition of company 1,622
Reassessments 1,287
Exchange differences (1,744)
-----------------------
At 30 September 2020 61,174
-----------------------
Depreciation and impairments
At 1 October 2019 -
Depreciation 6,467
Impairments 1,318
Exchange differences (15)
-----------------------
At 30 September 2020 7,770
-----------------------
Net book value at 30 September 2020 53,404
-----------------------
The rent expense recognised in the Consolidated Income Statement
in respect of short-term leases was GBP0.2m.
13 Lease liabilities
The table below shows the movements in lease liabilities during
the year.
Lease liabilities
GBP000
Transition to IFRS 16 on 1 October 2019 71,604
Additions 3,745
Balance at acquisition of company 1,748
Reassessments 1,287
Finance charge in year 1,985
Lease payments in year (8,056)
Exchange differences (2,172)
------------------
At 30 September 2020 70,141
------------------
Balance at acquisition of company 1,543
Additions 527
Finance charge in year 913
Lease payments in year (4,768)
Exchange differences (2,649)
------------------
At 31 March 2021 65,707
------------------
The maturity profile of the Group's lease payments is shown
below.
Lease payments
Timing of future lease payments GBP000
Within 12 months 9,331
1 - 3 years 22,986
4 - 5 years 14,391
Over 5 years 27,825
---------------
74,533
Impact of discounting future lease payments (8,826)
---------------
Lease liabilities at 31 March 2021 65,707
---------------
14 Financial instruments
The Group's financial assets and liabilities are as follows:
Unaudited Audited
as at as at
31 March 30 Sept
2021 2020
GBP000 GBP000
Financial assets
Fair value through profit or loss (FVTPL) assets
Derivative instruments 3,771 1,089
Cash and cash equivalents - money market funds 68,736 20,217
Amortised cost
Trade receivables and other debtors 60,787 61,813
Cash and cash equivalents - amortised cost 6,075 7,876
139,369 90,995
---------- ----------
Financial liabilities
Fair value through profit or loss liabilities
Derivative instruments (350) (1,048)
Amortised cost
Acquisition commitments (54) (15)
Lease liabilities (65,707) (70,141)
Borrowings and payables (125,874) (52,390)
(191,985) (123,594)
---------- ----------
The Group recorded an expected credit loss of GBP1.5m (31 March
2020: GBP1.4m) in the first half as a result of updating the
expected credit loss provision for the latest aging and credit loss
assumptions.
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.
-- Derivative financial instruments comprising foreign currency
forward contracts are measured using quoted forward exchange rates
and yield curves derived from quoted interest rates matching
maturities of the contracts.
-- Money market funds are valued at the closing price reported by the fund sponsor.
Level 3
-- If one or more significant inputs are not based on observable
market data, the instrument is included in level 3.
14 Financial instruments continued
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.
The Group classifies its financial instruments into the
following categories:
IFRS 9
Financial instrument category measurement category Fair value measurement hierarchy
Derivative instruments FVTPL(1) 2
Other equity investments FVTOCI 3
Convertible loan note FVTPL 3
Deferred consideration asset Amortised cost N/A
Receivables Amortised cost N/A
Cash and cash equivalents - cash at bank and short-term
deposits Amortised cost N/A
Cash and cash equivalents - money market funds FVTPL 2
Deferred consideration liability Amortised cost N/A
Deferred consideration liability FVTPL 3
Acquisition commitments Amortised cost N/A
Borrowings and payables Amortised cost N/A
Lease liabilities Amortised cost N/A
(1) Changes in fair value to derivatives designated in cash flow
hedging relationships, to the extent that the hedge is effective,
are taken to the hedging reserve through other comprehensive
income. Any ineffectiveness is recognised in profit or loss.
Movements in assets/(liabilities) arising from financing
activities:
Interest
and other
As at 30 Sept 2020 Cash flow non-cash movements Foreign exchange As at 31 March 2021
GBP000 GBP000 GBP000 GBP000 GBP000
Net cash comprises:
Cash and cash
equivalents 28,093 47,417 240 (939) 74,811
Borrowings - (50,000) - - (50,000)
------------------- ---------- ------------------- -------------------- --------------------
Net cash 28,093 (2,583) 240 (939) 24,811
------------------- ---------- ------------------- -------------------- --------------------
Analysis of changes
in liabilities from
financing
activities
Borrowings - (50,000) - - (50,000)
Other financing
items - Prepaid
bank fees 776 30 (192) - 614
Interest payable (2,304) 487 (390) - (2,207)
Lease liabilities (70,141) 4,768 (2,983) 2,649 (65,707)
Acquisition
commitments (15) - (39) - (54)
------------------- ---------- ------------------- -------------------- --------------------
Total liabilities
from financing
activities (71,684) (44,715) (3,604) 2,649 (117,354)
------------------- ---------- ------------------- -------------------- --------------------
15 Borrowings
Unaudited Audited
as at as at
31 March 30 Sept
2021 2020
GBP000 GBP000
Borrowings - non-current liabilities 50,000 -
---------- ---------
The Group's principal source of borrowings was provided through
a committed bank facility available to the Group until December
2022. At 31 March 2021 there was GBP138m available through this
facility (30 September 2020: GBP188m). There was a further
accordion facility of GBP130m should the Group wish to request it.
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 adjusted net debt to EBITDA. On 11 May 2021 the
Group agreed a new bank facility which runs to May 2024 (note
19).
16 Called up share capital
Unaudited Audited
as at as at
31 March 30 Sept
2021 2020
GBP000 GBP000
Allotted, called up and fully paid
109,289,406 ordinary shares of 0.25p each
(March 2020: 109,289,406 ordinary shares of 0.25p each)
(September 2020: 109,289,406 ordinary shares of 0.25p each) 273 273
---------- ---------
17 Contingent liabilities
EC investigation into state aid
In the 2020 Annual Report the Group disclosed, but did not
provide for, a contingent tax liability of GBP8.9m (including
interest) in relation to the European Commission (EC) investigation
into the UK Controlled Foreign Company legislation. Following the
Group's proactive engagement with HMRC, on 26 March 2021 HMRC
confirmed that the Group was not a beneficiary of State aid under
the EC Decision and therefore this matter is now closed with no
additional tax liability or consequences for the Group.
18 Related party transactions
The Group has not disclosed transactions and balances between
its entities that have been eliminated on consolidation. Other
related party transactions and balances are detailed below:
(i) During the period, dividends were paid to Directors:
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
GBP000 GBP000 GBP000
Dividends paid 41 64 64
------------ ------------ ---------
(ii) Amounts receivable from joint ventures
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2021 2020 2020
$000 $000 $000
Sanostro International AG 51 51 51
------------ ------------ ---------
19 Events after the balance sheet date
The Group holds a GBP10.7m provision in respect of an ongoing
tax enquiry in the UK. Following a judgement issued in the Group's
favour, HMRC intend to appeal this judgement at the Upper Tier
Tribunal and the Group currently anticipates that the case will be
held in early to mid-2022.
On 11 May 2021, the Group refinanced and increased its existing
GBP188m bank facility. It now has a committed multi-currency
revolving credit facility of GBP190m which is available to the
Group until May 2024, with two additional one-year extension
options available.
Responsibility Statement
We confirm that to the best of our knowledge:
(a) these Condensed Consolidated Interim Financial Statements, which
have been prepared in accordance with IAS 34 'Interim Financial Reporting',
give a true and fair view of the assets, liabilities, financial position
and profit of the Group as required by DTR 4.2.4R;
(b) this Half Year 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 Half Year 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 Officer
19 May 2021
Wendy Pallot
Chief Financial Officer
19 May 2021
Independent review report to Euromoney Institutional Investor
PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Euromoney Institutional Investor PLC's
condensed consolidated interim financial statements (the "interim
financial statements") in the Half Year Report of Euromoney
Institutional Investor PLC for the six month period ended 31 March
2021 (the "period").
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 2021;
-- 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 Half Year
Report of Euromoney Institutional Investor PLC 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 Half Year Report, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the Half
Year 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 Half Year 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 Half Year
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
19 May 2021
Directors
Executive Directors
Andrew Rashbass (Chief Executive Officer)
Wendy Pallot (Chief Financial Officer)
Non-executive Directors
Jan Babiak ++ (Senior Independent Director)
Colin Day --++
India Gary-Martin --
Imogen Joss ++
Tim Pennington --
Leslie Van de Walle ++ (Chairman)
member of the Remuneration Committee
++ member of the Nominations Committee
-- member of the Audit & Risk Committee
Board and Committee Composition Changes
Lorna Tilbian stepped down from the Board as a Non-Executive
Director on 24 March 2021.
India Gary-Martin was appointed to the Board as a Non-Executive
Director on 24 March 2021.
India Gary-Martin was appointed as a member of the Audit &
Risk and Remuneration Committees on 25 March 2021.
Shareholder Information
Financial calendar
2021 half year results announcement Thursday 20 May 2021
Half year dividend ex-dividend
date Thursday 27 May 2021
Half year dividend record date Friday 28 May 2021
Payment of 2021 half year dividend Friday 25 June 2021
Wednesday 21 July
Trading update 2021
Thursday 18 November
2021 final results announcement 2021
Thursday 25 November
Final dividend ex-dividend date 2021
Friday 26 November
Final dividend record date 2021*
Thursday 27 January
Trading update 2022*
Thursday 27 January
2022 AGM (approval of final dividend) 2022*
Friday 11 February
Payment of final dividend 2022*
* 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 Brokers Solicitors 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
Numis Securities Freshfields Bruckhaus
Limited Deringer LLP
The London Stock 65 Fleet Street
Exchange Building London
10 Paternoster EC4Y 1HT
Square
London
EC4M 7LT
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END
IR MZGMKGLKGMZZ
(END) Dow Jones Newswires
May 20, 2021 02:00 ET (06:00 GMT)
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