Euromoney – Results for the six months ended 31 March 2019 Thursday, 16 th May 2019 Transcript produced by Global Lingo London - 020 7870 7100 www.global-lingo.com
Euromoney – Results for the six months ended 31 March 2019 Thursday, 16 th May 2019 Overview Andrew Rashbass CEO, Euromoney Welcome Good morning, everyone. Thank you for coming to this presentation of our half year results. Unusually for us we are recording this and we will be producing a transcript. It is a feedback we have had from investors that those who cannot be here would like to be able to read a transcript. So let me start with a summary of the results. Headlines Strategic & Operational So I think the first thing that I would say is, and you have seen this through portfolio management and way of seeing growth in the business that that continuation of our move towards a 3.0 business continues. We completed the acquisition of BoardEx and The Deal. We sold Mining Indaba. Very much we have talked a lot over the last couple of years about a price reporting and we are making very good progress in the recognition and take-up of our pricing and the financialisation of those. And of course, perhaps more interesting to us than to others, but the distribution of DMGT shares to their shareholders completed, I think, successfully and we are delighted to welcome direct shareholders who are previously shareholders through DMGT. Financial One the financial side, underlying revenue grew 1%, that is the result of the mix of the strength in Pricing, Data & Market Intelligence; the challenges in Asset Management; and then some issues around event marketing. Wendy is going to talk in more detail about that. Strong profit growth driven by three things: the drop through of profit from the growing subscriptions in pricing; secondly, the benefit of the lower cost base and asset management following our restructure last year; and thirdly, lower interest compared with last year. You will see there the asset management numbers. And again, Wendy will come back to that later. And of course continuing strong cash conversion and strong balance sheet that you are used to with Euromoney. I mentioned this just a moment ago. But just record formally that that distribution has taken place and that having started just four years ago from DMGT’s point of view as a subsidiary of DMGT when they had two-thirds of their shareholding, they then did, as you know, their initial sell-down to 49% and now the full distribution and we have a independent Board and a more diversified shareholder base. I think many of you will have seen the greater liquidity that we are now seeing in our shares. So I think that reinforces the platform for growth that we have talked to you about over the past couple of years. Wendy? www.global-lingo.com 2
Euromoney – Results for the six months ended 31 March 2019 Thursday, 16 th May 2019 Finance Wendy Pallot CFO, Euromoney Highlights Thank you, Andrew. Good morning, everyone. H1 2019: Group at a glance So the group at a glance. On the top left here you can see that over the past 12 months almost 60% of our revenues have come from subscriptions. That is a slight increase from when I presented here in November. And almost 70% of our revenues were in dollars, which is a similar level to last year. On the top right there you can see the underlying half year revenue growth rates. So we have 1% underlying growth in the period. This time last year we had 4% growth. Andrew referred to some challenges on marketing to delegates in our PDMI segment, which I will talk about later. That accounted for about 1 percentage point of Group underlying growth reduction. Secondly, we have also sold in Mining Indaba, which last year contributed about 0.5 of that growth. You can also see we have added our ROIC on here on the bottom left. It is a question we sometimes get asked by shareholders, so that has gone on. Adjusted operating margin is 25% as it was during the first half last year. And our cash conversion, as Andrew said, remains strong at 98%, marginally below our performance last year but that reflects the timing impact as we upgrade our customers in Fastmarkets from subscriptions to licensing. What we do So you can see here the three segments within our business. Asset Management and PDMI are the two largest being predominantly subscriptions revenue. And Banking & Finance is the smaller segment being mostly events revenue. You will remember that we came down to this segment structure following the sale of Mining Indaba last year and there has been no change to this structure since we presented to you in November. Half-year Results Half-year summary The first six months saw as continuation of recent trends with the 1% underlying revenue growth. This was driven by PDMI, where underlying subscription revenues grew by 8% but partly offset both by those challenges in delegate marketing and continued headwinds in our Asset Management area. Adjusted revenues, which are the numbers you see here, are down year-on-year reflecting the sale of Mining Indaba partly netted by the acquisition of Random Lengths, TowerXchange, and BoardEx and The Deal. There are quite a few things coming in and going out this year in adjusted numbers. We have put a slide in the back of the presentation which will help you reconcile those numbers. www.global-lingo.com 3
Euromoney – Results for the six months ended 31 March 2019 Thursday, 16 th May 2019 The underlying operating profit margins up by 1 percentage point and that reflects some of the savings we have seen in the restructured Asset Management segment following that strategic review we did last year. These savings together with the flow-through from the PDMI growth and the lower interest costs, following our disposal of GMID last year, have meant that underlying profit before tax has grown by 13%. We are reiterating our effective tax guidance that we gave at the full year last year, that we expect the tax rate to be 20% for FY19. There is an interim dividend which is in line with our stated policy, which is that we pay 33% of the prior year’s dividend. So that increases the half year dividend by 6%. Strong cash conversion was at 98% and the comparator year, of course, also included GMID, which had quite a high cash conversion rate. So despite the acquisition of BoardEx and The Deal, we have got £29.3 million in cash at the end of March. Underlying revenue growth This is the revenue bridge. You can see some of the ins and outs I was talking about earlier. It highlights the underlying business growth. The discontinued operations on the left, that is GMID, which we sold in April. You can see the adjusted revenues benefited from the strengthening of the dollar, that is the £5.2 million you can see there. Timing adjustments includes removal of SFIG revenues, that was a major structured finance event which we were contracted to run for five years. The contract ended last year. Net M&A, of course, includes Mining Indaba. And you can see the underlying revenue growth there on the right-hand side, £1.2m, which came mainly from the PDMI segment offset by the decline in Asset Management, and in terms of revenue type that was events. Underlying PBT growth And a similar bridge on profit. So underlying profit grew by 13%, and particularly here on the right-hand side, you can see the benefit of the interest I was talking about following the GMID disposal, of £2.2 million year-on-year. We also had a small upside in the half year on central costs, which is largely from some unfilled positions and a bit of timing. But the main contributors on the right-hand side to profit growth, you can see were PDMI and Asset Management. Pricing, Data & Market Intelligence (PDMI) So let us look in a bit more detail at those segments. PDMI revenues grew by 3% on an underlying basis, despite having that strong comparator in the prior year. Subscriptions make up about 58% of the revenues in this segment. And they increased by 8%. Now that is down from the 12% in the prior year but obviously still a good number. But within that, if you dig into that, Fastmarkets subscriptions grew by 12% both in this period and in the same period last year. Outside of Fastmarkets, the underlying subscriptions grew by 4%, less than the 11% last year, which benefited from some one-off licence upgrades within Insurance Insider. We did see a fall in events revenue by 4%. We talked about those delegate marketing challenges. We had a number of marketing vacancies in this area at the end of the last financial year and indeed at www.global-lingo.com 4
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