Euromoney Institutional Investor PLC Half Year Report 2019 - PDF document

Euromoney Institutional Investor PLC Half Year Report 2019

Euromoney Institutional Investor PLC (“Euromoney”) Half Year results 16 May 2019 Underlying revenue and profit growth Euromoney, the global information business providing essential B2B information to global and specialist markets, announces results for the six months ended 31 March 2019. Change Underlying 2 H1 2019 H1 2018 Change Adjusted 1 • Revenue £184.9 m £189.1 m (2%) 1% • Operating profit margin 25 % 25 % - 1ppt • Profit before tax £46.1 m £45.6 m 1% 13% • Diluted earnings per share 34.32 p 33.60 p 2% Statutory • Revenue £184.9 m £189.1 m (2%) • Operating profit £49.6 m £122.7 m (60%) • Profit before tax £49.3 m £121.1 m (59%) • Diluted earnings per share 32.9 p 101.8 p (68%) Net cash/(debt) £29.3 m (£37.0) m £66.3 m Half year dividend per share 10.8 p 10.2 p 6% Strategic and operational highlights  Continued progress towards building a 3.0 business model: o Acquisition of BoardEx (executive profiling business) and The Deal (M&A data business) for $87.3m (£66.8m) o Sale of Mining Indaba completed in October 2018 for £30.1m  Strong performance from Fastmarkets within Pricing, Data & Market Intelligence (“PDMI”) segment; structural and cyclical trends within Asset Management are consistent with 2018  Increasing market recognition of pricing products reflects evolution of the business model  DMGT transaction completes phased transition to fully independent FTSE 250 Financial highlights  Growth in underlying revenue and profit (Statutory and adjusted numbers impacted by disposals)  Underlying revenue up 1%: challenges in event delegate marketing reduced underlying revenue by 1ppt  Statutory profit before tax down 59% predominantly due to the gain on disposal of Dealogic in December 2017  Underlying profit before tax up 13%: o Profit flow through of PDMI subscriptions growth o Savings in restructured Asset Management o Lower net interest costs  Underlying subscription revenue in PDMI up 8%  Asset Management restructuring complete: 5% underlying profit growth, £7m annualised savings  Strong underlying cash conversion of 98%  Strong balance sheet with net cash of £29.3m  We continue to expect to deliver profit in line with Board’s expectations Andrew Rashbass, CEO, said: “The first six months of the year saw a continuation of recent trends and further strategic progress for the Group. The distribution of Euromoney shares previously owned by DMGT affirmed Euromoney’s status as a fully independent FTSE 250 company, with a fully independent Board, higher free float, increased liquidity and better access to capital. We have also continued our strategic focus on embedding our businesses in the workflow of our customers. The acquisition of BoardEx and The Deal supports our transition towards a B2B 3.0 business model.” 1 Adjusted measures include the results of continuing operations and 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 are set out on pages 7 to 9 of this statement. 2 Underlying measures include the adjusted results of continuing operations and are 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. There will be an analyst presentation today at 9am at UBS, 5 Broadgate, London EC2M 2QS. 1

Operating Review The first half saw growth in underlying revenue and operating profit driven by the ongoing strong performance of Pricing, Data & Marketing Intelligence (“PDMI”) subscriptions despite continuing challenges in Asset Management. Strategy unchanged following Daily Mail and General Trust plc (“DMGT”) share distribution On 2 April 2019, DMGT distributed its shares in Euromoney, amounting to approximately 49% of the Company’s issued share capital, to certain shareholders. This is a key event in Euromoney's history and completes our transition to a fully independent FTSE 250 company. All Non-Executive Directors are now independent. Following this transition, our strategy remains unchanged: to provide essential B2B information to global and specialist markets where price discovery, market intelligence and convening market participants are highly valued. On 14 February 2019, we acquired BoardEx and The Deal for a total cash consideration of $87.3m. BoardEx is an executive profiling and relationship-mapping platform, providing users with accurate, up-to-date and in-depth profiles of over one million of the world’s business leaders. The platform’s proprietary software is embedded in the workflows of its customers. The Deal is a trusted source of data, news and intelligence on mergers and acquisitions, activist investing, private equity and restructuring. These businesses are now managed within our PDMI segment. Both products are highly complementary to Euromoney’s existing portfolio, serving a number of shared customer groups, particularly investors, banks and professional services firms. Growth in revenue and profit Statutory and adjusted revenue decreased by 2% to £184.9m, predominantly due to the sale of Mining Indaba in October 2018 and the end of the five year contract to run SFIG, a major structured finance event. As a consequence of these changes, the adjusted operating profit decreased by 2% to £46.2m. The adjusted operating profit margin remained at 25%, in line with the first half of last year. Statutory operating profit and profit before tax were down 60% and 59% respectively, predominantly due to the one-off impact of the gain on disposal of Dealogic in December 2017. Underlying revenue grew 1%, driven by PDMI, where underlying subscription revenue grew by 8%. This compares to 12% growth during the first half of 2018, which included one-off licence upgrades in Insurance Insider. In Fastmarkets, our price reporting agency, underlying subscription revenue grew 12%, in line with the previous year. We continue to see the impact of the structural and cyclical issues facing the Asset Management segment. However, the decline in underlying Asset Management subscription revenue was less than in the first half last year. Overall, underlying subscription revenue for the Group was unchanged from the same period last year. Total underlying events revenue was up by 3%, in line with previous guidance. This includes a 4% reduction in underlying revenue for PDMI events due to challenges in delegate marketing. Group underlying advertising revenue, which made up only 8% of total revenue, continued previous trends and was down by 5%, consistent with last year. Strong underlying growth in profit before tax of 13% reflects another period of good subscription revenue growth in PDMI, cost savings in Asset Management, following the strategic review in 2018, and lower interest costs, mainly reflecting cash receipts from disposals made during 2018. Segmental Review Continuing operations: Adjusted results for the six months ended 31 March 2019 Subscriptions Advertising Events Other Revenue Operating Profit Margin £’m Growth 1 £’m Growth 1 £’m Growth 1 £’m £’m Growth 1 £’m Growth 1 PDMI 52.4 8% 6.3 (6%) 30.6 (4%) 0.4 89.7 3% 32.7 3% 36% Asset Management 59.5 (5%) 5.6 6% 7.7 11% 0.2 73.0 (3%) 30.1 5% 41% Banking & Finance 3.3 (9%) 2.4 (22%) 17.5 13% 0.3 23.5 4% 3.5 (1%) 15% 186.2 1% 66.3 4% FX losses on forward (1.3) (1.3) (1.3) contracts Sub-total 115.2 0% 14.3 (5%) 55.8 3% (0.4) 184.9 1% 65.0 4% Sold/closed businesses (0.1) Balance sheet FX losses (0.6) Central costs (18.1) 3% Total 115.2 0% 14.3 (5%) 55.8 3% (0.4) 184.9 1% 46.2 7% 25% 1 Values shown above are adjusted, and growth percentages underlying and compared to the first half last year. Underlying measures are explained on pages 7 to 9 of the appendix to this statement. Pricing, Data & Market Intelligence (“PDMI”) The Group’s PDMI businesses generated underlying revenue and underlying operating profit growth of 3% against a strong comparable in the prior period. Subscription revenue, which account for 58% of PDMI revenue, increased by an underlying 8%, with another excellent performance from Fastmarkets, which makes up 42% of segment revenue. Subscription revenue growth was below last year’s levels reflecting some one-off licence upgrades in the prior period in Insurance Insider. Underlying events revenue, which accounts for 34% of PDMI revenue, fell by 4% due to delegate marketing challenges. Telecom’s Capacity Europe conference performed particularly well. The net effect reduced underlying Group revenue growth by approximately 1ppt. 2