Annual Report & Accounts 2015
Euromoney
Institutional
Investor PLC
24254.04 - 15 December 2015 11:52 AM - Proof 8
04
EuromonEy InstItutIonaL InvEstor PLC
www.euromoneyplc.com
Euromoney
Institutional
Investor PLC
Euromoney Institutional Investor PLC is listed on the London Stock Exchange and is a member of the
FTSE 250 share index. It is a leading international business-to-business media group focused primarily on the
international finance, metals and commodities sectors. It owns more than 70 brands including Euromoney,
Institutional Investor and Metal Bulletin, and is a leading provider of electronic and investment research and
data under brands including BCA Research, Ned Davis Research and the emerging markets information
providers, EMIS and CEIC. It also runs an extensive portfolio of conferences, seminars and training courses for
financial and commodities markets.
The group’s main offices are in London, New York, Sofia, Montreal and Hong Kong and more than a third of
its revenues are derived from emerging markets.
Year in Brief
November
Disposal of four
Institutional Investor
newsletter publications
JaNuary
London headquarters
moved to Bouverie Street
april
Announcement of new
executive chairman
Andrew Rashbass
who was appointed to
succeed Richard Ensor in
October 2015
September
Richard Ensor retires after
nearly 40 years of service
Investment in 9.9% of
Zanbato
Rollout of Delphi platform
completed with good
results
December
Disposal of Capital NET
and Capital DATA and
investment in Dealogic
During the year the
company made three
investments in financial
technology companies
starting with a 15.5%
interest in Dealogic
February
Mining Indaba achieved
revenues of £9.2m,
attracting more than
6,500 attendees and 400
exhibitors and sponsors
July
10% Equity investment
in Estimize
24254.04 - 15 December 2015 11:52 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Annual Report and Accounts 2015
01
Highlights
Contents
rEvEnuE
£403.4m
2015
2014
2013
4
.
3
0
4
7
.
4
0
4
oPEratIng ProfIt
£123.1m
2015
2014
2013
3
.
3
0
1
3
.
5
0
1
ProfIt bEforE tax
£123.3m
2015
2014
2013
5
.
1
0
1
3
.
5
9
dILutEd EarnIngs PEr s harE
83.4p
2015
2014
2013
2
.
9
5
7
.
6
5
6
.
6
0
4
1
.
3
2
1
3
.
3
2
1
4
.
3
8
adjustEd oPErat Ing ProfIt
£104.2m
.
2
4
0
1
2015
2014
2013
adjustEd ProfIt bEforE tax
£107.8m
8
.
7
0
1
2015
2014
2013
.
8
9
1
1
.
1
1
2
1
2
.
6
1
1
5
.
6
1
1
adjustEd dILutEd EarnIngs PEr s harE
70.1p
2015
2014
2013
dIvIdEnd
23.4p
2015
2014
2013
1
.
0
7
6
.
0
7
0
0
.
3
2
5
7
.
2
2
0
.
1
7
0
4
.
3
2
nEt C ash/(dEbt)
£17.7m
)
6
.
7
3
(
2014
)
9
.
9
(
2013
2015
7
.
7
1
Visit us online at
EuromonEyPLC.Com
24254.04 - 15 December 2015 11:52 AM - Proof 8
ovErvIEw
Highlights
Our Divisions
Chief Executive’s Statement
Appendix to Chief Executive’s Statement
stratEgIC rEPort
Managing Director’s Review
Business Model
Marketplace
Strategic Priorities
Key Performance Indicators
Principal Risks
Operating Review
Financial Review
Corporate and Social Responsibility
govErnanCE
Board of Directors
Directors’ Report
Corporate Governance
Directors’ Remuneration Report
fInanCIaL statEmEnts
group accounts
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
Consolidated Statement of
Cash Flows
Note to the Consolidated
Statement of Cash Flows
Notes to the Consolidated
Financial Statements
Company accounts
Company Balance Sheet
Notes to the Company Accounts
othEr
Five Year Record
Shareholder Information
1
2
4
6
7
8
9
10
12
14
22
26
28
31
32
36
46
70
78
79
80
81
82
83
84
139
140
150
151
02
Our Divisions
Financial
publishing
REvENUE
£74.3m
Financial publishing includes an extensive portfolio of
titles covering the international capital markets and asset
management as well as a number of specialist financial titles.
Products include magazines, newsletters, journals, surveys
and research, directories and books.
A selection of the company’s leading financial brands includes: Euromoney, Institutional
Investor, GlobalCapital, Latin Finance, Insurance Insider, IJGlobal, Air Finance, FOW and
the hedge fund title EuroHedge.
Research
and data
REvENUE
£125.8m
The group provides a number
of subscription-based
research and data services
for financial markets.
Montreal-based BCA Research is one of
the world’s leading independent providers
of global macro-economic research. In
2011, the group expanded its independent
research activities with the acquisition of
US-based Ned Davis Research, a leading
provider of independent financial research
to institutional and retail investors. EMIS
provides the world’s most comprehensive
service for news and data on global
emerging markets and CEIC is one of the
leading providers of time-series macro-
economic data for emerging markets.
Ned Davis
Research
Group
24254.04 - 15 December 2015 11:52 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Overview ❯ our dIvIsIons
03
Business
publishing
REvENUE
£70.0m
Conferences, seminars
and training
REvENUE
£131.1m
The business publishing
division produces print and
online information for the
metals, minerals and mining,
legal, telecoms and energy
sectors.
Its leading brands include: Metal Bulletin,
American Metal Market, Industrial
Minerals; International Financial Law
Review, International Tax Review,
Managing Intellectual Property; Capacity;
Petroleum Economist, World Oil and
Hydrocarbon Processing.
The group runs a large number of sponsored conferences and
seminars for the international financial and commodities
markets, mostly under the Euromoney, Institutional Investor,
Metal Bulletin, Coaltrans and IMN brands. Euromoney
Learning Solutions, the group’s training division, runs a
comprehensive range of banking, finance, energy and legal
courses, both public and in-house.
Many of these conferences are the leading annual events in their sector and provide
sponsors with a high-quality programme and speakers, and outstanding networking
opportunities. Such events include: Euromoney’s Covered Bond Congress; the Saudi
Arabia Conference; the Global Airfinance Conference; and Global ABS, ABS East and ABS
Vegas for the asset-backed securities market. In the commodities sector, events include
Metal Bulletin’s Middle East Iron and Steel conference and the world’s leading annual coal
conferences, World Coal Conference and Coaltrans Asia; and TelCap runs International
Telecoms Week, the worldwide meeting place for telecom carriers and service providers,
and Capacity Middle East, the world’s biggest meeting point for all operations and service
providers active in the Middle Eastern telecoms market.
Euromoney’s training courses are run all over the world for both
financial institutions and corporates.
DIVISIONAL SPLIT
media
Conferences, seminars
and training 33%
Research and data 31%
Financial publishing 19%
Business publishing 17%
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015
04
Chief Executive’s Statement
It’s a privilege to join Euromoney with its unique portfolio of businesses and outstanding
people. Richard Ensor will be a tough act to follow. I know our shareholders will join me in
thanking him for his decades of service to our company.
The results in this report reflect the strong headwinds, both cyclical and structural, facing
many of our customers and our businesses. But they also show areas of real strength, for
example in our asset-management-related businesses. They demonstrate, too, how cash
generative the business is. These strengths create great opportunity. We are reviewing our
strategy and we shall present to investors in early 2016.
The following is a summary of our results for
●● Adjusted operating profit fell by £15.6m to
●●
The statutory profit before tax of £123.3m
the year ended September 2015:
£104.2m. The adjusted operating margin
is higher than the adjusted profit before tax
●● Our adjusted profit before tax was £107.8m.
In 2014 it was £116.2m. Adjusted diluted
earnings a share were 70.1p (2014: 70.6p).
The directors recommend a final dividend
of 16.40p (2014: 16.00p), giving a total
dividend for the year of 23.40p (2014:
23.00p), to be paid to shareholders on
February 11 2016.
●●
revenue of £403.4m
Total
fell 1%
compared to the previous year. Underlying1
revenue, after also excluding the impact
of the timing of events, decreased by 2%.
Subscription revenue grew at a consistent
rate all year; advertising revenue declined
throughout the year. On the other hand,
event revenue declined in the second half of
the year having grown in the first half. This
was due to the downturn in commodity
prices and weakness in emerging markets.
fell from 30% to 26%. Half of the decline
as a result of gains realised on assets sold
in operating margin was as a result of
during the period, partly offset by acquired
factors we highlighted at the start of the
intangible amortisation and goodwill
year: higher property costs; the full-year
impairment charges.
impact of the group’s investment in its
●●
The group continued to invest in its digital
Delphi content platform; and the impact
products during 2015 including rolling out
of the Dealogic transaction. The other half
Delphi to most of the group’s remaining
came from higher people costs and from
titles.
declining advertising and delegate revenue
●●
The group ended the year with net cash
where there is little direct cost to be saved
for the first time since the acquisition of
from the loss of revenue.
Institutional Investor in 1997. Net cash
●●
The 7% fall in adjusted profit before tax
of £17.7m at September 30 compared
was better than the 13% drop in adjusted
with net debt of £37.6m at last year end.
operating profit because of a £2.5m credit
This reflects the group’s strong operating
(2014: £2.4m expense) from reversing last
cash flow, supplemented by net property
year’s long-term incentive accrual, and an
proceeds of £10.6m following the group’s
increase of £2.2m in the adjusted share of
move to new London offices. This was
results in associates following the Dealogic
offset by net M&A of £15.6m, including
transaction.
£11.6m for the deferred consideration on
●● Adjusted diluted earnings a share fell
the acquisition of Insurance Insider.
only 1% because of a lower tax rate and
a reduction in the number of shares in
issue following last year’s share buy-back.
Earnings for dividend purposes increased
by 2% and this is reflected in the increase
in the final dividend.
1 Underlying revenues exclude the impact of acquisitions, disposals and currency movements. A detailed
reconciliation of the group’s adjusted results is set out in the appendix to this statement.
24254.04 - 15 December 2015 11:52 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Overview ❯ ChIEf ExECutIvE’s statEmEnt
05
boarD Structure
Following the initial stage of the strategic
review, the board agreed that the company
would be better served with a more traditional
board structure, including the appointment of
an independent non-executive Chairman and
the creation of the new role of Chief Executive.
This will improve the governance of Euromoney
and
simplify
its management
structure.
Christopher Fordham, Diane Alfano, Bashar
AL-Rehany, Neil Osborn and Jane Wilkinson
will not seek re-election at the AGM. They have
all made a huge contribution to the success of
Euromoney over many years and will continue
to play a central role in the development of the
company. I look forward to working with them
and the rest of the executive team.
outlook
The first quarter of the new financial year has
started with a continuation of the challenging
market conditions we experienced in the
second half of financial year 2015. The group’s
activities
in the
investment banking and
commodities sectors, which together account
for more than two thirds of the group’s
revenues, continue to face significant structural
and cyclical headwinds, while emerging markets
remain generally weak. In contrast, the group’s
businesses serving the asset management
industry, which are predominantly subscription-
driven, have remained relatively robust. We
expect these conditions to continue for the
foreseeable future.
Finally, in my first few weeks with the company, I
have discovered what I am sure our shareholders
already know – that Euromoney is made up of
dedicated and expert people who have shown
great resilience and resourcefulness during a
difficult year. I thank them and look forward to
working with them all in the year ahead.
aNDrew raShbaSS
Chief Executive
December 14 2015
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015 06
Appendix to Chief Executive’s Statement
recoNciliatioN oF coNSoliDateD iNcome StatemeNt to aDJuSteD reSultS For the year eNDeD
September 30 2015
The reconciliation below sets out the adjusted results of the group and the related adjustments to the statutory Income Statement that the directors
consider necessary in order to provide an indication of the underlying trading performance.
Notes
adjusted
£000
adjustments
£000
2015
total
£000
Adjusted
£000
Adjustments
£000
2014
Total
£000
total revenue
adjusted operating profit
Acquired intangible amortisation
Long-term incentive credit/(expense)
Exceptional items
3
3
11
5
403,412
104,234
–
2,490
–
–
403,412
406,559
–
406,559
–
(17,027)
–
33,421
104,234
(17,027)
2,490
33,421
119,809
–
(2,367)
–
–
(16,735)
–
2,630
119,809
(16,735)
(2,367)
2,630
Operating profit
106,724
16,394
123,118
117,442
(14,105)
103,337
Share of results in associates and joint
ventures
13
2,435
(2,816)
(381)
264
–
264
Finance income
Finance expense
net finance income/(costs)
Profit before tax
Tax expense on profit
Profit for the year
attributable to:
Equity holders of the parent
Equity non-controlling interests
7
7
7
8
379
(1,728)
(1,349)
107,810
(18,890)
88,920
88,678
242
88,920
4,748
(2,851)
1,897
15,475
1,291
16,766
16,766
–
16,766
5,127
(4,579)
548
123,285
(17,599)
105,686
105,444
242
105,686
248
(1,799)
(1,551)
116,155
(25,722)
90,433
89,832
601
90,433
1,298
(1,873)
(575)
(14,680)
112
(14,568)
(14,568)
–
(14,568)
1,546
(3,672)
(2,126)
101,475
(25,610)
75,865
75,264
601
75,865
diluted earnings per share
10
70.12p
13.26p
83.38p
70.60p
(11.45)p
59.15p
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 acquired intangibles amortisation, tax in associates and joint ventures, and net movements in
deferred consideration and acquisition commitments. In respect of earnings, adjusted amounts reflect a tax rate that includes the current tax effect of
the goodwill and intangible assets.
Further analysis of the adjusting items is presented in notes 3, 5, 7, 8, 10, 11 and 13 to the group financial statements.
24254.04 - 15 December 2015 11:52 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Managing Director’s Review
07
Despite challenging market conditions this year, Euromoney’s market-leading businesses
are well placed to benefit from long-term global trends in the finance, metals and
commodities sectors.
Investor
Intelligence
Network
The group’s largest
current investment is
the Investor Intelligence
Network (IIN). The IIN
is a digital disruptive
technology that brings
together institutional
investors and investment
managers in two
separate but linked online
communities.
It uses data science to connect these
buyers and sellers of investment
funds in a targeted way, displacing
consultants and intermediaries in
certain sectors.
There was good progress in 2015,
with membership growth up 28%,
growth in total member assets
up US$28 trillion and 180 new
institutional investors have joined IIN
in North America.
Euromoney’s
performance
reflects
the
which acquired a controlling interest. Further
continuing challenges faced by the group’s
details of the Dealogic transaction are provided
markets, particularly within the investment
later in this report.
banking sector and in the latter stages of the
year for the energy and commodity sectors.
Headline revenues were down by 1% at
£403.4m and underlying1 revenues down
by 4%. The pressures on the investment
banking sector, which accounted for roughly
half the group‘s revenues, and on fixed
income, currency and commodities activities
in particular, continued to offset the improving
performance in the group’s businesses serving
the asset management sector.
Secondly, in July 2015 the group acquired
a 10% equity interest in Estimize, the most
comprehensive
crowd-sourced
financial
estimates platform for $3.6m. Estimize sources
company earnings and estimates from over
7,000 hedge fund, brokerage and independent
analysts as well as a diverse community of
individuals. By being more representative of
market expectations, Estimize has proved to be
an especially accurate forecaster of company
earnings. Estimize is working with BCA Research
The group continued to invest in technology
to develop new datasets, and BCA’s extensive list
and digital products and to roll out its Delphi
of buy-side clients now has access to data and
digital platform for authoring, storing and
insights from Estimize.
delivering content. By the end of September,
Euromoney had completed the transition of all
applicable publishing products onto the Delphi
authoring system. BCA Research’s new Delphi
tools – BCA Analytics, its standalone interactive
charting tool, and BCA Edge, its fully integrated
online research service – have begun to attract
significant customer support.
Thirdly, in September 2015 the group acquired
a 9.9% interest in Zanbato, an international
private capital placements platform for $5.4m.
Founded in 2010, Zanbato (www.zanbato.com)
is based in California and builds technology to
address inefficiencies in private capital markets.
Zanbato’s Marketplace
software
allows
institutional investors and family offices to
The group’s largest organic investment in
review private investment opportunities in pre-
2015 was
Institutional
Investor’s
Investor
IPO company shares and real estate. Zanbato
Intelligence Network and Manager Intelligence
and Institutional Investor have also entered
Network. These capital introduction networks
into a joint venture to bring together the
bring
together
institutional
investors and
technology of Zanbato and the market reach
asset managers from around the world in two
of Institutional Investor’s Investor Intelligence
separate but linked digital communities that
Network to serve the institutional segment of
allow them to connect, share knowledge and
the private placements market.
put capital to work. Revenues will come from
capital introduction fees, data services, platform
fees and, subject to regulatory approval in the
US being obtained, which is now expected in
spring 2016, the ability to charge basis points
on capital placed.
The group made three minority investments in
financial technology companies in 2015. The
first was a 15.5% equity stake in Dealogic in
December 2014, alongside the Carlyle Group
In 2015, the group also disposed of some non-
strategic assets, predominantly print-based
newsletters and magazines.
An indication of the trading outlook for
the group is given in the Chief Executive’s
Statement on page 5.
1 Underlying revenues exclude the impact of acquisitions, disposals and currency movements.
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015 Strategic report ❯ Managing director’s review 08
Business Model
The group’s activities are categorised into four operating divisions: Research and data; Financial
subscription revenues are the fees that
publishing; Business publishing; Conferences, seminars and training (see page 2 for further details).
customers pay to receive access to the group’s
The group has many valuable brands allowing the group to extend the value of existing products
information, through online access to various
and to develop in new areas – both geographically and with new products. For example, information
databases, through regular delivery of soft copy
businesses often run branded events and produce data products covering their area of specialism.
research, publications and newsletters or hard
The group has a sizeable and valuable marketing database allowing new and existing products to
copy magazines. Subscriptions are also received
be matched with relevant customers.
from customers who belong to Institutional
Investor’s exclusive specialised membership
The group primarily generates revenues from four revenue streams: subscriptions; sponsorship;
groups.
delegates; and advertising.
A R C H A ND DATA
i n g Research
k
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o
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AININ
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7 million contacts
180 countries
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ANCIAL P
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Sp
h over 30 b u s i n
g services Expert vie
ISHING CONFE
R
sponsorship revenues represent fees paid by
customers to sponsor an event. A payment
of sponsorship can entitle the sponsor to
high-profile speaking opportunities at the
conference, unique branding before, during
and after the event and an unparalleled
networking opportunity to invite the sponsor’s
clients and representatives.
delegate revenues represent fees paid by
customers to attend a conference, training
course or seminar.
advertising revenues represent the fees that
customers pay to place an advertisement in one
or more of the group’s publications, either in
print or online.
Details of the group’s revenues by revenue
stream and by division are set out in note 3 to
the group financial statements.
The group’s costs are tightly managed with a
constant focus on margin control. The group
benefits from having a flexible cost base,
outsourcing the printing of publications, hiring
external venues for events and choosing to
engage
freelancers, contributors, external
trainers and speakers to help deliver
its
products. Other than its main offices, the group
does not incur the fixed costs of offices in most
of the markets in which it operates; this allows
the group to scale up or reduce overheads as
the economic environment in which it operates
demands.
24254.04 - 15 December 2015 11:52 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com
Strategic report ❯ markEtPLaCE
09
REVENUE BY
CUSTOMER LOCATION
US 42%
Other 16%
Western Europe 15%
UK 15%
Asia 12%
REVENUE BY
MARKET SECTOR
Investment banking 41%
Asset management 33%
Commodities 19%
Other 7%
GROUP REVENUE SPLIT
Subscriptions 52%
Delegates 18%
Sponsorship 15%
Advertising 12%
Other 3%
Marketplace
Euromoney has a global customer base
with revenue derived from almost 200
countries; approximately 60% of revenues
come from the US, Canada, UK and Europe
and more than a third from emerging
markets. Its customer base predominantly
consists of global financial institutions,
investment banks; commodity
traders,
miners; asset managers; governments,
agencies and corporates; and service
providers including lawyers, consultants
and technology providers. Only 15% of
revenues are derived from the UK and
approximately 60% of the group’s people
are based outside the UK.
The group’s total addressable market is
driven by customers’ capital and trading
activities. The group’s EDEN marketing
database holds two million active names
of which more than 600,000 have bought
Euromoney’s products in the past three
years. However, more
important than
the size of the market is its propensity to
spend which is driven by the profitability
of the group’s clients, their expectations of
market developments and increasingly the
regulatory environment. They spend more
willingly where there is market share to be
won than in a market in structural decline.
14%
77%
77%
13%
16%
57%
41%
Although total headcount
in financial
markets has been on a downward trend for
the past five years, the group’s strategy is
driven by growing revenue per customer.
59%
16%
13%
5%
2%
Delegates
9%
1%
Sponsorship
Advertising
Subscriptions
Research and data
Financial publishing
Business publishing
Conferences, seminars
and training
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015
10
Strategic Priorities
The group’s strategy is designed to build a growing, robust and tightly focused global online information business with an emphasis on both developed
and emerging markets. This represents a significant and challenging transformation from its roots as a traditional print publishing and events business.
The group’s key strategic priorities are:
prioritieS
actioNS
key riSk S
kpis
Increasing the
proportion of
revenues derived from
electronic subscription
products
The group has increased the proportion of revenues derived from
subscription products, mostly online, to more than half of its total
revenues and expects the proportion to remain between 50%
and 60% for the foreseeable future. Subscription-based products,
particularly online, usually have the advantage of premium-prices,
high renewal rates and high margins.
●● Downturn in
economy or
market sector
●● Underlying
subscription revenue
growth
Subscription share
of total revenues
Subscription
retention rates
●●
●●
●●
Investment in
technology and new
products
●● Online user
engagement
Subscription
retention rates
●●
●● Underlying revenue
●●
●●
●●
growth
Percentage of
revenues delivered
online
Repeat revenue
rates
Sponsorship and
delegate revenue
yields
●● Audience quality
measures
●●
Revenue by type
●● Adjusted operating
margin
●● Adjusted profit
before tax
Investing in
technology to drive
the online migration
of the group’s
products and develop
new electronic
information services
Maintaining products
of the highest quality
The group invests for the long-term in businesses and products
that meet certain financial and strategic criteria. The group has
completed its transition of all applicable publishing products
onto the Delphi authoring system and continues to develop new
electronic information services, and to take advantage of mobile
and cloud technology.
●● Data integrity,
availability and
cyber security
Failure of key
technology
Failure of
product strategy
●●
●●
Approximately two thirds of the group’s revenues are derived
from its information activities including online and print content,
databases and research. The other third is derived from events
including training. Since 2010, the group has been investing
heavily in technology and content delivery platforms, particularly
for the mobile user, and in new digital products as part of its
transition to an online information business.
●●
Failure of
product strategy
Building large must-
attend events
The group consistently invests in and develops its event portfolio
to ensure they evolve and adapt with their clients’ changing focus
and needs.
●● Downturn in
economy or
market sector
Travel risk
●●
Eliminating products
with a low margin
or too high a
dependence on print
advertising
The group continues to eliminate products with a low margin or
too high a dependence on print advertising. In October 2014,
the group completed the sale of four of its Institutional Investor
newsletter publications.
●● Downturn in
economy or
market sector
24254.04 - 15 December 2015 11:52 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Strategic report ❯ stratEgIC PrIorItIEs
11
prioritieS
actioNS
key riSk S
kpis
Maintaining tight cost
control at all times
Retaining and
fostering an
entrepreneurial
culture
Using a healthy
balance sheet and
strong cash flows
to fund selective
acquisitions and
strategic investments
●● Downturn in
economy or
market sector
●● Adjusted operating
margin
●● Adjusted profit
before tax
●●
Securing and
retaining key
staff
●●
●●
Long-term incentives
(see Directors’
Remuneration
Report)
variable pay as a
percentage of total
pay
●● Cash consideration
on acquisitions
●● Net cash/debt to
EBITDA
●● Cash conversion
rate
The group’s costs are tightly managed with a constant focus
on margin control. The group benefits from having a flexible
cost base, outsourcing the printing of publications, hiring
external venues for events, and choosing to engage freelancers,
contributors, external trainers and speakers to help deliver its
products. Other than its main offices, the group avoids the fixed
costs of offices in most of the markets in which it operates. This
allows the group to scale up resources or reduce overheads as the
economic environment in which it operates demand.
The board does not micro-manage each business, but instead
devolves operating decisions to local management, while
taking advantage of a strong central control environment for
monitoring performance and underlying risk. This encourages an
entrepreneurial culture where businesses have the right kind of
support and managers are motivated and rewarded for growth
and initiative.
While the market for acquisitions of specialist online information
businesses remains competitive and valuations challenging, the
group continues to use its robust balance sheet and strong cash
flows to pursue further transactions. Equally, where businesses no
longer fit, the group divests.
●● Acquisition and
disposal risk
Treasury
operations
●●
The group has strong covenants and takes advantage of its
ability to borrow money cheaply using these funds to invest in
new products and fund acquisitions. The group’s subscription
revenues are normally received in advance, at the beginning of the
subscription service, and a typical subscription contract is for
12 months. This helps provide the group with strong cash flows
and normally leads to cash generated from operations being in
excess of adjusted operating profit – a cash conversion percentage
in excess of 100%.
See page 14 for a detailed explanation of the group’s principal risks and uncertainties and page 12 for the group’s performance against its KPIs.
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015 12
Key Performance Indicators
The group monitors its performance against its strategy using the following key performance indicators:
kpi
DeScriptioN
perFormaNce
uNDerlyiNg
reveNue
growth
Total revenue at constant currency excluding acquisitions and disposals.
Underlying revenues have fallen by 4% due to event timing differences
and weakness in the second half from the commodities sector and
emerging markets.
uNDerlyiNg
SubScriptioN
reveNue
growth
Subscription revenues at constant currency excluding acquisitions and
disposals. Underlying subscription revenues have been increasing at a
steady rate of 2% from a combination of new products and a robust
market landscape for the asset management sector.
12%
8%
1% 3%
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
(4%)
14%
4%
2% 2% 2%
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
SubScriptioN
Share oF total
reveNueS
Subscription-based products, particularly online, usually have the advantage
of premium-prices, high renewal rates and high margins. The group has
increased the proportion of revenues derived from subscription products to
more than half of its total revenues and expects the proportion to remain
between 50% and 60% for the foreseeable future.
47%
52%
52%
51%
51%
iNveStmeNt iN
techNology
aND New
proDuctS (£m)
caSh
coNSiDeratioN
oN acquiSitioNS
(£m)
The group’s investment in technology and new digital products as part of
its transition to an online information business.
19.6
19.0
17.3
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
9.0
10.0
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
The total cash outflow on acquisition-related activity net of cash acquired in
the Consolidated Statement of Cash Flows.
67.2
61.2
28.1
12.7
6.5
2
1
0
2
1
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
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EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Strategic report ❯ kEy PErformanCE IndICators
13
kpi
DeScriptioN
perFormaNce
Net (caSh)/Debt
to ebitDa
The amount of the group’s net debt (converted at the group’s weighted
average exchange rate for a rolling 12-month period) to adjusted operating
profit earnings before depreciation and amortisation of licences and
software, adjusted for the timing impact of acquisitions and disposals. The
strategic priority is to keep net debt to EBITDA below three times.
1.01
0.27
2
1
0
2
1
1
0
2
0.30
4
1
0
2
3
1
0
2
0.09
5
1
0
2
(0.15)
caSh
coNverSioN
rate
The percentage by which cash generated from operations covers adjusted
operating profit. The operating cash conversion rate was 105% (2014:
92%). This year the rate was more than 100% due to the favourable effect
of the rent-free period on the new London offices. The rate was less than
100% in 2014 as the vesting of options under CAP 2010 triggered cash
outflows of approximately £9m for which the expense was accrued in
previous years. After adjusting for these factors, the underlying operating
cash conversion rate was 101% (2014: 100%).
aDJuSteD proFit
beFore tax (£m)
Adjusted profit before tax as set out in the appendix to the Chief
Executive’s Statement.
aDJuSteD
operatiNg
margiN
Operating profit before acquired intangible amortisation, long-term
incentive expense and exceptional items as a percentage of revenue. The
adjusted operating margin fell from 30% to 26% in 2015, reflecting the
impact of higher property and technology investment costs as well as the
loss of contribution from Capital DATA following its sale to Dealogic.
108%
103%
105%
92%
88%
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
116.5 116.2
107.8
106.8
92.7
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
30% 30% 30% 30%
26%
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
variable pay
aS a perceNtage
oF total pay
Staff incentives including bonuses, commissions and normal long-term
incentive expense as a percentage of total staff costs as per note 6 to the
group financial statements.
44%
39%
32%
31%
30%
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
The key performance indicators are all within the board’s expectations taking into account the challenging market conditions and these indicators are
discussed in detail in the Chief Executive’s Statement on pages 4 and 5, and in the Operating Review and Financial Review from page 22.
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015 14
Principal Risks
The principal risks and uncertainties the group faces vary across the different businesses and are identified in the group’s risk register. Management of
significant risk is regularly on the agenda of the board, the risk and audit committees and other senior management meetings.
The group’s risk register identifies the principal risks facing the business. The register is put together following a group-wide assessment of risks reported
in its business risk registers. Each business risk register considers the likelihood of a risk occurring and both the monetary and reputational impact of
the risk crystallising. The risk assessment process also considers risk velocity and the group’s appetite for the risk.
The risk committee has completed a robust and detailed assessment of both the group’s risk management processes and the group risk register and has
considered the impact of significant risks to the group in the context of providing the company’s viability statement. Further details of the group’s risk
management processes, the governance structure for risk and the risk committee can be found in the Corporate Governance Report.
The group uses a number of tools to analyse its risks and facilitate discussions at the board, executive committee and risk committee. The risk matrix
below shows the relative impact and likelihood of the group’s principal risks. The group also considers the extent to which each risk arises from external
or internal factors, and whether each risk is established and understood or is an emerging risk and therefore less understood. The risk radar below maps
the group’s principal risks using this criteria, and uses data point size to illustrate risk direction with increasing risk indicated by the larger data points.
7
1
3
6
2
8
4
9
12
5
11
RISK RADAR
Established risks
5
10
Established/known
11
2
1
9
7
External
Emerging risks
3
12
6
8
4
10
Emerging/new
RISK MATRIX
i
n
a
t
r
e
c
t
s
o
m
A
l
d
o
o
h
i
l
e
k
i
L
y
l
e
k
i
l
n
U
Insignificant
Impact
Very significant
Established operations
Internal
Emerging operations
Euromoney registers its risks based on a residual risk rating after taking account of mitigating controls.
1. Downturn in economy or market sector
2.
Travel risk
3. Compliance with laws and regulations
4. Data integrity, availability and cyber security
5. Hazard risk affecting a significant office
6.
7.
8.
Published content risk
Securing and retaining key staff
Failure of key technology
9. Acquisition and disposal risk
10. Failure of product strategy
11. Treasury operations
12. Unforeseen tax liabilities
24254.04 - 15 December 2015 11:52 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com
Strategic report ❯ PrInCIPaL rIsks
15
The group’s principal risks and uncertainties are summarised below. The arrows provide a pictorial indication of the change in level of perceived risk
compared to last year.
riS k
poteNtial impact
mitigatioN
chaNge
DowNturN iN
ecoNomy or market
Sector
The group generates significant
income from certain key
geographical regions and market
sectors.
Economic or political uncertainty in global financial
markets increases the risk of a downturn or
potential collapse in one or more areas of the
business. If this occurs income is likely to be
adversely affected and for events businesses some
abandonment costs may also be incurred.
The group has a diverse product mix and
operates in many geographical locations.
This reduces dependency on any one sector
or region. Management has the ability to
cut costs quickly if required or to switch the
group’s focus to new or unaffected markets
for instance, through development of new
vertical markets or transferring events to
better performing regions.
travel riSk
The conference, seminar and
training businesses account for
approximately a third of the
group’s revenues and profits.
The success of these events
and courses relies heavily on
the confidence in and ability of
delegates and speakers to travel
internationally.
Significant disruptions to or reductions in
international travel for any reason could lead to
events and courses being postponed or cancelled
and could have a significant impact on the group’s
performance.
Past incidents such as transport strikes, extreme
weather including hurricanes, terrorist attacks, fears
over SARS and swine flu, and natural disasters such
as the disruption to airline schedules from volcanic
ash in Europe, have all had a negative impact on
the group’s results, although none materially.
Where possible, contingency plans are in
place to minimise the disruption from travel
restrictions. Events can be postponed or
moved to another location, or increasingly
can be attended remotely using online
technologies.
Cancellation and abandonment insurance
is in place for the group’s largest events,
including Ebola cover for Mining Indaba, the
group’s largest conference taking place in
South Africa in February 2016.
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015 16
Principal Risks
continued
riS k
poteNtial impact
mitigatioN
chaNge
A breach of legislation or regulations could
have a significant impact on the group in terms
of additional costs, management time and
reputational damage.
In recent years, responsibilities for managing
data protection have increased significantly. The
emergence of new online technology is leading to
further legislation and responsibilities for managing
data privacy.
Proposed new regulation by the European Union to
improve market transparency under which prices,
benchmarks and indices are provided, could affect a
number of businesses in the group.
Failure to comply with laws and regulations in any
part of the world could result in significant financial
penalties and reputational damage.
compliaNce
with lawS aND
regulatioNS
Group businesses are subject
to legislation and regulation
in the jurisdictions in which
they operate. The key laws
and regulations that may have
an impact on the group cover
areas such as libel, bribery and
corruption, competition, data
protection, privacy (including
e-privacy), health and safety and
employment law.
More recently, new financial
regulations being introduced
as a result of the financial crisis
of 2008 have implications for
the group’s price reporting,
benchmark and indices businesses
(see published content risk).
In September 2015 the group
acquired 9.9% interest in Zanbato
Inc, an international private
capital placements platform and
workflow tools provider. A new
business has been created to
bring together the technology of
Zanbato and the market reach
of Institutional Investor’s Investor
Intelligence Network (IIN) to serve
the institutional segment of the
private placements market. This
has increased legal and regulatory
compliance risk for the group.
Compliance with laws and regulations is
taken seriously throughout the group. A
Code of Conduct (and supporting policies)
sets out appropriate standards of business
behaviour and highlights the key legal and
regulatory issues affecting group businesses.
Divisional and local management are
responsible for compliance with applicable
local laws and regulations, overseen by the
executive committee and the board and
supported by internal audit.
The company’s speak-up policy sets out the
duty for all employees to report improper
activity or suspicions of improper activity. If
employees feel they cannot raise a matter
directly, it can be reported anonymously
using an independent whistle-blowing
hotline.
A compliance framework for price reporting,
benchmark and indices businesses has
been implemented, formalising standards
of conduct, procedural guidance and staff
training. Ethics audits have been conducted
to support the framework.
The group has strict policies and controls
in place for the management of data
protection and privacy. These are supported
by new computer-based training (CBT) rolled
out worldwide in 2015. The group has
website technology to reinforce online legal
and regulatory compliance.
The group has compliance staff in place
where relevant and appointed a senior
compliance manager in its IIN/Zanbato
business during the year.
A new online compliance handbook is being
provided to all managers in all offices this
year, to support governance and further
mitigate compliance risk.
24254.04 - 15 December 2015 11:52 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Strategic report ❯ PrInCIPaL rIsks
17
riS k
poteNtial impact
mitigatioN
chaNge
Data iNtegrity,
availability aND
cyber Security
The group uses large quantities
of data including customer,
employee and commercial
data in the ordinary course of
its business. The group also
publishes large quantities of data
(see published content risk).
The integrity, availability and
security of this data are key to the
success of the group.
Information risk has increased as
a result of the growing number
of cyber-attacks affecting
organisations globally, the
group’s greater dependency on
technology and the increasing
threats from cyber-crime.
Any challenge to the integrity or availability of
information that the group relies upon could result
in operational and regulatory challenges, costs to
the group, reputational damage and the permanent
loss of revenue. This risk has increased as the threat
of cyber-attack has become more significant. A
successful cyber-attack could cause considerable
disruption to business operations.
The wider use of social media has also increased
information risk as negative comments made about
the group’s products can now spread more easily
and more quickly.
Although technological innovations in mobile
working, the introduction of cloud-based
technologies and the growing use of social media
present opportunities for the group, they also
introduce new information security risks that need
to be managed carefully.
hazarD riSk
aFFecti Ng a
SigNiFicaNt oFFice
The group’s main offices are in
London, New York, Montreal,
Hong Kong and Sofia. A
significant incident affecting
these cities could lead to
disruption to group operations.
An incident affecting one or more of the key
offices could disrupt the ordinary operations of the
businesses at these locations; a region-wide disaster
affecting all offices could have worse implications
with serious management and communication
challenges for the group and a potential adverse
effect on results.
The risk of office space becoming unusable for a
prolonged period and a lack of suitable alternative
accommodation in the affected area could also
cause significant disruption to the business and
interfere with delivery of products and services.
Incidents affecting key clients or staff in these
regions could also give rise to the risk of not
achieving forecast results.
The group has comprehensive information
security standards and policies in place
which are reviewed on a regular basis.
Access to key systems and data is restricted,
monitored, and logged with auditable data
trails. Restrictions are in place to prevent
unauthorised data downloads. The group
is subject to regular internal information
security audits, supplemented by expert
external resource. The group continues
to invest in appropriate cyber defences
including implementation of intrusion
detection systems to mitigate the risk of
unauthorised access.
The group’s information security group
meets regularly to consider and address
cyber risks.
Comprehensive backup plans for IT
infrastructure and business data are in place
to protect the businesses from unnecessary
disruption.
Information providers are facing increasingly
sophisticated cyber-attacks. The controls
to prevent an information security breach
require constant review and assessment
across the company. The company has an
active information security programme in
place to mitigate cyber risk effectively.
The group’s professional indemnity
insurance provides cover for cyber risks
including cyber-attack and data breach
incidents.
Business continuity plans are in place for
all businesses. These plans are refreshed
annually and a programme is in place for
testing them. If required, employees can
work remotely.
The group has robust, high-availability IT
systems with key locations (including the
UK, US, Canada and Asia) benefiting from
offsite data backups, failover technology
and third-party 24-hour support contracts
for key applications.
The group’s business continuity planning
helped its New York office to recover
quickly and effectively from the significant
disruption caused by Hurricane Sandy
in 2012, and more recently maintain
operations in its Bangkok office during the
Thai political crisis last year.
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015 18
Principal Risks
continued
riS k
poteNtial impact
mitigatioN
chaNge
A successful libel claim could damage the group’s
reputation. The rise in use of social media, and in
particular tweeting and blogging, has increased this
risk. Damage to the reputation of the group arising
from libel could lead to a loss of revenue, including
income from advertising. In addition, there could be
costs incurred in defending a claim.
The group runs mandatory annual libel
courses for all journalists and editors.
Controls are in place, including legal review,
to approve content that may carry a libel
risk. Editorial controls are also in place for
social media and this activity is monitored
carefully.
The failure to manage content redistribution rights
and royalty agreements could lead to overpayment
of royalties, loss of intellectual property and
additional liabilities for redistribution of content.
The integrity of the group’s published data is critical
to the success of the group’s database, research and
data services. The group also publishes extensive
pricing information and indices for the global
metals industries and financial markets. Errors in
published data, price assessments or indices, or a
perceived reduction in the quality of the group’s
research could affect the reputation of the group
leading to fewer subscribers and lower revenues.
Any challenge to the integrity of polls and awards
could damage the reputation of the product and by
association the rest of the group, resulting in legal
costs and a permanent loss of revenue.
The group’s policy is to own its content
and manage redistribution rights tightly.
Royalty and redistribution agreements
are in place to mitigate risks arising from
online publishing. Tight controls have been
implemented for the verification, cleaning
and processing of data used in its database,
research and data services.
Processes and methodologies for assessing
metals and other commodity prices and
calculating indices are clearly defined and
documented. All employees involved with
publishing pricing information or indices
receive relevant training. Robust contractual
disclaimers are in place for all businesses
that publish pricing data, benchmarks and
indices.
publiSheD coNteNt
riSk
The group generates a significant
amount of its revenue from
publishing information and data
online or in its magazines and
journals. As a result, there is an
inherent risk of error which, in
some instances, may give rise
to claims for libel. The rapid
development of social media has
increased this risk.
The transition to online publishing
means content is being
distributed far quicker and more
widely than ever before. This has
introduced new challenges for
securing and delivering content
and effective management of
content rights and royalties.
The business also publishes
databases and data services
with a particular focus on high-
value proprietary data. There is
the potential for errors in data
collection, data processing and/
or poor quality research. The
group publishes industry pricing
benchmarks for the metals
markets and more than 1,000
equity and bond indices. The
group also runs more than 100
reader polls and awards each
year.
SecuriNg aND
retaiNiNg key S taFF
The group is reliant on key
management and staff across all
of its businesses. Many products
are dependent on specialist and/
or technical expertise.
The inability to recruit and retain talented people
could affect the group’s ability to maintain its
performance and deliver growth.
When key staff leave or retire, there is a risk that
knowledge or competitive advantage is lost.
Polls and awards are regularly audited and a
firewall is in place between the commercial
arm of the business and the editors.
Key staff are aware of the significant
risks associated with publishing content
and strong internal controls are in place
for reporting to senior management if a
potential issue arises. These are documented
in a publishing risk handbook provided
to all journalists. The group also has libel
insurance and professional indemnity cover.
Long-term incentive plans are in place
for key staff to encourage retention.
The directors remain committed to the
recruitment and retention of high-quality
management and talent, and provide a
programme of career opportunity and
progression for employees including
extensive training and international transfer
opportunities.
Succession planning is in place for senior
management.
24254.04 - 15 December 2015 11:52 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Strategic report ❯ PrInCIPaL rIsks
19
riS k
poteNtial impact
mitigatioN
chaNge
The group continues to invest significantly
in its central back-office, publishing and
research and data technologies. The
platforms are planned, managed and run
by dedicated, skilled teams with progress
and performance closely monitored by the
executive committee and the board.
The group has digital rights management
technology to ensure its content is
adequately secured and changing customer
requirements for accessing the group’s
products and services are met.
Operational and financial due diligence is
undertaken for all key suppliers as part of a
formal risk assessment process. Contingency
planning is carried out to mitigate risk from
supplier failure.
The group has made a substantial
investment in e-commerce technology
and hosting infrastructure to ensure the
back-office platform continues to perform
effectively.
Failure oF key
techNology
The company has invested
significantly in back-office and
publishing technologies to support
the transition of the business from
print to online publishing. The
proprietary data businesses rely on
specialised information systems
to deliver high-value benchmark,
index and price data to its clients.
The company’s event businesses
are dependent on delegate
registration technologies.
A failure of the back-office technology may affect
the performance, data integrity or availability of the
group’s products and services. Any extensive failure
is likely to affect a large number of businesses and
customers, and lead directly to a loss of revenues.
Online customers are accessing the group’s digital
content in an increasing number of ways, including
using websites, apps and e-books. The group relies
on effective digital rights management technology
to provide flexible and secure access to its content.
An inability to provide flexible access rights to
the group’s content could lead to products being
less competitive or allow unauthorised access to
content, reducing subscription revenues as a result.
The company has many online businesses that rely
on central content management technology to
meet its publishing deadlines and commitments.
Any interruption to publishing and updating
content risks serious reputational damage to
products and declining revenue.
Approximately a third of the group’s revenues derive
from its research and data products. Technology
failures affecting the quality and delivery of these
products could put this revenue at risk.
A failure of the company’s event systems could
cause significant disruption to the running of any of
its events leading to loss of revenue.
The group’s reliance on key suppliers, particularly IT
suppliers, has increased. An operational or financial
failure of a key supplier could affect the group’s
ability to deliver products, services or events which
could have a direct impact on management time
and financial results.
A failure of any one of its key technologies or
a poor strategic investment in an inappropriate
technology could have a significant impact on the
company’s reputation and results.
The company’s back-office
technology provides customer
and product management, digital
rights management, e-commerce
and performance and activity
reporting. The platform supports
a large share of the group’s
online requirements including
key activities for publishing,
events and data businesses.
Central content management
technologies are used to publish
most of the company’s online
content and data.
The company’s research and
data businesses rely on bespoke
databases and algorithms to
provide its clients with investment
research, commodity pricing,
macroeconomic analysis,
benchmarks and indices.
The company runs at least 400
events annually, many taking place
in emerging market countries.
The successful running of the
events depends on high-quality
registration and networking
technology.
The group’s technology is critical
to the successful functioning of all
its businesses and hence carries a
significant amount of risk.
The group considers that this risk
has increased because the group’s
reliance on key technologies has
increased.
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015 20
Principal Risks
continued
riS k
poteNtial impact
mitigatioN
chaNge
acquiSitioN aND
DiSpoSal riSk
As well as launching and building
new businesses, the group
continues to make strategic
acquisitions where opportunities
exist. The management team
reviews a number of potential
acquisitions each year with only
a small proportion of these going
through to the due diligence
stage and possible subsequent
purchase. The group also disposes
of businesses that no longer fit
the group’s strategy.
The group has impaired a number
of its investments during the
year, due to challenging market
conditions, and therefore
considers this acquisition and
disposal risk as increasing.
Failure oF proDuct
Strategy
The growth of tablets and
other mobile devices and the
proliferation of social media are
changing how customers access
and use the group’s products and
services.
The group has established a
strategy to meet the many
challenges of migrating the
publishing businesses from
traditional print media to online
and to ensure the non-publishing
businesses take advantage of new
technology when advantageous
to do so.
This strategy has been pursued
for a number of years.
The group considers that this
risk has increased because of the
increased reliance on technology
for new product development.
There is a risk that an acquisition opportunity
could be missed. The group could also suffer
an impairment loss if an acquired business does
not generate the expected returns or fails to
grow. Additionally, there is a risk that a newly
acquired business is not integrated into the
group successfully or that the expected risks of
a newly acquired entity are misunderstood. As a
consequence a significant amount of management
time could be diverted from other operational
matters.
The group is also subject to disposal risk, possibly
failing to achieve optimal value from disposed
businesses, failing to identify the time at which
businesses should be sold or underestimating
the impact on the remaining group from such a
disposal.
Senior management perform detailed
in-house due diligence on all prospective
acquisitions and call on expert external
advisors where necessary. Acquisition
agreements are usually structured to retain
key employees in the acquired company and
there is close monitoring of performance at
board level post-acquisition.
The board regularly reviews the group’s
existing portfolio of businesses to identify
under-performing businesses or businesses
that no longer fit with the group’s strategy
and puts in place divestment plans
accordingly.
The group’s online strategy addresses a number of
challenges arising from the group’s transition from
print media to an online business and changing
customer behaviour.
The group is embracing these challenges
and overall sees the Internet and other
technological advances as an opportunity,
not a threat.
Competition has increased, with free content
becoming more available on the Internet and
new competitors benefiting from lower barriers
to entry. A failure to manage pricing effectively or
successfully differentiate the group’s products and
services could negatively affect business results.
The customer environment is changing fast with an
increasing number spending more time using the
Internet. Print circulation is declining and a failure to
convert customers from print risks a permanent loss
of customers.
Further changes in technology including the
widespread use of tablets and other mobile devices
and social media are changing customer behaviour
and introducing new challenges.
A failure in the group’s online strategy to meet
these challenges could result in a permanent loss of
revenue.
Significant investment in the group’s online
strategy has already been made and will
continue for as long as necessary. New
content management technology is being
implemented across the group to enable
more effective publishing to web, print and
the rapidly increasing number of mobile
platforms coming onto the market. Many of
the group’s businesses already produce soft
copies of publications to supplement the
hard copies as well as provide information
and content via apps.
The group’s acquisition strategy has
increased the number of its online
information businesses. However, while
online revenues are important, the group’s
product mix reduces dependency on online
income. For example, the group generates a
third of its profits from its event businesses
and face-to-face meetings remain an
important part of customers’ marketing
activities.
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21
riS k
poteNtial impact
mitigatioN
chaNge
treaSury operatioNS
The group treasury function is
responsible for executing treasury
policy which seeks to manage
the group’s funding, liquidity and
treasury derivatives risks. These
include currency exchange rate
fluctuations, interest rate risks,
counterparty risk and liquidity
and debt levels. These risks
are described in more detail in
note 18 to the group financial
statements.
uNForeSeeN tax
liabilitieS
The group operates within many
tax jurisdictions and earnings
are therefore subject to taxation
at differing rates across these
jurisdictions.
If the treasury policy does not adequately mitigate
the group’s financial risks or is not correctly
executed, it could result in unforeseen derivative
losses or higher than expected finance costs.
The tax and treasury committee is
responsible for reviewing and approving
group treasury policies which are executed
by the group treasury.
The treasury function undertakes high-value
transactions hence there is an inherent risk of
payment fraud or error having an adverse impact on
group results.
Segregation of duties and authorisation
limits are in place for all payments made.
The treasury function is also subject to
regular internal audit.
The directors endeavour to manage the tax affairs
of the group in an efficient manner; however,
due to an ever-more complex international
tax environment there will always be a level of
uncertainty when provisioning for tax liabilities.
There is also a risk of tax laws being amended by
authorities in the different jurisdictions in which the
group operates which could have an adverse effect
on the financial results.
External tax experts and in-house tax
specialists, reporting to the tax and treasury
committee, work together to review all tax
arrangements within the group and keep
abreast of changes in global tax legislation.
viability StatemeNt
In accordance with provision C.2.2 of the 2014 revision of the Corporate Governance Code, the directors have assessed the viability of the group and
have selected a period of three years for the assessment.
The group operates in volatile sectors and geographical markets but has more than half of its revenues based on annual subscriptions with strong
renewal rates, has no outstanding debt and few long-term financial obligations. For these reasons the group uses a three-year strategic planning cycle
and the directors have determined that three years is also an appropriate period over which to provide its viability statement.
The assessment conducted considered the group’s operating profit, revenue, EBITDA, cash flows, dividend cover and other key financial ratios over
the three-year period. These metrics were subject to severe downside stress and sensitivity analysis over the assessment period, taking account of
the group’s current position, the group’s experience of managing adverse conditions in the past and the impact of a number of severe yet plausible
scenarios, based on the principal risks set out in the Strategic Report. The stress testing considered the principal risks assessed to have the highest
probability of occurrence or the severest impact, crystallising both individually and in combination. The assessment modelled a significant downturn in
the world economy affecting all three years of the assessment period and a number of successive product and business failures, including the failure
of a new acquisition.
In making the assessment, the directors have considered the group’s robust capital position, the cash-generative nature of the business, the ability of
the company to cut costs quickly, the access to available credit, the absence of pension and M&A liabilities and the group’s ability to restrict dividends.
Based on the results of this analysis, the directors confirm that they have a reasonable expectation that the group will be able to continue in operation
and meet its liabilities as they fall due over the next three years.
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015 22
Operating Review
operatiNg review
Trading review
Total revenues decreased by 1% to £403.4m.
Trading has remained difficult, particularly in
performance of the group’s asset management
investment banking, where tougher regulation,
businesses has remained robust throughout the
increased compliance costs and significant fines
year, and subscription revenues, particularly
Underlying revenues, after also adjusting for
levied by regulators have led to banks reducing
for data and research products, have proved
unfavourable event timing differences, decreased
headcount and cutting spend on marketing
resilient. Emerging markets, which account for
by 2%. A 1% increase in the first half was
and information. The commodities sector has
more than a third of the group’s revenues, have
followed by a 5% decrease in the second, largely
also suffered from oversupply, falling prices
proved challenging with increased geopolitical
due to weakness in the commodities sector.
and lower trading volumes. In contrast, the
risk and weakening currencies.
revenues
Subscriptions
Advertising
Sponsorship
Delegates
Other
Sold/closed businesses
Foreign exchange gains on forward contracts
total revenue
2015
£m
210.5
48.9
59.2
70.5
12.1
1.6
0.6
403.4
2014
£m
196.8
52.2
56.6
71.1
13.3
13.7
2.9
406.6
Headline
change
Underlying
change
7%
(6%)
5%
(1%)
(9%)
2%
(11%)
(4%)
(12%)
(11%)
Underlying
change
excluding
timing
differences
2%
(11%)
(2%)
(5%)
(11%)
(1%)
(4%)
(2%)
Growth
in underlying subscriptions partly
platform, and the impact of the Dealogic transaction. In addition, the adjusted operating margin fell
offset the declines experienced in advertising
by nearly two percentage points as a result of the high marginal profit on declining advertising and
and event revenues. Underlying subscription
delegate revenues. Permanent headcount has fallen by 23 to 2,168 people since September 30 2014
revenues have been increasing at a steady
but like many businesses operating in the digital space the group continues to experience increases in
rate of 2% for the past two years from a
people costs in excess of inflation, particularly in technology, data and research.
combination of new products and a robust
asset management sector. After first half
growth of 5%, underlying event revenues
(excluding event timing differences) declined by
9% in the second half due mainly to weakness
in the commodities sector. Most of the group’s
larger events have performed well, particularly
in the specialist finance and wholesale telecoms
sectors, but this has been more than offset by
the weaker performance from smaller events
and training which traditionally struggle more
in difficult markets. Underlying advertising
revenues continued to decline as a result of the
structural and cyclical headwinds which have
reduced banks’ marketing spend, and more
recently due to reductions in spend by energy
companies in response to weak oil prices.
The adjusted operating margin fell from 30%
to 26% as a result of a number of factors
highlighted at the start of the year, including
higher property costs, the full year impact of
the group’s investment in its Delphi content
Business division review
The research and data division, with its revenues derived predominantly from subscription services,
held up well during the year. Financial publishing continued to suffer from the structural and cyclical
challenges facing global investment banks, while business publishing, which is less advertising
dependent, was more robust. The conferences, seminars and training division had a difficult year
after the sharp downturn in energy markets in the second half. This particularly hit the training
business which was hit by reductions in training spend both from the energy sector itself as well as
from banks in energy-dependent economies, many of them in emerging markets.
revenues
2015
£m
2014
£m
Headline
change
Underlying
change
Underlying
change
excluding
timing
differences
Adjusted
operating
margin
2015
£m
Adjusted
operating
margin
2014
£m
Research and data
Financial publishing
Business publishing
Conferences, seminars
and training
Sold/closed businesses
Foreign exchange
gains on forward
contracts
total revenue
125.8 120.8
75.8
67.8
74.3
70.0
131.1 125.6
13.7
1.6
0.6
2.9
403.4 406.6
4%
(2%)
3%
0%
(6%)
0%
0%
(6%)
0%
35%
25%
35%
37%
28%
34%
4%
(7%)
(2%)
25%
27%
(1%)
(4%)
(2%)
26%
30%
24254.04 - 15 December 2015 11:52 AM - Proof 8
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23
research and data: the asset management
Conferences,
seminars and
training:
The strength of the US dollar has had a favourable
sector remained robust throughout 2015
the 7% decrease in underlying revenues is
impact on the translation of overseas profits.
and renewal rates at BCA and NDR remained
primarily attributable to the difficult market
The average sterling-US dollar rate for the year
high. However, the group’s emerging market
conditions faced by the group’s commodities-
to September 30 was $1.55 (2014: $1.66). This
information and data products, CEIC and EMIS,
related events, including metals and coal,
improved headline revenue growth rates for the
which generate a significant proportion of their
particularly during the second half. Even
year by approximately three percentage points
revenues from local emerging markets as well
after adjusting for some unfavourable events
and adjusted profit before tax by approximately
as the banking sector, fared less well. As a
timing,
this commodities weakness more
£7m. Each one cent movement in the US dollar
result, underlying revenues for the division were
than offset
the strength of
Institutional
rate has an impact on profits on translation of
flat. The adjusted operating margin fell two
Investor’s
subscription-based memberships
approximately £0.6m on an annualised basis.
percentage points to 35% due to amortisation
for the asset management industry which
at BCA for its new Delphi content platform,
continued to grow at double digit rates. The
investment at CEIC in content automation, and
adjusted operating margin dropped
two
new product and sales investment at EMIS.
percentage points to 25% reflecting the high
financial publishing: underlying revenues
decreased by 6%
reflecting
continued
weakness in the group’s financial titles and
their dependence on bank advertising. In
contrast, subscription revenues for the division
increased, including strong growth from Insider
Publishing, the insurance information business
acquired in 2013, and Euromoney TRADEdata,
the group’s derivative data business. The
adjusted operating margin fell three percentage
margin flow-through from
lower delegate
revenues, and investment in e-learning products
for Euromoney’s training division. The increase
in headline event revenues reflects the acquisition
of Mining Indaba in July 2014, which achieved
revenues of more than £9m the first time
it was run under Euromoney ownership in
February 2015.
Currency
The group generates approximately two thirds
points to 25% reflecting amortisation for
of both its revenues, including approximately a
GlobalCapital’s Delphi content platform, and
third of its UK revenues, and profit before tax in
increased technology spend, particularly for
US dollars. The exposure to US dollar revenues
HedgeFund Intelligence.
business publishing: underlying revenues
were flat despite a strong performance from
the wholesale telecoms business, TelCap, which
was offset by the challenging energy markets
faced by Gulf Publishing. Despite tougher
metals markets, Metal Bulletin’s revenues
held up well. The adjusted operating margin
improved from 34% to 35% attributable to the
strong performance of TelCap and an improving
margin for Metal Bulletin following a period of
investment in its steel information service and
pricing database.
in its UK businesses is hedged using forward
contracts to sell US dollars, which delays the
impact of movements in exchange rates for at
least a year. However, the group does not hedge
the foreign exchange risk on the translation of
overseas profits. While it endeavours to match
foreign currency borrowings with investments,
as debt levels have fallen the related foreign
currency finance cost has been of only limited
benefit as a hedge against the translation of
overseas profits.
Acquisitions and disposals
Acquisitions remain an important part of the
group’s growth strategy. In particular the board
believes that acquisitions are valuable for taking
the group into new sectors, for bringing new
technologies into the group and for increasing
the group’s revenues and profits by buying into
rapidly growing niche businesses. The group
continues to look for strategic acquisitions
which will fit well with its existing businesses.
Equally, where businesses no longer fit, the
group divests.
During 2015, the group made three minority
investments in financial technology companies:
a 15.5% equity stake in Dealogic in December
2014, a 10% equity stake in Estimize in
July 2015 and a 9.9% interest in Zanbato in
September 2015. The group disposed of its
interests in two businesses (Capital DATA and
Capital NET) to Dealogic and four Institutional
Investor newsletter publications. All three
investments were consistent with the group’s
strategy of expanding its digital offering into
workflow and Software-as-a-Service
(SaaS)
solutions for the global investment banking
and asset management sectors. Details of all
investments, acquisitions and disposals are set
out in notes 13 and 14 to the group financial
statements.
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015 24
Operating Review
continued
iNveStmeNt
DeScriptioN
equity
Stake
total
coNSiDeratioN
Date acquireD
Leading provider of an SaaS
platform for the global capital
markets industry.
15.5%
£37.8m
December 18 2014
Leading provider of a
crowdsourcing platform for
corporate earnings forecasts.
Leading international private
capital placements platform
and workflow tools provider.
10%
£2.3m
July 14 2015
9.9%
£3.5m
September 29 2015
Dealogic transaction
However, with its strong brand and global
The migration to the new consolidated office
Euromoney acquired a 15.5% equity interest,
use among investment banks, Dealogic offers
premises and flexible working model in London
and 20% of the voting rights, in Dealogic in
Euromoney attractive strategic potential. The
was successfully enabled by the operations and
December 2014. This investment was funded
Dealogic transaction has significant potential
service delivery teams and tools are now in place
through the sale to Dealogic of Euromoney’s
long-term financial upside but, as highlighted
to support an increasingly mobile workforce.
interests in two businesses, Capital DATA and
at the time of the transaction, in the short-term
An example of this was the project to migrate
Capital NET, which Dealogic and Euromoney
the loss of earnings from the Capital DATA
the Institutional Investor Memberships division
had operated since the 1980s. The transaction
and Capital NET arrangements have more than
from a legacy CRM to Salesforce that went live
valued Euromoney’s participation in these two
offset the group’s share of profits from the
on time and budget during the summer.
businesses at $85m, for which Euromoney
Dealogic associate interest.
received equity in Dealogic valued at $59m,
cash of $5m, and preference shares of $21m
which are redeemable in December 2015. The
transaction generated a gain on sale of £48m
which has been included in exceptional items.
Systems and information technology
Technology remains at the heart of the group’s
Talent attraction and development remain a key
capability. The group has an active graduate
programme linked to a number of universities in
business with significant investment throughout
both the UK and US, supported by a Hackathon
the year in the people, products, process, tools
at Google.
and infrastructure to support the group’s digital
For the year to September 30 2014, Euromoney’s
and events-based businesses. It has enabled
subscription revenues and adjusted operating
innovative new product development as well
profits included licence fees of £5.4m from
as driven cost efficiencies throughout the value
its investment in Capital DATA. For the same
chain.
period, Euromoney recognised a profit after tax
of £0.3m from its 48.4% associate interest in
Capital NET. In financial year 2015, for the three
months prior to the transaction, Euromoney
recognised subscription revenues of £1.2m
from Capital DATA and a profit after tax of
£0.1m from Capital NET. For the nine months
subsequent to the transaction, Euromoney
recognised an adjusted share of profit in
associates of £2.4m from Dealogic. As well as
reducing the group’s adjusted operating margin
by one percentage point, the transaction
diluted Euromoney’s 2015 adjusted after-tax
earnings by approximately 2%.
Project Delphi came to a close at the end of
the financial year with new products now live
at BCA, Global Capital, Capacity Intelligence
and HedgeFund Intelligence as well as a new
corporate website. Agile and lean principles
have been successfully assimilated into the
working culture alongside key
technical
capabilities in search, authoring, analytics,
data management and continuous integration.
Over 75 digital projects have been successfully
delivered across the group by a function that
now accounts for nearly 10% of the group’s
total workforce.
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25
BCA
Research
BCA Research has
continued to innovate its
product offerings both
in terms of content and
digital solutions and
launched during the year:
Marketing and digital development
The group continues to
invest
in digital
Increasingly, customers want to access and
pay for the group’s products and services
development, especially customer engagement
in different ways. The group has started to
and product innovation.
The group’s digital success is reflected in its
engagement metrics with now more than 100
businesses active on social media. The group’s
social media connections have increased 38%
year on year, and the group has more than
700,000 members across major social platforms,
such as LinkedIn and Twitter. The group has
also developed a more integrated approach
to content marketing in both publishing and
events businesses. This combines multi-media
and agenda-led content with speaker, sponsor
build new digital billing and subscription
management capabilities to replace existing
legacy technology and processes. The goals
are: to remove friction in a customer journey
from registering for a trial and logging-in to
buying, renewing and upgrading subscriptions;
to improve the efficiency and manual processes
for nurturing of sales leads; and, to standardise
and automate sales and business reporting.
This will increase flexibility to test new products,
prices and bundles in order to add more value
for customers.
and attendee interaction throughout the year.
The group continues to invest in EDEN, the
The company has accelerated the roll-out of
new subscription-based digital products: BCA
Research launched BCA Analytics and BCA
Edge using the new Delphi digital platform;
TelCap launched Capacity Intelligence, an online
database providing proprietary
information
on telecoms companies, M&A activity and
partnership data; HedgeFund
Intelligence
recently relaunched its platform, which includes
the world’s most sophisticated relationship
database of hedge fund performance; CEIC
group’s marketing database, which has in
excess of two million active names. The
BCA Edge enables users quickly
customer insight team provides more in-depth
to discover and integrate research
analysis of customer usage behaviour, renewal
content into their investment
cycles, web usage, demographics, helping to
workflows. It is an investment
identify opportunities for cross-selling and new
research platform that leverages
customer opportunities.
Headcount
The number of people employed is monitored
monthly to ensure there are sufficient resources
to meet the forthcoming demands of each
the Delphi technology stack to
semantically deconstruct BCA’s
research and analysis and overlays this
with a set of client-requested tools
and applications.
launched an online China Discovery product
business and to make sure that the businesses
BCA Indicators module is the first data
that provides actionable insights on China’s
markets; EMIS launched a Thought Leadership
product which creates
thought-provoking
content for global business leaders; Metal
Bulletin launched Copper Price Briefing to
provide crucial information for the copper
market; and Trade Finance relaunched its
product to provide customers with an improved
database and customer experience. The group
continue
to deliver
sustainable profits.
During 2015 the directors have focused on
maintaining headcount at a similar level to
that in 2014, hiring new heads only where it
was considered essential or for investment
purposes. Headcount has fallen by 23 since
September 2014 to 2,168, mainly attributable
to 23 leavers from the disposal of the four
Institutional Investor newsletter publications
continues to invest in product training by
and closure of Euromoney Yearbooks.
product to integrate BCA’s market-
leading proprietary indicators into
client models and systems.
BCA Research is working with
Estimize to build a set of innovative
features and products that deliver
insights and predictions on individual
company earnings and revenue and
economic indicators.
offering best practice tools and techniques to
individual businesses and participating in intra-
company product management workshops run
by DMGT.
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Annual Report and Accounts 2015 26
Financial Review
FiNaNcial r eview
The 7% fall in adjusted profit before tax to
The 1% decrease in adjusted diluted earnings a
The statutory profit before tax of £123.3m is
share reflects the benefit of a lower underlying
higher than the adjusted profit before tax due
£107.8m compares to a 13% drop in adjusted
tax rate and a reduction in the number of
to a net exceptional credit of £33.4m (see note
operating profit. This partly reflects a £2.5m
shares in issue following last year’s share buy-
3), offset by acquired intangible amortisation of
credit (2014: £2.4m expense) following the
back. The adjusted effective tax rate for the
£17.0m. The net exceptional credit mostly arises
first half decision to reverse last year’s CAP
year was 18% against 22% for 2014 as the
from profits on assets sold during the year, less
expense on the grounds that management
group continues to benefit from reductions in
goodwill impairment charges including a second
believe it is unlikely the minimum performance
the UK corporate tax rate and the tax effects of
half charge of £10.7m for Mining Indaba to
target under CAP 2014, the group’s long-term
acquisitions. The tax rate in each year depends
reflect the sharp downturn in the commodities
incentive plan, will be achieved in 2017. In
mainly on the geographic mix of profits and
sector which is not expected to reverse in the
addition, the Dealogic transaction gave rise to
applicable tax rates.
an increase of £2.2m in the adjusted share of
results in associates.
near term. A detailed reconciliation of the
group’s adjusted and statutory results is set out in
the appendix to the Chief Executive’s Statement.
Balance sheet
The main movements in the balance sheet were as follows:
Goodwill and other intangible assets
Property, plant and equipment
Investments
Acquisition commitments and deferred consideration
Deferred income
Other non-current assets and liabilities
Other current assets and liabilities
net assets before net debt
Net cash/(debt)
net assets
2015
£m
531.4
9.2
38.3
(8.6)
(112.1)
(24.0)
(7.0)
427.2
17.7
444.9
2014
£m
545.4
16.9
0.1
(21.9)
(109.8)
(27.6)
(9.0)
394.1
(37.6)
356.5
Change
£m
(14.0)
(7.7)
38.2
13.3
(2.3)
3.6
2.0
33.1
55.3
88.4
In 2015 the net assets increased by £88.4m to £444.9m. The increase in net assets is broadly as a result of the £105.4m group profit offset by dividends
of £29m.
The movements are explained below:
●● goodwill and other intangibles assets – there were no acquisitions in the year adding to goodwill and acquired intangible assets. The movement
includes goodwill impairment of £18.5m for Mining Indaba, HedgeFund Intelligence and Centre for Investor Education (CIE) and amortisation of
£19.7m.
●●
Property, plant and equipment – certain freehold and leasehold properties were sold as part of the relocation of the group’s London offices
reducing net assets by £11.3m. Capital expenditure of £6.5m included £5.2m for the new offices offset by depreciation of £2.6m.
●●
Investments – includes three minority investments in financial technology companies and disposals of Capital DATA and Capital NET (see pages
23 and 24 and note 13)
●● acquisition commitments and deferred consideration – the decrease is due to the deferred consideration payment of £11.6m for Insider
Publishing and the revision of the group’s prior estimate of acquisition commitments and deferred consideration in respect of CIE which has given
rise to a release of £5.2m (note 2).
●● deferred income – the underlying movement excluding exchange differences fell by £2.6m mainly due to the disposal of the Institutional Investor
newsletter publications and the continued pressure on delegate revenues.
●● other non-current assets and liabilities – includes the decrease of £2.9m in the pension deficit.
●● other current assets and liabilities – includes a debtor of $21.2m (£14m) for preference shares held as part of the disposal of Capital DATA
offset by accruals for the rent free periods on the new leases in the London office and movements on the marked to market valuation of short-term
derivative contracts.
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27
2015
£m
109.5
10.6
(3.0)
(14.8)
102.3
(29.4)
(15.6)
–
57.3
(37.6)
(2.0)
17.7
2014
£m
110.2
–
(7.3)
(22.5)
80.4
(29.0)
(55.7)
(21.5)
(25.8)
(9.9)
(1.9)
(37.6)
Change
£m
(0.7)
4.3
7.7
21.9
(0.4)
40.1
21.5
83.1
(27.7)
(0.1)
55.3
Net cash/(debt) and cash flow
The main movements in the cash flow were as follows:
Cash generated by operations
London property move
Capex and other movements
Taxation
Free cash flow
Dividends paid
Net M&A
Payments to acquire own shares
Opening net debt
Effect of foreign exchange rate movements
Closing net cash/(debt)
Net cash at September 30 2015 was £17.7m
depend on the group’s expected borrowing
and up to 50% for a further six months. As
compared with net debt of £10.6m at March 31
requirements at the time the facility expires,
a result of this hedging strategy, any profit or
and £37.6m at last year end. This balance sheet
including its acquisition pipeline.
loss from the strengthening or weakening of
position reflects the group’s strong operating
cash flows, as well as net property proceeds
of £10.6m following the group’s London office
move. This was offset by net acquisition and
disposal spend of £15.6m including £11.6m for
the deferred consideration on the acquisition of
Insurance Insider.
Dividends
The company’s policy is to distribute a third
of its adjusted after-tax earnings by way of
dividends. In line with its policy, the board
the US dollar will largely be delayed until the
following financial year and beyond. The group
does not hedge the foreign exchange risk on
the translation of overseas profits.
recommends a final dividend of 16.40p a share
Details of the financial instruments used are set
(2014: 16.00p), to be paid to shareholders on
out in note 18 to the group financial statements.
February 11 2016, giving a total dividend for
The operating cash conversion rate was 105%
the year of 23.40p a share (2014: 23.00p).
Tax
The adjusted effective tax rate based on
(2014: 92%). The rate was more than 100%
due to the favourable effect of the rent-free
period on the new London offices. The rate
was less than 100% in 2014 after the vesting
of options under CAP 2010 triggered cash
outflows of approximately £9m for which the
expense was accrued in previous years. After
adjusting for these timing differences, the
underlying operating cash conversion rate in
each year was 101% (2014: 100%).
The group has a US$160m (£106m) dedicated
multi-currency borrowing facility from Daily
Mail and General Trust plc, the group’s parent,
which expires
in April 2016. The group
has no significant outstanding acquisition
commitments for 2016 and expects to receive
a further $21m in January 2016 from the
redemption of preference shares as part of
the Dealogic transaction. The need for, and
size of, a new borrowing facility will therefore
Treasury
The treasury department does not act as a profit
adjusted profit before tax and excluding
deferred tax movements on intangible assets,
centre, nor does it undertake any speculative
prior year items and exceptional items is 18%
trading activity, and it operates within policies
(2014: 22%). The group’s reported effective
and procedures approved by the board.
tax rate decreased to 14% compared to 25%
The group generates approximately
two
thirds of its revenues in US dollars, including
approximately 30% of the revenues in its UK-
in 2014. A reconciliation to the underlying
effective rate is set out in note 8 to the group
financial statements.
based businesses, and approximately 60% of
The net deferred tax liability held is £18.4m
its operating profits are US dollar-denominated.
(2014: £19.1m) and
relates primarily
to
The group is therefore exposed to foreign
capitalised intangible assets and tax deductible
exchange risk on the US dollar revenues in its
goodwill, net of
short-term
temporary
UK businesses, and on the translation of the
differences and tax losses. The reduction in the
results of its US dollar-denominated businesses.
net deferred tax liability related to tax losses
In order to hedge its exposure to US dollar
revenues in its UK businesses, a series of forward
contracts are put in place to sell forward surplus
US dollars. The group hedges 80% of forecast
US dollar revenues for the coming 12 months
arising from the impairment of tax deductible
goodwill is partially offset by foreign exchange
movements on capitalised intangible assets.
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015 28
Corporate and Social Responsibility
corporate aND Social
reSpoNSibility
The group is diverse and operates through a
large number of businesses in many locations.
Each business provides important channels of
communication to different sections of society.
The success of the group’s businesses owes
much to understanding and engaging with
the communities they serve both locally and
globally.
Below are some explanations on key areas of
corporate responsibility.
People
One of the group’s strategic priorities is to
retain and foster an entrepreneurial culture.
Employees are encouraged to think creatively,
be entrepreneurial and innovative, and to deliver
organic growth. People are empowered not only
to deliver the best for their business, but to give
back to the communities in which they live and
work.
The group has continued to attract talent
through
the use of hackathons
and
communicating
its
technical
ambitions
at conferences. However, the market for
technology skills has never been hotter
and retention has been a challenge in 2015
which will continue into 2016.
Diversity
The group has strong focus on the world’s
emerging markets and has customers
in
more than 200 countries. Delivering excellent
quality products to the world’s diverse markets
demands a diverse workforce. A
recent
employee survey revealed that over 90 different
languages are spoken within the company.
The board believes that diversity is important for
board effectiveness. However, diversity is much
more than an issue of gender, and includes a
diversity of skills, experience, nationality and
background. Diversity will continue to be a
key consideration when contemplating the
composition and refreshing of the board as
well as senior and wider management. The
board recognises that while the overall balance
of gender is good within the group, with 47%
of employees being female (2014: 47%), there
is still more work to be done to fulfil overall
diversity ambitions.
The group is an equal opportunity employer.
It seeks to employ a workforce which reflects
the diverse community at
large, because
the contribution of the individual is valued,
irrespective of sex, age, marital status, disability,
sexual preference or orientation, race, colour,
religion, ethnic or national origin. It does not
discriminate in recruitment, promotion or other
employee matters. The group endeavours
to provide a working environment free from
unlawful discrimination,
victimisation or
harassment.
Further details on employees are set out in the
Directors’ Report.
DIVERSITY PROFILE AT SEPTEMBER 30 2015
training and development
The group
is committed
to developing
teams and individuals to achieve excellent
results. Training and development are the
responsibility of each operating business.
The group has an advantage when it comes
to training and development because it has
its own highly accredited training business,
Euromoney Learning Solutions, and as a result
a comprehensive range of training programmes
which are available as part of an employee’s
personal development. The group supplements
these with key initiatives, an implicit objective
of which is to build internal networks and
to foster peer assistance and collaboration,
including taking part in DMGT group-wide
initiatives. Examples of these are:
●● Management Development Programme
(MDP):
this
is a
three-day
intensive
workshop focusing on innovation and
launching new businesses, followed by
three months of group work to develop
new business
ideas, which are then
presented to a judging panel chaired by the
managing director.
●● Hackathon: the group ran its second hack
event, TechSprint, in October in its search
for the next generation of top tech talent.
30 recent graduates from across the UK
were placed in teams of five, and tasked
to solve and build solutions to real-life
business problems. Each team researched,
designed, coded and then presented a
variety of tech products to a panel of
judges. The group sees this kind of event as
evidence of its commitment to innovation
and investment in technology, and also an
invaluable source of graduate talent.
14
161
2,168
Board
Senior managers
Permanent employees
Male 86%
Female 14%
Male 76%
Female 24%
Male 53%
Female 47%
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29
●● Graduate Programme: graduate trainee
journalists join the group on a six-month
training programme. The scheme combines
on-the-job training with classroom-based
learning to equip participants for a career
in financial and business journalism. The
technology graduate training programme
recruits skilled graduates for roles including
developer, business analyst and quality
assurance tester. Graduates are supported
by a team of mentors and gain hands-on
experience working on projects across
the group alongside divisional heads of
technology and project managers.
●● DMGT’s
Leadership
Development
Programme (LDP): this is a comprehensive
programme consisting of
two week-
long modules with a six-month period
in between. The programme allows the
sharing of insights in leadership such as
markets and competitive landscapes and
advances in technology.
Capital appreciation Plan (CaP)
The CAP, the group’s long-term incentive
scheme designed to retain and reward those
who drive the group’s profit growth, has been
an integral part of its growth strategy since it
was first introduced in 2004. The minimum
performance target under the CAP is unlikely
to be achieved given the continuing tough
trading conditions with the result that the
CAP costs were not amortised in 2015 and the
costs recognised in 2014 were reversed in the
current year resulting in a credit of £2.5m to
the Income Statement. Further details are set
out in the Directors’ Remuneration Report.
Environment
The group does not operate directly in industries
where there is the potential for serious industrial
pollution. It does not print products in-house or
have any investments in printing works. It takes
its environmental responsibility seriously and
complies with all relevant environmental laws and
regulations in each country in which it operates.
is
Wherever economically feasible, account
taken of environmental issues when placing
contracts with suppliers of goods and services
and these suppliers are regularly reviewed and
monitored. For instance, the group’s two biggest
print contracts are outsourced to companies
which have environment management systems
compliant with the ISO 14001 standard. The
paper used for the group’s publications is
produced from pulp obtained from sustainable
forests, manufactured under strict, monitored
and accountable environmental standards.
it does manage
The group is not a heavy user of energy;
however,
energy
requirements sensibly using low-energy office
equipment where possible and uses a common
sense approach to office energy management.
its
Each office within the group is encouraged
to reduce waste, reuse paper and only print
documents and emails where necessary. The
main offices across the group also recycle waste
where possible.
The directors are committed to reducing
the group’s absolute carbon emissions and
managing its carbon footprint. In 2012 the
company, as part of the wider DMGT group, set
a target to reduce its carbon footprint relative
to revenue over a three year period by 10%.
The company exceeded this target, with a
total reduction in emissions intensity over the
three-year period of 12%. Further details of the
carbon footprint are set out in the Directors’
Report.
Social investment
The group continues to expand its charitable
activities and raised over £0.5m for local
and
international charitable causes during
the year. These contributions came from its
own charitable budget, individual employee
fundraising efforts and also from clients who
generously made donations in support of
the company’s charitable projects. The group
also continues to encourage employees to
be involved actively in supporting charities by
fundraising themselves which it then matches.
Further details can be found on the company’s
website, www.euromoneyplc.com/corporate-
social-responsibility.
The group works and partners with recognised
charitable organisations that have expertise
within certain sectors, thus ensuring that
the implementation and management of a
charitable project is carried out efficiently and
that donated funds reach the communities at
which the charitable cause is aimed. At the
same time, the charity committee is careful
to address the sustainability aspects of each
charitable project to ensure a long-lasting
beneficial impact.
The group also tries to adopt a company-wide
charity and support it for a year or more. The
last such charity was Action Against Cancer for
which Euromoney raised over £1m in 2013.
In 2015 the group went through a selection
process to find a new charity to support for
the next 12 to 18 months. Employees were
requested to nominate charities and from 40
nominations the executive committee compiled
a final shortlist of three. After due diligence of
the charities and a final vote from employees
the decision was made to support both Afghan
Connection, a charity with over 10 years’
experience successfully
funding education
and sports projects in Afghanistan, and Haven
House, an independent charity supporting over
300 families in the UK with children who have
life-limiting or life-threatening conditions. The
plan for the fundraising efforts is underway to
capture the enthusiasm that employees have
shown for both charities. Further details about
these charities can be found on the company’s
website.
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Annual Report and Accounts 2015 30
Corporate and Social Responsibility
continued
that
confirms
Euromoney
FTSE Group
Institutional Investor PLC has been independently
assessed according to the FTSE4Good criteria,
and has satisfied the requirements to become
a constituent of the FTSE4Good Index Series.
FTSE4Good is an equity index series designed
to facilitate investment in companies that meet
globally
responsibility
standards. Companies in the FTSE4Good Index
Series have met stringent environmental, social
and governance criteria, and are positioned to
capitalise on the benefits of responsible business
practice.
recognised corporate
Certain statements made in this document are
forward-looking. Such statements are based on
current expectations and are subject to a number
of risks and uncertainties that could cause actual
events or results to differ materially from any
expected future events or results referred to
in these forward-looking statements. Unless
otherwise required by applicable law, regulation
or accounting standards, the directors do not
undertake any obligation to update or revise
any forward-looking statements, whether as a
result of new information, future developments
or otherwise. Nothing in this document shall be
regarded as a profit forecast.
The Strategic Report has been prepared for
the group as a whole and therefore focuses
primarily on those matters which are significant
to Euromoney Institutional Investor PLC and
its subsidiary undertakings when viewed as a
whole. It has been prepared solely to provide
additional information to shareholders to assess
the company’s strategy and the potential for that
strategy to succeed, and the Strategic Report
should not be relied upon by any other party for
any other purpose.
On behalf of the board
chriStopher ForDham
Managing Director
December 14 2015
Euromoney climbs
Kilimanjaro for Haller
In June 2015, a party of sixteen from Euromoney climbed the summit of Kilimanjaro,
raising more than £60,000 for the Haller Foundation,
one of the company’s supported charities.
At 5,895m high, Kilimanjaro is the highest peak in Africa and the world’s highest free
standing mountain. The Euromoney team followed the Machame route, renowned to
be the most difficult route to the top. After four days of hiking and a seven-hour night
time ascent, the team reached the Uhuru Peak on June 15 at 7:15am.
Every employee made the summit.
The climb brought to a close a year of busy fundraising activities, including cake sales,
office breakfast deliveries, garden fete, a quiz night, an online auction and golf day.
The funds raised from the climb will allow Haller to roll out its sustainable development
model to another community, the Upendo Nguu Tatu Community which will benefit
from improved water infrastructure, healthcare and education through a mobile app.
The community will benefit from more than two years of active development from the
funds raised by the climbers.
The Haller Foundation’s remarkable development model has been helping to build
sustainable community economies in some of the poorest parts of Kenya since the
1970s (www.haller.org).
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31
Board of Directors
A RAshbAss‡
Chief executive
Appointed to the board: 2015
Jl WilkiNsoN^
Executive director
Appointed to the board: 2007
mWh moRgAN†‡
Non-executive director
Appointed to the board: 2008
Andrew Rashbass was appointed executive
Jane Wilkinson joined the company in 2000. She
Martin Morgan was appointed chief executive
chairman on October 1 2015. Following
is the group marketing director and managing
of Daily Mail and General Trust plc in 2008. He
changes to the board on November 18 2015
director of Euromoney Learning Solutions.
has more than 30 years of experience in the
his role has changed to CEO. He has broad
She was previously CEO of
Institutional
media industry. Prior to joining DMGT he held
international experience and proven ability
Investor’s publishing activities and president of
various senior positions at Reed International
to manage
top-quality editorial products
Institutional Investor LLC.
both in the UK and US. He joined DMGT in
while also growing digital revenues. Between
2013 and 2015 he was the chief executive
of Reuters, the news division of Thomson
Reuters, the global business information group.
Before joining Reuters, he spent 15 years at
The Economist Group, where for the last five
years he was chief executive and successfully
led its transformation from a traditional print
to leading digital business. Before that he was
publisher of The Economist.
ChC FoRdhAm*^
Executive director
Appointed to the board: 2003
Christopher Fordham joined the company in
2000 and was appointed managing director in
2012. He was previously the director responsible
for acquisitions and disposals as well as running
some of the company’s businesses.
NF osboRN^
Executive director
Appointed to the board: 1988
Neil Osborn joined the company in 1983. He is
the publisher of Euromoney.
CR JoNes
Finance director
Appointed to the board: 1996
Colin Jones is a chartered accountant. He joined
the company in 1996 from Price Waterhouse,
and was appointed finance director
in
November 1996.
de AlFANo ^
Executive director
Appointed to the board: 2000
Diane Alfano joined Institutional Investor LLC in
1984. She is managing director of Institutional
Investor’s conference division and a director and
chairman of Institutional Investor LLC.
b Al-RehANy^
Executive director
Appointed to the board: 2009
Bashar AL-Rehany is chief executive officer and
a director of BCA Research, Inc. which he joined
1989 and became CEO of dmg Information.
dP PRiTChARd †§
Independent non-executive director
and chairman of the audit committee
Appointed to the board: 2008
in 2003. Euromoney acquired BCA Research,
David Pritchard is chairman of AIB Group (UK)
Inc. in October 2006.
The VisCouNT RoTheRmeRe‡
Non-executive director
Appointed to the board: 1998
The Viscount is chairman of Daily Mail and
General Trust plc and he brings significant
experience of media. He worked at the
International Herald
Tribune
in
Paris
and the Mirror Group before moving to
Northcliffe Newspapers in 1995. In 1997 he
plc, and a director of The Motability Tenth
Anniversary Trust. He has over 30 years of
experience in the banking industry. He was
formerly deputy chairman of Lloyds TSB Group,
chairman of Cheltenham & Gloucester plc and
a director of Scottish Widows Group and LCH.
Clearnet Group.
ART bAlliNgA l
Independent non-executive director
Appointed to the board: 2012
became managing director of the Evening
Andrew Ballingal
is chief executive of
Standard.
siR PATRiCk seRgeANT ‡
Non-executive director and president
Appointed to the board: 1969
Sir Patrick founded the company in 1969 and
was managing director until 1985 when he
became chairman. He retired as chairman in
September 1992 when he was appointed as
president and a non-executive director.
JC boTTs†‡§
Non-executive director and chairman
of the remuneration and nominations
committee
Appointed to the board: 1992
John Botts served as interim chairman following
the changes to the board on November 18
2015. He is senior adviser of Allen & Company
in London and a director of several private
companies. He was formerly non-executive
chairman of United Business Media plc.
Ballingal Investment Advisors, an independent
investment firm based in Hong Kong. He has
over 20 years of experience as an advisor,
investor, and partner in hedge funds, much
of it in Asia. He has been a member of the
Euromoney
Institutional
Investor PLC Asia
Pacific Advisory Board since 2008.
TP hillgARTh §
Independent non-executive director
Appointed to the board: 2012
Tristan Hillgarth has over 30 years of experience
in asset management and has held senior
positions at Framlington, Invesco and Jupiter.
He is a non-executive director of JPMorgan
Overseas Investment Trust PLC.
† Member of the remuneration committee
‡ Member of the nominations committee
§ Member of the audit committee
* Member of the nominations committee through
2015, but resigned from the committee on
November 18 2015.
^ Director will not seek re-election as executive director
of the company at the AGM on January 28 2016.
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Annual Report and Accounts 2015
32
Directors’ Report
Euromoney Institutional Investor PLC is a public
limited company. It holds a premium listing on
emPloyee shARe TRusT
The executive directors of the company together
sigNiFiCANT shAReholdiNgs
As at November 18 2015, the company had
the London Stock Exchange main market for
with other employees of the group are potential
been notified of the following significant
listed securities and is a member of the FTSE
beneficiaries of the Euromoney Employee Share
interests:
250 share index.
The Directors’ Report comprises pages 32 to 45
of this report (together with the sections of the
Annual Report incorporated by reference). Some
of the matters required by legislation have been
included in the Strategic Report (pages 7 to 30)
as the board considers them to be of strategic
importance. Specifically,
these are
future
business developments and principal risks.
Trust and as such, are deemed to be interested
in any ordinary shares held by the trust. At
September 30 2015, the trust’s shareholding
totalled 1,747,631 shares representing 1.4% of
the company’s called-up ordinary share capital.
No share awards have vested during the year.
VoTiNg RighT s ANd
ResTRiCTioNs oN TRANsFeR oF
shARes
Each share entitles its holder to one vote at
It is expected that the company, which has
shareholders’ meetings and the right to receive
no branches, will continue to operate as the
one share of the company’s dividends. There
holding company of the group.
gRouP ResulTs ANd diVideNds
The group profit for the year attributable to
equity holders of the parent amounted to
£105.4m
(2014: £75.3m). The company’s
policy is to distribute a third of its adjusted
after-tax earnings by way of dividends each
year. Pursuant to this policy, the directors
are no special control rights attaching to them.
The company is not aware of any agreements
or control rights between existing shareholders
that may result in restrictions on the transfer
of securities (shares or loan notes) or on voting
rights.
ChANge oF CoNTRol
There are a number of agreements that take
recommend a final dividend of 16.40p per
effect, alter or terminate upon a change of
ordinary share (2014: 16.00p), payable on
control of the company following a takeover
Thursday February 11 2016 to shareholders on
bid. None of these agreements is deemed to
the register on Friday November 27 2015. This,
be significant in terms of their potential impact
together with the interim dividend of 7.00p
on the business of the group as a whole. The
per ordinary share (2014: 7.00p) which was
company’s share plans contain provisions that
Name of
holder
Nature
of
holding
Number
of shares
% of
voting
rights
DMG
Charles
Limited
Direct 85,838,458
66.93
RelATioNshiP deed
The company and Daily Mail and General
Trust plc, the parent company of DMG Charles
Limited, entered into a relationship deed on July
16 2014 in accordance with the Listing Rules
and have acted in accordance with its terms
since execution.
emPloyees
Quality and integrity of employees
The competence of people is ensured through
high recruitment standards and a commitment
to management and business skills training.
The group has the advantage of running
external training businesses and uses this in-
house resource to train cost-effectively its
employees on a regular basis. Employees are
also encouraged actively to seek external
training as necessary.
declared on May 14 2015 and paid on June 18
take effect in such an event but do not entitle
High-quality and honest personnel are an
2015, brings the total dividend for the year to
participants to a greater interest in the shares
essential part of the control environment.
23.40p per ordinary share (2014: 23.00p).
of the company than created by the initial
The high ethical standards expected are
shARe CAP iTAl
The company’s share capital is divided into
ordinary shares of 0.25p each. At September
30 2015 there were 128,248,894 ordinary
shares in issue and fully paid. During the year,
grant or award under the relevant plan. Details
communicated by management and through
of the directors’ entitlement to compensation
the employee handbook which is provided
for loss of office following a takeover or
to all employees. The employee handbook
contract termination are given in the Directors’
includes specific policies on matters such as
Remuneration Report.
the use of the group’s information technology
resources, data protection policy, the UK Bribery
Act, and disciplinary and grievance procedures.
The group operates an intranet which is used
to communicate with employees and provide
guidance and assistance on day-to-day matters
facing employees. The group has a specific
whistle-blowing policy that is supported by an
externally managed whistle-blowing hotline.
The whistle-blowing policy is updated regularly
and is reviewed by the audit committee.
115,477 ordinary shares of 0.25p each (2014:
1,676,093 ordinary shares) with an aggregate
nominal value of £289 (2014: £4,191) were
AuThoRiTy To PuRChAse ANd
AlloT oWN shARes
the 2015 AGM,
At
the company was
issued following the exercise of share options
authorised by shareholders to purchase up to
granted under the company’s share option
10% of its own shares and to allot shares up
schemes for a cash consideration of £0.5m
to an aggregate nominal amount of £96,100.
(2014: £0.3m). Details of the company’s share
The resolutions to renew this authority for a
capital are given in note 22 to the group
further period will be put to shareholders at the
financial statements. The company’s ultimate
2016 AGM.
controlling party is given in note 30.
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33
Human rights and health and safety
requirements
The group is committed to the health and
Disabled employees
It is the group’s policy to give full and fair
goiNg C oNCeRN
Having assessed the principal risks and the
consideration to applications for employment
other matters discussed in connection with
safety and the human rights of its employees
from people who are disabled; to continue,
the viability statement, the directors consider it
and communities in which it operates. Health
wherever possible, the employment of, and
appropriate to adopt the going concern basis
and safety issues are monitored to ensure
to arrange appropriate training for, employees
of accounting in preparing this Annual Report.
compliance with all local health and safety
who become disabled; and
to provide
regulations. External health and safety advisors
opportunities for the career development,
are used where appropriate. The UK businesses
training and promotion of disabled employees.
AddiTioNAl disClosuRes
Additional information that is relevant to this
report, and which is incorporated by reference
benefit from a regular assessment of the
working environment by experienced assessors
and regular training of all existing and new UK
employees in health and safety matters.
PoliTiCAl doNATioNs
No political donations were made during the
into this report, including information required
in accordance with the UK Companies Act
year (2014: £nil).
2006 and Listing Rule 9.8.4R, can be located
PosT bAlANCe sheeT eVeNTs
Events arising after September 30 2015
are set out in note 29 to the group financial
statements.
as follows:
●●
●●
Financial instruments (note 18)
Related party transactions (note 28)
gReeNhouse gAs (ghg) RePoRTiNg
The company, as part of the wider Daily Mail and General Trust plc group (DMGT), participates in a DMGT group-wide carbon footprint analysis
completed by ICF International. This exercise has been undertaken every year since 2007 using the widely recognised GHG protocol methodology
developed by the World Resource Institute and the World Business Council for Sustainable Development.
The directors are committed to reducing the group’s absolute carbon emissions and managing its carbon footprint. In 2012 the company, as part of the
wider DMGT group, set a target to reduce its carbon footprint relative to revenue over a three-year period by 10%. The company exceeded this target
with a total reduction in emissions intensity over the three-year period of 12%.
GreeNhouse emissioN stAtemeNt
The following emissions have been calculated according to the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (revised
edition) methodology. Data was gathered to fulfil the requirements under the CRC Energy Efficiency scheme, and emission factors from the UK
Government’s GHG Conversion Factors for Company Reporting 2014. The carbon footprint is expressed in tonnes of carbon dioxide equivalent
and includes all the Kyoto Protocol gases that are of relevance to the business. The company’s footprint covers emissions from its global
operations and the following emission sources: Scope 1 and 2 (as defined by the GHG Protocol), business travel and outsourced delivery activities.
AssessmeNt PArAmeters
Baseline year
Consolidation approach
Boundary summary
Consistency with the financial statements
Assessment methodology
Intensity ratio
2012
Operational control
All entities and facilities either owned or under operational control
The only variation is that leased properties, under operational control, are included in
scope 1 and 2 data, all scope 3 emissions are off-balance sheet emissions
Greenhouse Gas Protocol and Defra environmental reporting guidelines
Emissions per £m of revenue
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Annual Report and Accounts 2015
34
Directors’ Report
continued
GreeNhouse GAs emissioN source
2015
2014
Scope 1: Combustion of fuel and operation of facilities
Scope 2: Electricity, heat, steam and cooling purchased for own use
total scope 1 and 2*
Scope 3: Business travel and outsourced activities
total emissions
* Statutory carbon reporting disclosures required by Companies Act 2006
(tco2e)
4,200
2,400
6,600
6,900
13,500
(tco2e)/
£m
10.4
6.0
16.4
17.1
33.5
(tco2e)
4,500
3,200
7,700
8,300
16,000
(tco2e)/
£m
11.1
7.9
19.0
20.4
39.4
AudiToR
Each director confirms that, so far as he/she is
Details of the interests of the directors in the
offer themselves for re-election. In addition,
ordinary shares of the company and of options
in accordance with the Code, before the
aware, there is no relevant audit information of
held by the directors to subscribe for ordinary
re-election of a non-executive director, the
which the company’s auditor is unaware; and
shares in the company are set out in the
chairman is required to confirm to shareholders
that each of the directors has taken all the steps
Directors’ Remuneration Report on pages 46
that, following formal performance evaluation,
that he/she ought to have taken as a director
to 69.
written notice to such director. The Articles of
as permitted by the Company’s Articles of
Association themselves may be amended by a
Association and Section 232 and 234 of the
the non-executive directors’ performance
continues to be effective and demonstrates
commitment to the role. Accordingly, the non-
executive directors will retire at the forthcoming
AGM and, being eligible following a formal
performance evaluation by the chairman, offer
themselves for re-election.
Directors’ indemnities
third-party
A qualifying
indemnity
(QTPI)
Companies Act 2006, has been granted by
the company to each of the directors of the
company. Under the provisions of QTPI the
company undertakes to indemnify each director
against liability to third parties (excluding
criminal and regulatory penalties) and to pay
directors’ costs as incurred, provided that they
are reimbursed to the company if the director
is found guilty or, in an action brought by
the company, judgement is given against the
director.
to make himself/herself aware of any relevant
audit information and to establish that the
company’s auditor is aware of the information.
A resolution to re-appoint Pricewaterhouse
Coopers LLP as the company’s statutory auditor
and to authorise the audit committee to
determine their remuneration will be proposed
at the 2016 AGM.
ANNuAl geNeRAl meeTiNg
The company’s next AGM will be held at
Euromoney Institutional Investor PLC, 8 Bouverie
Street, London EC4Y 8AX on January 28 2016
at 9.30 a.m. A separate circular comprising the
Notice of Meeting, together with explanatory
notes, accompanies this Annual Report.
diReCToRs
Directors and directors’ interests
The membership of the board and biographical
Appointment and removal of
directors
The company’s Articles of Association give
power to the board to appoint directors from
time to time. In addition to the statutory
rights of shareholders to remove a director by
ordinary resolution, the board may also remove
a director where 75% of the board gives
special resolution of the shareholders.
Following the changes to the board announced
on November 19 2015, CHC Fordham,
NF Osborn, DE Alfano, JL Wilkinson and
B AL-Rehany will not seek re-election as
executive directors of the company at the AGM
in January 2016.
Following best practice under the 2014 UK
details of the directors are given on page
Corporate Governance Code (the ‘Code’) and
31. On April 9 2015, the group announced
in accordance with the company’s Articles of
the appointment of A Rashbass as executive
Association, all directors submit themselves for
chairman with effect from October 1 2015.
re-election annually. Accordingly, all directors
PR Ensor retired as executive chairman on
except those listed above will retire at the
September 30 2015.
forthcoming AGM and, being eligible, will
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35
Directors’ responsibilities
The directors are responsible for preparing the
responsible for safeguarding the assets of the
company and hence for taking reasonable steps
Annual Report and Accounts in accordance
for the prevention and detection of fraud and
with applicable law and regulations. Company
other irregularities.
law requires the directors to prepare financial
statements for each financial year. Under that
law the directors are required to prepare the
group financial statements in accordance with
International Financial Reporting Standards
(IFRSs) as adopted by the European Union
and Article 4 of the IAS Regulation and the
parent company financial
statements
in
accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law).
Under company law the directors must not
approve the accounts unless they are satisfied
that they give a true and fair view of the state of
affairs of the company and of the profit or loss
of the company for that period. In preparing
the financial statements, the directors are
Having taken advice from the audit committee,
the directors consider that the Annual Report,
taken as a whole, is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
company’s performance, business model and
strategy.
The directors are
responsible
for
the
maintenance and integrity of the corporate and
financial information included on the company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination of
financial statements may differ from legislation
in other jurisdictions. Each of the directors
confirms that to the best of their knowledge:
required to:
●●
the financial statements, are prepared
in accordance with the applicable set of
accounting standards, give a true and
fair view of the assets, liabilities, financial
position and profit of the parent company
and the group taken as a whole; and
●●
the Strategic Report and the Directors’
Report
include a fair review of the
development and performance of the
business and the position of the parent
company and the group taken as a whole,
together with a description of the principal
risks and uncertainties that they face.
On behalf of the board
ChRisToPheR FoRdhAm
Director
December 14 2015
ColiN JoNes
Director
December 14 2015
●●
select suitable accounting policies and
apply them consistently;
●● make
judgements
and
accounting
estimates that are reasonable and prudent;
●●
state whether applicable IFRSs as adopted
by the European Union have been followed
for the group financial statements subject
to any material departures disclosed and
explained in the financial statements;
●●
all accounting
standards which are
considered applicable have been followed
in preparing the parent company financial
statements; and
prepare
the financial
●●
statements on
the going concern basis unless
it
is
inappropriate to presume that the group
and company will continue in business.
The directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the company’s transactions
and disclose with reasonable accuracy at any
time the financial position of the company
and enable them to ensure that the financial
statements and Directors’ Remuneration
Report comply with the Companies Act 2006
and, as regards the group financial statements,
Article 4 of the IAS Regulation. They are also
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36
Corporate Governance
The Listing Rules require premium listed companies to report against the Financial Reporting Council’s 2014 UK Corporate Governance Code (the
‘Code’). The paragraphs below and in the Directors’ Remuneration Report on pages 46 to 69 set out how the company has applied the principles
laid down by the Code. The company continues substantially to comply with the Code, save for the exceptions disclosed in the Directors’ Compliance
Statement on page 45.
diReCToRs
The board and its role
members and attendance:
Board
executive
committee
remuneration
committee
Nominations
committee
Audit
committee
risk
committee
tax and
treasury
committee
Number of meetings held
during year
executive directors
PR Ensor (retired
September 30 2015)
A Rashbass (appointed
October 1 2015)
CHC Fordham
NF Osborn
CR Jones
DE Alfano
JL Wilkinson
B AL-Rehany
Non-executive directors
The Viscount Rothermere
Sir Patrick Sergeant
JC Botts
MWH Morgan
DP Pritchard (independent)
ART Ballingal (independent)
TP Hillgarth (independent)
7
7
–
7
7
7
7
7
7
7
5
6
7
6
7
7
11
11
–
11
11
11
10
11
11
–
–
–
–
–
–
–
3
–
–
–
–
–
–
–
–
–
–
3
3
3
–
–
4
4
–
4
–
–
–
–
–
4
3
4
4
–
–
–
3
–
–
–
–
–
–
–
–
–
–
3
–
3
–
3
3
3
–
3
–
3
–
–
–
–
–
–
–
3
–
–
2
2
–
1
–
2
–
–
–
–
–
–
–
2
–
–
On April 9 2015, the group announced the
executive directors and eight non-executive
The board believes that these changes will
appointment of A Rashbass as executive
directors, four of whom will be independent.
allow for more effective management of
chairman with effect from October 1 2015.
Of the four non-executive directors who are
the group including clearer delineation of
PR Ensor retired as executive chairman on
not independent, one is the founder and ex-
responsibilities between the board and the
September 30 2015.
chairman of the company, two are directors
executive management team. It will also bring
Following the changes to the board announced
on November 19 2015 (see page 37), CHC
Fordham, NF Osborn, DE Alfano, JL Wilkinson
and B AL-Rehany will not seek re-election
as executive directors of the company at the
AGM on January 28 2016. Accordingly, after
the AGM, subject to the re-election of each
director and following the recruitment and
appointment of a new non-executive chairman,
it is expected that the board will comprise two
of Daily Mail and General Trust plc (DMGT),
the company more in line with widely accepted
an intermediate parent company, and one
corporate governance practice.
has served on the board for more than the
recommended term of nine years under the
Code.
There are clear divisions of responsibility
within the board such that no one individual
has unfettered powers of decision. There is a
procedure for all directors in the furtherance of
their duties to take independent professional
advice, at the company’s expense. They also
have access to the advice and services of the
company secretary.
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37
The board meets at least every two months
and
there
is
frequent contact between
Nominations committee
The nominations committee is responsible
●● A Rashbass to step down as chairman
of the nominations committee and JC
meetings. Board meetings take place
in
for proposing candidates for appointment
Botts to replace A Rashbass as chairman
London, New York, Montreal and Hong Kong,
to the board having regard to the balance of
of the nominations committee until an
and occasionally in other locations where the
skills, structure and composition of the board
independent non-executive chairman has
group has operations. The board has delegated
and ensuring the appointees have sufficient
been appointed;
certain aspects of the group’s affairs to standing
time available to devote to the role. During
●● CHC Fordham to step down from the
committees, each of which operates within
the year the committee comprised PR Ensor
nominations committee; and
defined terms of reference available on the
(chairman of the committee), CHC Fordham
●●
the number of executive directors on the
company’s website. Set out below are details of
and four non-executive directors, being Sir
board to reduce and accordingly CHC
the membership and duties of the five principal
Patrick Sergeant, The Viscount Rothermere,
Fordham, NF Osborn, JL Wilkinson, B
committees that operated throughout 2015.
MWH Morgan and JC Botts. PR Ensor retired
AL-Rehany and DE Alfano not to seek re-
However, to ensure its overall control of the
on September 30 2015 and A Rashbass was
election at the company’s next AGM in
group’s affairs, the board has reserved certain
appointed chairman of the committee with
January 2016.
matters to itself for decision. Board meetings
effect from October 1 2015.
are held to set and monitor strategy, identify,
evaluate and manage material risks, to review
trading performance, ensure adequate funding,
examine major acquisition possibilities and
approve reports to shareholders. Procedures
are established to ensure that appropriate
information is communicated to the board in
a timely manner to enable it to fulfil its duties.
CommiTTees
Executive committee
The executive committee meets each month
to discuss strategy, results and forecasts, risks,
possible acquisitions and disposals, costs, staff
numbers, recruitment and training, and other
The committee meets when required and this
year met four times, and informal discussions
were held at other times during the year. The
main purpose of the meetings in 2015 was
to recommend a successor to the board for
PR Ensor as executive chairman who retired
as the company’s chairman at the end of
financial year 2015. A thorough search process
The nominations committee’s main focus for
2016 will be the recruitment and appointment
of the new
independent non-executive
chairman.
The group’s gender diversity information is set
out in the Strategic Report on page 28.
Remuneration committee
The remuneration committee meets twice a year
was undertaken by all of the non-executive
and additionally as required. It is responsible for
directors and not limited to the committee.
determining the contract terms, remuneration
The committee ensured that the appointed
and other benefits of executive directors,
executive search agency was independent and
including performance-related incentives. This
had no other connections with the group.
committee also recommends and monitors the
management issues. It also discusses corporate
Further meetings were held in October and
and social responsibility including the group’s
November 2015 to discuss the restructure of
various charity initiatives. It is not empowered
the board, which was proposed and agreed by
to make decisions except those that can be
the board on November 18 2015. The board
made by the members in their individual
agreed that:
capacities as executives with powers approved
by the board of the company. It is chaired by
the group chairman and comprises all executive
directors and 10 divisional directors. Details
and experience of each member can be found
on the company’s website. The discussions of
the committee are summarised by the group
chairman and reported to each board meeting,
together with recommendations on matters
reserved for board decisions.
●●
the chairman of the board be changed to
a non-executive role and that JC Botts be
appointed as the non-executive chairman
in an interim capacity until such time
as the company appoints a permanent
independent non-executive chairman;
●● A Rashbass’s role as executive chairman be
changed to the new role of chief executive
officer;
overall level of remuneration and remuneration
for senior management, including group-wide
share option schemes. The composition of the
committee, details of directors’ remuneration
and interests in share options and information
on directors’ service contracts are set out in the
Directors’ Remuneration Report on pages 46
to 69.
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Annual Report and Accounts 2015 38
Corporate Governance
continued
Audit committee
The committee is responsible for reviewing and
NoN-exeCuTiVe diR eCToRs
The non-executive directors bring both
The Viscount Rothermere and MWH Morgan
are also executive directors of DMGT, an
reporting to the board on the group’s financial
independent views and the views of the
intermediate parent company. However, the
reporting and for maintaining an appropriate
company’s major shareholder to the board. The
company is run as a separate, distinct and
relationship with the group’s auditor. Details of
non-executive directors who served during the
decentralised subsidiary of DMGT and these
the members and role of the audit committee
year were The Viscount Rothermere, Sir Patrick
directors have no involvement in the day-to-day
are set out on pages 40 and 41.
Sergeant, JC Botts, MWH Morgan, DP Pritchard
management of the company. While they bring
Risk committee
The risk committee oversees the group’s risk
management processes and considers the
(independent), ART Ballingal (independent) and
valuable experience and advice to the company,
TP Hillgarth (independent). Their biographies
the board does not believe these non-executive
can be found on page 31 of the accounts.
directors are able to exert undue influence
group risk register biannually. It reviews specific
At least once a year the company’s chairman
risks and monitors developments in relevant
meets the non-executive directors without
legislation and regulation, assessing the impact
the other executive directors being present.
on the group. The committee reports on its
The non-executive directors meet without the
operations to the board to enable the directors
company’s chairman present at least annually
to determine the overall effectiveness of the
to appraise the chairman’s performance and on
group’s internal control and risk management
other occasions as necessary.
on decisions taken by the board, nor does it
consider their independence to be impaired
by their positions with DMGT. However, their
relationship with DMGT means they are not
considered to be independent.
boARd ANd CommiTTee
eFFeCTiVeN ess
Each year the performance of the board and
systems. During the year the risk committee
was changed from an executive management
committee to a board committee, with defined
terms of reference which can be found on the
company’s website. Details of the members and
role of the risk committee are set out on page
44.
Tax and treasury committee
The group’s tax and treasury committee
normally meets twice a year and is responsible
The board considers DP Pritchard, ART Ballingal
its committees is evaluated. The Code requires
and TP Hillgarth to be independent non-
an externally facilitated evaluation of the board
executive directors. JC Botts has been on the
to be concluded every three years. An external
board for more than the recommended term
performance evaluation was conducted by a
of nine years under the Code and the board
company independent to the group in 2014.
believes that his length of service enhances
The evaluation indicated a highly cohesive
his role as a non-executive director. However,
board and there were no outlying scores to
due to his length of service, JC Botts is not
suggest any significant issues needed to be
considered to be independent.
addressed.
for recommending policy to the board. During
Sir Patrick Sergeant has served on the board
Actions arising from the evaluation included
2015 the committee members comprised the
in various roles since founding the company
the following:
chairman, managing director and finance
in 1969 and has been a non-executive director
director of the company, and the finance
since 1992. As founder and president of the
director and deputy finance director of DMGT.
company, the board believes his insight and
The chairman of the audit committee is also
external contacts remain invaluable. However,
invited to attend tax and treasury committee
due to his length of service, Sir Patrick Sergeant
meetings. The group’s treasury policies are
is not considered to be independent.
●● More training on regulatory and compliance
matters was required. During the year the
board received briefings on trade sanctions
and the implications of risk-related changes
to the Code.
●● Completion of embedding the strategy into
directed to giving greater certainty of future
costs and revenues and ensuring that the group
has adequate liquidity for working capital and
debt capacity for funding acquisitions.
Details of the tax and treasury policies are set
out in the Strategic Report on page 27.
The Viscount Rothermere has a significant
the board agenda and regular strategic
shareholding in the company through his
reviews to be carried out. During 2015 the
beneficial holding in DMGT and because of this
managing director reported an update at
he is not considered independent.
each board meeting of the group’s strategic
priorities and the principal risks. There were
two strategy away days including members
of the board and executive committee to
discuss the opportunities for the company
to return to growth.
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39
●● Communication between the nominations
shareholders have at least 20 working days’
Following the identification of governance
committee and
the board could be
notice of the AGM at which the executive
and financial
irregularities at Centre
for
improved. During 2015 all the non-
directors,
non-executive
directors
and
Investor Education (CIE) which resulted in an
executive directors
took part
in
the
committee chairs are available for questioning.
overstatement in profit, the following steps were
search for the new executive chairman
and attended informal meetings with the
members of the nominations committee.
●● While many directors felt that risks were
well managed and communicated to
the board, some non-executive directors
suggested that the role of the risk
committee could be formalised. During the
year the risk committee was changed from
an executive management committee to a
board committee, with defined terms of
reference.
Following his appointment, A Rashbass began a
strategic review of all aspects of the company’s
business including its board structure and,
as a result of the initial stage of that review,
A Rashbass proposed to the nominations
committee that the future management and
oversight of the company would be better
served through a more traditional board
structure, including the appointment of an
independent non-executive chairman and the
creation of the new role of CEO. See page 37
for the changes agreed by the board.
During the year each of the main committees
completed a questionnaire encompassing key
areas of their mandates. It was concluded
that the board and its committees had been
effective throughout the year.
CommuNiCATioN WiTh
shAReholdeRs
The company’s chairman, together with the
board, encourages
regular dialogue with
shareholders. Meetings with shareholders are
held, both in the UK and in the US, to discuss
annual and
interim results and highlight
significant acquisitions or disposals, or at the
request of institutional shareholders. Private
shareholders are encouraged to participate
in the AGM. In line with best practice, all
The company’s chairman and finance director
report to fellow board members matters raised
by shareholders and analysts to ensure members
of the board develop an understanding of the
investors’ and potential investors’ views of the
company.
iNTeRNAl CoNTRol ANd Risk
mANAgemeNT
The board as a whole is responsible for the
oversight of risk, the group’s system of internal
control and for reviewing its effectiveness.
Such a system is designed to manage rather
than eliminate the risk of failure to achieve
business objectives, and can only provide
reasonable and not absolute assurance
against material misstatement or loss. The
board has implemented a continuing process
for identifying, evaluating and managing the
material risks faced by the group.
The directors completed a review of the
effectiveness of the group’s system of risk
management and internal controls covering
all material controls,
including financial,
operational and compliance controls. The
majority of controls operated throughout the
year, though some additional controls were
implemented during the year. The review did
not identify any significant weaknesses in the
system of internal control and risk management.
Where weaknesses were identified, they were
localised and specific to individual businesses
and not considered generic or significant at
an overall group level. A number of businesses
are small and based away from the main hub-
offices. As a result, local controls are weaker,
but supplemented by central oversight and
control giving an overall effective system of risk
management and control.
taken by management. The previous owners
were removed from office and their directorships
and consultancy contracts were terminated,
and a new CEO installed. The business’s data,
records and systems were successfully isolated
and secured and the business was moved
to new premises. Management deployed an
independent forensic accounting team to
complete a comprehensive investigation of the
matter. As a result the board was satisfied with
the remedial actions taken by management.
In October 2015, the group filed a public
statement of claim against the previous owners
for breaches of warranties and other damages.
Management has also considered whether this
could arise at any other location within the
group and was satisfied that the particular facts
and circumstances that gave rise to this issue
have not arisen elsewhere.
The controls to prevent an information security
breach or cyber-attack are being regularly
enhanced to reflect evolving best practice. As
a result, these controls vary across the group,
with some operating businesses requiring more
improvement than others. Addressing these
opportunities for improvement has been, and
continues be, a focus area for the management
team of each business, the risk committee and
the main board. Significant progress is expected
to be made within the next financial year.
Principal risks and mitigating actions are set out
on pages 15 to 21.
Key procedures which the directors have
established with a view to providing effective
internal control, and which have been in place
throughout the year and up to the date of this
report, are as follows:
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Corporate Governance
continued
The board of directors
●●
the board normally meets six times a year to
consider group strategy, risk management,
Accounting and computer systems
controls and procedures
Accounting controls and procedures are
ACCouNTAbiliTy
The board has determined that having separate
audit and risk committees, each with specific
financial
performance,
acquisitions,
regularly
reviewed
and
communicated
terms of reference, is required to provide the
business development and management
throughout the group. Particular attention is
challenge and review necessary across the
issues. The board met seven times in 2015;
paid to authorisation levels and segregation of
range of businesses the group operates. The
●●
the board has overall responsibility for the
duties. The group’s tax, financing and foreign
audit and the risk committees collaborate with
group and there is a formal schedule of
exchange positions are overseen by the tax and
one another, as appropriate, with members
matters specifically reserved for decision by
treasury committee. Controls and procedures
possessing the requisite skills and experience
the board;
over the security of data and disaster recovery
to allow each committee to meet its obligation
●●
each executive director has been given
are periodically reviewed and are subject to
and to provide the relevant assurance to the
responsibility for specific aspects of the
internal audit.
group’s affairs;
●●
the board reviews and assesses the group’s
principal risks and uncertainties at least
annually and has performed a robust
assessment of those principal risks as
outlined on pages 14 to 21;
●●
the board seeks assurance that effective
control is being maintained through regular
reports from business group management,
the
audit
committee
and
various
independent monitoring functions; and
●●
the board approves the annual forecast
after performing a review of key risk
factors. Performance is monitored regularly
by way of variances and key performance
indicators to enable relevant action to
be taken and forecasts are updated each
quarter. The board considers longer-term
financial projections as part of its regular
discussions on the group’s strategy and
funding requirements.
Investment appraisal
The managing director, finance director and
Internal audit
The group’s internal audit function is managed
by DMGT’s internal audit department, working
closely with the company’s finance director.
Internal audit draws on the services of the
group’s central finance teams to assist in
board. This ensures that matters of mutual
interest raised in either of the committees are
discussed in the other committee and also
cascaded down to the operating businesses.
AudiT CommiTTee
Committee composition
The audit committee comprises DP Pritchard
completing the audit assignments. Internal audit
(chairman, independent), JC Botts, SW Daintith,
aims to provide an independent assessment
the finance director of DMGT, and TP Hillgarth
as to whether effective systems and controls
(independent). Three of the four members are
are in place and being operated to manage
non-executive directors. All members of the
significant operating and financial risks. It also
committee have a high level of financial literacy,
aims to support management by providing cost
SW Daintith and TP Hillgarth are chartered
effective recommendations to mitigate risk and
accountants and members of the ICAEW, and
control weaknesses identified during the audit
DP Pritchard has considerable audit committee
process, as well as provide insight into where
experience.
cost efficiencies and monetary gains might
be made by improving the operations of the
business. Businesses and central departments
are selected for an internal audit on a risk-
focused basis, after taking account of the
risks identified as part of the risk management
process, the risk and materiality of each of the
group’s businesses, the scope and findings
Responsibilities
The committee meets at least three times each
financial year and is responsible for:
●● monitoring the integrity of the interim
report, the annual report and accounts and
other related formal statements, reviewing
accounting policies used and judgements
applied;
●●
reviewing the content of the Annual Report
and Accounts and advising the board
on whether, taken as a whole, it is fair,
balanced and understandable and provides
the information necessary for shareholders
to assess the company’s performance,
business model and strategy;
●●
considering the effectiveness of the group’s
internal financial control systems;
business group managers consider proposals
of external audit work, the departments and
for acquisitions and new business investments.
businesses reviewed previously and the findings
Proposals beyond specified limits are put to
from these reviews. This approach ensures that
the board for approval and are subject to due
internal audit focus is placed on the higher
diligence by the group’s finance team and, if
risk areas of the group, while ensuring an
necessary, independent advisors. For capital
appropriate breadth of audit coverage. DMGT’s
expenditure above specified levels, detailed
internal audit function reports its findings to
written proposals must be submitted to the
management and to the audit committee.
board and reviews are carried out to monitor
progress against business plan.
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41
●●
considering
the
appointment
or
understandable. The co-ordination and review
●●
knowledge sharing by management of
reappointment of the external auditor and
of the group-wide input to the Annual Report
key risks and matters likely to affect the
reviewing their remuneration, both for
and Accounts is a sizeable exercise performed
annual report through attendance by the
audit and non-audit;
within an exacting timeframe which runs
chairman of the audit committee at the
●● monitoring and reviewing the external
alongside the formal audit process undertaken
annual internal audit planning meeting and
auditor’s independence and objectivity and
by the external auditor.
the effectiveness of the audit process;
●● monitoring and reviewing the resources
and effectiveness of internal audit;
●●
reviewing the internal audit programme
and receiving periodic reports on
its
findings;
Arriving at a position where initially the audit
committee, and then the board, are satisfied
with the overall fairness, balance and clarity of
the report and accounts is underpinned by the
following:
●●
reviewing the whistle-blowing arrangements
●●
early preparation by management and
available to staff;
●●
reviewing
the group’s policy on
the
employment of former audit staff; and
review by the committee of key components
of the annual report, particularly those
reflecting new disclosure and reporting
●●
reviewing the group’s policy on non-audit
requirements;
fees.
Content of the Annual Report and
Accounts – fair, balanced and
understandable
One of the key governance requirements
of a group’s financial statements is for the
report and accounts to be fair, balanced and
●●
comprehensive
reviews
undertaken
by management, a sub-committee of
the directors and the auditor to ensure
consistency and overall balance;
tax and treasury committee meetings held
during the year as well as through the audit
committee chairman’s regular meetings
with management and internal audit; and
●●
a twice yearly review by the audit committee
of key assumptions and
judgements
made by management in preparation of
the annual and interim reports as well as
considering significant issues arising during
the year.
Financial reporting and significant
financial judgements
The committee, with input from the external
auditor, assessed whether suitable accounting
policies
had
been
adopted, whether
management had made appropriate estimates
and judgements and whether disclosures were
balanced and fair.
For the year ended September 30 2015 the committee reviewed the following main issues:
issue
centre for investor education (cie)
review
There were a number of financial and governance irregularities at CIE
The committee was satisfied with the remedial actions taken by
identified by the group in the first half of the year. As a result, management
management (see Internal control and risk management on pages
made a number of significant accounting judgements at the half year, namely:
39 and 40) following the identification of governance and financial
●●
recognition of a goodwill impairment charge of £2.9m on the basis of
irregularities.
reforecast results and reflecting the impact of the public announcements
The committee has examined all evidence provided to it, including
relating to the exit of the former owners; and
the group’s own investigation, Deloitte & Touche LLP Australia’s
●●
the group, in its preparation of these financial statements at September
findings and the advice from external legal counsel, in reaching
30 2015, has examined all evidence, including its own management
the conclusion that the significant accounting judgements used by
investigation and Deloitte & Touche LLP Australia’s findings, in reaching
management were appropriate. The committee has also ensured
the conclusion no further amounts are payable under the share purchase
that the related disclosures in the Annual Report and Accounts
agreement for CIE, and it has reversed the liability on this basis together
were appropriate.
with de-recognising the non-controlling interest.
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Annual Report and Accounts 2015 42
Corporate Governance
continued
issue
review
Accounting for acquisitions and disposals
Options under the group sold its investments in Capital NET and Capital DATA
The committee has satisfied itself on the appropriateness of the
for a combined consideration of $85.0m, which included a 15.5% minority
key accounting judgements relating to the Dealogic acquisition
stake in Dealogic, for $59.2m. The following key accounting judgements
through discussion with management, review of the acquisition
were made:
●●
that the disposal and subsequent acquisition had commercial substance,
board papers as well as the work undertaken by the external
auditor and reported at the audit committee meetings.
meaning that a gain on disposal should be recognised;
The committee reviewed the inputs and assumptions into the
●●
this investment has been equity accounted as an associate under IAS 28
calculation of the acquisition commitments liability at year end.
by virtue of the group’s significant influence conveyed by its 20% voting
rights and board representation; and
●●
the calculation of the £48.4m profit on disposal of Capital NET and
Capital DATA.
The group also has acquisition commitments on previous acquisitions.
Goodwill and other intangibles
The group has goodwill of £382.0m and other intangible assets of £141.8m.
The committee has considered the assessments made in relation
As a result of the impairment review at the half year and year end, the group
to the impairment of goodwill. The committee discussed the
recognised impairment charges for CIE of £2.9m, HedgeFund Intelligence
methodology around the inputs into the model supporting the
(HFI) of £4.8m and Mining Indaba of £10.7m.
A sensitivity analysis for NDR has been included as further disclosures are
required under IAS 36 if any reasonably possible change to a key assumption
carrying value. The committee reviewed those businesses where
headroom has decreased or where management has identified
impairments, including CIE, HFI and Mining Indaba.
would cause the cash generating units carrying amount to exceed its
The committee has also understood the sensitivity analysis used by
recoverable amount.
taxation
management in its review and disclosure of impairment.
The group is a multi-national group with tax affairs in many geographical
The committee discussed the deferred tax balances and the
locations. This inherently leads to higher complexity to the group’s tax structure
provision for uncertain tax positions with the external auditor
and makes the degree of estimation and judgement more challenging.
and management to establish how they were determined and
calculated. The chairman of the audit committee also attends
the tax and treasury committee which provides valuable insight
into the tax matters, related provisions and helps establish the
appropriateness of the recognition of the deferred tax balances.
share-based payments
Options under the group’s long-term incentive schemes, CAP 2014 and CSOP
The committee concluded that the group’s reversal of the
2014, were granted in 2014. The fair value calculated using an appropriate
cumulative CAP 2014 charge was appropriate based on the latest
option pricing model at the grant date is expensed on a straight-line basis
forecasts and that subsequent trading in the second half had not
over the expected vesting period, based on the estimate of the number of
significantly improved.
shares that will eventually vest. The final award is subject to a number of
performance tests which may change the number of shares that will vest.
At the half year, management reversed the cumulative CAP 2014 charge of
£2.5m through the Income Statement as the latest forecasts for the group did
not indicate that the required profit target would be met in 2017.
significant provisions and accruals
The group continues to recognise significant provisions and accruals including
The committee discussed with management and the external
a provision for the impairment of trade receivables and property-related
auditor the methods used to determine and calculate the provision
provisions.
levels. They also discussed matters not provided against to establish
if this was appropriate.
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43
issue
review
Presentation of the financial statements
Presentation of the financial statements, in particular the presentation of the
The committee reviewed the financial statements and discussed
adjusted performance and the adjusting items.
with management and the external auditor the appropriateness of
the adjusted items including consideration of their consistency and
the avoidance of any misleading effect on the financial statements.
The committee is satisfied that all issues have been addressed appropriately and in accordance with the relevant accounting standards and principles.
The committee is satisfied that, taken as a whole, the 2015 Annual Report and Accounts is fair, balanced and understandable.
External auditor
As a result of the tender performed in 2014,
As part of its role in ensuring effectiveness,
the committee reviewed PwC’s audit plan to
shareholders approved the appointment of
ensure its appropriateness for the group and
Effectiveness of internal financial
control systems
The committee invests time in meeting with
PricewaterhouseCoopers LLP
(PwC) as the
has completed a review which focussed on the
internal audit to better understand their work
company’s new statutory auditor at the 2015
effectiveness, independence and objectivity
and its outcome. At each meeting of the
AGM. To ensure a smooth handover process
of the external audit. The assessment of the
committee internal audit present a detailed
from Deloitte LLP, the previous statutory auditor,
effectiveness is based on a framework setting
report covering controls audited since the last
PwC shadowed Deloitte LLP through areas
out the key areas of the audit process for the
meeting, matters identified and updates to
of the 2014 year end process, giving them a
committee to consider, as well as the role that
any previous control issues still outstanding.
good understanding of the business. During
management has contributed to an effective
The committee challenges internal audit and
the year, PwC underwent a thorough induction
process. As this is PwC’s first year, the committee
discusses these audits and matters identified
process to enhance their understanding of the
was only able to assess their work up until the
as appropriate.
Internal audit supplement
business, including meetings with executives,
end of the financial period and not the year end
their work through a series of peer reviews
members of the finance function and divisional
audit itself. However, the period included the
completed by finance people across the group
directors, lead partner visits to the New York
interim reporting cycle. Results from tailored
but independent from the business being
and Montreal offices, process walk-throughs
questionnaires sent to the chairman of the
audited. The peer reviews audit the operation
of their in-scope businesses and mobilisation
audit committee, finance director, deputy
of key internal controls which have been
of their global audit teams. The company and
finance director, and divisional finance directors
confirmed by the businesses as in place through
PwC have adopted an approach encouraging
were discussed by the audit committee and no
an annual control standards sign-off. Internal
open communication on current matters as and
significant issues were raised by the assessment.
audit review the findings of this supplemental
when they arise.
PwC confirmed to the committee that they
work and present a summary to the committee
maintained appropriate internal safeguards to
at each audit committee meeting. This is
ensure their independence and objectivity. The
challenged by the committee and discussed as
committee recommends the reappointment of
necessary.
PwC at the 2016 AGM.
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Annual Report and Accounts 2015 44
Corporate Governance
continued
Resources available to internal audit
and its effectiveness
The audit committee monitors the level and skill
Non-audit work
The audit committee completes an annual
●●
the group’s overall
risk assessment
approach and methodology, including:
assessment of the type of non-audit work
●— the group’s capability to identify and
base available to the group from internal audit.
permissible and a de minimis level of non-
manage new risk types;
Although internal audit areas are planned a
audit fees acceptable. Any non-audit work
●— the group’s procedures for detecting
year ahead, the amount of time available to the
performed outside this remit is assessed and
fraud and for the prevention of bribery;
group from internal audit is not fixed. Internal
where appropriate approved by the committee.
and
audit is able to scale up resource as required
Fees paid to PwC for audit services, audit-
●— the adequacy and security of the group’s
and draws on finance people across the wider
related services and other non-audit services
speak-up arrangements;
DMGT group as well as regularly supplementing
are set out in note 4. During 2015, PwC did
●●
the principal
risks and uncertainties
its team through the use of specialists.
not provide significant non-audit services. The
disclosure
and other
relevant
risk
The committee
is able
to monitor
the
effectiveness of internal audit through its
involvement in their focus, planning, process
and outcome. The committee approves the
internal audit plan and any revision to it during
group’s non-audit fee policy is available on the
management disclosures for inclusion in
company’s website.
the annual report.
Risk CommiTTee
Committee composition
The risk committee comprises CHC Fordham
The committee also advises the board on
current risk exposures of the group, future
risk mitigation strategies and the overall risk
the year. The chair of the committee is invited
(chairman), PR Ensor, CR Jones, DP Pritchard
appetite and tolerance.
to attend the initial internal audit planning
(independent), ST Hardie (chief risk officer) and
meeting with management.
Internal audit
C Chapman (general counsel and company
present, at each audit committee meeting, a
secretary to DMGT). One of the six members
summary of its work and findings, the results of
is an
independent non-executive director.
the internal audit team’s follow up of completed
PR Ensor retired on September 30 2015 and
reviews and a summary of assurance work
A Rashbass was appointed chairman of the
completed by other audit functions within the
committee with effect from October 1 2015.
ANNuAl RePoRT ANd ACCouNTs
The directors have responsibility for preparing
the 2015 Annual Report and Accounts and for
making certain confirmations concerning it. In
accordance with the Code provision C.1.1 the
board considers that, taken as a whole, it is
fair, balanced and understandable and provides
the information necessary for shareholders to
assess the company’s performance, business
model and strategy. The board reached this
conclusion after receiving advice from the audit
business; technology audits; circulation audits;
polls and awards audits and peer reviews (as
explained above). Internal audit are involved
in other risk assurance projects including fraud
investigation, the annual fraud and bribery risk
assessment, information security and business
continuity. Internal audit are also subject to
an external review every five years, the results
of which are fed back to the committee.
This external review was last carried out in
September 2013.
Responsibilities
The committee meets at least three times a year
and is responsible for review and consideration of:
●●
the risks which the committee believes
committee.
are those most pertinent to the group
and its subsidiaries including emerging or
potential future risks and their likely impact
on the group;
●●
the impact of those risks and proposed
remedial actions where appropriate;
●●
the group risk register and risk registers
from each operating business including the
applicable controls;
●●
reports on any material risk incidents and
the adequacy of proposed action including
management’s
responsiveness
to
the
findings;
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45
sTATemeNT by The diReCToRs oN ComPliANCe WiTh The Code
The Listing Rules require the board to report on compliance throughout the accounting year with the provisions of the Code issued by the Financial
Reporting Council. Since its formation in 1969, the company has had a majority shareholder, Daily Mail and General Trust plc (DMGT). As majority
shareholder, DMGT retains two non-executive positions on the board. These non-executive directors are not regarded as independent under the Code.
In addition, the company’s founder, president and ex-chairman, Sir Patrick Sergeant, remains on the board but is not regarded as an independent
director under the Code. As a result, the company failed to comply throughout the financial year ended September 30 2015 with certain provisions
of the Code as set out below. Following the changes to the board announced on November 19 2015 it is the Company’s intention that the board
will comprise two executive directors (the CEO and finance director) and eight non-executive directors, four of whom will be independent. The board
believes that these changes will allow for more effective management of the group including clearer delineation of responsibilities between the board
and the executive management team. It will also bring the company more in line with the Code.
ProvisioN
code PriNciPle
exPlANAtioN of NoN-comPliANce
A.3.1
Appointment of the
chairman
The appointment of A Rashbass on October 1 2015 as executive chairman and then JC Botts on
November 18 2015 as interim non-executive chairman did not meet the Code’s Independence
criteria. The company is undertaking a search for an independent non-executive chairman and
intends to be compliant in the near term.
A.4.1
Composition of the board
The board has not identified a senior independent director. JC Botts, although not independent due
to his length of service, acts as senior non-executive director.
B.1.2
Composition of the board
Less than half the board are independent non-executive directors. However, there are clear divisions
of responsibility within the board such that no one individual has unfettered powers of decision.
The company will be compliant in relation to the reduced number of executive directors following
the AGM and aims to be more in line with best practice in the near term in relation to the number
of independent directors.
B.2.1
B.3.2
Composition of the
nominations committee
The nominations committee does not comprise a majority of independent non-executive directors.
The committee comprises four non-executive and two executive directors, none of whom are
considered independent under the Code.
Terms and conditions of
appointment of
non-executive directors
JC Botts, DP Pritchard, ART Ballingal and TP Hillgarth have terms and conditions of appointment.
However, The Viscount Rothermere, MWH Morgan and Sir Patrick Sergeant operate under the
terms of their employment contracts with DMGT and Euromoney respectively.
C.3.1
Composition of the audit
committee
The audit committee does not comprise at least three independent non-executives directors. The
committee comprises four members, only two of whom are considered independent under the
Code.
C.3.2
Risk committee approach
D.2.1
Composition of the
remuneration committee
The risk committee does not comprise of at least three independent non-executive directors.
The committee comprises six members, only one of whom is considered independent under the
Code. As explained on page 44 the role and responsibilities of the risk committee, including
its membership, are considered appropriate and well suited to reviewing the company’s risk
management approach. The risk committee and the audit committee work collaboratively to ensure
that the principles of the Code are achieved within this structure.
The remuneration committee does not comprise at least three independent non-executive
directors. The committee comprises three non-executive directors, only one of whom is considered
independent under the Code. JC Botts is the chairman of the remuneration committee and
following the board changes on November 18 2015 is now the interim chairman of the company.
The company is undertaking a search for a new independent chairman and on appointment will
ensure JC Botts’ appointment to the committee is once again compliant.
On behalf of the board
ColiN JoNes
Director
December 14 2015
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Annual Report and Accounts 2015 46
Directors’ Remuneration Report
Report from the chairman of the remuneration committee
iNFoRm ATioN NoT subJeCT
To AudiT
RemuNeRATioN Re PoRT
CoNTeNTs
This report covers the reporting period from
October 1 2014 to September 30 2015 and
includes three sections:
●●
●●
●●
the report from the chairman of the
remuneration committee setting out the
key decisions taken on executive and senior
management pay during the year;
the policy report which outlines the
to
remuneration policy
September 2016 and later years; and
the annual report on remuneration which
sets out how the previous remuneration
policy has been implemented including
details of payments made and outcomes
for the variable pay elements based on
performance for the year.
the year
for
This report has been prepared in accordance
with the relevant requirements of the Large
and Medium-Sized Companies and Groups
(Accounts and Reports) Regulations 2013 (‘the
Regulations’) and of the Listing Rules of the
Financial Conduct Authority. As required by the
Regulations, a separate resolution to approve
the remuneration report will be proposed at the
company’s AGM.
RePoRT FRom The ChAiRmAN oF
The RemuNeRATioN CommiTTee
The remuneration committee reviews the
incentive plans of the
remuneration and
executive directors and other key employees as
well as looking at the remuneration costs and
policies of the group as a whole.
On April 9 2015, the group announced the
appointment of Andrew Rashbass as executive
chairman with effect from October 1 2015,
subject to shareholder approval, and this was
given at the General Meeting on June 1 2015.
Richard Ensor retired as executive chairman on
September 30 2015. Following changes to the
board on November 18 2015, Mr Rashbass’
role has changed to the new role of CEO.
The key activity of the committee during
the year has been the structuring of the
remuneration package of Mr Rashbass. There
were no other changes made to the salaries
and incentives of the executive directors during
financial year 2015.
The board and shareholders have approved a
remuneration package for Mr Rashbass that the
board believes is market competitive, aligned
with shareholder interests and reflects current
best practice.
The key elements of Mr Rashbass’ remuneration
package are as follows:
●● A base salary of £750,000 per annum,
subject to annual review in April each year
in line with the date of salary reviews for all
our employees.
●● A pension allowance of 10% of salary
per annum, payable in cash, and private
healthcare and life insurance in line with
those provided to the other executive
directors.
●● An annual bonus with a maximum value of
up to 150% of salary each year (‘Annual
Bonus Plan’). Annual bonuses will be
determined based on financial, business
and/or individual performance measures for
a year, as determined by the Remuneration
Committee. The performance measures will
be aligned with the company’s corporate
priorities. For financial year 2016, these
performance measures will be weighted
50% to the achievement of the group’s
budgeted adjusted profit before tax for
the year, and 50% to individual objectives
linked to the development of the group’s
long-term strategy. Any annual bonus
earned for a year of up to 100% of salary
will be payable in cash. Any annual bonus
earned in excess of 100% of salary will be
paid in ordinary shares in the company, the
vesting of which will be deferred for two
years.
●● An annual award of shares under the
2015 Performance Share Plan (2015 PSP)
with a face value of up to 200% of salary.
PSP awards will vest five years after grant,
subject to satisfaction of financial and
strategic measures to be determined by
the Remuneration Committee that will
be aligned with the company’s long-term
growth strategy. The 2015 PSP award
for financial year 2016 will be made
within six weeks of the announcement
of the company’s 2015 financial results.
It is expected that the performance tests
associated with these awards will be based
on the achievement of an adjusted EPS
growth target and individual objectives
linked to the group’s long-term strategy.
In addition, a one-off award of shares in the
company with a value of £2,250,000 was
made in order to compensate Mr Rashbass
for incentives foregone on leaving his previous
employment. This was considered to be no
more than the comparable commercial value
of the incentives foregone by Mr Rashbass
from his previous employment. Based on the
company’s average share price for the month of
September 2015, 221,011 shares were awarded
on October 1 2015. Subject to continued
employment, 40% of this award will vest on
September 30 2016 and the remaining 60%
will vest in three equal tranches on September
30 2017, 2018 and 2019 respectively.
Mr Rashbass will not participate
in the
company’s Capital Appreciation Plan 2014
(CAP 2014) or profit share scheme.
The board believes that the remuneration
package for Mr Rashbass:
●●
●●
long-term
provides appropriate alignment with
the medium- and
interests
of shareholders through the significant
weighting of his package towards variable
performance-driven incentives;
reflects best practice in a number of key
areas, including:
●— the maximum annual bonus potential
and annual 2015 PSP awards will both
be capped as a percentage of salary;
●— the annual bonus will be partially
deferred in shares in order to provide
additional longer-term alignment with
shareholders;
●— 2015 PSP awards will be subject to
a five year period between the initial
award and vesting;
●— annual cash and deferred bonuses and
the 2015 PSP awards will be subject to
malus and clawback as required by the
UK Corporate Governance Code; and
●— the company is taking this opportunity
to introduce minimum shareholding
guidelines for the CEO of 200% of
salary and 100% of salary for other
executive directors; and
●● was appropriate to secure the appointment
of an executive as experienced and skilled
as Mr Rashbass.
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47
A long-term incentive plan, CAP 2014, was
approved by shareholders at the 2014 AGM.
The achievement of the CAP 2014 performance
target is dependent on a number of factors,
including the health of the financial and
commodities markets, the success of acquisitions
and disposals, the return on the group’s digital
investment, and exchange rates. In light of
the continuing uncertainty over financial and
commodities markets and exchange rates,
as well as the difficulties of forecasting M&A
activity and investment returns, management
has concluded that it cannot forecast with the
required degree of certainty that the minimum
CAP 2014 performance target will be achieved
by 2017. Accordingly the CAP expense of
£2.5m charged in the second half of 2014 has
been reversed in the first half of this year, and
no further CAP cost is being amortised in 2015.
Notwithstanding the accounting treatment of
the CAP cost, the group continues to pursue
the acquisition of high growth businesses and
to invest in its digital transformation, and the
CAP remains an important part of the incentive
this growth
for delivering
arrangements
strategy.
No changes to the performance conditions
under the group’s long-term incentive plans
were made during the year.
RemuNeRATioN CommiTTee
During the year the remuneration committee
comprised JC Botts (chairman), MWH Morgan,
and DP Pritchard (independent). All members
of the committee are non-executive directors
of the company. MWH Morgan is the chief
executive of Daily Mail and General Trust plc,
the group’s parent company. For the year under
review, the committee also sought advice and
information from the company’s chairman,
managing director and finance director. The
committee’s terms of reference permit its
members to obtain professional advice on any
matter. Guidance was sought from Deloitte on
structuring Mr Rashbass’ package in line with
best practice and on benchmarking against an
appropriate peer group. Deloitte was appointed
and selected by the remuneration committee to
undertake this work as they are independent
and have good knowledge of the group. They
were paid £39,500 for this service. External
benchmarking was also undertaken for the
remuneration of other executive directors.
The key activities of the committee in the year
included:
●●
●●
obtaining advice on a suitable, competitive
remuneration package for Mr Rashbass;
considering the impact of the assumption
that the minimum performance target
under CAP 2014 would not be met and its
implications for retention and motivation
of senior executives;
●●
●●
●●
confirming that salaries of the executive
directors would remain unchanged at April
1 2015;
approving the average annual pay increase
for the group, effective from April 1 2015,
of 2%; and
approving the annual profit shares for the
executive directors and senior management
of the group for financial year 2015.
liNkiNg k Pis To RemuNeRATioN
As explained in the Remuneration Policy Report
on page 49 the group’s remuneration policies
are designed to drive and reward earnings
growth and shareholder value.
The group’s KPIs set out on pages 12 and 13
of the Strategic Report similarly contribute
to the growth in the group’s earnings and
shareholder value and are integral to the
setting of management incentives. For the
executive directors, growth in adjusted profits
has traditionally been the KPI on which their
incentives were based. The introduction of
the Annual Bonus Plan and 2015 PSP, initially
to be applied to the new CEO, will enable
future incentives for executive directors and
senior management to be more closely aligned
with the group’s key strategic, financial and
operational objectives.
2015 RemuNeRATioN AT A gl ANCe
executive directors
PR Ensor (retired September 30 2015)
CHC Fordham
NF Osborn
CR Jones
DE Alfano
JL Wilkinson
B AL-Rehany
JohN boTTs
Chairman of the remuneration committee
December 14 2015
salary
£
Benefits
£
Profit share
£
Pension
£
total
£
175,500
375,000
130,863
265,000
141,862
180,000
219,171
1,487,396
5,378
1,506
1,581
1,506
10,152
–
1,006
21,129
3,799,984
161,700
154,026
559,789
815,649
83,536
240,082
22,918
37,500
9,399
39,750
4,256
18,000
6,915
4,003,780
575,706
295,869
866,045
971,919
281,536
467,174
5,814,766
138,738
7,462,029
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Directors’ Remuneration Report
Remuneration policy report
iNFoRm ATioN NoT subJeCT
To AudiT
iNTRoduCTioN
The current remuneration policy was approved
by shareholders at the General Meeting held
The new remuneration policy also provides
additional flexibility
for designing
future
RemuNeRATioN PoliCy
The group believes in aligning the interests
incentive plans for the other executive directors
of management with those of shareholders.
and senior management and ensuring these
It is the group’s policy to construct executive
incentives are more closely aligned with the
remuneration packages such that a significant
on June 1 2015 and can be found on the
group’s long-term strategy.
company’s website (www.euromoneyplc.com).
The new policy took effect from October 1
2015.
The implementation of the remuneration policy
for the A Rashbass for the 2016 financial
year was outlined in the Notice of General
The key changes in the new remuneration
Meeting sent to shareholders in May 2015. The
policy were to accommodate the remuneration
implementation of the remuneration policy for
package for the A Rashbass as follows:
●— the introduction of an Annual Bonus Plan;
●— the introduction of a Performance Share
Plan (PSP);
the other executive directors is set out on pages
57 to 68 of this report. These arrangements
are expected to remain in place for the 2016
financial year.
●— the recruitment policy was amended to
accommodate the recruitment award for
the new CEO; and
ComPliANCe sTATemeNT
This report sets out the group’s policy and
structure for the remuneration of executive
●— a minimum shareholding guideline of 200%
and non-executive directors. This policy report
of base salary was introduced for the CEO
is intended to be in full compliance with the
and 100% of base salary for the other
requirements of the Large and Medium-sized
executive directors.
Companies and Groups (Accounts and Reports)
Regulations 2008 (as amended).
part of a director’s remuneration is linked
to performance measures aligned with the
group’s key strategic, financial and operational
objectives and with the creation of sustainable
long-term shareholder value. Salaries and
benefits are generally not intended to be
the most significant part of a director’s
remuneration.
In formulating
its directors’
remuneration policy,
the committee has
considered employee pay and benefits available
across the group and also sought advice on
best practice from Deloitte.
deTAiled Remu NeRATioN ARRANgemeNTs oF exeCuTiVe diReCToRs
BAsic sAlAry
Purpose and link to
●●
Part of an overall market competitive pay package with salary generally not the most significant part of a director’s
strategy
overall package.
operation
●●
●●
Reflect the individual’s experience, role and performance within the company.
Paid monthly in cash.
●● Normally reviewed by the remuneration committee in April each year.
Benchmarking
●●
The Remuneration Committee examines salary levels at FTSE 250 companies and other listed peer group companies to
help determine executive director pay increases.
relationship to
●●
There is no prescribed maximum employee salary level. The approach to setting base salary increases across the group
employee salaries
takes into account performance of the individuals concerned, the performance of the business they work for, micro
and macroeconomic factors, and market rates for similar roles, skills and responsibility.
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BeNefits
Purpose and link to
●●
Basic benefits are provided as part of a market competitive pay package.
strategy
operation
Benefits may include:
●●
●●
Private healthcare;
Life insurance; and
●● Overseas relocation and housing costs.
relationship to
●●
Benefits are available to all directors and employees subject to a minimum length of service or passing a probationary
employee benefits
period.
Benefit levels
●● All executive directors participate in the healthcare scheme offered in the country where they reside. There is no
prescribed maximum level of benefits.
PeNsioNs
Purpose and link to
●●
Retirement benefits are provided as part of a market competitive pay package.
strategy
operation
●● Directors may participate in the pension arrangements applicable to the country where they work.
●● A director who elects to cease contributing to a company pension scheme due to changes in tax or pension legislation
may choose to receive a pension allowance in lieu of the company’s pension contributions.
●● All directors and employees are entitled to participate in the same pension scheme arrangements applicable to the
country where they work. The maximum employers’ contribution to a pension scheme is 15% of pensionable salary.
relationship to
employee pension
levels
Profit shAres
Purpose and link to
●●
Profit share links the pay of those executive directors to whom it relates directly to the growth in profits of their
strategy
businesses. It encourages each director to grow their profits, to invest in new products, to search for acquisitions, and
operation
●●
●●
●●
●●
●●
●●
●●
to manage costs and risks tightly.
Profit shares are designed to maximise sustainable profits with no guaranteed floor and no ceiling.
Profit shares are expected to make up much of a director’s total pay and encourage long-term retention.
Profit shares are paid in full in the financial year following the year in which they are earned. In exceptional circumstances
profit shares may be paid in part during the year in which they are earned but only to the extent that profits have
already been generated.
There is no deferral of profit share.
There is no guaranteed floor or ceiling on profit shares earned.
Profit shares are calculated after charging the cost of funding acquisitions at the group’s actual cost of funds.
Each director’s profit share is subject to audit and to Remuneration Committee approval, and can be revised at any time
if the director’s responsibilities are changed.
●● Gains or losses on the disposal of capital assets, including subsidiaries and investments, are not included in profit shares;
●●
In the event of material misstatement relating to any information used in determining the amount of profit share, or
gross misconduct by an executive director, the board may claw back profit share previously paid for a period of up to
three years after the year when the event happened.
●●
The profit shares of each executive director for financial year 2015 are reported in detail in the remuneration
implementation report. These arrangements are expected to remain in place for financial year 2016.
relationship to
●●
Incentives, including profit shares, are an important part of the group culture. The directors believe they directly reward
employee incentive
good and exceptional performance. Most employees across the group have an incentive scheme in place.
schemes
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50
Directors’ Remuneration Report
Remuneration policy report continued
ANNuAl BoNus
Pl AN
Purpose and link to
strategy
●●
●●
The Annual Bonus Plan links reward to key business targets and an individual’s contribution.
The Annual Bonus Plan provides alignment with shareholders’ interests through the operation of bonus deferral.
operation
●● Any executive director may participate in the Annual Bonus Plan.
●●
The maximum award that can be made under the Annual Bonus Plan is 150% of salary. Each year the Remuneration
Committee will determine the maximum annual bonus opportunity for individual executive directors within this limit.
●● Annual bonus payments will be paid in cash following the release of audited results and/or as a deferred award over
company shares.
●● Deferred awards are usually granted in the form of conditional share awards or nil-cost options (and may also be
settled in cash).
●● Deferred awards usually vest two years after award although may vest early on leaving employment or on a change
of control (see later sections).
●● An additional payment (in the form of cash or shares) may be made in respect of shares which vest under deferred
awards to reflect the value of dividends which would have been paid on those shares (this payment may assume that
dividends had been reinvested in company shares on a cumulative basis).
●●
The annual bonus payable is based on performance assessed over one year using appropriate financial, strategic and
individual performance measures. The majority of the Annual Bonus will generally be determined by measure(s) of
group financial performance.
●● Any annual bonus payout is ultimately at the discretion of the Remuneration Committee.
●●
The cash bonus will be subject to recovery, and / or deferred awards will be withheld, at the Remuneration Committee’s
discretion in exceptional circumstances where, before the preliminary announcement of audited results during the third
financial year following the financial year in which the bonus is determined, a material misstatement or miscalculation
comes to light which resulted in an overpayment under the Annual Bonus Plan, or there is gross misconduct.
●●
The Annual Bonus Plan will first be operated in financial year 2016 when the only director who will participate is the
new executive chairman.
relationship to
●●
Incentive schemes, like the Annual Bonus Plan, are an important part of the group culture. The directors believe they
employee incentive
directly reward good and exceptional performance. Most employees across the group have an incentive scheme in
schemes
place.
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loNg-TeRm
iNCeNTiV e
PlANs
Purpose and link to
●●
Share schemes are an important part of overall compensation and align the interests of directors and managers with
strategy
operation
shareholders. They encourage directors to deliver long-term, sustainable profit and share price growth.
2014 Capital Appreciation Plan (CAP 2014)
●● At the company’s AGM in January 2014, the directors received approval for a new long-term incentive scheme
following the achievement of the performance conditions of CAP 2010. Awards under CAP 2014 are granted to
senior employees who have direct and significant responsibility for the profits of the group. Each CAP 2014 award will
comprise an option to subscribe for ordinary shares of 0.25 pence each in the company and a right to receive a cash
payment. No individual may receive an award over more than 5% of the award pool. In accordance with the terms of
CAP 2014, no consideration will be payable for the grant of these awards.
●●
The primary performance test under CAP 2014 requires the company to achieve an adjusted profit before tax (before
CAP costs) of £173.6m by financial year 2017 (increased to £178.4m for the acquisition of Mining Indaba). This is
equivalent to an average profit growth rate of at least 10% a year from a base in 2013 which the Remuneration
Committee decided was a sufficiently challenging target. Subject to the performance test being satisfied, rewards
under CAP 2014 are expected to vest in three tranches in February 2018, 2019 and 2020. The profit target under
CAP 2014 will be adjusted in the event that any significant acquisitions or disposals are made during the performance
period. Awards are granted under CAP 2014 to senior employees of acquired entities who have direct and significant
responsibility for the profits of the group.
●●
In the event of material misstatement relating to any information used in determining the vesting of CAP 2014 awards,
or gross misconduct by an executive director, the board may claw back long-term incentives previously paid for a
period of up to three years after the year when the event happened.
2014 Company Share Option Plan (CSOP 2014)
●● At the company’s 2014 AGM, the directors also received approval for a new CSOP. The CSOP 2014 will be a delivery
mechanism for part of the CAP 2014 award. Awards are granted under the CSOP 2014 to senior employees who have
direct and significant responsibility for the profits of the group. Each CSOP 2014 option will enable each UK-based
participant to purchase up to £30,000* of shares in the company with reference to the market price of the company’s
shares at the date of grant. No consideration will be payable for the grant of these awards. The options will vest and
become exercisable at the same time as the corresponding share award under the CAP 2014 providing the CSOP
option is in the money at that time.
* The Canadian version of the CSOP 2014 will enable a Canada-based participant to purchase up to £100,000 of shares in the company
with reference to the market price of the company’s shares at the date of grant
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Directors’ Remuneration Report
Remuneration policy report continued
loNg-TeRm
iNCeNTiV e
PlANs
2015 Performance Share Plan (PSP)
●● At the company’s General Meeting in June 2015 shareholder approval was sought for the PSP. Any executive director
may participate in the PSP.
●●
The maximum annual award permitted under the PSP is shares with a market value of 200% of annualised basic
salary. These awards will normally be subject to a performance period of five years. If the Remuneration Committee
determines so, an alternative performance period may be applied (with a minimum of at least three years) plus, if
applied, an additional holding period of up to two years. Awards may vest early on leaving employment or on a change
of control (see later sections). Vesting of these awards will be based on financial performance measures and/or strategic
business goals, with the precise measures and weighting of the measures determined by the Remuneration Committee
on the grant of each award. For achieving a threshold level of performance against a performance measure, no more
than 25% of the portion of the PSP award determined by that measure will vest. Vesting of that portion would then
increase to 100% for achieving a stretching maximum performance target.
●● All PSP awards may be granted as conditional awards of shares or nil-cost options (or, if appropriate, as cash-settled
equivalents). An additional payment (in the form of cash or shares) may be made in respect of shares which vest under
PSP awards to reflect the value of dividends which would have been paid on those shares (and this payment may
assume that dividends had been reinvested in company shares on a cumulative basis).
●●
PSP awards will be subject to recovery and/or withholding at the Remuneration Committee’s discretion in exceptional
circumstances where, before the preliminary announcement of audited results during the sixth financial year following
the financial year in which the award is granted, a material misstatement or miscalculation comes to light which
resulted in an over-vesting of PSP awards, or gross misconduct.
relationship to all
●●
Both the CAP and the PSP reward the creation of long-term shareholder value and are potentially available to all senior
employee long-term
employees across the group. An individual would not normally be granted an award under both the CAP and the PSP
incentive schemes
in the same financial year.
loNg-TeRm
iNCeNTiV e
PlANs (All-
emPloyee
sChemes)
Purpose and link to
●● All-employee share schemes align staff with the group’s financial performance and promote a sense of ownership.
strategy
operation
Euromoney SAYE scheme
●●
The group operates an all-employee save as you earn scheme in which those directors employed in the UK are eligible
to participate. No performance conditions attach to options granted under this plan. It is designed to incentivise all
employees. Participants save a fixed monthly amount of up to £500 (or such other limit as may be approved from time
to time by HMRC) for three years and are then able to buy shares in the company at a price set at a 20% discount to
the market value at the start of the savings period.
DMGT SIP
●● Daily Mail and General Trust plc, the group’s parent company, operates a share incentive plan in which all UK-based
employees of the Euromoney group can participate. Executive directors may participate on the same basis as other
employees, in line with HMRC guidance.
●● All employees based in the UK are entitled to participate in the Euromoney SAYE and DMGT SIP schemes.
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53
Notes to table:
●●
The Remuneration Committee may vary any
of the payment were consistent with the
Committee may allow CAP awards to
performance condition(s) if an event occurs
shareholder-approved remuneration policy
vest early on such event. If the shares
which causes it to determine that a varied
in force at the time they were agreed; or (iii)
in the company cease to be listed
condition would be more appropriate,
at a time when the relevant individual was
otherwise than on a change of control,
provided that any such varied condition is
not a director of the company and, in the
the CAP will continue to operate but
not materially less difficult to satisfy. In the
opinion of the Remuneration Committee,
share awards will be satisfied in cash.
event that the Remuneration Committee
the payment was not in consideration for
●— Under the PSP and the deferred share
was to make an adjustment of this sort, a
the individual becoming a director of the
bonus plan, outstanding awards will
full explanation would be provided in the
company. For these purposes “payments”
vest early in the event of a change of
next Remuneration Report.
includes the Remuneration Committee
control/takeover unless the change of
●●
Performance measures – The performance
satisfying awards of variable remuneration
control is an internal reorganisation
measures used in the variable incentive
and, in relation to an award over shares,
or
the Remuneration Committee
plans are reviewed annually and chosen
the terms of the payment are “agreed” at
determines otherwise in which case
to focus executive rewards on delivery
the time the award is granted.
awards will be exchanged for equivalent
of key financial targets for the relevant
●●
The
Remuneration Committee may
awards over shares in the acquiring
performance period in addition, where
make minor amendments to the Policy
company. In the case of PSP awards,
appropriate, to key strategic or operational
(for regulatory, exchange control, tax
the extent to which awards vest will
goals relevant to an individual. Precise
or administrative purposes or to take
take into account the satisfaction of the
targets are set at the start of each
account of a change in legislation) without
performance conditions and, unless the
performance period by the Remuneration
obtaining shareholder approval for that
Remuneration Committee determines
Committee based on relevant reference
amendment.
otherwise, on a time pro-rated basis
points,
including,
for group financial
●●
The Remuneration Committee will operate
by reference to the proportion of the
targets, the company’s business plan, and
the variable
incentive plans according
performance period that has elapsed. If
are designed to be appropriately stretching.
to their respective rules which provide
the company is wound up or is or may be
●●
The Remuneration Committee intends to
flexibility in a number of regards:
affected by a demerger, delisting, special
honour any commitments entered into with
●— Under the CAP, outstanding awards
dividend or other event which would, in
current or former directors on their original
will vest early in the event of a change
the Remuneration Committee’s opinion
terms,
including outstanding
incentive
of control/takeover or if the company
affect the company’s share price, the
awards, which have been disclosed in
is wound up, but, in the event that
Remuneration Committee may allow
previous remuneration reports and, where
the relevant transaction takes place
PSP and deferred share bonus plan
relevant, are consistent with a previous
prior to the end of the performance
awards to vest on the same basis as for
policy approved by shareholders. Any such
period, only to the extent that the
a takeover.
payments to former directors will be set out
Remuneration Committee considers
●— Any buy-out award granted as part of
in the Remuneration Report as and when
that the performance conditions have
the recruitment of an executive director
they occur.
The Remuneration Committee reserves
●●
been met. However, the rule applying
will be treated as a change of control in
on changes of control/takeovers does
line with the agreed commercial terms
the right to make any remuneration
not apply on an internal reorganisation
of that award.
payments and payments for loss of office
or where the acquiring company either
●— If there is a variation of the company’s
(including
exercising
any discretions
agrees to continue to operate the
share capital or a demerger, delisting,
available to it in connection with such
plan in accordance with its terms (but
special dividend, rights issue or other
payments) notwithstanding that they are
satisfying share awards in cash) or to
event which,
in the Remuneration
not in line with the policy set out above
replace the plan with equivalent share
Committee’s opinion would affect
where the terms of the payment were
arrangements relating to shares in the
the
company’s
share price,
the
agreed: (i) before the date the company’s
acquiring company. If the company is
Remuneration Committee may adjust
first remuneration policy approved by
affected by any demerger, dividend
the terms of the awards.
shareholders in accordance with section
in specie, special dividend or other
439A of the Companies Act came into
transaction which will adversely affect
effect; and (ii) before the policy set out above
the current or future value of awards
came into effect, provided that the terms
under the CAP, the Remuneration
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Directors’ Remuneration Report
Remuneration policy report continued
NoN-exeCuTiVe diR eCToRs
The remuneration of non-executive directors
which have been forfeited in order to join the
agreements provide for a notice period of 12
company. When structuring a buy-out award the
months from the company and the executive.
is determined by the board based on the time
Remuneration Committee will take account of
The service agreements for PR Ensor, NF Osborn,
commitment required by the non-executive
all relevant factors, including any performance
CHC Fordham, DE Alfano and B AL-Rehany
directors, their role and market conditions.
conditions attached to forfeited
incentive
include payment in lieu of notice provisions.
Each non-executive director receives a base
awards, the likelihood of those conditions
Each executive director participates in bonus or
fee for services to the board with an additional
being met, the proportion of the vesting/
incentive arrangements (and in the case of A
fee payable
for non-executive directors
performance period remaining and the form of
Rashbass a recruitment award as compensation
with selected, additional responsibilities (for
the award (e.g. cash or shares). The overriding
for forfeiting remuneration in order to join the
example, the chairs of the remuneration and
principle will be that any replacement buy-out
company).
audit committees). The non-executive directors
award should, in aggregate, not exceed the
do not participate in any of the company’s
commercial value of the earnings which have
incentive schemes. The non-executive directors
been forfeited. The Remuneration Committee
receive reimbursement for reasonable expenses
may, in a recruitment scenario, rely upon the
incurred as part of their role as non-executive
Listing Rules exemption from shareholder
approval to grant a one-off buy-out award to
facilitate the recruitment of a director.
directors.
PoliCy oN exTeRNAl
APPoiNTmeNTs
The
company encourages
The service agreement for the new CEO, A
Rashbass, includes, the following provisions on
termination (consistent with the other executive
directors): 12 months’ notice from the company
(and the executive) and during such notice the
executive will normally continue to be entitled
to receive, at the absolute discretion of the
New executive directors are entitled
to
Remuneration Committee, bonus, long-term
its executive
participate in the Euromoney SAYE and DMGT
incentive awards that accrue during the notice
directors to take a limited number of outside
SIP schemes.
directorships provided they are not expected to
impinge on their principal employment. Subject
to the approval of the company chairman,
directors may retain the remuneration received
from the first such appointment.
ReCRuiTmeNT Poli Cy
Compensation packages
for new board
directors are set
in accordance with the
Where an executive director is appointed from
within the organisation, the normal policy of
the company is that any legacy arrangements
would be honoured in line with the original
terms and conditions. Similarly, if an executive
director is appointed following the company’s
acquisition of or merger with another company
or business, legacy terms and conditions would
prevailing Remuneration Policy at their time of
be honoured.
joining the Board. The main components are
detailed below.
New executive directors will receive a salary
commensurate with their responsibilities and
which will not be the most significant part
of their overall remuneration package. The
director will also be offered the benefit of
New non-executive directors appointed to the
board will receive a base fee in line with that
payable to other non-executive directors. In the
event that a non-executive director is required
to temporarily take on the role of an executive
director, their remuneration may include any
of the elements listed above for executive
private healthcare and life assurance. Other
directors.
benefits may include a pension allowance,
relocation or housing allowance.
diReCToRs’ seRViCe CoNTRACTs
The company’s policy is to employ executive
New executive directors will participate in one
directors on
service agreements which
or more of the incentive plans outlined in the
are terminable on 12 months’ notice. The
section “Detailed remuneration arrangements
Remuneration Committee seeks to minimise
of executive directors” earlier in this Policy
termination payments and believes these should
Report.
Where appropriate, a new executive director
be restricted to the value of remuneration for
the notice period.
may be granted a one-off buy-out award for
The
company’s
executive directors
are
loss of earnings from previous employment
employed for an indefinite term and the service
period and the recruitment bonus (to the extent
that the award vests during the notice period).
If the company terminates employment and
elects to make a payment in lieu of notice
(PILON) this will be calculated on the basis of A
Rashbass’ base salary for the notice period and
will also take account of any recruitment bonus
to which A Rashbass would become entitled
during the notice period. At the absolute
discretion of the Remuneration Committee,
A Rashbass will also be considered for any
bonuses to which he would or may become
entitled during the notice period. The other
executive directors’ service agreements are
currently being reviewed and updated where
necessary – the revised contracts for executive
directors will provide for 12 months’ notice and
provisions for payment in lieu of notice and
garden leave.
The service agreements for the executive
directors are expressed to expire on reaching
their respective retirement age; however, the
executive directors could not, under UK law,
be required to retire at this age following the
abolition of the default retirement age.
In the event that employment is terminated due
to incapacity (90 calendar days absence in a
rolling 12 month period) the service agreements
provide for termination on six months’ notice
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EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 55
apart from NF Osborn and DE Alfano. The
The treatment of outstanding share awards in
Committee determines
it should vest as
contract for NF Osborn provides for one
the event of termination is governed by the
soon as reasonably practicable following the
month’s notice and for DE Alfano provides for
relevant share plan rules as summarised below.
participant’s cessation. The extent to which the
immediate termination. In these circumstances
the company would also make a payment for
pension and pro-rated profit share up to the
date of termination for all executive directors.
If a participant in the CAP ceases to be employed
by reason of death, injury, disability, redundancy,
the sale of the participant’s employing business or
entity out of the Group, or any other exceptional
With the exception of Sir Patrick Sergeant, none
circumstance as determined by the Remuneration
of the non-executive directors has a service
Committee, then the Remuneration Committee
award vests will take account of the extent to
which the performance condition is satisfied
and, unless the Remuneration Committee
determines otherwise, on a time pro-rated
basis by reference to the proportion of the
performance period that has elapsed.
contract, although JC Botts, DP Pritchard,
has the discretion to allow the CAP award to
If a PSP award is subject to a holding period
TP Hillgarth and ART Ballingal serve under a
vest on the normal vesting date, to the extent
and a participant ceases to be an officer or
letter of appointment. The service contract of
determined by the Remuneration Committee
employee of the Group during that holding
Sir Patrick Sergeant provides for 12 months’
at the time of cessation. If such discretion is
period, his award will normally be released at
expense allowance and an expense allowance
not exercised, then the award will lapse 60
the end of the holding period except where
up to the date of termination in the event of
days
following cessation of employment.
the Remuneration Committee determines it
incapacity.
Such discretion is not exercisable on voluntary
should be released following the participant’s
The directors’ service contracts are available
for shareholder inspection at the company’s
registered office.
PoliCy oN PAymeNT FoR loss
oF oFFiCe
The company’s approach to payments in the
event of termination is to take account of the
individual circumstances including the reason
for
termination,
individual performance,
contractual obligations, the terms of profit share
plans/incentives and long-term incentive plans
in which the executive director participates.
The company’s general practice for all executive
directors is to provide for 12 months’ salary,
pension and pro-rated profit share up to the
date of termination.
The company may
lawfully terminate an
executive director’s employment without
compensation in circumstances where the
company is entitled to terminate for cause (this
is defined in the service agreements).
The Remuneration Committee may determine
that any executive director is eligible to receive
an annual bonus in respect of the financial
year in which they cease employment. This
bonus would usually be time apportioned. In
determining the level of bonus to be paid, the
Remuneration Committee may, at its discretion,
take into account performance up to the date of
cessation or over the financial year as a whole.
resignation of the participant or where the
cessation. However, if a participant is summarily
cessation of employment occurs in circumstances
dismissed during a holding period, his award
which would justify summary dismissal of the
will lapse immediately. Nil-cost options will
participant. In all other circumstances, awards
normally be exercisable for six months after
will lapse on the participant ceasing to be
release.
employed (or giving or being given notice to
terminate the employment).
Where an executive director participates in
the deferred share bonus plan and ceases
If an executive director participates in the PSP
employment, their outstanding awards will
and ceases to be an officer or employee of the
normally lapse unless cessation is due to the
Group during the performance period in any
participant’s death or a Good Leaver Reason,
circumstances other than those set out below,
in which case outstanding awards will vest at
an unvested award will lapse on the date on
the normal vesting date or, if the Remuneration
which their employment ceases.
Committee
so determines, as
soon as
reasonably practicable following the individual’s
If a participant dies, an unvested PSP award will
vest at the time of the participant’s death taking
cessation.
into account the satisfaction of the performance
Any buy-out award granted as part of the
condition and, unless
the Remuneration
recruitment of an executive director will be
Committee determines otherwise, on a time
treated on cessation of employment in line with
pro-rated basis by reference to the proportion
the agreed commercial terms of that award.
of the performance period that has elapsed.
If a participant is treated as a good leaver
approve a contribution towards a departing
because cessation of employment is as a
executive’s legal or other professional costs,
result of ill-health, injury, disability, the sale
where appropriate.
The Remuneration Committee may also
of the
individual’s employing business or
entity out of the Group, the transfer of the
individual to another of DMGT’s businesses
outside the Group or any other reason at the
Remuneration Committee’s discretion (‘a Good
Leaver Reason’) a participant’s unvested PSP
award will usually continue until the normal
vesting date except where the Remuneration
No other termination payments are provided
unless otherwise required by law.
A non-executive director’s contract can be
terminated by the company giving summary
notice, with the exception of Sir Patrick
Sergeant who has a 12-month notice period.
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Annual Report and Accounts 2015 Governance ❯ directors’ remuneration report 56
Directors’ Remuneration Report
Remuneration policy report continued
PoliCy FoR diReCToRs holdiNg equiTy iN The ComPANy
With effect from October 1 2015, there is a minimum shareholding requirement of 200% of base salary for the executive chairman and 100% of salary
for other executive directors on a continuous basis. A newly appointed executive director will have a period of five years from their date of appointment
to meet the minimum shareholding requirement.
sCeNARio ChARTs F oR diReCToRs’ Remu NeRATioN
The chart below provides illustrative values of the remuneration package for the new CEO, A Rashbass, under three assumed performance scenarios
for FY2016. This chart is for illustrative purposes only and actual outcomes may differ from those shown.
Assumed Perform ANce
AssumPtioNs used
All performance scenarios (Fixed pay)
●● Consists of total fixed pay, including base salary, benefits and pension.
●●
●●
●●
Base salary – salary effective as at October 1 2015.
Benefits – estimated value of £2,000.
Pension allowance – amount expected to be received in FY2016 (10% of salary).
Minimum (less than threshold) performance (Variable pay)
●● No pay-out under the annual bonus.
Performance in line with expectations (Variable pay)*
Maximum performance (Variable pay)*
●● No vesting under the PSP.
●●
●●
●●
●●
2/3rd of the maximum pay-out under the annual bonus.
50% vesting under the PSP.
100% of the maximum pay-out under the annual bonus.
100% vesting under the PSP.
*PSP awards have been shown at face value, with no share price growth or discount rate assumptions. All-employee share plans have been excluded.
0
0
0
£
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2,327
32%
32%
36%
827
100%
3,452
43%
33%
24%
Minimum
In line with expectations
Maximum
PSP
Annual Bonus
Fixed Pay
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EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Directors’ Remuneration Report
Annual report on remuneration
57
iNFoRmATioN subJeCT To AudiT
The table below sets out the breakdown of the single total figure of remuneration for each executive director in financial years 2015 and 2014.
salary
long-term
and fees
Benefits
Profit share
incentive
Pension
single total figure of remuneration
executive directors
PR Ensor (retired September 30 2015)¹
CHC Fordham²
NF Osborn³
DC Cohen (resigned September 30 2014)
CR Jones4
DE Alfano5
JL Wilkinson6
B AL-Rehany7
total executive directors
Non-executive directors
The Viscount Rothermere
Sir Patrick Sergeant
JC Botts
MWH Morgan
DP Pritchard
ART Ballingal
TP Hillgarth
total non-executive directors
total 2015
Total 2014
£
22,918
22,918
37,500
37,500
9,399
9,399
–
15,855
39,750
39,750
4,256
3,986
18,000
17,982
6,915
6,191
138,738
153,581
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
total
£
4,003,780
4,575,444
575,706
895,206
295,869
379,129
–
468,101
866,045
947,321
971,919
768,263
281,536
346,832
467,174
596,923
7,462,029
8,977,219
30,000
30,000
30,000
30,000
36,500
36,500
30,000
30,000
36,500
36,500
30,000
30,000
30,000
30,000
223,000
223,000
138,738
153,581
7,685,029
9,200,219
£
£
£
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
175,500
175,500
375,000
375,000
130,863
130,863
–
115,700
265,000
265,000
141,862
132,882
180,000
180,000
219,171
231,740
1,487,396
1,606,685
30,000
30,000
30,000
30,000
36,500
36,500
30,000
30,000
36,500
36,500
30,000
30,000
30,000
30,000
223,000
223,000
1,710,396
1,829,685
5,378
1,416
1,506
1,771
1,581
1,416
–
1,771
1,506
1,771
10,152
8,130
–
45,656
1,006
1,096
21,129
63,027
3,799,984
4,375,610
161,700
480,935
154,026
237,451
–
334,775
559,789
640,800
815,649
623,265
83,536
103,194
240,082
357,896
5,814,766
7,153,926
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21,129
63,027
5,814,766
7,153,926
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Governance ❯ directors’ remuneration report 58
Directors’ Remuneration Report
Annual report on remuneration continued
●●
Salaries and fees include basic salaries and any non-executive directors’ fees. Salaries are reviewed in April each year. None of the executive directors
received a salary increase in 2015. Differences in salaries between 2014 and 2015 reflect currency movements for those executive directors based
●●
●●
●●
1.
outside the UK.
Benefits include private healthcare and costs in relation to private pension schemes.
Pension amounts are those contributed by the company to pension schemes or cash amounts paid in lieu of pension contributions.
Profit shares are calculated as follows:
PR Ensor receives a profit share based on the adjusted pre-tax post non-controlling interests’ profit of the group. The profit share is calculated by applying a multiplier
of 2.97% (2014: 2.97%) to the adjusted pre-tax profits. In addition, PR Ensor is entitled to 1.11% (2014: 1.11%) of adjusted pre-tax profit in excess of a threshold of
£44,988,722 (2014: £42,846,402).
2. CHC Fordham receives a profit share linked to the growth in the group’s adjusted pre-tax EPS above a base pre-tax EPS. This base EPS increases by
5% a year and he receives £24,500 for every 1 pence increase in EPS above the base. For 2015, his base EPS was 74.45 pence (2014: 70.9 pence) and the adjusted
pre-tax EPS was 81.1 pence (2014: 90.5 pence).
3. NF Osborn receives a profit share linked to the operating profits of the businesses he manages at a rate of 2.5% on profits to £1m, 4% on the next £1m, 5.5% on the
next £1 million and 7% on profits in excess of £3m.
4. CR Jones receives a profit share linked to the growth in adjusted pre-tax EPS of the group. A sum of £500 is payable for every percentage point that the adjusted pre-tax
EPS is above 11 pence and an additional sum of £800 is payable for every percentage point that the adjusted pre-tax EPS is above 20 pence.
5. DE Alfano receives a profit share linked to the operating profits of the businesses she manages at a rate of 1% on profits between US$402,116 and US$727,116, and
6.
7.
a rate of 6.5% on profits above US$727,116. Her profit share on acquisitions she manages is at a rate of 5% of profits above a threshold.
JL Wilkinson receives a profit share linked to the operating profits of the businesses she manages at a rate of 5% of profits above a threshold of £1m. In 2014,
the benefits figure for JL Wilkinson included £41,837 of New York housing allowance. In 2014, JL Wilkinson returned to London and no longer receives a housing
allowance.
B AL-Rehany receives a profit share linked to the operating profits of the businesses he manages at a rate of 5% of profits above a threshold. This threshold increases
by 10% per annum.
Information relating to certain targets, performance of individual businesses and adjustments to profit are considered to be commercially sensitive and
the group do not believe it to be appropriate to disclose now or in the future.
NoN-exeCuTiVe diR eCToRs
Each non-executive director receives a base fee for services to the board of £30,000 (2014: £30,000) with an additional fee of £6,500 (2014: £6,500)
payable to the chairs of the remuneration and audit committees.
iNFoRmATioN NoT subJeCT To AudiT
External appointments
PR Ensor is an external member of the Finance Committee of Oxford University Press. During the year he retained earnings of £20,000 (2014: £20,000)
from this role. This amount has not been included in his single figure of remuneration on page 57.
NF Osborn serves as an advisor to the boards of both DMG Events and dmgi, fellow group companies, for which he received a combined fee of
US$18,600 (2014: US$23,638). These amounts have not been included in his single figure of remuneration on page 57.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 59
Profit share performance against expectations for the executive directors under the company’s remuneration policy for FY2015 are set out below. These
charts show, for each director, the profit share expected at the beginning of the year based on the group’s FY2015 forecast, the actual profit share
and an estimate of the maximum profit share for FY2015. The maximum profit share was calculated assuming that profits were 20% higher than the
FY2015 forecast, although profit shares have no ceiling.
6,000
5,000
4,000
0
0
0
£
3,000
2,000
1,000
0
300
250
200
0
0
0
£
150
100
50
0
PR ENSOR
CHC FORDHAM
0
0
0
£
1,200
1,000
800
600
400
200
0
In line with expectations
Actual
Maximum
In line with expectations
Actual
Maximum
NF OSBORN
CR JONES
0
0
0
£
900
800
700
600
500
400
300
200
100
0
In line with expectations
Actual
Maximum
In line with expectations
Actual
Maximum
1,000
DE ALFANO
0
0
0
£
800
600
400
200
0
300
250
200
0
0
0
£
150
100
50
0
JL WILKINSON
0
0
0
£
250
200
150
100
50
0
In line with expectations
Actual
Maximum
In line with expectations
Actual
Maximum
B AL-REHANY
In line with expectations
Actual
Maximum
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Annual Report and Accounts 2015 Governance ❯ directors’ remuneration report 60
Directors’ Remuneration Report
Annual report on remuneration continued
VARiAble PAy
Of the total remuneration of the seven executive directors who served in the year, 79% was derived from variable profit shares, as illustrated in the
following chart:
PR Ensor
5%
CHC Fordham
70%
NF Osborn
46%
CR Jones
32%
DE Alfano
16%
JL Wilkinson
68%
B AL-Rehany
48%
Total
21%
Total (excluding PR Ensor)
40%
95%
30%
54%
68%
84%
32%
52%
79%
60%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100
Fixed salary and benefits
Variable profit shares
ComPANy shARe sChemes
Details of each director’s share options can be found on pages 63 to 64.
CAPiTAl APPReCiATioN PlAN 2014 (CAP 2014)
CAP 2014 was approved by shareholders at the AGM on January 30 2014 as a direct replacement for CAP 2010.
Awards under CAP 2014 were granted in June 2014 to approximately 250 directors and senior employees who have direct and significant responsibility
for the profits of the group. Each CAP 2014 award comprises two equal elements: an option to subscribe for ordinary shares of 0.25 pence each in the
company; and a right to receive a cash payment. No individual could receive an award over more than 5% of the award pool. In accordance with the
terms of CAP 2014, no consideration was payable for the grant of the awards.
The value of awards received by a participant is directly linked to the growth in profits over the performance period of the businesses for which the
participant is responsible. Where there is no growth, no awards are allocated, whereas participants whose businesses grow the most will receive the
highest proportion of the award.
The award pool comprises a maximum of 3.5m ordinary shares and cash of £7.6m, limiting the total accounting cost of the scheme to
£41m over its life. Awards will vest in three equal tranches, subject to the performance conditions, and lapse to the extent unexercised by September
30 2023.
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EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 61
ComPANy shARe oPTioN PlAN
2014 (CsoP 2014)
Shareholders approved
the CSOP 2014
at the AGM on January 30 2014. The
CSOP 2014 was approved by HMRC on
March 31 2014.
Awards were granted under the CSOP 2014
on June 20 2014 to approximately 150 UK
and Canadian directors and senior employees
of the group who have direct and significant
responsibility for the profits of the group.
Each CSOP 2014 option enables each UK
participant to purchase up to 2,688 shares
and each Canadian participant to purchase
up to 8,963 shares in the company at a price
of £11.16 per share, the market value at the
date of grant. No consideration was payable
for the grant of these awards. The options vest
and become exercisable at the same time as
the corresponding share award under the CAP
2014.
The CSOP 2014 has the same performance
criteria as CAP 2014. The number of CSOP
2014 awards that vest proportionally reduce
the number of shares that vest under the
CAP 2014. The CSOP is effectively a delivery
mechanism for part of the CAP 2014 award.
The CSOP 2014 options have an exercise price
of £11.16, which will be satisfied by a funding
award mechanism which results in the net
gain2 on these options being delivered in the
equivalent number of shares to participants
as if the same gain had been delivered using
CAP 2014 options. The amount of the funding
award will depend on the company’s share
price at the date of exercise.
The fair value per option granted and the
assumptions used to calculate its value are set
out in note 23.
Vesting
The first tranche will vest on satisfaction of the
If the primary performance condition is not met
during the performance period, the awards will
primary performance condition, but no earlier
lapse at the end of the last financial year of the
performance period unless adjusted pre-tax
profits1 are at least 84.9% of the primary target.
This is known as the secondary performance
condition.
If the secondary performance
condition is met, the number of ordinary shares
and cash in the award pool will be reduced in
accordance with the table below to reflect the
extent to which the adjusted pre-tax profits1
have fallen short of the primary target.
Adjusted pre–tax
profits1 as a % of
the primary target
% reduction
in the award pool
100
95.7
94.2
93.1
91.5
88.2
84.9
0
2
6
10
17.3
37.1
67
If the secondary performance condition is met
in the financial year ended September 30 2017
and the adjusted pre-tax profits1 in the financial
year ended September 30 2018 and/or 2019
exceeds the adjusted pre-tax profits1 for 2017
then an additional number of ordinary shares
and cash will be allocated to the award pool.
The number of ordinary shares and the amount
of cash will be equal to one-third of that which
would have been included in the award pool
for 2017 if the adjusted pre-tax profits had
been equal to 2018 and/or 2019.
than February 2017.
The second tranche will vest in the February
following the initial vesting year in which the
following conditions (‘subsequent conditions’)
are satisfied:
a. Adjusted pre-tax profits1 for that financial
year equals or exceeds:
i.
if the primary performance condition
is satisfied, the primary target plus the
percentage growth in RPI from the start
of the initial vesting year to the start of
the relevant financial year; or
ii. if the primary performance condition is
not met but the secondary performance
condition is met, the adjusted pre-tax
profits1 for the financial year ending
September 30 2017 plus the growth in
RPI from October 1 2016 to the start of
the relevant financial year; and
b. the contribution
to growth of
that
participant does not fall by more than 20%
of that made in the initial vesting year.
The third tranche will vest in the financial year
following the second vesting year in which the
subsequent conditions are satisfied.
Performance conditions
The primary performance condition requires
the group to achieve adjusted pre-tax profits1 of
£173.6m, from a 2013 base profit of £118.6m,
by no later than the financial year ending
September 30 2017. Following the acquisition
of Mining Indaba in 2014, this profit target was
increased to £178.4m.
The performance target for CAP 2014 requires
the group to generate profit growth of at
least 10% a year (or RPI plus 5%, whichever is
higher) over a four year period from a base of
profits achieved in 2013.
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Directors’ Remuneration Report
Annual report on remuneration continued
CAPiTAl APPRe CiATioN PlAN
2010 (CAP 2010)
CAP 2010 was approved by shareholders
ComPANy shARe oPTioN PlAN
2010 (CsoP 2010)
Shareholders approved the CSOP 2010 at the
sAye
The group operates a save as you earn scheme
in which all employees, including directors,
at the AGM on January 21 2010 as a direct
AGM on January 21 2010. The CSOP 2010 plan
employed in the UK are eligible to participate.
replacement for CAP 2004. Each CAP 2010
was approved by HM Revenue and Customs on
Participants save a fixed monthly amount of up
award comprised two equal elements: an
June 21 2010.
option to subscribe for ordinary shares of 0.25p
each in the company at an exercise price of
0.25p per ordinary share; and a right to receive
a cash payment. No consideration was payable
for the grant of the awards.
Each CSOP 2010 option enabled each
participant to purchase up to 4,9723 shares in
the company at a price of £6.033 per share,
the market value at the date of grant. No
consideration was payable for the grant of
The award pool comprised 3,500,992 ordinary
these awards. Any CSOP options that did not
shares with an option value (calculated at date
fully vest in the first tranche of the CAP 2010
to £500 for three years and are then able to buy
shares in the company at a price set at a 20%
discount to the market value at the start of the
savings period. In line with market practice,
no performance conditions attach to options
granted under this plan. NF Osborn participated
in this scheme during the year, details of which
can be found on page 63 of this report.
of grant using an option pricing valuation
award vested at the same time as the second
model) of £15m, and cash of £15m, limiting
tranche of an individual’s CAP award, but only
dmgT siP
DMGT, the group’s parent company, operates
the total accounting cost of the scheme to
where the CSOP 2010 is in the money.
a share incentive plan in which all UK-based
£30m over its life. Awards vested in two equal
tranches. The first tranche became exercisable
in February 2013 on satisfaction of the primary
performance condition in 2012. The second
tranche became exercisable in February 2014
when the primary performance condition was
again satisfied in 2013. The vesting of the
second tranche was subject to an additional
performance condition which required the
profits of each business in the subsequent
vesting period be at least 75% of that achieved
in the year the first tranche of awards become
exercisable. The options lapse to the extent
unexercised by September 30 2020.
The CSOP 2010 had the same performance
criteria as CAP 2010 as set out above. The
number of CSOP 2010 awards that vested
proportionally reduced the number of shares
that vested under the CAP 2010. The CSOP was
effectively a delivery mechanism for part of the
CAP 2010 award. The CSOP 2010 options had
an exercise price of £6.033, which was satisfied
by a funding award mechanism which results in
the net gain2 on these options being delivered in
the equivalent number of shares to participants
as if the same gain had been delivered using
CAP 2010 options. The amount of the funding
award depended on the company’s share price
The number of options received under the
at the date of exercise.
share award of CAP 2010 was reduced by the
number of options vesting from the Company
Share Option Plan 2010 (see below and
note 23).
The fair value per option granted and the
assumptions used to calculate its value are set
out in note 23.
The fair value per option granted and the
assumptions used to calculate its value are set
out in note 23.
employees of the Euromoney group can
participate. Employees can contribute up to
£150 a month from their gross pay to purchase
DMGT ‘A’ shares. These shares are received
tax free by the employee after five years. The
executive directors who participated in this
scheme during the year were PR Ensor and
CR Jones, details of which can be found on
page 65 of this report.
1. Adjusted pre-tax profits are presented before the
impact of amortisation of acquired intangible
items, and movements
assets, exceptional
in deferred
consideration and acquisition
commitments, and the cost of the CAP itself.
2. The net gain on the CSOP options is the market
price of the company’s shares at the date of
exercise less the exercise price multiplied by the
number of options exercised.
3. The Canadian version of the CSOP 2010 had a
grant date of March 2010 and an exercise price of
£5.01, the market value of the company’s shares
at the date of grant, and enabled each Canadian
participant to purchase up to 19,960 shares in the
company.
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EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 63
iNFoRmATioN subJeCT To AudiT
diReCToRs’ shARe oPTioNs
At start
Granted
exercised
of year
during year
during year
At end
of year
exercise
price
date
from which
exercisable
expiry
date
1,810
1,810
1,408
20,167
2,688
24,263
1,810
1,340
3,150
14,457
2,688
17,145
28,020
28,020
2,059
7,954
2,688
12,701
16,964
–
–
–
–
–
–
–
–
1,104
1,104
–
–
–
–
–
–
–
–
–
–
(1,810)
(1,810)
–
– *
–
1,408 §
£4.97
£6.39
–
20,167 ^
£0.0025
Feb 1 2015
Aug 1 2015
Feb 1 2016
Performance criteria
not satisfied
Performance criteria
Aug 1 2016
Sep 30 2023
–
–
(1,810)
–
–
(1,810)
–
–
–
–
–
–
–
–
–
–
2,688 †
24,263
£11.16
not satisfied
Sep 30 2023
– *
£4.97
Feb 1 2015
Performance criteria
Aug 1 2015
1,340 †
1,104 ¥
2,444
£11.16
£8.15
not satisfied
Feb 1 2018
Sep 30 2023
Aug 1 2018
14,457 ^
£0.0025
Performance criteria
not satisfied
Performance criteria
Sep 30 2023
2,688 †
17,145
28,020 ^
28,020
£11.16
not satisfied
Sep 30 2023
Performance criteria
£0.0025
not satisfied
Sep 30 2023
2,059
£0.0025
7,954 ^
£0.0025
Performance criteria
not satisfied
Performance criteria
not satisfied
Performance criteria
Sep 30 2020
Sep 30 2023
2,688 †
12,701
£11.16
not satisfied
Sep 30 2023
16,964 ^
£0.0025
Performance criteria
not satisfied
Performance criteria
Sep 30 2023
8,963
25,927
113,016
–
–
1,104
–
–
(3,620)
8,963 †
25,927
110,500
£11.16
not satisfied
Sep 30 2023
PR Ensor
(retired September 30 2015)
CHC Fordham
NF Osborn
CR Jones
DE Alfano
JL Wilkinson
B AL-Rehany
total
*
§
¥
Issued under the Euromoney Institutional Investor PLC SAYE scheme 2012.
Issued under the Euromoney Institutional Investor PLC SAYE scheme 2013.
Issued under the Euromoney Institutional Investor PLC SAYE scheme 2014.
‡ Options granted relate to the true-up to the funding awards outstanding from tranche 2 of CAP 2010 which vested on February 13 2014. The number of such options
granted was provisional last year and was trued-up to reflect the share price on the date of vesting.
† The number of options granted under CSOP 2014 to each director will vest at the same time as the corresponding share award under CAP 2014 providing the CSOP
2014 is in the money at the time. If the option is not in the money at the time of vesting of the corresponding CAP 2014 award it continues to subsist and will vest at
the same time as the second or third tranche of the CAP 2014 share award.
The market price of the company’s shares on September 30 2015 was £9.50. The high and low share prices during the year were £12.61 and £9.41
respectively. There were 1,104 options granted during the year (2014: 105,925).
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Governance ❯ directors’ remuneration report 64
Directors’ Remuneration Report
Annual report on remuneration continued
diReCToRs’ CAsh seTTled oPTioNs
Under the terms of CAP 2010 and CAP 2014, the directors have been granted the following cash awards:
CHC Fordham
NF Osborn
CR Jones
DE Alfano
JL Wilkinson
JL Wilkinson
B AL-Rehany
At start
Granted
exercised
At end of
of year
during year
during year
£
49,461
2,900
37,105
60,640
8,824
23,031
56,109
238,070
£
–
–
–
–
–
–
–
–
£
–
–
–
–
–
–
–
–
year
£
49,461 ^
2,900 ^
37,105 ^
60,640 ^
8,824
23,031 ^
56,109 ^
238,070
date from which entitled
Performance criteria not satisfied
Performance criteria not satisfied
Performance criteria not satisfied
Performance criteria not satisfied
Performance criteria not satisfied
Performance criteria not satisfied
Performance criteria not satisfied
The cash settled options lapse four months after the preliminary announcement of the group’s results for the financial year in which the performance
conditions are met (see note 23).
^ The number of options and amount of cash award granted under CAP 2014 to each director is provisional and based on the performance of the respective directors’
individual businesses up to the end of the performance period (September 2017). As such the actual number of options and amount of cash award issued is likely to be
different to the amount disclosed. The percentage of awards that would vest if the minimum performance test was satisfied is 33%. The number of options received
under the share award of the CAP 2014 is reduced by the number of options vesting with participants from the CSOP 2014. The share options awarded under CAP 2014
have a face value of £10.77 per option on the date of grant June 20 2014.
diReCToRs’ oPTioNs exeRCised duRiNg The yeAR
The aggregate gain made by the directors on the exercise of share options in the year was £19,440 (2014: £1,441,411) as follows:
PR Ensor (retired September 30 2015)
NF Osborn
Number of
market price
options
date of
on date of
exercised
exercise
exercise
Feb 6 2015
Feb 6 2015
£10.34
£10.34
1,810
1,810
3,620
Gain on
exercise
£9,720
£9,720
£19,440
Number of
shares
retained
1,810
–
1,810
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com diReCToRs’ iNTeResTs iN The ComPANy
The interests of the directors in the shares of the company as at September 30 were as follows:
executive directors
PR Ensor (retired September 30 2015)
CHC Fordham
NF Osborn
CR Jones
DE Alfano
JL Wilkinson
B AL-Rehany
Non-executive directors
The Viscount Rothermere
Sir Patrick Sergeant
JC Botts
MWH Morgan
DP Pritchard
ART Ballingal
TP Hillgarth
Non-beneficial
Sir Patrick Sergeant
65
ordinary shares of
0.25p each
2015
2014
145,368
179,971
31,354
192,000
78,006
37,922
31,844
–
165,304
15,503
7,532
–
–
–
884,804
194,529
179,971
31,354
192,000
78,006
89,430
32,844
24,248
165,304
15,503
7,532
–
–
–
1,010,721
20,000
20,000
Each of the executive directors held shares with a value in excess of 100% of salary throughout the year, in accordance with the policy for directors
holding equity in the company. This policy ceases to apply on termination of a director’s service contract.
iNFoRmATioN NoT subJeCT To AudiT
diReCToRs’ iNTeResTs iN dAily mAil ANd geNeRAl TRusT PlC
The interests of the directors, to be disclosed under chapter 9.8.6 of the Listing Rules, in the shares of Daily Mail and General Trust plc as at September
30 were as follows:
The Viscount Rothermere1
PR Ensor (retired September 30 2015)
CR Jones
Sir Patrick Sergeant
MWH Morgan1
ordinary shares of
12.5p each
‘A’ ordinary non-voting
shares of 12.5p each
2015
2014
2015
2014
19,890,364
19,890,364
61,958,863
64,758,863
–
–
–
–
–
–
–
–
1,544
1,523
36,000
1,318
1,271
36,000
1,247,880
1,243,403
1 The figures in the table above include ‘A’ shares awarded to executives under the DMGT Executive Bonus Scheme.
The Viscount Rothermere had non-beneficial interests as a trustee at September 30 2015 in 4,880,000 ‘A’ ordinary non-voting shares of 12.5 pence
each (2014: 5,540,000 shares).
Daily Mail and General Trust plc has been notified that, under section 824 of the Companies Act 2006 and including the interests shown in the table
above, The Viscount Rothermere is deemed to have been interested in 19,890,364 ordinary shares of 12.5 pence each (2014: 19,890,364 shares).
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Governance ❯ directors’ remuneration report 66
Directors’ Remuneration Report
Annual report on remuneration continued
At September 30 2015 and September 30 2014, The Viscount Rothermere was beneficially interested in 756,700 ordinary shares of Rothermere
Continuation Limited, the company’s ultimate parent company.
The Viscount Rothermere and MWH Morgan had options over 427,680 and 185,666 respectively ‘A’ ordinary non-voting shares in Daily Mail and
General Trust plc at September 30 2014 (2014: 487,680 and 201,396 options respectively). The exercise price of these options is £nil. Further details of
these options are listed in the Daily Mail and General Trust plc annual report.
Since September 30 2015, PR Ensor and CR Jones each purchased, through the DMGT SIP scheme, 16 and 20 (2014: 32 and 32) additional ‘A’ ordinary
non-voting shares in Daily Mail and General Trust plc respectively. There have been no other changes in the directors’ interests since September 30 2015.
iNFoRmATioN subJeCT To AudiT
diReCToRs’ PeNsio Ns
Executive directors can participate in the Harmsworth Pension Scheme (a defined benefit scheme), the Euromoney Pension Plan (a money purchase
plan) or their own private pension scheme. Further details of these schemes are set out in note 26 to the accounts. Pension contributions paid by the
company on behalf of executive directors during the year were as follows:
cash
alternative
to pension
scheme
contribution
2015
£
22,918
–
9,399
–
39,750
–
–
–
euromoney
Pension Plan
2015
£
–
37,500
–
–
–
–
18,000
–
72,067
55,500
Private
schemes
2015
£
–
–
–
–
–
4,256
–
6,915
11,171
total
2015
£
22,918
37,500
9,399
–
39,750
4,256
18,000
6,915
Total
2014
£
22,918
37,500
9,399
15,855
39,750
3,986
17,982
6,191
138,738
153,581
PR Ensor (retired September 30 2015)
CHC Fordham
NF Osborn
DC Cohen (resigned September 30 2014)
CR Jones
DE Alfano
JL Wilkinson
B AL-Rehany
The Harmsworth scheme is closed to new entrants; existing members still in employment can continue to accrue benefits in the scheme on a cash basis,
with members using this cash account to purchase an annuity at retirement. Under the Harmsworth Pension Scheme, the following pension benefits
were earned by the directors:
harmsworth Pension scheme
Accrued
annual
pension at
sept 30
2015
£
Pension cash
accrual at
sept 30
2015
£
transfer
value at
sept 30
2015
£
Normal
retirement
date
Additional
value of
benefits
if early
retirement
taken
weighting
of pension
benefit value
as shown in
single figure
table
Cash
allowance:
CR Jones
46,700
65,200
902,000
Aug 15 2025
none
100%
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 67
The accrued annual pension entitlement is that which would be paid annually on retirement based on service to September 30 2015 and ignores any
increase for future inflation. The pension cash accrual represents the sum which would be available on retirement based on service to September 30
2015 to secure retirement benefits, ignoring any increase for future inflation. All transfer values have been calculated on the basis of actuarial advice
in accordance with ‘Retirement Benefit – Transfer Values (GN11)’ published by the Board for Actuarial Standards. The transfer values of the accrued
entitlement include the pension cash accrual and represent the value of assets that the pension scheme would need to transfer to another pension
provider on transferring the scheme’s liability in respect of the directors’ pension benefits. They do not represent a sum paid or payable to individual
directors and, therefore, cannot be added meaningfully to annual remuneration. The pension cash accrual has been included in the increase in transfer
value (net of directors’ contributions). Members of the scheme have the option of paying additional voluntary contributions. Neither the contributions
nor the resulting benefits are included in the above table. The normal retirement age for the pension cash accrual element of the scheme is 65. The
normal retirement age for the accrued benefits under the now closed element of the Harmsworth Pension Scheme is 62.
PAymeNTs To PAsT diReCToRs
In April 2015 DC Cohen received £138,000 in respect of the profit share for the balance of his notice period.
PAymeNTs FoR loss oF oFFiCe
There were no payments for loss of office made in the year.
iNFoRmATioN NoT subJeCT To AudiT
ComPARisoN oF oVeRAll PeRFoRmANCe ANd RemuNeRATioN oF The mANAgiNg diReCToR
The chart below compares the company’s total shareholder return with the FTSE 250 index over the past seven financial years. For these purposes
shareholder return represents the theoretical growth in value of a shareholding over a specific period, assuming that dividends are reinvested to
purchase additional shares. The company is a constituent of the FTSE 250 index and, accordingly, this is considered to be an appropriate benchmark.
Company
FTSE 250
%
n
r
u
t
e
R
l
r
e
d
o
h
e
r
a
h
S
l
a
t
o
T
450
400
350
300
250
200
150
100
50
0
3
0
3
1
3
0
3
1
3
0
3
1
3
0
3
1
3
0
3
1
3
0
3
1
3
0
3
1
3
0
M
M
M
M
M
M
M
S
e
p
t
2
a
r
2
S
e
p
t
2
a
r
2
S
e
p
t
2
a
r
2
S
e
p
t
2
a
r
2
S
e
p
t
2
a
r
2
S
e
p
t
2
a
r
2
S
e
p
t
2
a
r
2
S
e
p
t
2
0
0
8
0
0
9
0
0
9
0
1
0
0
1
0
0
1
1
0
1
1
0
1
2
0
1
2
0
1
3
0
1
3
0
1
4
0
1
4
0
1
5
0
1
5
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Governance ❯ directors’ remuneration report
68
Directors’ Remuneration Report
Annual report on remuneration continued
mANAgiNg diReCToR – siNgle Figu Re oF RemuNeRATioN
CHC Fordham replaced PR Ensor as managing director on October 14 2012. The single figure of total remuneration for the managing director set out
below includes salary, benefits, company pension contributions and long-term incentives as set out on page 57 of this report.
variable
element
(profit
share)
payout
against
value of
long-term
incentive
(share
options)
long-term
incentive
vesting
rates
against
single figure
variable
element
2015 CHC Fordham
2014 CHC Fordham
2013 CHC Fordham
2012
2011
2010
2009
PR Ensor
PR Ensor
PR Ensor
PR Ensor
year on year
of total
(profit
maximum
vesting in
maximum
maximum
% change
remuneration
share)
opportunity
period
opportunity
opportunity
%
(36%)
(46%)
(66%)
10%
11%
36%
0%
£
575,706
895,206
1,647,267
4,856,723
4,396,681
3,976,660
2,916,771
£
161,700
480,935
648,025
4,630,646
4,201,414
3,787,355
2,508,665
%
17%
52%
58%
82%
82%
82%
81%
£
–
–
585,468
26,640
–
–
218,983
£
–
–
585,468
26,640
–
–
218,983
%
–
–
100%
100%
–
–
100%
The group’s profit share scheme has no ceiling; the maximum annual variable element of remuneration was therefore calculated assuming that profits
achieved had been 20% higher. From October 1 2015 this disclosure will be provided for A Rashbass as the group’s CEO from November 18 2015.
PeRCeNTAge ChANge iN RemuNeRATioN oF The mANAgiNg diReCToR
The table below illustrates the change in remuneration for the managing director compared with the change in remuneration of the average employee
across the group at constant currency. The directors feel that this group of people is the most appropriate as a comparator because employee pay is
determined annually by the remuneration committee at the same time as that of the managing director and under the same economic circumstances.
The directors believe this demonstrates the best link between the changes in average remuneration compared to the managing director.
Managing director remuneration
Average employee
% change 2014 to 2015
salary
–
2.7%
Benefits
(15.0%)
13.3%
incentives
(66.4%)
9.7%
Remuneration in the above table excludes long-term incentive payments and pension benefits.
RelATiVe imPoRTANCe oF sPeNd oN PAy
The table below illustrates the company’s spend on employee pay in comparison to profits and distributions to shareholders. These are deemed by the
directors to be the significant distributions made during the year and will assist stakeholders in understanding the relative importance of spend on pay.
For this purpose, total employee pay includes salaries, profit shares and bonuses.
Total employee pay
Dividends
Adjusted profit before tax
2015
£m
146.9
29.1
107.8
2014
% increase/
£m
141.1
28.8
116.2
(decrease)
4.1%
1.0%
(7.2%)
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 69
geNeRAl meeTiNgs – shAReholdeR VoTe ouTCome
The first table below shows the binding shareholder vote on the 2014 remuneration report at the January 2015 AGM. The second table below shows
the binding shareholder vote on the remuneration policy at the January 2015 AGM. The third table below shows the binding shareholder vote on the
remuneration policy at the June 2015 general meeting.
The committee believes the 96.9% votes in favour of the remuneration report shows strong shareholder support for the company’s remuneration
arrangements. The committee consults with key investors prior to any major changes in its remuneration arrangements.
votes for
113,215,978
votes for
102,677,919
votes for
103,127,111
%
96.9%
%
87.9%
%
87.1%
votes against
3,617,152
votes against
14,155,606
votes against
15,212,519
%
3.1%
%
12.1%
%
12.9%
Abstentions
724,930
Abstentions
724,535
Abstentions
704,902
APPoiNTmeNTs ANd Re-eleCTioN
A Rashbass will stand for election as a director following his appointment to the board on October 1 2015. CR Jones and all non-executive directors will
stand for re-election at the forthcoming AGM. All other directors will not seek re-election at the AGM.
oTheR RelATed PARTy TRANsACTioNs
NF Osborn serves as an advisor to the boards of both DMG Events and dmgi, fellow group companies, for which he received a combined fee of
US$18,600 (2014: US$23,638).
imPlemeNTATioN oF The RemuNeRATioN PoliCy
For the year ending September 30 2016 the group intends to apply the remuneration policy as follows:
●● Directors’ salaries from October 1 2015 are as set out on page 57. These salaries will be reviewed in April 2016.
●●
●●
Benefits will also be reviewed during the year although it is not anticipated that any significant changes will be made.
The profit share arrangement for each director will be as described on page 58. Profit share thresholds are subject to review during the year.
Changes to thresholds are made only where considered appropriate by the remuneration committee, taking into account the businesses that the
respective director is responsible for, acquisitions and disposals, and the other factors stated in the group’s policy. The thresholds for the year ending
September 30 2016 will be disclosed in the 2016 report and accounts.
●● Directors will continue to be able to participate in the pension schemes operated in the country in which they reside.
JohN boTTs
Chairman of the remuneration committee
December 14 2015
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Governance ❯ directors’ remuneration report 70
Independent Auditor’s Report
to the members of Euromoney Institutional Investor PLC
RePoRT oN The FiNANCiAl sTATemeNTs
Audit scope
ouR oPiNioN
In our opinion:
We conducted work in five key territories, being the UK, US, Canada,
Australia and India. This included full scope audits at five components
with specified procedures performed at a further five components.
●● Euromoney Institutional Investor PLC’s group financial statements
Taken together, the components at which audit work has been performed
and company financial statements (the ‘financial statements’) give a
accounted for approximately 78% of the group’s revenue, 81% of the
true and fair view of the state of the group’s and of the company’s
group’s statutory profit before tax and 73% of the group’s profit before
affairs as at September 30 2015 and of the group’s profit and cash
tax, adding back certain non-recurring items.
flows for the year then ended;
●● the group financial statements have been properly prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union;
●● the company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice; and
●● the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006 and, as regards the group
financial statements, Article 4 of the IAS Regulation.
WhAT We hAVe AudiTed
The financial statements, included within the Annual Report and Accounts
(the ‘Annual Report’), comprise:
Areas of focus
●● Accounting for acquisitions and disposals
●● Carrying value of goodwill and acquired intangibles
●● Uncertain tax positions
●● Share-based payments
The scope of our audit and our areas of focus
We conducted our audit in accordance with International Standards on
Auditing (UK and Ireland) (ISAs (UK & Ireland)).
We designed our audit by determining materiality and assessing the risks
of material misstatement in the group and company financial statements.
In particular, we looked at where the directors made subjective
judgements, for example in respect of significant accounting estimates
that involved making assumptions and considering future events that
●● the Consolidated Statement of Financial Position as at September 30
are inherently uncertain. As in all of our audits, we also addressed the
2015;
risk of management override of internal controls, including evaluating
●● the Company Balance Sheet as at September 30 2015;
whether there was evidence of bias by the directors that represented
●● the Consolidated Income Statement and Consolidated Statement of
a risk of material misstatement due to fraud, and the risk of fraud in
Comprehensive Income for the year then ended;
revenue recognition. Procedures designed to address these risks included
●● the Consolidated Statement of Cash Flows for the year then ended;
testing of material journal entries and post-close adjustments, testing and
●● the Consolidated Statement of Changes in Equity for the year then
evaluating management’s key accounting estimates for reasonableness
ended; and
and consistency, understanding and testing management incentive plans,
●● the notes to the financial statements, which include a summary of
undertaking cut-off procedures to ensure proper cut-off of revenue and
significant accounting policies and other explanatory information.
expenses and testing the existence and accuracy of revenue transactions.
The financial reporting framework that has been applied in the preparation
In light of this being our first year audit of the group, we also performed
of the group financial statements is applicable law and IFRSs as adopted
specific procedures over opening balances by shadowing the prior year
by the European Union. The financial reporting framework that has
audit undertaken by the previous auditors, reviewing the predecessor
been applied in the preparation of the company financial statements
auditor working papers in the UK and in each of the group’s significant
is applicable law and United Kingdom Accounting Standards (United
territories and considering the key management judgements in the
Kingdom Generally Accepted Accounting Practice).
opening balance sheet at October 1 2014.
ouR AudiT APPRoACh
Overview
Materiality
Overall group materiality: £4.3m which represents 5% of profit before
tax, adding back certain non-recurring items.
The risks of material misstatement that had the greatest effect on our
audit, including the allocation of our resources and effort, are identified
as areas of focus in the table below. We have also set out how we tailored
our audit to address these specific areas in order to provide an opinion on
the group and company financial statements as a whole. Any comments
we make on the results of our procedures should be read in this context.
This is not a complete list of all risks identified by our audit.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Group accounts ❯ iNdePeNdeNt Auditor’s rePort
71
Areas of focus
how our audit addressed the area of focus
Accounting for acquisitions and disposals
Refer to the audit committee report on pages 41 and 42 and to notes 13
and 14 in the Consolidated Financial Statements.
The group continues to undertake material transactions with complex
accounting implications. We focused on the two transactions in the year
that had the biggest impact on the consolidated income statement as
follows:
Dealogic transaction
In December 2014, the group sold its investment in Capital NET and
Capital DATA for combined consideration of £54.2m, comprising £2.9m
of cash, £13.5m of redeemable preference shares and a 15.5% minority
stake in Diamond TopCo Limited (Dealogic) valued at £37.8m (together
the ‘Dealogic transaction’).
We focused on the key accounting judgements taken by management in
relation to this transaction, namely:
●● That the disposal and subsequent acquisition had commercial
substance, meaning that a gain on disposal should be recognised,
restricted in proportion to the 15.5% stake acquired in accordance
with IAS 28;
●● That the investment in Dealogic should be accounted for as an
associate on the basis of the group having significant influence; and
●● The calculation of the £48.4m profit on disposal of Capital NET and
Capital DATA.
Centre for Investor Education (CIE)
In April 2013, the group acquired a 75% equity interest in CIE with a put
and call option over the remaining 25% stake. During the year, the group
identified a number of governance and financial irregularities at CIE. As a
result of these irregularities, a number of judgemental adjustments were
made by management, namely:
●● To impair the group’s acquired goodwill by £2.9m, leaving a remaining
balance relating to CIE of £2.0m; and
●● To reverse the £3.5m acquisition commitment held at October 1 2014
relating to the put and call option over the remaining 25% equity
stake and to derecognise the non-controlling interest in equity on the
basis that payments already made by the company have fully settled
all contractual obligations to the non-controlling shareholders. As a
result, the consolidated financial statements reflect no non-controlling
interest (NCI) ownership of CIE at September 30 2015 although 25%
of the shares remain legally held by the NCI investors.
We focused on this area as the eventual outcome of this matter is uncertain
pending conclusion of ongoing legal proceedings and the positions
taken by management are based on material judgements. Accordingly,
unexpected adverse outcomes could impact the group’s reported profit
and financial position relating to CIE.
We obtained an understanding of the Dealogic transaction to verify that
it had commercial substance.
We obtained the calculation of the profit on disposal of Capital NET
and Capital DATA. We agreed that the valuation of the Dealogic shares
contributed as part consideration for the investments in Capital NET and
Capital DATA was comparable to the price paid to acquire the majority
stake. We considered the requirements of IAS 28 in circumstances
where a non-monetary asset is exchanged for an equity interest in a
new associate and the requirement to restrict any profit on disposal
in proportion to the new equity stake obtained. We re-computed
management’s calculation for the element of profit restricted of £5.9m
with reference to the signed sale and purchase agreements and the
group’s equity stake in Dealogic.
We challenged management on the classification of the 15.5%
equity stake in Dealogic as an associate and the extent to which the
group is able to exert significant influence. We agreed the key terms
of the transaction to the shareholders’ agreement and articles of
association, including shareholder voting rights of 20% and how these
are enforceable, confirmed these facts with the company’s external
legal counsel and validated management’s attendance and exercise of
significant influence at board meetings.
Based on the procedures performed, we determined that the accounting
for the Dealogic transaction, including the calculation of the profit on
disposal, was appropriate and in line with the requirements of IAS 28.
Given the material and non-recurring nature of this transaction, we are
satisfied that classification of the profit on disposal as an exceptional
item is appropriate.
We engaged with management and with the group’s external legal
counsel through our half year and year-end procedures to understand
the sequence of events at CIE and the latest position at year-end,
including the commencement of legal proceedings in October 2015.
We obtained management’s goodwill impairment calculation which was
revised to reflect the latest expectations of future performance and taking
account of the impact of public announcements relating to the business.
Deploying our valuations specialists, we tested the reasonableness of
the key assumptions including cash flow forecasts, terminal value and
discount rates, taking account of the re-based business plan since the
minority shareholders were exited from business.
We considered the timing of the impairment and the reversal of the
acquisition commitment being recorded in the financial year ended
September 30 2015.
Through our discussions with the group’s external legal counsel, we
assessed the reasonableness of management’s judgement that there is
no further liability to the non-controlling shareholders in respect of the
acquisition of the remaining 25% shareholding given amounts already
paid for the group’s 75% equity stake.
We found that the judgements made by management were reasonable
and that the disclosures made in respect of these adjustments were
appropriate given the evidence we obtained.
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Annual Report and Accounts 2015 72
Independent Auditor’s Report
to the members of Euromoney Institutional Investor PLC continued
Areas of focus
how our audit addressed the area of focus
carrying value of goodwill and acquired intangibles
Refer to the audit committee report on page 42 and to note 11 in the
Consolidated Financial Statements.
The group has £523.8m of goodwill and intangible assets, including
£141.8m of acquired intangibles and £382.0m of goodwill at September
30 2015.
During the year, the group recognised an £18.5m impairment charge in
relation to goodwill for CIE (£2.9m), HedgeFund Intelligence (HFI) (£4.8m)
and Mining Indaba (£10.7m).
The carrying values of goodwill and intangibles are contingent on future
cash flows of the underlying cash generating units (CGU) and there is
a risk that if these cash flows do not meet management’s expectations
that the assets will be impaired. This risk is increased in periods in which
the group’s trading performance does not meet expectations. The cash
flow forecasts and related value in use calculations include a number
of significant judgements and estimates including profit growth, cash
conversion, terminal growth rate and discount rate. Changes in these
assumptions have a significant impact on the headroom available in the
impairment calculations.
Deploying our valuations specialists, we obtained management’s
goodwill impairment model and tested the reasonableness of key
assumptions, including profit and cash flow growth, terminal values and
the selection of discount rates. We agreed the underlying cash flows to
board approved budgets and assessed how these budgets are compiled.
We assessed the terminal growth rate and discount rate applied to
each CGU by comparison to third party information, past performance,
the group’s cost of capital and relevant risk factors. We performed
our own risk assessment by considering historical performance,
forecasting accuracy and modelled headroom to highlight the CGUs
with either a lower headroom or which are more sensitive to changes
in key assumptions. We focused our attention on those businesses
where headroom has decreased or where management has identified
impairments, namely CIE, HFI, Mining Indaba and NDR.
We performed our own sensitivity analysis to understand the impact of
reasonable changes in the assumptions on the available headroom. We
focused in particular on NDR which is more sensitive to change than
other CGUs. We considered the need for additional sensitivity disclosures
for this CGU as required by lAS 36 and we agree with management’s
decision to provide these additional disclosures for NDR in note 11 given
that reasonably possible changes in the assumptions would give rise to
an impairment.
We checked for any additional impairment triggers in any other businesses
through discussions with management, review of management accounts
and board minutes and examining performance of recent acquisitions to
identify under-performing businesses.
As a result of our work, we determined that the impairment charge
recognised in 2015 was appropriate. For those intangible assets,
including goodwill, where management determined that no impairment
was required and that no additional sensitivity disclosures should be
given, we found that these judgements were supported by reasonable
assumptions that would require significant downside changes before
any additional material impairment was necessary.
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73
Areas of focus
how our audit addressed the area of focus
uncertain tax positions
Refer to the audit committee report on page 42 and to note 8 in the
Consolidated Financial Statements.
The group operates in a complex multinational tax environment and there
Deploying our tax specialists, we evaluated and challenged management’s
judgements in respect of estimates of tax exposures and contingencies
in order to assess the adequacy of the group’s tax provisions.
are open tax matters with the tax authorities, especially in the US and
In understanding and evaluating management’s judgements, we
Canada. In addition, from time to time the group enters into transactions
considered third party tax advice received by the group, the status of
with complicated accounting and tax consequences, including the
recent and current tax authority audits and enquiries, the outturn of
Dealogic transaction. Judgement is required in assessing the level of
previous claims, judgemental positions taken in tax returns and current
provisions needed in respect of uncertain tax positions.
year estimates and developments in the tax environment.
In light of this being our first year audit of the group, we undertook an
independent assessment of tax risks, including permanent establishment
risks, in the group’s most material markets (UK, US and Canada) and
we have evaluated the appropriateness and completeness of related tax
provisions.
From the evidence obtained, we considered the level of provisioning to
be acceptable in the context of the Consolidated Financial Statements
taken as a whole. However, we noted that the assumptions and
judgements that are required to formulate the provisions mean that the
range of possible outturns is broad.
We challenged management and the directors on forecast trading
performance through September 30 2017. We considered past
performance and current trading and applied this experience to the
share-based payments
Refer to the audit committee report on page 42 and to note 23 in the
Consolidated Financial Statements.
The company operates a number of share-based payment schemes,
forecast results.
the most significant of which is the Capital Appreciation Plan (CAP) for
executives.
The accounting for share-based payment arrangements requires
We agree with management’s judgement to reverse the CAP 2014
charge that was originally booked in the year ended September 30 2014
and the appropriateness of the related disclosures in the Annual Report
judgement to be exercised in determining the fair value of the awards at
and Accounts.
the date of grant and, where the scheme is treated as cash settled, the
value of the liability recognised on the balance sheet at each period end
which may be based on expectations of future financial performance.
The Capital Appreciation Plan 2014 (CAP 2014) was approved by
shareholders in January 2014. The primary performance test under CAP
2014 requires the group to achieve an adjusted profit before tax of £178m
(adjusted for the acquisition of Mining Indaba) by 2017.
We have focused our attention on the key judgement taken in the year
to reverse the cumulative CAP 2014 charge of £2.5m on the basis that
the performance of the business is not expected to meet this performance
test.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 74
Independent Auditor’s Report
to the members of Euromoney Institutional Investor PLC continued
hoW We TAiloRed The AudiT sCoPe
We tailored the scope of our audit to ensure that we performed enough
work to be able to give an opinion on the financial statements as a whole,
taking into account the geographic structure of the group, the accounting
processes and controls and the industry in which the group operates.
We performed specified procedures at Ned Davis Research, Inc. and
Information Management Network LLC over revenue and receivables
(including material accrued and deferred revenue balances), ISI India
over cash, Tipall Limited over fixed assets and Euromoney Institutional
Investor PLC over cash and other receivables. This ensured that sufficient
and appropriate audit procedures were performed and sufficient audit
The Consolidated Financial Statements are a consolidation of 176
coverage was achieved in respect of these areas.
reporting units, each of which is considered to be a component. We
identified four reporting units in the US, Canada and UK that required an
audit of their complete financial information due to size. We identified one
further reporting unit in Australia that required an audit of its complete
financial information due to risk characteristics. Specific audit procedures
over significant balances and transactions were performed at a further
five reporting units in the US, UK and India to give appropriate audit
coverage. None of the reporting units not included in our group audit
scope individually contributed more than 3% to consolidated revenue or
5% to profit before tax.
In establishing the overall approach to the group audit, we determined
the type of work that needed to be performed at the reporting units by
us, as the group engagement team, or component auditors within PwC
UK and from other PwC network firms operating under our instruction.
Where the work was performed by component auditors, we determined
the level of involvement we needed to have in the audit work at those
reporting units to be able to conclude whether sufficient appropriate
audit evidence had been obtained as a basis for our opinion on the
consolidated financial statements as a whole.
We performed full scope audits in respect of Euromoney Trading Limited,
Euromoney Global Limited, BCA Research, Inc. and Institutional Investor
LLC which, in our view, were financially significant and required an audit
of their complete financial information due to their size. In light of the
financial and governance irregularities identified by management at the
Centre for Investor Education Limited during the year, we accelerated the
statutory audit to align with the group audit timetable and included this
entity within our overall scope as a fifth full scope audit.
In light of this being a first year audit, we visited our component teams in
the US and Canada at both the half year and year-end, which included file
reviews and attendance at key audit meetings with local management.
We also had regular dialogue with component teams in Australia and
India throughout the year.
The group consolidation, financial statement disclosures and corporate
functions were audited by the group audit team. This included our work
over goodwill and intangible assets, acquisitions and disposals, treasury,
post-retirement benefits, share-based payments and tax.
Taken together, the components and corporate functions where we
conducted audit procedures accounted for approximately 78% of the
group’s revenue, 81% of the group’s statutory profit before tax and 73%
of the group’s profit before tax, adding back certain non-recurring items.
This provided the evidence we needed for our opinion on the consolidated
financial statements taken as a whole. This was before considering the
contribution to our audit evidence from performing audit work at the
group level, including disaggregated analytical review procedures, which
covers certain of the group’s smaller and lower risk components that were
not directly included in our group audit scope.
Materiality
The scope of our audit was influenced by our application of materiality.
We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our
audit and the nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and on the financial
statements as a whole.
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75
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
overall group materiality
£4.3m
how we determined it
5% of profit before tax (£123.3m), adjusted for non-recurring items, comprising: goodwill impairment
(£18.5m); profit on disposal of property, plant and equipment (£4.2m); profit on disposal of associate
(£2.9m); profit on disposal of available-for-sale investment (£45.5m); profit on disposal of business (£2.4m);
restructuring and other exceptional costs (£3.2m); and long-term incentive credit (£2.5m).
rationale for benchmark applied
The group’s principal measure of earnings comprises adjusted operating profit, which adds back to statutory
profit a number of items of income and expenditure including those detailed above. Management uses this
measure as it believes that it eliminates the volatility inherent in non-recurring items. We have taken this
measure into account in determining our materiality, except that we have not adjusted profit before tax to
add back amortisation of acquired intangible assets as in our view this is a recurring item which does not
introduce volatility to the group’s earnings.
component materiality
For each component in our audit scope, we allocate materiality that is less than our overall group materiality.
The range of materiality allocated across components was between £97,500 and £3,870,000.
We agreed with the Audit Committee that we would report to them
As noted in the Directors’ Statement, the directors have concluded that it
misstatements identified during our audit above £200,000 as well as
is appropriate to adopt the going concern basis in preparing the financial
misstatements below that amount that, in our view, warranted reporting
statements. The going concern basis presumes that the group has
for qualitative reasons.
Going concern
Under the Listing Rules, we are required to review the Directors’
Statement, set out on page 33, in relation to going concern. We have
nothing to report having performed our review.
Under ISAs (UK & Ireland), we are also required to report to you if we
have anything material to add or to draw attention to in relation to the
Directors’ Statement about whether they considered it appropriate to
adopt the going concern basis in preparing the financial statements. We
have nothing material to add or to draw attention to.
adequate resources to remain in operation, and that the directors intend
it to do so, for at least one year from the date the financial statements
were signed. As part of our audit, we have concluded that the directors’
use of the going concern basis is appropriate.
However, because not all future events or conditions can be predicted,
these statements are not a guarantee of the group’s ability to continue
as a going concern.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 76
Independent Auditor’s Report
to the members of Euromoney Institutional Investor PLC continued
oTheR RequiRed RePoRTiNg
CoNsisTeNCy oF oTheR iNFoRmATioN
Companies Act 2006 opinion
In our opinion, the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements.
isAs (uK & ireland) reporting
Under ISAs (UK & Ireland), we are required to report to you if, in our opinion:
We have no exceptions to report.
●● Information in the Annual Report is:
●— materially inconsistent with the information in the audited financial statements; or
●— apparently materially incorrect based on, or materially inconsistent with, our knowledge of the
group and company acquired in the course of performing our audit; or
●— otherwise misleading.
The statement given by the directors on page 35, in accordance with provision C.1.1 of the UK Corporate
We have no exceptions to report.
Governance Code (the ‘Code’), that they consider the Annual Report taken as a whole to be fair, balanced
and understandable and provides the information necessary for members to assess the group’s and
company’s performance, business model and strategy is materially inconsistent with our knowledge of the
group and company acquired in the course of performing our audit.
The section of the Annual Report on pages 40 and 41, as required by provision C.3.8 of the Code, describing
We have no exceptions to report.
the work of the audit committee does not appropriately address matters communicated by us to the audit
committee.
The diReCToRs’ AssessmeNT oF The PRosPeCTs oF The gRouP ANd oF The PRiNCiPAl Risks ThAT Would
ThReATeN The solVeNCy oR liquidiTy oF The gRouP
Under ISAs (UK & Ireland), we are required to report to you if we have anything material to add or to draw attention to in relation to:
●● the directors’ confirmation in the Annual Report, in accordance with provision C.2.1 of the Code, that
We have nothing material to add or to
they have carried out a robust assessment of the principal risks facing the group, including those that
draw attention to.
would threaten its business model, future performance, solvency or liquidity.
●● the disclosures in the Annual Report that describe those risks and explain how they are being managed
We have nothing material to add or to
or mitigated.
draw attention to.
●● the directors’ explanation in the Annual Report, in accordance with provision C.2.2 of the Code, as
We have nothing material to add or to
to how they have assessed the prospects of the group, over what period they have done so and why
draw attention to.
they consider that period to be appropriate and their statement as to whether they have a reasonable
expectation that the group will be able to continue in operation and meet its liabilities as they fall
due over the period of their assessment, including any related disclosures drawing attention to any
necessary qualifications or assumptions.
Under the Listing Rules, we are required to review the directors’ statement that they have carried out a robust assessment of the principal risks facing the
group and the directors’ statement in relation to the longer-term viability of the group, set out on page 21. Our review was substantially less in scope
than an audit and only consisted of making inquiries and considering the directors’ process supporting their statements, checking that the statements
are in alignment with the relevant provisions of the Code and considering whether the statements are consistent with the knowledge acquired by us in
the course of performing our audit. We have nothing to report having performed our review.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Group accounts ❯ iNdePeNdeNt Auditor’s rePort
77
AdequACy oF ACCouNTiNg ReCoRds ANd
iNFoRmATioN ANd exPlANATioNs ReCeiVed
Under the Companies Act 2006, we are required to report to you if, in
our opinion:
This report, including the opinions, has been prepared for and only for the
company’s members as a body in accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any other purpose or
to any other person to whom this report is shown or into whose hands
●● we have not received all the information and explanations we require
it may come save where expressly agreed by our prior consent in writing.
for our audit; or
●● adequate accounting records have not been kept by the company, or
returns adequate for our audit have not been received from branches
WhAT AN AudiT oF FiNANCiAl sTATemeNTs
iNVolVes
not visited by us; or
●● the company financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with the
accounting records and returns.
An audit involves obtaining evidence about the amounts and disclosures
in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused
by fraud or error. This includes an assessment of:
We have no exceptions to report arising from this responsibility.
diReCToRs’ RemuNeRATioN
Directors’ Remuneration Report — Companies Act 2006
opinion
In our opinion, the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with the Companies
Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006, we are required to report to you if, in
our opinion, certain disclosures of directors’ remuneration specified by
law are not made. We have no exceptions to report arising from these
responsibilities.
Corporate governance statement
Under the Listing Rules, we are required to review the part of the
Corporate Governance Statement relating to ten further provisions of
the UK Corporate Governance Code. We have nothing to report having
performed our review.
ResPoNsibiliTies FoR The FiNANCiAl sTATemeNTs
ANd The AudiT
●● whether the accounting policies are appropriate to the group’s and
the company’s circumstances and have been consistently applied and
adequately disclosed;
●● the reasonableness of significant accounting estimates made by the
directors; and
●● the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the directors’
judgements against available evidence, forming our own judgements,
and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing
techniques, to the extent we consider necessary to provide a reasonable basis
for us to draw conclusions. We obtain audit evidence through testing the
effectiveness of controls, substantive procedures or a combination of both.
In addition, we read all the financial and non-financial information in
the Annual Report to identify material inconsistencies with the audited
financial statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the audit. If we
become aware of any apparent material misstatements or inconsistencies
we consider the implications for our report.
ouR ResPoNsibiliTies ANd Those oF The diReCToRs
As explained more fully in the Directors’ Responsibilities Statement set out
giles hANNAm (seNioR sTATuToRy AudiToR)
for and on behalf of PricewaterhouseCoopers LLP
on page 35, the directors are responsible for the preparation of the financial
Chartered Accountants and Statutory Auditor
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and ISAs (UK & Ireland).
Those standards require us to comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
London, United Kingdom
December 14 2015
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 78
Consolidated Income Statement
for the year ended September 30 2015
total revenue
operating profit before acquired intangible amortisation, long-term
incentive credit/(expense) and exceptional items
Acquired intangible amortisation
Long-term incentive credit/(expense)
Exceptional items
operating profit
Share of results in associates and joint ventures
Finance income
Finance expense
Net finance income/(costs)
Profit before tax
Tax expense on profit
Profit for the year
Attributable to:
Equity holders of the parent
Equity non-controlling interests
Basic earnings per share
Diluted earnings per share
Adjusted basic earnings per share
Adjusted diluted earnings per share
Dividend per share (including proposed dividends)
Notes
2015
£000
2014
£000
3
403,412
406,559
3
11
23
5
3, 4
13
7
7
7
3
8
3
10
10
10
10
9
104,234
(17,027)
2,490
33,421
123,118
(381)
5,127
(4,579)
548
123,285
(17,599)
105,686
105,444
242
105,686
83.42p
83.38p
70.16p
70.12p
23.40p
119,809
(16,735)
(2,367)
2,630
103,337
264
1,546
(3,672)
(2,126)
101,475
(25,610)
75,865
75,264
601
75,865
59.49p
59.15p
71.00p
70.60p
23.00p
A detailed reconciliation of the group’s statutory results to the adjusted results is set out in appendix to the Chief Executive’s Statement on page 6.
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EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Group accounts ❯ coNsolidAted stAtemeNt of comPreheNsive iNcome
79
Consolidated Statement of Comprehensive Income
for the year ended September 30 2015
Profit for the year
items that may be reclassified subsequently to profit or loss:
Change in fair value of cash flow hedges
Transfer of gains on cash flow hedges from fair value reserves to Income Statement:
Foreign exchange gains in total revenue
Foreign exchange (losses)/gains in operating profit
Net exchange differences on translation of net investments in overseas subsidiary undertakings
Translation reserves recycled to Income Statement
Net exchange differences on foreign currency loans
Tax on items that may be reclassified
items that will not be reclassified to profit or loss:
Actuarial gains/(losses) on defined benefit pension schemes
Tax (charge)/credit on actuarial gains/losses on defined benefit pension schemes
other comprehensive income/(expense) for the year
total comprehensive income for the year
Attributable to:
Equity holders of the parent
Equity non-controlling interests
2015
£000
2014
£000
105,686
75,865
(5,000)
(1,642)
1,657
(375)
24,305
–
(8,788)
581
2,421
(484)
14,317
120,003
119,429
574
120,003
990
164
(207)
(482)
(3,448)
36
(2,297)
459
(6,427)
69,438
69,418
20
69,438
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 80
Consolidated Statement of Financial Position
as at September 30 2015
Notes
2015
£000
2014
£000
11
11
12
13
13
13
24
21
18
15
24
18
24
24
16
17
19
18
20
24
19
21
26
18
20
22
381,993
149,386
9,171
32,437
30
5,835
258
20
9
579,139
83,386
331
5,912
515
9,799
8,889
1,313
110,145
–
–
(24,011)
(14,043)
(55,743)
(112,129)
(267)
(741)
(3,346)
(835)
(211,115)
(100,970)
478,169
(9,171)
(641)
(10)
–
(18,424)
(1,973)
(661)
(2,345)
(33,225)
444,944
320
102,557
64,981
8
(21,582)
37,169
(27,506)
53,420
228,823
438,190
6,754
444,944
383,934
161,509
16,924
72
–
–
1,532
–
179
564,150
67,424
354
6,470
613
–
8,571
2,611
86,043
(2,088)
(10,389)
(25,532)
(9,125)
(47,973)
(109,842)
(490)
–
(1,322)
(2,164)
(208,925)
(122,882)
441,268
(11,277)
(804)
(10)
(45,677)
(19,101)
(4,787)
(385)
(2,704)
(84,745)
356,523
320
102,011
64,981
8
(21,582)
39,158
(22,259)
36,706
149,564
348,907
7,616
356,523
Non-current assets
Intangible assets
Goodwill
Other intangible assets
Property, plant and equipment
Investment in associates
Investment in joint ventures
Available-for-sale investments
Deferred consideration
Deferred tax assets
Derivative financial instruments
current assets
Trade and other receivables
Deferred consideration
Current income tax assets
Group relief receivable
Cash deposit with DMGT group company
Cash and cash equivalents (excluding bank overdrafts)
Derivative financial instruments
current liabilities
Acquisition commitments
Deferred consideration
Trade and other payables
Current income tax liabilities
Accruals
Deferred income
Loan notes
Bank overdrafts
Derivative financial instruments
Provisions
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Acquisition commitments
Other non-current liabilities
Preference shares
Committed loan facility with DMGT group company
Deferred tax liabilities
Net pension deficit
Derivative financial instruments
Provisions
Net assets
shareholders’ equity
Called up share capital
Share premium account
Other reserve
Capital redemption reserve
Own shares
Reserve for share-based payments
Fair value reserve
Translation reserve
Retained earnings
equity shareholders’ surplus
Equity non-controlling interests
total equity
The accounts were approved by the board of directors on December 14 2015.
ChRisToPheR FoRdhAm
ColiN JoNes
Directors
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Group accounts ❯ coNsolidAted stAtemeNt of chANGes iN equity
81
Consolidated Statement of Changes in Equity
for the year ended September 30 2015
share
premium
account
£000
other
reserve
£000
share
capital
£000
capital
redemp-
tion
reserve
£000
own
shares
£000
reserve
for
share-
based
pay-
ments
£000
fair
value
reserve
£000
trans-
lation
reserve
£000
retained
earnings
£000
Non-
control-
ling
interests
£000
total
£000
total
equity
£000
At September 30 2013
Profit for the year
Other comprehensive
expense for the year
total comprehensive
income for the year
Exercise of acquisition
commitments
Adjustment arising from
change in non-controlling
interest
Charge for share-based
payments
Cash dividend paid
Own shares acquired
Exercise of share options
Tax relating to items taken
directly to equity
At september 30 2014
Profit for the year
Other comprehensive
income/(expense) for the
year
total comprehensive
income for the year
Derecognition of non-
controlling interest
Adjustment arising from
change in non-controlling
interest
Credit for share-based
payments
Cash dividend paid
Exercise of share options
Tax relating to items taken
directly to equity
At september 30 2015
316 101,709 64,981
–
–
–
–
–
–
–
–
–
–
4
–
–
–
–
–
–
–
302
–
–
–
–
–
–
–
–
–
–
–
320 102,011 64,981
–
–
–
8
–
–
–
–
–
(74) 37,122 (20,216) 38,707 102,959 325,512
75,264
75,264
–
–
–
–
8,247 333,759
75,865
601
–
–
–
–
–
–
–
–
(2,043)
(2,001)
(1,802)
(5,846)
(581)
(6,427)
(2,043)
(2,001)
73,462
69,418
20
69,438
–
–
–
–
–
–
–
–
–
–
–
–
176
176
(176)
–
44
44
114
158
–
(28,771)
2,036
(28,771)
– (21,508)
306
–
–
(589)
2,036
(29,360)
– (21,508)
306
–
–
–
–
–
– (21,508)
–
–
2,036
–
–
–
–
–
1,694
–
8 (21,582) 39,158 (22,259) 36,706 149,564 348,907
– 105,444 105,444
–
–
1,694
–
–
–
–
–
1,694
7,616 356,523
242 105,686
–
–
–
–
–
–
–
–
–
–
–
–
–
546
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,989)
–
–
(5,247) 16,714
2,518
13,985
332
14,317
(5,247) 16,714 107,962 119,429
574 120,003
–
–
–
–
–
–
–
–
–
–
1,079
1,079
(1,079)
–
(226)
(226)
82
(144)
–
(1,989)
(29,064) (29,064)
546
–
–
(1,989)
(439) (29,503)
546
–
–
(492)
6,754 444,944
–
–
320 102,557 64,981
–
–
(492)
–
8 (21,582) 37,169 (27,506) 53,420 228,823 438,190
(492)
–
–
–
The investment in own shares is held by the Euromoney Employees’ Share Ownership Trust (ESOT) and Euromoney Employee Share Trust (EEST). The
EEST was incorporated in February 2014 to facilitate the purchase of shares for the Capital Appreciation Plan 2014. 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.
Euromoney Employees’ Share Ownership Trust
Euromoney Employee Share Trust
total
Nominal cost per share (p)
Historical cost per share (£)
Market value (£000)
2015
Number
2014
Number
58,976
1,747,631
1,806,607
0.25
11.95
17,163
58,976
1,747,631
1,806,607
0.25
11.95
18,337
The other reserve represents the share premium arising on the shares issued for the purchase of Metal Bulletin plc in October 2006.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 82
Consolidated Statement of Cash Flows
for the year ended September 30 2015
2015
£000
123,118
17,027
2,680
2,643
18,458
(4,168)
(2,490)
(2,921)
(45,502)
(2,446)
–
(1,757)
104,642
1,169
3,641
109,452
(13,670)
(1,116)
94,666
123
401
(1,760)
(6,487)
15,837
(5,835)
–
–
–
40
(934)
2,912
4,297
(29,064)
(439)
(904)
546
–
(11,558)
(252)
(223)
(56,735)
(98,629)
334
8,571
(757)
8,148
2014
£000
103,337
16,735
1,962
2,908
–
(7)
2,367
–
–
(6,834)
444
(1,326)
119,586
(4,662)
(4,765)
110,159
(19,553)
(2,927)
87,679
323
242
(3,236)
(3,105)
10
–
(9)
(58,001)
158
5,345
–
–
(58,273)
(28,771)
(589)
(1,372)
306
(21,508)
(2,849)
(369)
(538)
23,916
(31,774)
(2,368)
11,268
(329)
8,571
cash flow from operating activities
Operating profit
Acquired intangible amortisation
Licences and software amortisation
Depreciation of property, plant and equipment
Goodwill impairment
Profit on disposal of property, plant and equipment
Long-term incentive (credit)/expense
Profit on disposal of associate
Profit on disposal of available-for-sale investment
Profit on disposal of business (2014: includes recycled cumulative translation differences)
Impairment of carrying value of associate
Decrease in provisions
operating cash flows before movements in working capital
Decrease/(increase) in receivables
Increase/(decrease) in payables
cash generated from operations
Income taxes paid
Group relief tax paid
Net cash generated from operating activities
investing activities
Dividends received from associate
Interest received
Purchase of intangible assets
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Purchase of available-for-sale investments
Payment following working capital adjustment from purchase of subsidiary
Purchase of subsidiary undertaking, net of cash acquired
Proceeds from disposal of non-controlling interest
Proceeds from disposal of business
Purchase of associates and joint venture
Proceeds from disposal of associate and joint venture
Net cash from/(used) in investing activities
financing activities
Dividends paid
Dividends paid to non-controlling interests
Interest paid
Issue of new share capital
Payments to acquire own shares
Payment of acquisition deferred consideration
Purchase of additional interest in subsidiary undertakings
Redemption of loan notes
Loan (repaid to)/received with DMGT group company
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
cash and cash equivalents at beginning of year
Effect of foreign exchange rate movements
cash and cash equivalents at end of year
Cash and cash equivalents include bank overdrafts.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Group accounts ❯ Note to the coNsolidAted stAtemeNt of cAsh flows
83
Note to the Consolidated Statement of Cash Flows
as at September 30 2015
Net cash/(debt)
At October 1
Net increase/(decrease) in cash and cash equivalents
Net decrease/(increase) in amounts owed to DMGT group company
Redemption of loan notes
Effect of foreign exchange rate movements
At september 30
Net cash/(debt) comprises:
Cash at bank and in hand
Bank overdrafts
total cash and cash equivalents
Cash deposit with DMGT group company
Committed loan facility with DMGT group company
Loan notes
Net cash/(debt)
2015
£000
(37,596)
334
56,735
223
(2,016)
17,680
8,889
(741)
8,148
9,799
–
(267)
17,680
2014
£000
(9,937)
(2,368)
(23,916)
538
(1,913)
(37,596)
8,571
–
8,571
–
(45,677)
(490)
(37,596)
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 84
Notes to the Consolidated Financial Statements
1 ACCouNTiNg P oliCies
General information
Euromoney Institutional Investor PLC (the ‘company’) is a company
incorporated in the United Kingdom (UK).
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 associates and joint ventures. The parent company
financial statements present information about the entity and not about
its group.
The group financial statements have been prepared and approved by
the directors in accordance with the International Financial Reporting
Standards (IFRS) adopted for use in the European Union and, therefore,
comply with Article 4 of the EU IAS Regulation. The company has elected
to prepare its parent company financial statements in accordance with
UK GAAP.
●● IAS 27 (revised) ‘Separate Financial Statements (2011)’ now contains
requirements relating only to separate financial statements as the
new IFRS 10 ‘Consolidated Financial Statements’ addresses the
requirements for consolidated financial statements. The amendments
do not have an effect on these consolidated financial statements.
●● IAS 28 (revised) ‘Investments in Associates and Joint Ventures (2011)’
includes the requirements for joint ventures, as well as associates, to
be equity accounted following the issue of IFRS 11. The amendments
do not have an effect on these consolidated financial statements.
●● Amendments to IAS 32 ‘Offsetting Financial Assets and Financial
Liabilities’ provide clarification on the application of offsetting rules
relating to financial assets and financial liabilities. The amendments
do not have a significant effect on these consolidated financial
statements.
●● Amendments to IFRS 10, 11, and 12 on transition guidance clarify the
‘date of initial application’ in IFRS 10, and provide relief in IFRS 11 and
12 from the presentation or adjustment of comparative information
The loan (repaid to)/received from DMGT group company in the 2014
for periods prior to the
immediately preceding period. The
Consolidated Statement of Cash Flows has been re-presented to show
amendments do not have a significant effect on these consolidated
the allowable netting of the drawdowns and repayment of amounts from
financial statements.
a committed facility with DMGT group company.
●● Amendments to IFRS 10, IFRS 12 and IAS 27 on ‘Consolidation for
The 2014 Consolidated Statement of Financial Position has been
re-presented to reflect a reclassification to net down certain balances
Investment Entities’ define an investment entity and introduce an
exception to consolidating particular subsidiaries for investment
entities. The amendments do not have an effect on these consolidated
within trade receivables of £8.5m, accrued income of £3.9m and deferred
financial statements.
income of £12.4m. This has a corresponding impact on the working
capital movements in the Consolidated Statement of Cash Flows.
This reclassification has no impact on the net assets or cash and cash
equivalents.
Judgements made by the directors in the application of those accounting
policies that have a significant effect on the financial statements, and
estimates with a significant risk of material adjustment in the next year,
are discussed in note 2.
(a) Relevant new standards, amendments and
interpretations issued and applied in the 2015
financial year:
●● IFRS 10 ‘Consolidated Financial Statements’. This standard builds
on existing principles by identifying the concept of control as the
determining factor in whether an entity should be included within
consolidated financial statements. The amendments do not have an
effect on these consolidated financial statements.
●● IFRS 11 ‘Joint Arrangements’ provides for a more realistic reflection
of joint arrangements by focusing on the rights and obligations of
the arrangement, rather than its legal form. The amendments do not
have an effect on these consolidated financial statements.
●● IFRS 12 ‘Disclosure of Interests in Other Entities’ includes the
disclosure requirements for all forms of interests in other entities,
including joint arrangements, associates, special purpose vehicles
and other off balance sheet vehicles. The amendments do not have a
material impact on these consolidated financial statements.
●● Amendments to IAS 36 on ‘Recoverable Amount Disclosures for
Non-financial Assets’ remove certain disclosures of the recoverable
amounts of CGUs. The application of these amendments has no
material impact on the disclosures in these consolidated financial
statements.
●● Amendments to IAS 39 on ‘Novation of Derivatives and Continuation
of Hedge Accounting’ provide relief from discontinuing hedge
accounting when novation of a derivative designated as a
hedging instrument meets certain criteria. The application of these
amendments has not had any material impact on these consolidated
financial statements.
(b) Relevant new standards, amendments and
interpretations issued but effective subsequent to the
year end:
●● IFRS 9 ‘Financial Instruments’ – not yet adopted by the EU
●● IFRS 15 ‘Revenue from Contracts with Customers’ – not yet adopted
by the EU
●● Amendments to IAS 38 on Intangible Assets
●● Annual Improvements 2010-2012 Cycle
●● Annual Improvements 2011-2013 Cycle
●● Annual Improvements 2012-2014 Cycle
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 85
1 ACCouNTiNg PoliCies continued
The directors are still assessing the impact of these standards but do not
to reflect new information obtained about facts and circumstances that
existed as of the date of the acquisition that, if known, would have
expect there to be a material impact on the financial statements of the
affected the amounts recognised as of that date.
group.
Basis of preparation
The accounts have been prepared under the historical cost convention,
The measurement period is the period from the date of acquisition
to the date the group obtains complete information about facts and
circumstances that existed as of the acquisition date and is a maximum
except for certain financial instruments which have been measured at
of one year.
fair value. The accounting policies set out below have been applied
consistently to all periods presented in these group financial statements.
Having assessed the principal risks and the other matters discussed
in connection with the viability statement, the directors consider it
appropriate to adopt the going concern basis of accounting in preparing
this Annual Report.
Basis of consolidation
(a) Subsidiaries
The consolidated accounts incorporate the accounts of the company
and entities controlled by the company (its ‘subsidiaries’). The group
controls an entity when the group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the group.
They are deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains and losses on
transactions between group companies are eliminated.
Partial acquisitions — control unaffected
Where the group acquires an additional interest in an entity in which
a controlling interest is already held, the consideration paid for the
additional interest is reflected within movements in equity as a reduction
in non-controlling interests. No goodwill is recognised.
Step acquisitions — control passes to the group
Where a business combination is achieved in stages, at the stage at
which control passes to the group, the previously held interest is treated
as if it had been disposed of, along with the consideration paid for the
controlling interest in the subsidiary. The fair value of the previously held
interest then forms one of the components that is used to calculate
goodwill, along with the consideration and the non-controlling interest
less the fair value of identifiable net assets. The consideration paid for the
earlier stages of a step acquisition, before control passes to the group, is
treated as an investment in an associate.
(b) Transactions with non-controlling interests
Transactions with non-controlling interests in the net assets of consolidated
The group uses the acquisition method of accounting to account for
subsidiaries are identified separately and included in the group’s equity.
business combinations. The amount recognised as consideration by
Non-controlling interests consist of the amount of those interests at the
the group equates to the fair value of the assets, liabilities and equity
date of the original business combination and its share of changes in
acquired by the group plus contingent consideration (should there be any
equity since the date of the combination. Total comprehensive income
such arrangement). Acquisition related costs are expensed as incurred.
is attributed to non-controlling interests even if this results in the non-
Identifiable assets acquired and liabilities and contingent liabilities
controlling interests having a deficit balance.
assumed in a business combination are measured initially at their fair
values at acquisition. The group recognises any non-controlling interest
in the acquiree at fair value.
(c) Interests in joint ventures and associates
A joint venture is a contractual arrangement whereby the group and other
parties undertake an economic activity that is subject to joint control, that
To the extent the consideration (including the assumed contingent
is, when the strategic financial and operating policy decisions relating to
consideration) provided by the acquirer is greater than the fair value of
the activities require the unanimous consent of the parties sharing control.
the assets and liabilities, this amount is recognised as goodwill. Goodwill
also incorporates the amount of any non-controlling interest in the
acquiree and the acquisition date fair value of any previous equity interest
in the acquiree over the fair value of the group’s share of the identifiable
net assets acquired. If this consideration is lower than the fair value of
the net assets of the subsidiary acquired, the difference is recognised as
‘negative goodwill’ directly in the Income Statement.
If the initial accounting for a business combination is incomplete by the
end of the reporting period in which the combination occurs, the group
reports provisional amounts for the items for which the accounting
is incomplete. Those provisional amounts are adjusted during the
measurement period, or additional asset and liabilities are recognised
An associate is an entity over which the group has significant influence
and that is neither a subsidiary nor an interest in a joint venture. Significant
influence is the power to participate in the financial and operating policy
decisions of the investee, but is not control or joint control over those
policies.
The post-tax results of joint ventures and associates are incorporated in
the group’s results using the equity method of accounting. Under the
equity method, investments in joint ventures and associates are carried
in the Consolidated Statement of Financial Position at cost as adjusted
for post-acquisition changes in the group’s share of the net assets of
the joint venture and associates, less any impairment in the value of the
investment.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 86
Notes to the Consolidated Financial Statements
continued
1 ACCouNTiNg PoliCies continued
Losses of joint ventures and associates in excess of the group’s interest in
that joint venture or associate are not recognised. Additional losses are
provided for, and a liability is recognised, only to the extent that the group
has incurred legal or constructive obligations or made payments on behalf
of the joint venture or associate.
Any excess of the cost of acquisition over the group’s share of the net
Depreciation of property, plant and equipment is provided on a straight-
line basis over their expected useful lives at the following rates per year:
Freehold land
Freehold buildings
Long-term leasehold premises
Short-term leasehold premises
Office equipment
do not depreciate
2%
over term of lease
over term of lease
11% – 33%
fair value of the identifiable assets, liabilities and contingent liabilities
of the joint venture or associate recognised at the date of acquisition
Intangible assets
Goodwill
is recognised as goodwill. The goodwill is included within the carrying
Goodwill represents the excess of the fair value of purchase consideration
amount of the investment.
over the net fair value of identifiable assets and liabilities acquired.
Foreign currencies
Functional and presentation currency
Goodwill is recognised as an asset at cost and subsequently measured
at cost less accumulated impairment. For the purposes of impairment
The functional and presentation currency of Euromoney Institutional
testing, goodwill is allocated to those cash generating units that have
Investor PLC and its UK subsidiaries, other than Fantfoot Limited, Centre
benefited from the acquisition. Assets are grouped at the lowest level for
for Investor Education (UK) Limited and Redquince Limited is sterling. The
which there are separately identifiable cash flows. The carrying value of
functional currency of other subsidiaries, associates, joint ventures and
goodwill is reviewed for impairment at least annually or where there is
available-for-sale investments is the currency of the primary economic
an indication that goodwill may be impaired. If the recoverable amount
environment in which they operate.
Transactions and balances
Transactions in foreign currencies are recorded at the rate of exchange
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated into sterling at the
rates ruling at the balance sheet date. Gains and losses arising on foreign
currency borrowings and derivative instruments, to the extent that they
of the cash generating unit is less than its carrying amount, then the
impairment loss is allocated first to reduce the carrying amount of the
goodwill allocated to the unit and then to the other assets of the unit
on a pro rata basis. Any impairment is recognised immediately in the
Income Statement and may not subsequently be reversed. On disposal of
a subsidiary undertaking, the attributable amount of goodwill is included
in the determination of the profit and loss on disposal.
are used to provide a hedge against the group’s equity investments in
Goodwill arising on foreign subsidiary investments held in the consolidated
overseas undertakings, are taken to equity together with the exchange
balance sheet are retranslated into sterling at the applicable period end
difference arising on the net investment in those undertakings. All other
exchange rates. Any exchange differences arising are taken directly to
exchange differences are taken to the Income Statement.
equity as part of the retranslation of the net assets of the subsidiary.
On consolidation exchange differences arising from the translations of
Goodwill arising on acquisitions before the date of transition to IFRS has
the net investment in foreign entities and borrowings and other currency
been retained at the previous UK GAAP amounts having been tested for
instruments designated as hedges such as investments are taken to
impairment at that date. Goodwill written off to reserves under UK GAAP
shareholders’ equity. The group treats specific inter-company loan
before October 1 1998 has not been reinstated and is not included in
balances, which are not intended to be repaid in the foreseeable future,
determining any subsequent profit or loss on disposal.
as part of its net investment.
Group companies
Internally generated intangible assets
An internally generated intangible asset arising from the group’s software
The Income Statements of overseas operations are translated into sterling
and systems development is recognised only if all of the following
at the weighted average exchange rates for the year and their balance
conditions are met:
sheets are translated into sterling at the exchange rates ruling at the
balance sheet date. All exchange differences arising on consolidation
●● An asset is created that can be identified (such as software or a
are taken to equity. In the event of the disposal of an operation, the
website);
related cumulative translation differences are recognised in the Income
●● It is probable that the asset created will generate future economic
Statement in the period of disposal.
benefits; and
●● The development cost of the asset can be measured reliably.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and any recognised impairment loss.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 87
1 ACCouNTiNg PoliCies continued
Internally generated intangible assets are recognised at cost and
Cash and cash equivalents
Cash and cash equivalents include cash, short-term deposits and other
amortised on a straight-line basis over the useful lives from the date the
short-term highly liquid investments with an original maturity of three
asset becomes usable. Where no internally generated intangible asset can
months or less.
be recognised, development expenditure is recognised as an expense in
the period in which it is incurred.
Other intangible assets
For all other intangible assets, the group initially makes an assessment
of their fair value at acquisition. An intangible asset will be recognised
as long as the asset is separable or arises from contractual or other legal
rights, and its fair value can be measured reliably.
For the purpose of the Statement of Cash Flows, cash and cash equivalents
are as defined above, net of outstanding bank overdrafts.
Financial assets
The group classifies its financial assets into the following categories:
financial assets at fair value through profit or loss, loans and receivables,
and available-for-sale financial assets. The classification depends on the
purpose for which the assets were acquired. Management determines
Subsequent to acquisition, amortisation is charged so as to write off the
the classification of its assets on initial recognition and re-evaluates this
costs of other intangible assets over their estimated useful lives, using
designation at every reporting date. Financial assets in the following
a straight-line or reducing balance method. These intangible assets are
categories are classified as current assets if expected to be settled within
reviewed for impairment as described below.
12 months; otherwise, they are classified as non-current.
These intangibles are stated at cost less accumulated amortisation and
Classification
impairment losses.
Amortisation
Amortisation of intangible assets is provided on a reducing balance basis
or straight-line basis as appropriate over their expected useful lives at the
following rates per year:
Trademarks and brands
Customer relationships
Databases
Licences and software
5 – 30 years
1 – 16 years
1 – 22 years
3 – 5 years
Impairment of non-financial assets
Assets that have an indefinite useful life – for example, goodwill or
Financial assets at fair value through profit and loss
Financial assets at fair value through profit or loss are financial assets
held for trading. A financial asset is classified in this category if acquired
principally for the purpose of selling in the short term or if so designated
by management. Derivatives are also categorised as held for trading
unless they are designated as hedges.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. The
group’s loans and receivables comprise trade and other receivables and
cash and cash equivalents in the balance sheet.
intangible assets not ready to use – are not subject to amortisation and are
Available-for-sale (AFS) financial assets
tested annually for impairment. Assets that are subject to amortisation are
AFS financial assets are non-derivatives that are either designated in this
reviewed for impairment whenever events or changes in circumstances
category or not classified in any of the other categories.
indicate that the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of
an asset’s fair value less costs to sell or value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash generating units). Non-
financial assets, other than goodwill, that suffer impairment are reviewed
for possible reversal of the impairment at each reporting date.
Trade and other receivables
Trade receivables are recognised and carried at original invoice amount,
less provision for impairment. A provision is made and charged to the
Income Statement when there is objective evidence that the group will
not be able to collect all amounts due in accordance to the original
terms. More information on impairment is included in the impairment of
financial assets section below.
Recognition and measurement
Regular purchases and sales of financial assets are recognised on the date
on which the group commits to purchase or sell the asset. All financial
assets, other than those carried at fair value through profit or loss, are
initially recognised at fair value plus transaction costs.
Financial assets at fair value through profit and loss
Financial assets carried at fair value through profit or loss are initially
recognised at fair value, and transaction costs are expensed in the profit
and loss component of the Statement of Comprehensive Income. Gains
and losses arising from changes in the fair value of the ‘financial assets at
fair value through profit or loss category’ are included in the profit and
loss component of the Statement of Comprehensive Income in the period
in which they arise. Dividend income from assets, categorised as financial
assets at fair value through profit or loss, is recognised in the profit and
loss component of the Statement of Comprehensive Income as part of
other income when the group’s right to receive payments is established.
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Notes to the Consolidated Financial Statements
continued
1 ACCouNTiNg PoliCies continued
Loans and receivables
Loans and receivables are carried at amortised cost using the effective
interest method.
Available-for-sale (AFS) financial assets
The group first assesses whether objective evidence of impairment exists.
The amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred) discounted
at the financial asset’s original effective interest rate. The asset’s carrying
AFS financial assets are subsequently measured at fair value where it can
amount is reduced and the amount of the loss is recognised in the profit
be measured reliably. AFS equity investments that do not have a quoted
and loss component of the Statement of Comprehensive Income. If a loan
market price in an active market and whose fair value cannot be reliably
has a variable interest rate, the discount rate for measuring any impairment
measured are measured at cost less any identified impairment losses.
loss is the current effective interest rate determined under the contract.
Offsetting financial instruments
If the asset’s carrying amount is reduced, the amount of the loss is recognised
Financial assets and liabilities are offset and the net amount reported in
in the profit and loss component of the Statement of Comprehensive
the balance sheet when there is a legally enforceable right to offset the
Income.
recognised amounts and there is an intention to settle on a net basis or
realise the asset and settle the liability simultaneously.
Impairment of financial assets
If in a subsequent period, the amount of the impairment loss decreases
and the decrease can be related objectively to an event occurring after
the impairment was recognised (such as an improvement in the debtor’s
The group assesses at each reporting period whether there is objective
credit rating), the reversal of the previously recognised impairment
evidence that a financial asset or a group of financial assets is impaired. A
loss is recognised in the profit and loss component of the Statement of
financial asset or a group of financial assets is impaired and impairment
Comprehensive Income.
losses are incurred only if there is objective evidence of impairment as a
result of one or more events that occurred after the initial recognition of
the asset (a ‘loss event’) and that loss event (or events) has an impact on
the estimated future cash flows of the financial asset or group of financial
assets that can be reliably estimated.
Financial liabilities
Committed borrowings and bank overdrafts
Interest-bearing loans and overdrafts are recorded at the amounts received,
net of direct issue costs. Direct issue costs are amortised over the period of
the loans and overdrafts to which they relate. Finance charges, including
The criteria that the group uses to determine that there is objective
premiums payable on settlement or redemption are charged to the Income
evidence of an impairment loss include:
●● significant financial difficulty of the issuer or obligor;
●● a breach of contract, such as a default or delinquency in interest or
Statement as incurred using the effective interest rate method and are
added to the carrying value of the borrowings or overdraft to the extent
they are not settled in the period in which they arise.
principal payments;
Trade payables and accruals
●● the group, for economic or legal reasons relating to the borrower’s
Trade payables and accruals are not interest-bearing and are stated at their
financial difficulty, granting to the borrower a concession that the
fair value.
lender would not otherwise consider;
●● it becomes probable that the borrower will enter bankruptcy or other
financial reorganisation;
●● the disappearance of an active market for that financial asset because
of financial difficulties; or
Derivative financial instruments
The group uses various derivative financial instruments to manage its
exposure to foreign exchange and interest rate risks, including forward
foreign currency contracts and interest rate swaps.
●● observable data indicating that there is a measurable decrease in the
estimate of future cash flows from a portfolio of financial assets since
the initial recognition of those assets, although the decrease cannot
yet be identified with the individual financial assets in the portfolio,
All derivative instruments are recorded in the Statement of Financial
Position at fair value. The recognition of gains or losses on derivative
instruments depends on whether the instrument is designated as a hedge
and the type of exposure it is designed to hedge. The group designates
including:
certain derivatives as either:
i. adverse changes in the payment status of borrowers in the
(a) hedges of the fair value of recognised assets or liabilities or a firm
portfolio; and
commitment (fair value hedge);
ii. national or local economic conditions that correlate with defaults
on the assets in the portfolio.
(b) hedges of a particular risk associated with a recognised asset or
liability or a highly probable forecast transaction (cash flow hedge);
or
(c) hedges of a net investment in a foreign operation (net investment
hedge).
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1 ACCouNTiNg PoliCies continued
The full fair value of a hedging derivative is classified as a non-current
When a hedging instrument expires or is sold, or when a hedge no
longer meets the criteria for hedge accounting, any cumulative gain or
asset or liability when the derivative matures in more than 12 months,
loss existing in equity at that time remains in equity and is recognised
and as a current asset or liability when the derivative matures in less than
when the forecast transaction is ultimately recognised in the Income
12 months. Trading derivatives are classified as a current asset or liability.
Statement. When a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in equity is immediately
Changes in the fair value of the derivative financial instruments that do
not qualify for hedge accounting are recognised in the Income Statement
transferred to the Income Statement.
as they arise.
Fair value hedge
Net investment hedge
Hedges of net investments in foreign operations are accounted for in the
same way as cash flow hedges.
Changes in the fair value of derivatives that are designated and qualify
as fair value hedges are recorded in the Income Statement, together with
Gains or losses on the qualifying part of net investment hedges are
any changes in the fair value of the hedged asset or liability that are
recognised in other comprehensive income together with the gains and
attributable to the hedged risk. The group only applies fair value hedge
losses on the underlying net investment. The ineffective portion of such
accounting for hedging fixed asset risk on borrowings. The gain or loss
gains and losses is recognised in the Income Statement immediately.
relating to the effective portion of interest rate swaps hedging fixed rate
borrowings is recognised in the Income Statement within ‘finance costs’.
The gain or loss relating to the ineffective portion is recognised in the
Income Statement within ‘operating profit’. Changes in the fair value
of the hedge fixed rate borrowings attributable to interest rate risk are
recognised in the Income Statement within ‘finance costs’.
Cash flow hedge
The effective portion of gains or losses on derivatives that are designated
and qualify as cash flow hedges are recognised in other comprehensive
income within the Statement of Comprehensive Income. The ineffective
portion of such gains and losses is recognised in the Income Statement
immediately.
Amounts accumulated in equity are reclassified to the Income Statement in
the periods when the hedged item is recognised in the Income Statement
(for example when the forecast transaction that is hedged takes place).
The gain or loss relating to the effective portion of interest rate swaps
hedging variable rate borrowings is recognised in the Income Statement
accordingly, the gain or loss relating to the ineffective portion is recognised
in the Income Statement immediately. However, whenever the forecast
transaction that is hedged results in the recognition of a non-financial
asset (for example fixed assets), the gains and losses previously deferred in
equity are transferred from equity and included in the initial measurement
The group does not hedge the translation of the results of foreign
subsidiaries and fluctuations in the value of sterling versus foreign
currencies could materially affect the amount of these items in the
consolidated financial statements, even if their values have not changed
in their original currency. The group does endeavour to match foreign
currency borrowings to investments in order to provide a natural hedge
for the translation of the net assets of overseas subsidiaries.
Gains and losses accumulated in equity are transferred to the Income
Statement when the foreign operation is partially disposed of or sold.
Liabilities in respect of acquisition commitments and deferred
consideration
Liabilities for acquisition commitments over the remaining minority
interests in subsidiaries and deferred consideration are recorded in the
Statement of Financial Position at their estimated discounted present
value. These discounts are unwound and charged to the Income
Statement as notional interest over the period up to the date of the
potential future payment.
Taxation
The tax expense for the period comprises current and deferred tax. Tax is
recognised in the Income Statement, except to the extent that it relates
to items recognised in other comprehensive income or directly in equity.
of the cost of the asset. The deferred amounts are ultimately recognised
Current tax, including UK corporation tax and foreign tax, is provided at
in depreciation in the case of fixed assets.
amounts expected to be paid (or recovered) using the tax rates and laws
that have been enacted or substantively enacted by the balance sheet
date.
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Notes to the Consolidated Financial Statements
continued
1 ACCouNTiNg PoliCies continued
Deferred taxation is calculated under the provisions of IAS 12 ‘Income
Multi-employer scheme
The group also participates in the Harmsworth Pension Scheme, a defined
Tax’ and is recognised on differences between the carrying amounts of
benefit pension scheme which is operated by Daily Mail and General Trust
assets and liabilities in the accounts and the corresponding tax bases
plc. As there is no contractual agreement or stated policy for charging the
used in the computation of taxable profit, and is accounted for using the
net defined benefit cost for the plan as a whole to the individual entities,
balance sheet liability method. Deferred tax liabilities are recognised for
the group recognises an expense equal to its contributions payable in
taxable temporary differences and deferred tax assets are recognised to
the period and does not recognise any unfunded liability of this pension
the extent that it is probable that taxable profits will be available against
scheme on its balance sheet. In other words, this scheme is treated as a
which deductible temporary differences can be utilised. No provision
defined contribution plan.
is made for temporary differences on unremitted earnings of foreign
subsidiaries or associates where the group has control and the reversal of
the temporary difference is not foreseeable.
Defined benefit plans
Defined benefit plans define an amount of pension benefit that an
employee will receive on retirement, usually dependent on one or more
The carrying amount of deferred tax assets is reviewed at each balance
factors such as age, years of service and compensation.
sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to
be recovered. Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the asset is realised
based on tax rates and laws that have been enacted or substantively
enacted by the balance sheet date. Deferred tax is charged or credited in
the Income Statement, except when it relates to items charged or credited
directly to Consolidated Statement of Comprehensive Income and equity,
in which case the deferred tax is also dealt with in Consolidated Statement
of Comprehensive Income and equity.
The group operates the Metal Bulletin Pension Scheme, a defined benefit
scheme. The liability recognised in the Statement of Financial Position in
respect of the defined benefit pension plan is the present value of the
defined benefit obligation at the end of the reporting period less the fair
value of plan assets. The defined benefit obligation is calculated annually
by independent actuaries using the projected credit method. The present
value of the defined benefit obligation is determined by discounting
the estimated future cash outflows using interest rates of high-quality
corporate bonds that are denominated in the currency in which the
benefits will be paid, and that have terms to maturity approximating to
Deferred tax assets and liabilities are offset when there is a legally
the terms of the related pension obligation. The actuarial valuations are
enforceable right to set off current tax assets against current tax liabilities
obtained at least triennially and are updated at each balance sheet date.
and when they relate to income taxes levied by the same taxation
authority and the group intends to settle its current assets and liabilities
on a net basis.
Provisions
A provision is recognised in the balance sheet when the group has a
present legal or constructive obligation as a result of a past event, and it is
probable that economic benefits will be required to settle the obligation.
If material, provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risks specific to the
liability.
Pensions
Contributions to pension schemes in respect of current and past service,
ex-gratia pensions, and cost of living adjustments to existing pensions are
based on the advice of independent actuaries.
Defined contribution plans
A defined contribution plan is a pension plan under which the group pays
fixed contributions into a separate non-group related entity. Payments
to the Euromoney Pension Plan and the Metal Bulletin Group Personal
Pension Plan, both defined contribution pension schemes, are charged as
an expense as they fall due.
Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are recognised in full in the Statement
of Comprehensive Income in the period in which they occur.
Past-service costs are recognised immediately in the Income Statement.
Share-based payments
The group makes share-based payments to certain employees which are
equity and cash-settled. These payments are measured at their estimated
fair value at the date of grant, calculated using an appropriate option
pricing model. The fair value determined at the grant date is expensed on
a straight-line basis over the vesting period, based on the estimate of the
number of shares that will eventually vest. At the end of each period the
vesting assumptions are revisited and the charge associated with the fair
value of these options updated. For cash-settled share-based payments a
liability equal to the portion of the services received is recognised at the
current fair value as determined at each balance sheet date.
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EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 91
1 ACCouNTiNg PoliCies continued
Revenue
Revenue represents income from advertising, subscriptions, sponsorship
and delegate fees, net of value added tax.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the board and executive committee members who
are responsible for strategic decisions, allocating resources and assessing
●● Advertising revenues are recognised in the Income Statement on the
date of publication.
●● Subscription revenues are recognised in the Income Statement on a
straight-line basis over the period of the subscription. Subscription
revenues contains certain items recognised on a cash basis including
voting revenues where the amount paid by the customer is determined
by a qualitative vote and paid in arrears for services rendered, and
best efforts revenues where the payments for services rendered are
uncertain until received.
●● Sponsorship and delegate revenues are recognised in the Income
Statement over the period the event is run.
Revenues invoiced but relating to future periods are deferred and treated
as deferred income in the Statement of Financial Position.
Leased assets
Leases in which a significant portion of the risks and rewards of ownership
are retained by the lessor are classified as operating leases. Operating
lease rentals are charged to the Income Statement on a straight-line basis
as allowed by IAS 17 ‘Leases’.
Dividends
Dividends are recognised as a liability in the period in which they are
approved by the company’s shareholders. Interim dividends are recorded
in the period in which they are paid.
Own shares held by Employees’ Share Ownership Trust
and Employees Share Trust
Transactions of the group-sponsored trusts are included in the group
performance of the operating segments.
2 key JudgemeNTAl AReAs AdoPTed iN
PRePARiNg T hese FiNANC iAl sTATemeNTs
The group prepares its group financial statements in accordance with
International Financial Reporting Standards (IFRS), the application of
which often requires judgements to be made by management when
formulating the group’s financial position and results. Under IFRS, the
directors are required to adopt those accounting policies most appropriate
to the group’s circumstances for the purpose of presenting fairly the
group’s financial position, financial performance and cash flows.
In determining and applying accounting policies, judgement is often
required in respect of items where the choice of specific policy, accounting
estimate or assumption to be followed could materially affect the reported
results or net asset position of the group should it later be determined
that a different choice would have been more appropriate.
Management considers the accounting estimates and assumptions
discussed below to be its key judgemental areas and accordingly provides
an explanation of each below. Management has discussed its critical
accounting estimates and associated disclosures with the group’s audit
committee.
The discussion below should be read in conjunction with the group’s
disclosure of IFRS accounting policies in note 1.
Centre for Investor Education Limited (CIE)
In April 2013 the group acquired a 75% equity interest in CIE for a final
financial statements. In particular, the trusts’ holdings of shares in the
consideration of £10.2m, with a commitment to acquire the remaining
company are debited direct to equity.
Earnings per share
The earnings per share and diluted earnings per share calculations follow
the provisions of IAS 33 ‘Earnings Per Share’. The diluted earnings per
share figure is calculated by adjusting for the dilution effect of the
exercise of all ordinary share options, SAYE options and the Capital
Appreciation Plan options granted by the company, but excluding the
ordinary shares held by the Euromoney Employees’ Share Ownership Trust
and Euromoney Employee Share Trust.
Exceptional items
Exceptional items are items of income or expense considered by the
directors, either individually or if of a similar type in aggregate, as being
either material or significant and which require additional disclosure in
order to provide an indication of the underlying trading performance of
the group.
25% by early 2016. At September 30 2014 based on the reported
financial performance of CIE up to that date, the liability for the acquisition
commitment was valued at £3.5m and the deferred consideration was
valued at £1.7m. However, as part of the local statutory audit of CIE for
the year to September 30 2014, a number of governance and financial
irregularities were identified which remain subject to legal resolution. As
a result of these irregularities, the former owner-managers of CIE were
replaced and a number of adjustments made to the group’s investment in
CIE. The acquisition goodwill has been subject to an impairment charge
of £2.9m (note 5). The group, in preparation of these financial statements
at September 30 2015 has examined all evidence, including its own
management investigation and Deloitte & Touche LLP Australia’s findings,
in reaching the conclusion that no further amounts are payable under
the share purchase agreement for CIE. In October 2015, the group filed
a public statement of claim against the previous owners for breaches of
warranties and other damages.
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Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 92
Notes to the Consolidated Financial Statements
continued
2 key JudgemeNTAl AReAs AdoPTed iN
PRePARiNg T hese FiNANCiAl sTATemeNTs continued
As a result, the group has revised its prior estimate of acquisition
Acquisition commitments
The group is party to a number of put and call options over the remaining
non-controlling interests in some of its subsidiaries. IAS 32 ‘Financial
commitments in respect of CIE which has given rise to a credit of £3.5m
Instruments: Presentation’ requires the discounted present value of these
and deferred consideration credit of £1.7m included in net finance income
acquisition commitments to be recognised as a liability on the Statement
as a fair value adjustment (note 7). The group has also de-recognised the
of Financial Position with a corresponding decrease in reserves. Each
non-controlling interest in equity.
Acquisitions and disposals
The purchase consideration for the acquisition of a subsidiary or business
is allocated over the net fair value of identifiable assets, liabilities and
contingent liabilities acquired.
In December 2014, the group sold its investments in Capital NET and
Capital DATA for a combined consideration of $85.0m (note 13), which
included a 15.5% minority stake in Dealogic for $59.2m. The following
key accounting judgements were made:
●● That the disposal and subsequent acquisition had commercial
substance, meaning that a gain on disposal should be recognised.
●● This investment has been equity accounted as an associate under IAS
28 by virtue of the group’s significant influence conveyed by its 20%
voting rights and board representation.
●● The calculation of the £48.4m profit on disposal of Capital NET and
Capital DATA.
Deferred consideration
The group often pays for a portion of the equity acquired at a future date.
This deferred consideration is contingent on the future results of the entity
acquired and valuation multiplier applicable to those results. The initial
amount of the deferred consideration is recognised as a liability in the
Statement of Financial Position. Each period end management reassesses
the amount expected to be paid and any changes to the initial amount
are recognised as finance income or expense in the Income Statement.
Significant management judgement is required to determine the amount
of deferred consideration that is likely to be paid, particularly in relation
to the future profitability of the acquired business. At September 30 2015
the discounted present value of the deferred consideration asset was
£0.6m (2014: liability £8.5m).
period end management reassesses the amount expected to be paid and
any changes to the initial amount are recognised as a finance income
or expense in the Income Statement. The discounts are unwound as a
notional interest charge to the Income Statement. Key areas of judgement
in calculating the discounted present value of these commitments
are the expected future cash flows and earnings of the business, the
period remaining until the option is exercised, and the discount rate. At
September 30 2015 the discounted present value of these acquisition
commitments was £9.2m (2014: £13.4m).
Goodwill and other intangibles impairment
Goodwill is impaired where the carrying value of goodwill is higher than
the net present value of future cash flows of those cash generating units
to which it relates. Key areas of judgement in calculating the net present
value are the forecast cash flows, the long-term growth rate of the
applicable businesses and the discount rate applied to those cash flows.
Goodwill held on the Statement of Financial Position at September 30
2015 was £382.0m (2014: £383.9m).
Share-based payments
The group makes long-term incentive payments to certain employees.
These payments are measured at their estimated fair value at the date
of grant, calculated using an appropriate option pricing model. This
fair value is expensed on a straight-line basis over the expected vesting
period, based on the estimated number of shares that will eventually vest.
The key assumptions used in calculating the fair value of the options are
the discount rate, the group’s share price volatility, dividend yield, risk free
rate of return, and expected option lives.
These assumptions are set out in note 23. Management regularly performs
a true-up of the estimate of the number of shares expected to vest, which
is dependent on the anticipated number of leavers.
The directors regularly reassess the expected vesting period. A plan that
vests earlier than originally estimated results in an acceleration of the
fair value expense of the plan recognised in the Income Statement at
the time the reassessment occurs. Equally, a plan that vests later than
previously estimated results in a credit to the Income Statement at the
date of reassessment.
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2 key JudgemeNTAl AReAs AdoPTed iN
PRePARiNg T hese FiNANCiAl sTATemeNTs continued
The group’s long-term incentive schemes, CAP 2014 and CSOP 2014 were
The group has certain significant open items in several tax jurisdictions
and as a result the amounts recognised in the group financial statements
in respect of these items are derived from the group’s best estimation
granted in 2014. The final award is subject to a number of performance
and judgement, as described above. However, the inherent uncertainty
tests which may change the number of shares that will vest. At the half
regarding the outcome of these items means eventual resolution could
year, management reversed the cumulative CAP 2014 charge of £2.5m
differ from the accounting estimates and therefore affect the group’s
through the Income Statement as the latest forecasts for the group did
results and cash flows.
not indicate that the required profit target would be met in 2017. The
credit for long-term incentive payments for the year ended September 30
2015 is £2.5m (2014: charge of £2.4m).
Defined benefit pension scheme
The surplus or deficit in the defined benefit pension scheme that is
Significant provisions and accruals
The group continues to recognise significant provisions and accruals
including a provision for the impairment of trade receivables and
property-related provisions. Impairment provisions for trade receivables
are made when there is objective evidence that a loss event has occurred.
recognised through the Statement of Comprehensive Income is subject
A property-related provision is measured based on best estimates of the
to a number of assumptions and uncertainties. The calculated liabilities of
expenditure required to settle the obligation at each period end date.
the scheme are based on assumptions regarding salary increases, inflation
rates, discount rates, the long-term expected return on the scheme’s
assets and member longevity. Details of the assumptions used are shown
in note 26. Such assumptions are based on actuarial advice and are
benchmarked against similar pension schemes.
Taxation
The group’s tax expense on profit is the sum of the total current and
deferred tax expense. The calculation of the group’s total tax charge
necessarily involves a degree of estimation and judgement in respect
of certain items whose tax treatment cannot be finally determined
until resolution has been reached with the relevant tax authority or, as
appropriate, through a formal legal process. The final resolution of some
of these items may give rise to material profit and loss and/or cash flow
variances.
The group is a multinational with tax affairs in many geographical
locations. This inherently leads to a higher than usual complexity to the
group’s tax structure and makes the degree of estimation and judgement
more challenging. The resolution of issues is not always within the control
of the group and it is often dependent on the efficiency of the legislative
processes in the relevant taxing jurisdictions in which the group operates.
Issues can, and often do, take many years to resolve. Payments in respect
of tax liabilities for an accounting period include payments on account
and depend on the final resolution of open items. As a result, there
can be substantial differences between the tax expense in the Income
Statement and tax payments.
3 segmeNTAl ANAlysis
Segmental information is presented in respect of the group’s business
divisions and reflects the group’s management and internal reporting
structure. The group is organised into four business divisions: Research
and data; Financial publishing; Business publishing; Conferences,
seminars and training. Financial publishing and Business publishing consist
primarily of advertising and subscription revenue. Conferences, seminars
and training consists of both sponsorship income and delegate revenue,
as well as subscription revenue for membership institutes. Research and
data consists primarily of subscription revenue. A breakdown of the
group’s revenue by type is set out below.
Following the disposal of MIS Training Institute Holdings, Inc. (MIS
Training) during the year to September 30 2014, the training division
has been merged with Conferences and seminars due to the relative size
of the training division as compared to other divisions. As a result the
comparative segment information has been restated.
In October 2014 the group disposed of four newsletter titles and in
December 2014 the group disposed of 100% of the equity share capital
in both Capital NET and Capital DATA. As a result segment information
from the disposal of the titles and Capital NET and Capital DATA has been
reclassified as sold/closed businesses and the comparative split of divisional
revenues, revenue by type and operating profits have been restated.
Analysis of the group’s three main geographical areas is also set out
to provide additional information on the trading performance of the
businesses.
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Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 94
Notes to the Consolidated Financial Statements
continued
3 segmeNTAl ANAlysis continued
Inter-segment sales are charged at prevailing market rates and shown in the eliminations columns below.
united Kingdom
2014
£000
2015
£000
North America
2015
£000
2014
£000
rest of world
2015
£000
2014
£000
eliminations
2015
£000
2014
£000
total
2015
£000
2014
£000
revenue
by division and source:
Research and data
Financial publishing
Business publishing
Conferences, seminars and training
Sold/closed businesses
Foreign exchange gains on forward
–
contracts
179,572 180,330 191,050 186,238
total revenue
64
Investment income (note 7)
total revenue and investment income 179,572 180,330 191,167 186,302
16,202
49,549
48,900
54,576
8,226
16,784
50,565
51,151
59,237
1,212
85,081
28,382
19,621
57,370
596
80,747
28,907
19,327
51,824
5,433
2,877
117
623
–
–
–
23,940
2
1,687
14,675
–
–
40,304
262
40,566
23,897
1,949
1,786
19,680
182
–
47,494
171
47,665
–
(4,646)
(2,505)
(219)
(144)
–
(7,514)
–
(7,514)
(4,600)
(2,212)
74,303
69,954
(3) 125,805 120,843
75,805
67,801
(528) 131,063 125,552
13,681
1,664
(160)
–
623
2,877
(7,503) 403,412 406,559
235
(7,503) 403,791 406,794
379
–
united Kingdom
2014
£000
2015
£000
North America
2015
£000
2014
£000
rest of world
2015
£000
2014
£000
total
2015
£000
2014
£000
revenue
by type and destination:
Subscriptions
Advertising
Sponsorship
Delegates
Other
Sold/closed businesses
Foreign exchange gains on forward contracts
total revenue
35,195
5,136
10,156
7,380
2,523
1,215
623
62,228
32,016 103,055
23,343
23,737
15,287
6,937
450
–
72,465 210,476 196,824
52,161
48,905
22,660
56,632
59,155
25,857
71,141
70,487
47,945
13,242
12,100
3,097
13,682
1,666
2,258
2,877
623
–
64,360 172,809 167,917 168,375 174,282 403,412 406,559
92,343
22,659
24,445
15,813
7,383
5,274
–
72,226
20,426
25,262
47,820
2,640
1
–
6,842
6,330
7,383
2,762
6,150
2,877
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 95
3 segmeNTAl ANAlysis continued
operating profit1
by division and source:
Research and data
Financial publishing
Business publishing
Conferences, seminars and training
Sold/closed businesses
Unallocated corporate costs
operating profit before acquired intangible
amortisation, long-term incentive credit/(expense) and
exceptional items
Acquired intangible amortisation2 (note 11)
Long-term incentive credit/(expense)
Exceptional items (note 5)
operating profit
Share of results in associates and joint ventures (note 13)
Finance income (note 7)
Finance expense (note 7)
Profit before tax
Tax expense (note 8)
Profit for the year
united Kingdom
2014
£000
2015
£000
North America
2015
£000
2014
£000
rest of world
2015
£000
2014
£000
total
2015
£000
2014
£000
3,922
13,395
17,008
14,621
1,019
(15,566)
5,111
15,456
15,483
12,362
5,984
(9,451)
34,362
4,977
7,451
17,113
322
(260)
34,311
5,774
7,474
16,446
752
(798)
5,315
95
(215)
1,568
(25)
(868)
5,733
332
(149)
5,679
(24)
(666)
43,599
18,467
24,244
33,302
1,316
(16,694)
45,155
21,562
22,808
34,487
6,712
(10,915)
34,399
(6,822)
1,269
36,781
65,627
44,945
(6,869)
(1,146)
(2,887)
34,043
63,965
(9,645)
757
1,752
56,829
63,959
(9,485)
(1,090)
6,062
59,446
5,870
(560)
464
(5,112)
662
(381)
(131)
(545)
10,905 104,234 119,809
(16,735)
(17,027)
(2,367)
2,490
2,630
33,421
9,848 123,118 103,337
264
(381)
1,546
5,127
(3,672)
(4,579)
123,285 101,475
(25,610)
(17,599)
75,865
105,686
1. Operating profit before acquired intangible amortisation, long-term incentive credit/(expense) and exceptional items (refer to the appendix to the
Chief Executive’s Statement).
2. Acquired intangible amortisation represents amortisation of acquisition-related non-goodwill assets such as trademarks and brands, customer
relationships and databases (note 11).
other segmental information
by division:
Research and data
Financial publishing
Business publishing
Conferences, seminars and training
Sold/closed businesses
Unallocated corporate costs
Acquired
intangible
amortisation
2015
£000
2014
£000
long-term
incentive
credit/(expense)
exceptional
items
2015
£000
2014
£000
2015
£000
2014
£000
depreciation
and amortisation
2014
£000
2015
£000
(10,344)
(1,988)
(2,141)
(2,454)
–
(100)
(17,027)
(9,469)
(3,434)
(2,322)
(1,403)
–
(107)
(16,735)
622
498
249
598
–
523
2,490
(628)
(464)
(232)
(557)
–
(486)
(2,367)
(1,259)
(5,133)
(40)
(15,045)
2,441
52,457
33,421
(547)
(1,202)
(28)
(190)
6,834
(2,237)
2,630
(1,137)
(85)
(25)
(37)
–
(4,039)
(5,323)
(1,224)
(30)
(28)
(48)
–
(3,540)
(4,870)
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 96
Notes to the Consolidated Financial Statements
continued
3 segmeNTAl ANAlysis continued
Non-current assets (excluding derivative financial
instruments, deferred consideration and deferred tax
assets) by location:
Goodwill
Other intangible assets
Property, plant and equipment
Investments
Non-current assets
Capital expenditure by location
united Kingdom
2014
£000
2015
£000
North America
2015
£000
2014
£000
rest of world
2015
£000
2014
£000
total
2015
£000
2014
£000
64,773
7,274
38,302
122,037 137,669 253,560 236,369
86,978
1,757
–
232,386 226,083 338,813 325,104
(397)
73,681
14,661
72
83,913
1,340
–
(5,622)
(2,465)
(493)
6,396
700
557
–
7,653
(372)
9,896 381,993 383,934
850 149,386 161,509
16,924
9,171
506
72
38,302
–
11,252 578,852 562,439
(3,105)
(6,487)
(243)
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.
4 oPeRATiNg PR oFiT
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
operating profit
2015
£000
2014
£000
403,412
(107,488)
295,924
(3,278)
(169,528)
123,118
406,559
(106,057)
300,502
(3,582)
(193,583)
103,337
Administrative expenses include items separately disclosed in exceptional items of £33.4m (2014: £2.6m) (note 5).
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 4 oPeRATiNg PRoFiT continued
operating profit is stated after charging/(crediting):
Staff costs (note 6)
Intangible amortisation:
Acquired intangible amortisation
Licences and software
Depreciation of property, plant and equipment
Property operating lease rentals
Loss/(profit) on disposal of property, plant and equipment
Exceptional items (note 5):
Profit on disposal of associate
Profit on disposal of available-for-sale investment
Profit on disposal of business (2014: includes recycled cumulative translation differences)
Profit on disposal of property, plant and equipment
Goodwill impairment
Restructuring and other exceptional costs
Impairment of carrying value of associate
Foreign exchange loss
Audit and non-audit services relate to:
Group audit:
Fees payable for the audit of the group’s annual accounts
Fees payable for other services to the group:
Audit of subsidiaries pursuant to local legislation
Assurance services:
Audit related assurance services
Non-audit services:
Taxation compliance services
Other taxation advisory services
Other services
total group auditor’s remuneration
97
2015
£000
2014
£000
158,381
156,923
17,027
2,680
2,643
8,961
13
(2,921)
(45,502)
(2,446)
(4,181)
18,458
3,171
–
2,449
2015
£000
509
250
759
119
16
63
34
113
991
16,735
1,962
2,908
7,443
(7)
–
–
(6,834)
–
–
3,760
444
1,437
2014
£000
390
350
740
115
85
284
23
392
1,247
PricewaterhouseCoopers LLP was appointed as the group’s auditor for the year ended September 30 2015. Accordingly comparative figures in the table
above for the year ended September 30 2014 are in respect of remuneration paid to the group’s previous auditor, Deloitte LLP and other member firms
of Deloitte Touche Tohmatsu Limited.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
98
Notes to the Consolidated Financial Statements
continued
5 exCePTioNAl iTems
Exceptional items are items of income or expense considered by the directors, either individually or if of a similar type in aggregate, as being either
material or significant and which require additional disclosure in order to provide an indication of the underlying trading performance of the group.
Profit on disposal of associate
Profit on disposal of available-for-sale investment
Profit on disposal of business (2014: includes recycled cumulative translation differences)
Profit on disposal of property, plant and equipment
Goodwill impairment
Restructuring and other exceptional costs
Impairment of carrying value of associate
2015
£000
2,921
45,502
2,446
4,181
55,050
(18,458)
(3,171)
–
33,421
2014
£000
–
–
6,834
–
6,834
–
(3,760)
(444)
2,630
for the year ended september 30 2015 the group recognised an exceptional credit of £33.4m. During the year the group disposed of its interests in
a number of assets generating a gain on sale of £55.1m. Most of this relates to the sale of group’s interests in Capital DATA and Capital NET as part of
the Dealogic transaction (note 13). The group also sold a number of predominantly print-based newsletters and magazines (note 14) as well as certain
freehold and leasehold properties as part of the relocation of its London offices.
Following the sharp downturn in the commodities sector in 2015 and no sign that market conditions will improve over the near term, the group has
impaired the value of its investment in the Investing in African Mining Indaba (Mining Indaba), originally purchased in July 2014, by £10.7m. The group
expects Mining Indaba to recover strongly once commodity markets pick up and will continue with its strategy set out at the time of the acquisition to
develop the event’s investor content and networking opportunities and to use its expertise in emerging markets, as well as its international network,
to accelerate growth outside Africa.
The acquisition goodwill for Centre for Investor Education (CIE) has been subject to an impairment charge of £2.9m. For further details see note 2.
The remaining £4.8m charge for goodwill impairment relates to HedgeFund Intelligence (HFI), the group’s information and events business serving the
hedge fund industry. The performance of the business since the last year end has been disappointing but for 2016 HFI products have moved onto the
Delphi content platform which will significantly enhance their quality.
Restructuring and other exceptional costs cover the major reorganisation of certain businesses initiated in the first half, costs relating to the relocation
of the group’s London headquarters, and professional fees resulting from the CIE dispute.
The group’s tax charge includes a related tax charge on these exceptional items of £1.0m (note 8).
for the year ended september 30 2014 the group recognised a net exceptional credit of £2.6m. This comprised an exceptional credit for the profit
on disposal of MIS Training offset by exceptional acquisition costs, restructuring and property costs, and impairment of carrying value of associate. The
restructuring and other exceptional costs of £3.8m include acquisition costs of £0.9m for the acquisitions of Infrastructure Journal and Mining Indaba,
costs of £1.5m for the relocation of the group’s London headquarters and restructuring costs of £1.3m from the reorganisation of certain businesses
including closure of print products. The group’s tax charge included a related tax charge of £0.3m.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 99
2015
Average
2014
Average
846
394
301
398
381
2,320
822
385
278
418
506
2,409
2015
Average
2014
Average
923
741
656
2,320
2015
£000
146,944
10,754
3,173
(2,490)
158,381
2015
£000
379
4,748
–
5,127
(1,120)
(170)
(2,851)
(438)
(4,579)
548
990
761
658
2,409
2014
£000
141,131
10,517
2,908
2,367
156,923
2014
£000
235
1,298
13
1,546
(1,349)
(120)
(1,873)
(330)
(3,672)
(2,126)
6 sTAFF CosTs
(i) Number of staff (including directors and temporary staff)
By business segment:
Research and data
Financial publishing
Business publishing
Conferences, seminars and training
Central
By geographical location:
United Kingdom
North America
Rest of World
(ii) Staff costs (including directors and temporary staff)
Wages and salaries
Social security costs
Other pension costs
Long-term incentive (credit)/expense
Details of directors’ remuneration have been disclosed in the Directors’ Remuneration Report on pages 46 to 69.
7 FiNANCe iNCome ANd exPeNse
finance income
Interest income:
Interest receivable from short-term investments
Movements in acquisition commitments (note 24)
Fair value gains on financial instruments:
Ineffectiveness of interest rate swaps and forward contracts
finance expense
Interest expense:
Interest payable on committed borrowings
Net interest expense on defined benefit liability (note 26)
Movements in acquisition deferred consideration (note 24)
Interest on tax
Net finance income/(costs)
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
100
Notes to the Consolidated Financial Statements
continued
7 FiNANCe iNCome ANd exPeNse continued
reconciliation of net finance income/(costs) in income statement to adjusted net finance costs
Total net finance income/(costs) in Income Statement
Add back:
Movements in acquisition commitments
Movements in deferred consideration
Adjusted net finance costs
2015
£000
2014
£000
548
(2,126)
(4,748)
2,851
(1,897)
(1,349)
(1,298)
1,873
575
(1,551)
The reconciliation of net finance income/(costs) in the Income Statement has been provided since the directors consider it necessary in order to provide
an indication of the adjusted net finance costs.
Included in the movements of acquisition commitments and deferred consideration are fair value adjustments of £3.5m and £1.7m respectively for CIE
(for further detail see note 2).
8 TAx oN PRoFiT
current tax expense
UK corporation tax expense
Foreign tax expense
Adjustments in respect of prior years
deferred tax expense
Current year
Adjustments in respect of prior years
total tax expense in income statement
Effective tax rate
The adjusted effective tax rate for the year is set out below:
reconciliation of tax expense in income statement to adjusted tax expense
Total tax expense in Income Statement
Add back:
Tax on acquired intangible amortisation
Tax on exceptional items
Tax on US goodwill amortisation
Share of tax on associates
Adjustments in respect of prior years
Adjusted tax expense
Adjusted profit before tax (refer to the appendix to the Chief Executive’s Statement)
Adjusted effective tax rate
2015
£000
2014
£000
7,989
12,949
(1,083)
19,855
(1,764)
(492)
(2,256)
17,599
14%
6,906
12,695
(570)
19,031
6,107
472
6,579
25,610
25%
2015
£000
2014
£000
17,599
25,610
4,096
(983)
3,113
(4,113)
716
1,575
1,291
18,890
4,114
(263)
3,851
(3,837)
–
98
112
25,722
107,810
18%
116,155
22%
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 101
8 TAx oN PRoFiT continued
The group presents the above adjusted effective tax rate to help users of this report better understand its tax charge. In arriving at this rate, the group
removes the tax effect of items which are adjusted for in arriving at the adjusted profit disclosed in the appendix to the Chief Executive’s Statement.
However, the current tax effect of goodwill and intangible items is not removed. The group considers that the resulting adjusted effective tax rate is
more representative of its tax payable position, as the deferred tax effect on the goodwill and intangible items is not expected to crystallise.
The actual tax expense for the year is different from 20.5% of profit before tax for the reasons set out in the following reconciliation:
Profit before tax
Tax at 20.5% (2014: 22%)
Factors affecting tax charge:
Different tax rates of subsidiaries operating in overseas jurisdictions
Share of tax on associates and joint ventures
US state taxes
Non-taxable income
Goodwill and intangibles
Disallowable expenditure
Other items deductible for tax purposes
Tax impact of consortium relief
Adjustments in respect of prior years
total tax expense for the year
2015
£000
2014
£000
123,285
25,273
101,475
22,325
3,150
(84)
1,371
(6,356)
197
1,734
(5,515)
(596)
(1,575)
17,599
6,238
(73)
1,075
–
63
92
(3,394)
(618)
(98)
25,610
In addition to the amount charged to the Income Statement, the following amounts relating to tax have been directly recognised in other comprehensive
income and equity:
Current tax
Deferred tax (note 21)
9 diVideNds
Amounts recognisable as distributable to equity holders in year
Final dividend for the year ended September 30 2014 of 16.00p (2013: 15.75p)
Interim dividend for year ended September 30 2015 of 7.00p (2014: 7.00p)
Employee share trusts dividend
Proposed final dividend for the year ended September 30
Employee share trusts dividend
other comprehensive income
equity
2015
£000
–
(97)
(97)
2014
£000
–
(495)
(495)
2015
£000
–
492
492
2015
£000
20,501
8,977
29,478
(414)
29,064
21,033
(296)
20,737
2014
£000
(2,690)
996
(1,694)
2014
£000
19,917
8,969
28,886
(115)
28,771
20,501
(289)
20,212
The proposed final dividend of 16.40p (2014: 16.00p) is subject to approval at the AGM on January 28 2016 and has not been included as a liability in
these financial statements in accordance with IAS 10 ‘Events after the Reporting Period’.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 102
Notes to the Consolidated Financial Statements
continued
10 eARNiNgs PeR shARe
Basic earnings attributable to equity holders of the parent
Adjustments (refer to the appendix to the Chief Executive’s Statement)
Adjusted earnings
Weighted average number of shares
Shares held by the employee share trusts
weighted average number of shares
Effect of dilutive share options
diluted weighted average number of shares
Basic earnings per share
Adjustments per share
Adjusted basic earnings per share
diluted earnings per share
Adjustments per share
Adjusted diluted earnings per share
2015
£000
105,444
(16,766)
88,678
2015
Number
000
128,202
(1,807)
126,395
65
126,460
Pence
83.42
(13.26)
70.16
83.38
(13.26)
70.12
2014
£000
75,264
14,568
89,832
2014
Number
000
127,506
(990)
126,516
720
127,236
Pence
59.49
11.51
71.00
59.15
11.45
70.60
The adjusted diluted earnings per share figure has been disclosed since the directors consider it necessary in order to give an indication of the underlying
trading performance.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 103
11 goodWill ANd oTheR iNTANgibles
Acquired intangible assets
trademarks
& brands
2015
£000
customer
relationships
2015
£000
databases
2015
£000
total
acquired
intangible
assets
2015
£000
licences &
software
2015
£000
intangible
assets in
development
2015
£000
Goodwill
2015
£000
total
2015
£000
164,843
98,713
12,083
275,639
–
–
7,018
171,861
62,144
8,209
–
3,157
73,510
–
–
4,064
–
–
533
102,777
12,616
53,059
7,737
–
2,351
63,147
7,225
1,081
–
463
8,769
–
–
11,615
287,254
122,428
17,027
–
5,971
145,426
12,923
1,324
498
420
15,165
4,687
2,680
–
240
7,607
98,351
39,630
3,847
141,828
7,558
62
436
(498)
–
–
–
–
–
–
–
–
411,815
700,439
–
–
1,760
–
17,457
29,492
429,272
731,691
27,881
154,996
–
18,458
940
19,707
18,458
7,151
47,279
200,312
381,993
531,379
Acquired intangible assets
Trademarks
& brands
2014
£000
Customer
relationships
2014
£000
Databases
2014
£000
Total
acquired
intangible
assets
2014
£000
Licences &
software
2014
£000
Intangible
assets in
development
2014
£000
Goodwill
2014
£000
Total
2014
£000
2015
cost/carrying amount
At October 1 2014
Additions
Transfer
Exchange differences
At september 30 2015
Amortisation and impairment
At October 1 2014
Amortisation charge
Impairment
Exchange differences
At september 30 2015
Net book value/carrying
amount at september 30 2015
2014
cost/carrying amount
At October 1 2013
Additions
Transfer
Acquisitions
Balance at disposal of company
Exchange differences
148,636
89,859
9,150
247,645
–
–
16,581
–
(374)
–
–
9,031
–
(177)
–
–
–
–
2,941
28,553
–
(8)
–
(559)
3,023
244
9,598
–
–
58
At september 30 2014
164,843
98,713
12,083
275,639
12,923
Amortisation and impairment
At October 1 2013
Amortisation charge
Balance at disposal of company
Exchange differences
54,746
7,417
–
(19)
44,821
8,300
–
(62)
6,043
1,018
–
164
105,610
16,735
–
83
2,709
1,962
–
16
At september 30 2014
62,144
53,059
7,225
122,428
4,687
6,690
2,992
(9,598)
–
–
(22)
62
385,518
642,876
–
–
30,832
(3,450)
(1,085)
3,236
–
59,385
(3,450)
(1,608)
411,815
700,439
–
–
–
–
–
28,944
137,263
–
18,697
(907)
(156)
(907)
(57)
27,881
154,996
Net book value/carrying
amount at september 30 2014
102,699
45,654
4,858
153,211
8,236
62
383,934
545,443
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 104
Notes to the Consolidated Financial Statements
continued
11 goodWill ANd oTheR iNTANgibles continued
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 this report.
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGU) that are expected to benefit from that
business combination.
The carrying amounts of acquired intangible assets and goodwill by CGU are as follows:
CEIC
EMIS
Petroleum Economist
Gulf Publishing
HedgeFund Intelligence
Information Management Network
BCA
Metal Bulletin publishing businesses
FOW
Total Derivatives
TelCap
Structured Retail Products
NDR
Global Grain
TTI/Vanguard
Insider Publishing
Centre for Investor Education
Euromoney Indices
IJ Global
Mining Indaba
Other
total
Acquired intangible assets
Goodwill
2015
£000
1,799
175
–
–
–
2,656
48,875
17,992
–
1,044
1,916
1,908
2014
£000
2,113
190
–
–
–
2,667
50,853
19,869
–
1,502
2,041
2,413
25,273
26,778
525
2,190
6,775
2,838
2,728
5,118
660
2,189
7,469
3,604
3,491
5,650
20,016
21,722
–
–
2015
£000
2014
£000
13,916
9,469
236
5,046
9,886
31,441
152,982
52,710
196
8,180
10,448
4,794
38,410
3,889
3,048
15,280
2,021
–
7,091
12,941
9
12,973
8,828
236
4,705
14,718
29,312
142,621
52,710
196
8,180
10,448
4,794
35,809
4,085
2,841
15,280
5,479
–
7,091
23,619
9
141,828
153,211
381,993
383,934
Goodwill impairment testing
During the year the goodwill in respect of each of the above businesses was tested for impairment in accordance with IAS 36 ‘Impairment of Assets’.
The methodology applied to the value in use calculations, reflecting past experience and external sources of information, included:
●● budgets by business based on pre-tax cash flows with a CAGR of 3% to 25% for the next four years derived from approved 2015 budgets.
Management believes these budgets to be reasonably achievable;
●● subsequent cash flows for one additional year increased in line with growth expectations of the applicable businesses;
●● pre-tax discount rates between 12.3% and 13.8%, derived from the company’s benchmarked weighted average cost of capital (WACC) of 10.7%
adjusted for risks specific to the nature of CGUs and risks included within the cash flows themselves; and
●● long-term nominal growth rate of between 2% and 3%.
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11 goodWill ANd oTheR iNTANgibles continued
Following the impairment review, the net impairment losses recognised in exceptional items (note 5) in respect of goodwill are as follows:
cGu
reportable segment
Mining Indaba
Centre for Investor Education
HedgeFund Intelligence
total
Conferences, seminars and training
Conferences, seminars and training
Financial publishing
2015
£000
10,679
2,947
4,832
18,458
2014
£000
–
–
–
–
Goodwill sensitivity analysis
Further disclosures in accordance with IAS 36 are provided where the group holds an individual goodwill item relating to a CGU that is significant, which
the group considers to be 15% of the total net book value, in comparison with the group’s total carrying value of goodwill. The only significant item
of goodwill included in the net book value above relate to BCA.
Using the above methodology, a pre-tax discount rate of 12.5% and long-term nominal growth rate of 2%, the recoverable amount exceeded the total
carrying value by £150.4m. The directors performed a sensitivity analysis on the total carrying value of this CGU. For the recoverable amount to fall to
the carrying value the discount rate would need to be increased by 10.2% or the long-term growth rate reduced by 29%.
For the other CGUs, IAS 36 provides that, if there is any reasonably possible change to a key assumption that would cause the CGU’s carrying amount
to exceed its recoverable amount, further disclosures are required. For NDR when using the above methodology and a pre-tax discount rate of 13%
and long-term nominal growth rate of 2% the recoverable amount exceeded the total carrying value by £9.5m. Sensitivity analysis performed around
the base case assumptions has indicated that for NDR, the following changes in assumptions (in isolation), would cause the value in use to fall below
the carrying value:
●● the five year pre-tax cash flows decreased by 12%;
●● the discount rate increased by 2%;
●● the long-term growth rate reduced by 4%.
12 PRoPeRTy, PlANT ANd equiPmeNT
2015
cost
At October 1 2014
Additions
Disposals
Exchange differences
At september 30 2015
depreciation
At October 1 2014
Charge for the year
Disposals
Exchange differences
At september 30 2015
Net book value at september 30 2015
freehold
land and
buildings
2015
£000
long-term
leasehold
premises
2015
£000
short-term
leasehold
premises
2015
£000
office
equipment
2015
£000
6,447
–
(6,447)
–
–
532
21
(553)
–
–
–
3,081
19
(2,575)
60
585
930
82
(511)
56
557
28
18,373
3,142
(9,789)
451
12,177
11,877
792
(6,435)
396
6,630
5,547
21,317
3,326
(5,779)
548
19,412
18,955
1,748
(5,422)
535
15,816
3,596
total
2015
£000
49,218
6,487
(24,590)
1,059
32,174
32,294
2,643
(12,921)
987
23,003
9,171
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 106
Notes to the Consolidated Financial Statements
continued
12 PRoPeRTy, PlANT ANd equiPmeNT continued
2014
cost
At October 1 2013
Additions
Disposals
Balance at disposal of company
Exchange differences
At september 30 2014
depreciation
At October 1 2013
Charge for the year
Disposals
Balance at disposal of company
Exchange differences
At september 30 2014
Net book value at september 30 2014
Net book value at september 30 2013
13 iNVesTmeNTs
At October 1 2013
Impairment
Disposals
Share of profits after tax retained
Share of profits before tax and acquired intangible amortisation
Share of tax
Dividends
At september 30 2014
Additions
Disposals
Share of profits after tax retained
Share of profits before tax and acquired intangible amortisation
Share of tax
Share of acquired intangible amortisation
Dividends
At september 30 2015
Freehold
land and
buildings
2014
£000
Long-term
leasehold
premises
2014
£000
Short-term
leasehold
premises
2014
£000
6,447
3,082
–
–
–
–
–
–
–
(1)
16,583
1,838
(11)
(29)
(8)
Office
equipment
2014
£000
20,791
1,267
(319)
(196)
(226)
Total
2014
£000
46,903
3,105
(330)
(225)
(235)
6,447
3,081
18,373
21,317
49,218
449
83
–
–
–
532
5,915
5,998
808
121
–
–
1
930
2,151
2,274
10,781
1,121
(11)
(15)
1
11,877
6,496
5,802
18,073
1,583
(316)
(191)
(194)
18,955
2,362
2,718
investment
in associates
£000
investment
in joint
ventures
£000
Available-
for-sale
investments
£000
702
(444)
(127)
264
337
(73)
(323)
72
32,855
10
(377)
2,440
(85)
(2,732)
(123)
32,437
–
–
–
–
–
–
–
–
34
–
(4)
(5)
1
–
–
30
–
–
–
–
–
–
–
–
5,835
–
–
–
–
–
–
5,835
30,111
2,908
(327)
(206)
(192)
32,294
16,924
16,792
total
£000
702
(444)
(127)
264
337
(73)
(323)
72
38,724
10
(381)
2,435
(84)
(2,732)
(123)
38,302
All of the above investments in associates and joint ventures are accounted for using the equity method in these consolidated financial statements as
set out in group’s accounting policies in note 1.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 107
2015
£000
2014
£000
(381)
84
2,732
2,816
2,435
264
–
–
–
264
13 iNVesTmeNTs continued
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
Add back:
Share of tax
Share of acquired intangible amortisation
Adjusted share of results in associates and joint ventures
Information on investment in associates, investment in joint ventures and available-for-sale investments:
Note Principal activity
year
ended
description
of holding
Group
interest
country of
incorporation
investment in associates
Diamond TopCo Limited (Dealogic)
World Bulk Wine Exhibition (WBWE)
investment in joint ventures
Institutional Investor Zanbato Limited
(II Zanbato)
Sanostro Institutional AG (Sanostro)
Available-for-sale investments
Estimize, Inc (Estimize)
Zanbato, Inc (Zanbato)
Dec 31 Ordinary share capital
1 Capital market software solutions
2 Event for commercialisation of bulk wine Dec 31 Ordinary share capital
15.5%
40.0%
3 Hedge fund manager trading signals
Sept 30 Ordinary share capital
50.0%
UK
Spain
UK
4 Hedge fund manager trading signals
Dec 31 Ordinary share capital
50.0%
Switzerland
5 Financial estimates platform
6 Private capital placement and workflow
Dec 31 Ordinary share capital
Dec 31 Ordinary share capital
10.0% Delaware, US
9.9% California, US
1. In December 2014 the group acquired 15.5% of the equity share capital with 20% voting rights in Dealogic, a company incorporated by the Carlyle
Group. Dealogic provides data and analytics, market intelligence and capital markets software solutions to investment banks to help them manage
their workflows, assist with deal origination and execution, and optimise productivity across their equity capital markets, fixed income, investment
banking and research, sales and trading businesses.
2. In April 2015 the group acquired 40% of the equity share capital of WBWE for a consideration of €1.3m (£0.9m). WBWE is the biggest event in the
world dedicated to the commercialisation of bulk wine.
3. In November 2014 the group set up a new joint venture with Zanbato Inc. with each owning 50% equity share capital in II Zanbato.
4. In December 2014 the group acquired 50% of the equity share capital of Sanostro for a cash consideration of £34,000. Sanostro provides hedge
fund manager trading signals to European banks. The group has joint control over the company.
5. In July 2015 the group acquired 10% of the equity share capital of Estimize for a cash consideration of $3.6m (£2.3m). Estimize provides a financial
estimates platform through sourcing estimates from hedge fund, brokerage and independent analysts to provide consensus market expectations.
This investment is treated as an available-for-sale investment.
6. In September 2015 the group acquired 9.9% of the equity share capital of Zanbato for a cash consideration of $5.4m (£3.5m). Zanbato is an
international private capital placement and workflow tools provider. This investment is treated as an available-for-sale investment.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 108
Notes to the Consolidated Financial Statements
continued
13 iNVesTmeNTs continued
Set out below is the summarised financial information for Dealogic as at September 30 2015 which in the opinion of the directors is material to the
group:
summarised balance sheet:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
summarised statement of comprehensive income:
Revenue
Profit from continuing operations
Post tax loss from continuing operations
Other comprehensive expense
total comprehensive expense
Group share of loss after tax
Dividends received from the associate during the year
dealogic
2015
£000
26,271
494,725
(263,855)
(7,622)
249,519
75,187
5,184
(2,745)
(2,085)
(4,830)
(418)
–
Reconciliation of the above summarised financial information to the carrying amount of the interest in Dealogic recognised in the Consolidated Financial
Statements:
Closing net assets
Proportion of the group’s ownership interest in the associate
Restriction of profit applied on acquisition
Goodwill
Exchange differences
carrying amount of the group’s interest in the associate
Aggregate information of associates that are not individually material:
Group share of profit from continuing operations
Aggregate carrying amount of the group’s interests in these associates
Capital NET Limited (CapNet)
dealogic
2015
£000
249,519
38,675
(5,862)
(128)
(1,148)
31,537
2015
£000
41
900
In December 2014 the group disposed of 100% of its equity share capital in CapNet for a cash consideration of US$4.6m (£2.9m). At the date of
disposal, CapNet had a net liability value of £10,000 resulting in a profit on disposal of £2.9m (note 5).
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13 iNVesTmeNTs continued
Assets available-for-sale investments
Capital DATA Limited (CapData)
The group had a 50% interest in CapData. The ordinary share capital of CapData was divided into 50 ‘A’ shares and 50 ‘B’ shares with the group owning
the 50 ‘A’ shares. Under the terms of the Articles of Association of CapData, the ‘A’ shares held by the group did not carry entitlement to any share of
dividends or other distribution of profits of CapData. The group did not have the ability to exercise significant influence nor was it involved in the day-
to-day running of CapData. As such the investment in CapData was accounted for as an asset available-for-sale with a carrying value of £nil (2014: £nil).
In December 2014 the group disposed its equity share capital in CapData for a total consideration of US$80.4m, settled by US$59.2m of ordinary ‘B’
shares (representing 15.5%) and US$21.2m of zero-coupon redeemable preferences shares in Dealogic. The $59.2m of ‘B’ shares were valued based
on the price paid by other third party investors in Dealogic. IAS 28 requires that where a non-monetary asset is contributed to an associate for an equity
interest in that associate, the resulting gain must be restricted. As the group received part of the consideration for CapData (US$59.2m) in the form of
an associate interest in Dealogic, this element of the disposal gain must be restricted by the percentage of the group’s investment in the new structure,
namely 15.5%. The consideration in preference shares is treated as a current receivable given the fixed short-term redemption of this instrument, and
the related profit on disposal is recognised immediately. The profit on disposal (note 5) is as follows:
Ordinary ‘B’ shares in Dealogic received as consideration
Restriction applied to ordinary ‘B’ shares consideration
Preference shares received
total profit on disposal
14 ACquisiTioNs ANd disPosAls
Purchase of new business
Infrastructure Journal (IJ)
$000
£000
59,225
(9,180)
50,045
21,215
71,260
37,817
(5,862)
31,955
13,547
45,502
During the financial year to September 30 2014, the group acquired IJ. The fair value of net assets acquired and consideration for the acquisition have
been finalised and there were no changes since September 30 2014.
Increase in equity holdings
TTI Technologies LLC (TTI/Vanguard)
In March 2015 the group acquired 5.4% of the equity share capital of TTI/Vanguard for a cash consideration of US$0.2m (£0.1m). The group’s equity
shareholding in TTI/Vanguard increased to 100%.
Family Office Network Limited (FON)
In April 2015 the group acquired 49% of the equity share capital of FON for a cash consideration of US$0.2m (£0.1m). The group’s equity shareholding
in FON increased to 100%.
Sale of business
Institutional Investor Titles (II Titles)
On October 31 2014, the group completed the sale of its newsletter publications and website services titled Compliance Intelligence, Fund Director
Intelligence, Fund Industry Intelligence, and Real Estate Finance Intelligence to Pageant Media Limited. The disposal of II Titles gave rise to a profit on
disposal of US$4.0m (£2.4m), after deducting disposal costs incurred, which was recognised as an exceptional item (note 5) in the Income Statement.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 110
Notes to the Consolidated Financial Statements
continued
14 ACquisiTioNs ANd disPosAls continued
The net assets of II Titles at the date of disposal were as follows:
Net liabilities disposed
directly attributable costs
Profit on disposal
total consideration
consideration satisfied by:
Cash
Deferred consideration
Net cash inflow arising on disposal:
Cash consideration (net of directly attributable costs)
Less: cash and cash equivalent balances disposed
final fair
value
£000
(2,129)
53
2,446
370
93
277
370
40
–
40
The net liabilities disposed mainly relates to the deferred revenue balances held by the group, with Pageant Media now being responsible for the delivery
of the underlying service.
15 TRAde ANd oTheR ReCeiVAbles
Amounts falling due within one year
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net of provision
Amounts owed by DMGT group undertakings
Other debtors
Prepayments
Accrued income
2015
£000
59,084
(5,441)
53,643
192
20,347
7,451
1,753
83,386
2014
£000
54,874
(5,226)
49,648
485
6,684
8,089
2,518
67,424
The 2014 comparatives have been re-presented to reflect a reclassification to net down certain balances within trade receivables of £8.5m, accrued
income of £3.9m and deferred subscription income of £12.4m (note 17). The corresponding impact of this representation on the opening balance
sheet at October 1 2013 would have been a net reduction to trade receivables of £6.7m, accrued income of £4.5m and deferred subscription income
of £11.2m. This reclassification has no impact on net assets.
The average credit period on sales of goods and services is 30 days. Trade receivables beyond 60 days overdue are provided for based on estimated
irrecoverable amounts from the sale of goods and services, determined by reference to past default experience.
Credit terms for customers are determined in individual territories. There are no customers who represent more than 5% of the total balance of trade
receivables.
As at September 30 2015, trade receivables of £21.9m (2014: £34.1m) were not yet due.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 15 TRAde ANd oTheR ReCeiVAbles continued
Ageing of past due but not impaired trade receivables:
Past due less than a month
Past due more than a month but less than two months
Past due more than two months but less than three months
Past due more than three months
111
2015
£000
14,496
3,760
2,990
2,649
23,895
2014
£000
5,978
4,005
1,830
2,274
14,087
The group has not provided for these trade receivables as there has been no significant change in their credit quality and the amounts are still considered
recoverable. These relate to a number of independent customers for whom there is no recent history of default. The average age of these receivables
is 67 days (2014: 73 days). The group does not hold any collateral over these balances.
Ageing of trade receivables impaired and partially provided for:
Past due less than a month
Past due more than a month but less than two months
Past due more than two months but less than three months
Past due more than three months
2015
£000
6,444
2,195
462
4,203
13,304
2014
£000
1,763
1,065
157
3,660
6,645
The amount of the provision for impaired trade receivables was £5.4m (2014: £5.2m). It was assessed that a portion of the receivables is expected to
be recovered.
Movements on the group provision for impairment of trade receivables are as follows:
At October 1
Impairment losses recognised
Impairment losses reversed
Amounts written off as uncollectible
Disposals
Exchange differences
At september 30
2015
£000
(5,226)
(4,835)
3,007
1,696
–
(83)
(5,441)
2014
£000
(5,846)
(4,686)
3,537
1,707
30
32
(5,226)
In determining the recoverability of a trade receivable, the group considers any change in the credit quality of the trade receivable from the date
credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated.
Accordingly, the directors believe that there is no further credit risk provision required in excess of the allowance for doubtful debts.
The allowance for doubtful debts does not include individually impaired trade receivables which have been placed under liquidation as these trade
receivables are written off directly to the Income Statement.
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Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 112
Notes to the Consolidated Financial Statements
continued
16 TRAde ANd oTheR PAyAbles
Trade creditors
Amounts owed to DMGT group undertakings
Liability for cash-settled options
Other creditors
The directors consider the carrying amounts of trade and other payables approximate their fair values.
17 deFeRRed iNCome
Deferred subscription income (note 15)
Other deferred income
2015
£000
2,490
534
71
20,916
24,011
2014
£000
2,969
20
147
22,396
25,532
2015
£000
86,198
25,931
112,129
2014
£000
82,026
27,816
109,842
18 FiNANCiAl iNsTRumeNTs ANd Risk m ANAgemeNT
forward foreign exchange contracts - cash flow hedge:
Current
Non-current
2015
2014
Assets
£000
liabilities
£000
Assets
£000
Liabilities
£000
1,313
9
1,322
(3,346)
(661)
(4,007)
2,611
179
2,790
(1,322)
(385)
(1,707)
Financial risk management objectives
The group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk
and price risk), credit risk and liquidity risk arising in the normal course of business. Derivative financial instruments are used to manage exposures to
fluctuations in foreign currency exchange rates and interest rates but are not employed for speculative purposes.
Full details of the objectives, policies and strategies pursued by the group in relation to financial risk management are set out in this note and on
pages 88 and 89 of the accounting policies. In summary, the group’s tax and treasury committee normally meets twice a year and is responsible for
recommending policy to the board. The group’s treasury policies are directed to giving greater certainty of future costs and revenues and ensuring that
the group has adequate liquidity for working capital and debt capacity for funding acquisitions.
The treasury department does not act as a profit centre, nor does it undertake any speculative trading activity and it operates within policies and
procedures approved by the board.
Interest rate swaps are used to manage the group’s exposure to fluctuations in interest rates on its floating rate borrowings. Further details are set out
in the interest rate risk section on page 116.
Forward contracts are used to manage the group’s exposure to fluctuations in exchange rate movements. Further details are set out in the foreign
exchange rate risk section (page 114).
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18 FiNANCiAl iNsTRumeNTs ANd Risk m ANAgemeNT continued
Capital risk management
The group manages its capital to ensure that entities in the group will be able to continue as a going concern while maximising the return to
stakeholders through the optimisation of the debt and equity balance. The group’s overall strategy remains unchanged from 2014.
The capital structure of the group consists of debt, which includes the borrowings disclosed in note 19, cash deposits with Daily Mail and General Trust
plc (DMGT) group disclosed in note 28, cash and cash equivalents and equity attributable to equity holders of the parent, comprising share capital,
reserves and retained earnings as disclosed in the Statement of Changes in Equity.
Net cash/debt to EBITDA* ratio
The group’s tax and treasury committee reviews the group’s capital structure at least twice a year. As part of the debt covenants under the loan facility
provided by DMGT, the board must ensure net debt to a rolling 12 month EBITDA do not exceed three times. During the financial year ended September
30 2015 the net debt to rolling 12 month EBITDA did not breach the DMGT debt covenant. The DMGT loan was repaid in full in September 2015. The
group expects to be able to remain within these limits during the life of the facility. The net cash/debt to EBITDA covenant is defined to allow the rate
used in the translation of US dollar EBITDA, including hedging contracts, to be used also in the calculation of net debt, thereby removing any distortion
to the covenant from increases in net debt due to short-term movements in the US dollar.
On November 13 2013, the group signed a US$160m multi-currency replacement facility with DMGT that provides access to funds, should the group
require it during the period to April 2016. The facility requires the group’s net debt to EBITDA to be no more than three times.
On August 3 2015, the group entered into a deposit agreement with DMGT to place excess operating funds on deposit with DMGT at a LIBID plus
0.5%. The total cash deposit held with DMGT is disclosed in note 28. The increase in cash position has converted the historical net debt into a net cash
position.
The net cash/(debt) to EBITDA* ratio at September 30 is as follows:
Committed loan facility (at weighted average exchange rate)
Loan notes
total debt
Cash deposit
Cash and cash equivalents, net of bank overdrafts
Net cash/(debt)
eBitdA
Net (cash)/debt to eBitdA ratio
2015
£000
–
(267)
(267)
9,799
8,148
17,680
114,482
(0.15)
2014
£000
(45,403)
(490)
(45,893)
–
8,571
(37,322)
122,576
0.30
* EBITDA (Earnings before interest, tax, depreciation, amortisation) = adjusted operating profit before depreciation and amortisation of licences and software, adjusted for
the timing impact of acquisitions and disposals.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 114
Notes to the Consolidated Financial Statements
continued
18 FiNANCiAl iNsTRumeNTs ANd Risk m ANAgemeNT continued
Categories of financial instruments
The group’s financial assets and liabilities at September 30 are as follows:
financial assets
Derivative instruments in designated hedge accounting relationships
Deferred consideration (note 24)
Loans and receivables (including cash at bank and short-term deposits)
financial liabilities
Derivative instruments in designated hedge accounting relationships
Acquisition commitments (note 24)
Deferred consideration (note 24) (Level 3)
Loans and payables (including bank overdrafts)
2015
£000
1,322
589
94,623
96,534
(4,007)
(9,171)
–
(80,762)
(93,940)
2014
£000
2,790
1,886
67,906
72,582
(1,707)
(13,365)
(10,389)
(120,138)
(145,599)
The fair value of the financial assets and liabilities above are classified as level 2 in the fair value hierarchy other than deferred consideration which is
classified as level 3 (page 119). The directors consider that the carrying value amounts of financial assets and liabilities are equal to their fair value.
The group has derivative assets of £1.3m (2014: £2.8m) and derivative liabilities of £4.0m (2014: £1.7m) with a number of banks that do not meet the
offsetting criteria of IAS 32, but which the group has the right to setoff same currency cash flows settled on the same date. Consequently, the gross
amount of the derivative assets and the gross amount of the derivative liabilities are presented separately in the group’s Statement of Financial Position.
The group has entered into an omnibus guarantee and setoff agreement with Lloyds Banking Group plc with a right to setoff outstanding credit
balances against cash balances. Gross assets of £10.4m (2014: £10.3m) and gross liabilities of £2.3m (2014: £1.8m) under this agreement meet the
offsetting criteria of IAS 32 are setoff, resulting in the presentation of a net derivative asset of £8.1m (2014: £8.6m) in the group’s Statement of Financial
Position.
i) Market price risk
Market price risk is the possibility that changes in currency exchange rates, interest rates or commodity prices will adversely affect the value of the
group’s financial assets, liabilities or expected future cash flows. The group’s primary market risks are interest rate fluctuations and exchange rate
movements. Derivatives are used to hedge or reduce the risks of interest rate and exchange rate movements and are not entered into unless such risks
exist. Derivatives used by the group for hedging a particular risk are not specialised and are generally available from numerous sources. The fair values
of interest rate swaps and forward exchange contracts are set out in this note and represent the value for which an asset could be sold or liability settled
between knowledgeable willing parties in an arm’s length transaction calculated using the market rates of interest and exchange at September 30 2015.
The group has no other material market price risks. Market risk exposures are measured using sensitivity analysis.
There has been no change to the group’s exposure to market risks or the manner in which it manages and measures the risks during the year.
ii) Foreign exchange rate risk
The group’s principal foreign exchange exposure is to US dollar. The group generates approximately two-thirds of its revenues in US dollars, including
approximately 30% of the revenues in its UK-based businesses, and approximately 60% of its operating profits are US dollar-denominated. The group is
therefore exposed to foreign exchange risk on the US dollar revenues in its UK businesses, the translation of results of foreign subsidiaries and external
loans as well as loans to foreign operations within the group where the denomination of the loan is not in the functional currency of the lender/
borrower.
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18 FiNANCiAl iNsTRumeNTs ANd Risk m ANAgemeNT continued
The carrying amounts of the group’s US dollar-denominated monetary assets and monetary liabilities at the reporting date are as follows:
US dollar
Assets
liabilities
2015
£000
78,404
2014
£000
2015
£000
2014
£000
77,011
(158,319)
(138,447)
Subsidiaries normally do not hedge transactions in foreign currencies into the functional currency of their own operations. However, at a group level,
a series of US dollar and euro forward contracts are put in place to sell forward surplus US dollars and euros so as to hedge 80% of the group’s UK
based US dollar and euro revenues for the coming 12 months and 50% of the group’s UK based US dollar and euro revenues for the subsequent six
months. The timing and value of these forward contracts is based on management’s estimate of its future US dollar and euro revenues over an 18 month
period and is regularly reviewed and revised with any changes in estimates resulting in either additional forward contracts being taken out or existing
contracts’ maturity dates being moved forward or back. If management materially underestimate the group’s future US dollar and euro denominated
revenues, this would lead to too few forward contracts being in place and the group being more exposed to swings in US dollar and euro to sterling
exchange rates. An overestimate of the group’s US dollar and euro denominated revenues would lead to associated costs in unwinding the excess
forward contracts. The group also has a significant operation in Canada whose revenues are mainly in US dollars. At a group level a series of US dollar
forward contracts is put in place up to 18 months forward to hedge the operation’s Canadian cost base. In addition, each subsidiary is encouraged to
invoice sales in its local functional currency where possible. Forward exchange contracts are gross settled at maturity.
Impact of 10% strengthening of sterling against US dollar
The following table details the group’s sensitivity to a 10% increase and decrease in sterling against US dollar. A 10% sensitivity has been determined
by the board as the sensitivity rate appropriate when reporting an estimated foreign currency risk internally and represents management’s assessment
of a reasonably possible change in foreign exchange rates at the reporting date.
The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a
10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the group where
the denomination of the loan is not in the functional currency of the lender/borrower. Where sterling strengthens 10% against the relevant currency
a negative number below indicates a decrease in profit and equity. For a 10% weakening of sterling against the relevant currency, there would be an
equal and opposite impact on the profit and other comprehensive income, and the balances below would be positive.
Change in profit for the year in Income Statement (US$ net assets in UK companies)
Change in other comprehensive income (derivative financial instruments)
Change in other comprehensive income (external loans and loans to foreign operations)
2015
£000
(892)
8,184
12,466
2014
£000
(583)
6,819
10,350
The increase in the loss from the sensitivity analysis is due to a decrease in the working capital assets. The increase in other comprehensive income from
£6.8m to £8.2m from the sensitivity analysis is due to the increase of the value of the derivative financial assets.
The group is also exposed to the translation of the results of its US dollar-denominated businesses, although the group does not hedge the translation
of these results. Consequently, fluctuations in the value of sterling versus other currencies could materially affect the translation of these results in the
consolidated financial statements.
The change in other comprehensive income from a 10% change in sterling against US dollars in relation to the translation of external loans and loans
to foreign operations within the group where the denomination of the loan is not in the functional currency of the lender/borrower would result in a
change of £12.5m (2014: £10.4m). However, the change in other comprehensive income is completely offset by the change in value of the foreign
operation’s net assets from their translation into sterling.
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Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 116
Notes to the Consolidated Financial Statements
continued
18 FiNANCiAl iNsTRumeNTs ANd Risk m ANAgemeNT continued
Forward foreign exchange contracts
It is the policy of the group to enter into forward foreign exchange contracts to cover specific foreign currency payments and receipts. A series of US
dollar and euro forward contracts are put in place to sell forward surplus US dollars and euros so as to hedge 80% of the group’s UK based US dollar
and euro revenues for the coming 12 months and 50% of the group’s UK based US dollar and euro revenues for the subsequent six months. In addition,
at a group level a series of US dollar forward contracts is put in place up to 18 months forward to hedge the subsidiary’s Canadian cost base.
Average exchange rate
2014
2015
foreign currency
2015
us$000
2014
US$000
contract value
2015
£000
2014
£000
fair value
2015
£000
2014
£000
cash flow hedges
sell usd buy GBP
Less than a year
More than a year but less
than two years
sell usd buy cAd†
Less than a year
More than a year but less
than two years
sell eur buy GBP
Less than a year
More than a year but less
than two years
1.564
1.623
86,574
80,500
55,362
49,591
(1,829)
1.543
1.653
28,800
20,800
18,671
12,584
(359)
(229)
(308)
1.181
1.081
15,793
15,863
9,215
9,461
(1,214)
(374)
1.303
1.102
4,900
4,450
3,154
2,707
(84)
(69)
€000
€000
£000
£000
£000
£000
1.296
1.189
34,800
32,600
26,858
27,408
1,009
1,880
1.370
1.245
12,300
12,000
8,979
9,636
(208)
170
† Rate used for conversion from CAD to GBP is 2.0239 (2014: 1.8117).
As at September 30 2015, the aggregate amount of unrealised gains under forward foreign exchange contracts deferred in the fair value reserve
relating to future revenue transactions is £2.7m (2014: gains £1.1m). It is anticipated that the transactions will take place over the next 18 months at
which stage the amount deferred in equity will be released to the Income Statement. As at September 30 2015, there were no ineffective cash flow
hedges in place at the year end (2014: £nil).
iii) Interest rate risk
The group’s borrowings are in both sterling and US dollars with the related interest tied to LIBOR. This results in the group’s interest charge being at risk
to fluctuations in interest rates. It is the group’s policy to hedge approximately 80% of its interest exposure, converting its floating rate debt into fixed
debt by means of interest rate swaps. The maturity dates are spread in order to avoid interest rate basis risk and also to negate short-term changes in
interest rates. The predictability of interest costs is deemed to be more important than the possible opportunity cost forgone of achieving lower interest
rates and this hedging strategy has the effect of spreading the group’s exposure to fluctuations arising from changes in interest rates and hence protects
the group’s interest charge against sudden increases in rates but also prevents the group from benefiting immediately from falls in rates.
As at September 30 2015, there were no interest rate swaps outstanding as the group had repaid its debt in full (2014: £nil).
The group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk section on page 117.
Interest rate sensitivity analysis
The sensitivity analysis has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the balance
sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding
for the whole year. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and
represents the directors’ assessment of a reasonably possible change in interest rates at the reporting date.
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18 FiNANCiAl iNsTRumeNTs ANd Risk m ANAgemeNT continued
If interest rates had been 100 basis points higher or lower and all other variables were held constant, the group’s profit for the year ended September
30 2015 would decrease or increase by £0.1m (2014: £0.4m). This is mainly attributable to the group’s exposure to interest rates on its variable rate
borrowings and decrease in loan payable to DMGT with the eventual repayment of loan at September 2015.
iv) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the group. The group seeks to
limit interest rate and foreign currency risks described above by the use of financial instruments and as a result have a credit risk from the potential
non-performance by the counterparties to these financial instruments, which are unsecured. The amount of this credit risk is normally restricted to the
amounts of any hedge gain and not the principal amount being hedged. The group also has a credit exposure to counterparties for the full principal
amount of cash and cash equivalents and cash on deposit with DMGT. Credit risks are controlled by monitoring the amounts outstanding with, and
the credit quality of, these counterparties. For the group’s cash and cash equivalents these are principally licensed commercial banks and investment
banks with strong long-term credit ratings, and for cash on deposit and derivative financial instruments with DMGT who have treasury policies in place
which do not allow concentrations of risk with individual counterparties and do not allow significant treasury exposures with counterparties which are
rated lower than AA.
The group also has credit risk with respect to trade and other receivables, prepayments and accrued income. The concentration of credit risk from trade
receivables is limited due to the group’s large and broad customer base. Trade receivable exposures are managed locally in the business units where they
arise. Allowance is made for bad and doubtful debts based on management’s assessment of the risk of non-payment taking into account the ageing
profile, experience and circumstance.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, recorded
in the Statement of Financial Position. The group does not have any significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics. The group defines counterparties as having similar characteristics if they are related entities. Concentration
of credit risk did not exceed 5% of gross monetary assets at any time during the year.
v) Liquidity risk
The group is an approved borrower under a DMGT US$160m dedicated multi-currency facility which expires at the end of April 2016.
The DMGT loan facility requires the group to meet certain covenants based on net debt and profits adjusted for certain non-cash items and the impact
of foreign exchange. Exceeding the covenant would result in the group being in breach of the facility potentially resulting in the facility being withdrawn
or impediment of management decision making by the lender. Management regularly monitors the covenants and prepares detailed cash flow forecasts
to ensure that sufficient headroom is available and that the covenants are not close or potentially close to breach. At September 30 2015, the group’s
net cash to adjusted EBITDA was (0.15) times.
In August 2015, the group entered into a deposit agreement with DMGT to place any excess operating funds on deposit with DMGT at a LIBID plus
0.5%.
The group’s strategy is to use excess operating cash to deposit with DMGT or pay down its debt. As at September 2015, the group repaid the multi-
currency borrowing facility with DMGT in full. The group generally has an annual cash conversion rate (the percentage by which cash generated from
operations covers operating profit before acquired intangible amortisation, long-term incentive expense and exceptional items) of 100% or more due
to much of its subscription, sponsorship and delegate revenue being paid in advance. The group’s operating cash conversion rate was 105%. The
underlying operating cash conversion rate is 101% compared to 100% in 2014.
There is a risk that the undrawn portion of the facility, or that the additional funding, may be unavailable or withdrawn if DMGT experience funding
difficulties themselves. However, if DMGT were unable to fulfil its funding commitment to the group, the directors are confident that the group would
be in a position to secure adequate external facilities, although at a higher cost of funding.
This table has been drawn up based on the undiscounted contractual cash flows of the financial liabilities including both interest and principal cash
flows. To the extent that the interest rates are floating, the undiscounted amount is derived from interest rate curves at September 30 2015. The
contractual maturity is based on the earliest date on which the group may be required to settle.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 118
Notes to the Consolidated Financial Statements
continued
18 FiNANCiAl iNsTRumeNTs ANd Risk m ANAgemeNT continued
2015
Variable rate borrowings
Acquisition commitments
Non-interest bearing liabilities (trade and other payables, and accruals)
2014
Variable rate borrowings
Acquisition commitments
Deferred consideration
Non-interest bearing liabilities (trade and other payables, and accruals)
weighted
average
effective
interest rate
%
less than
1 year
£000
1–3 years
£000
3.08
–
–
267
–
80,495
80,762
–
9,171
–
9,171
total
£000
267
9,171
80,495
89,933
Weighted
average
effective
interest rate
%
2.67
–
–
–
Less than
1 year
£000
490
2,088
10,389
73,505
86,472
1–3 years
£000
Total
£000
45,677
11,277
–
466
57,420
46,167
13,365
10,389
73,971
143,892
During September 2015 the committed facility with DMGT group was repaid and at September 30 2015, the group placed £1.2m of deposits (2014:
£37.8m of borrowings designated) in US dollars with the remainder in sterling. The average rate of interest paid on the debt during the year was 4.32%
(2014: 3.42%).
The following table details the group’s remaining contractual maturity for its non-derivative financial assets, mainly short-term deposits for amounts on
loans owed by DMGT group undertakings and equity non-controlling interests. This table has been drawn up based on the undiscounted contractual
maturities of the financial assets including interest that will be earned on those assets except where the group anticipates that the cash flow will occur
in a different period.
2015
weighted
average
effective
interest rate
%
less than
1 year
£000
1–3 years
£000
Variable interest rate instruments (cash at bank and short-term deposits)
Deferred consideration
Non-interest bearing assets (trade and other receivables excluding prepayments)
3.16
–
–
2014
Weighted
average
effective
interest rate
%
Variable interest rate instruments (cash at bank)
Deferred consideration
Non-interest bearing assets (trade and other receivables excluding prepayments)
1.65
–
–
18,688
331
75,935
94,954
Less than
1 year
£000
8,571
354
59,335
68,260
–
258
–
258
1–3 years
£000
–
1,532
–
1,532
total
£000
18,688
589
75,935
95,212
Total
£000
8,571
1,886
59,335
69,792
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EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 119
18 FiNANCiAl iNsTRumeNTs ANd Risk m ANAgemeNT continued
The following table details the group’s liquidity analysis for its derivative financial instruments. The table has been drawn up based on the undiscounted
gross inflows and (outflows) on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount
disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves existing at the reporting date.
2015
Foreign exchange forward contracts inflows
Foreign exchange forward contracts outflows
2014
Foreign exchange forward contracts inflows
Foreign exchange forward contracts outflows
less than
1 month
£000
8,212
(8,375)
(163)
Less than
1 month
£000
7,463
(7,085)
378
1–3
months
£000
14,754
(15,342)
(588)
1–3
months
£000
14,515
(14,001)
514
3 months
to 1 year
£000
68,469
(69,717)
(1,248)
3 months
to 1 year
£000
65,983
(65,235)
748
1–5
years
£000
total
£000
30,808
(31,383)
(575)
122,243
(124,817)
(2,574)
1–5
years
£000
Total
£000
23,426
(23,445)
(19)
111,387
(109,766)
1,621
Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined as follows:
Level 1
●● The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets is determined with
reference to quoted market prices.
Level 2
●● The fair value of other financial assets and financial liabilities (excluding derivative instruments) is determined in accordance with generally accepted
pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar
instruments.
●● Foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching
maturities of the contracts.
●● Interest rate swaps are measured at the present value of future cash flows estimated and discounted based on the applicable yield curves derived
from quoted interest rates.
Level 3
●● If one or more significant inputs are not based on observable market date, the instrument is included in level 3.
As at September 30 2015 and the prior year, all the resulting fair value estimates have been included in level 2 other than the group’s acquisition
commitments and deferred consideration which are classified as level 3.
Other financial instruments not recorded at fair value
The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements
approximate their fair values. Such financial assets and financial liabilities include cash and cash equivalents, receivables, payables and loans.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 120
Notes to the Consolidated Financial Statements
continued
19 loANs
Loan notes – current liabilities
Committed loan facility – non-current liabilities
2015
£000
267
–
2014
£000
490
45,677
Loan notes
Loan notes were issued in October and November 2006 to fund the purchase of Metal Bulletin plc. Interest is payable on these loan notes at a variable
rate of 0.75% below LIBOR, payable in June and December. Loan notes can be redeemed at the option of the loan note holder twice a year on the
interest payment dates above. At least 20 business days’ written notice prior to the redemption date is required. During the year ended September 30
2015 £0.2m (2014: £0.5m) of these loan notes were redeemed.
Committed loan facility
The group’s debt is provided through a dedicated multi-currency borrowing facility from Daily Mail and General Trust plc (DMGT). The total maximum
borrowing capacity is US$160m (£106m) facility which expires at the end of April 2016. Interest is payable on this facility at a variable rate of between
1.35% and 2.35% above LIBOR dependent on the ratio of adjusted net debt to EBITDA. The facility’s covenant requires the group’s net debt to be no
more than three times adjusted EBITDA on a rolling 12 month basis. Failure to do so would result in the group being in breach of the facility, potentially
resulting in the facility being withdrawn or impediment of management decision making by the lender. Management regularly monitors the covenant
and prepares detailed debt forecasts to ensure that sufficient headroom is available and that the covenants are not close or potentially close to breach.
At September 30 2015, the group’s net cash to adjusted EBITDA was (0.15) times and the committed undrawn facility available to the group was £106m
given the loan was paid in full.
In the absence of any significant acquisitions, the group has no pressing requirement to arrange new finance before the facility expires in April 2016 and
the group intends to replace it with a new borrowing facility, the amount and terms of which will depend on its expected borrowing requirements at
the time. There is a risk that the undrawn portion of the facility, or that the additional funding, may be unavailable or withdrawn if DMGT experiences
funding difficulties themselves. However, if DMGT were unable to fulfil its funding commitment to the group, the directors are confident that the group
would be in a position to secure adequate external facilities, although at a higher cost of funding.
The group’s strategy is to use excess operating cash to deposit with DMGT or pay down its debt. As at September 2015, the group repaid the multi-
currency borrowing facility with DMGT in full. The group generally has an annual cash conversion rate (the percentage by which cash generated from
operations covers operating profit before acquired intangible amortisation, long-term incentive expense and exceptional items) of 100% or more due
to much of its subscription, sponsorship and delegate revenue being paid in advance. The group’s operating cash conversion rate was 105%. The
underlying operating cash conversion rate is 101% compared to 100% in 2014.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 121
total
£000
4,868
693
(1,264)
(1,186)
69
3,180
2014
£000
2,164
463
2,241
4,868
onerous
lease
provision
£000
other
provisions
£000
1,929
–
(195)
(956)
62
840
2,939
693
(1,069)
(230)
7
2,340
2015
£000
835
–
2,345
3,180
20 PRoVisioNs
At October 1 2014
Provision in the year
Release in the year
Used in the year
Exchange differences
At september 30 2015
Maturity profile of provisions:
Within one year (included in current liabilities)
Between one and two years (included in non-current liabilities)
Between two and five years (included in non–current liabilities)
Onerous lease provision
The onerous lease provision relates to certain buildings within the property portfolio which either at acquisition were rented at non-market rates, or are
no longer occupied by the group.
Other provisions
The provision consists of social security arising on share option liabilities and dilapidations on leasehold properties.
21 deFeRRed TAxATioN
The net deferred tax liability at September 30 2015 comprised:
Capitalised goodwill and intangibles
Tax losses
Financial instruments
Other short-term temporary differences
deferred tax
comprising:
Deferred tax assets
Deferred tax liabilities
income
statement
£000
(303)
1,967
–
592
2,256
other
comprehensive
income
£000
–
–
581
(484)
97
equity
£000
(254)
–
–
(238)
(492)
exchange
differences
£000
(1,707)
165
–
378
(1,164)
2014
£000
(28,724)
2,130
(315)
7,808
(19,101)
–
(19,101)
(19,101)
2015
£000
(30,988)
4,262
266
8,056
(18,404)
20
(18,424)
(18,404)
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 122
Notes to the Consolidated Financial Statements
continued
21 deFeRRed TAxATioN continued
other short-term temporary differences:
Share-based payments
Pension deficit
Accelerated capital allowances
Deferred income, accruals and other provisions
total other short-term temporary differences
income
statement
£000
other
comprehensive
income
£000
equity
£000
exchange
differences
£000
(699)
(79)
593
777
592
–
(484)
–
–
(484)
(238)
–
–
–
(238)
–
–
–
378
378
2014
£000
950
956
669
5,233
7,808
2015
£000
13
393
1,262
6,388
8,056
At the balance sheet date, the group has unused US tax losses available for offset against future profits. At September 30 2015 a deferred tax asset of
£2.7m (2014: £2.1m) has been recognised in relation to these losses. The US losses can be carried forward for a period of 20 years from the date they
arose. The US losses have expiry dates between 2015 and 2030.
At the balance sheet date, the group has unused UK tax losses available for offset against future profits. At September 30 2015 a deferred tax asset of
£1.6m (2014: nil) has been recognised in relation to these losses. There is no expiry date on these losses.
The directors are of the opinion, that based on recent and forecast trading, it is probable that the level of profits in future years is sufficient to enable
the above assets to be recovered.
No deferred tax liability is recognised on temporary differences of £228.0m (2014: £181.0m) relating to the unremitted earnings of overseas subsidiaries
as the group is able to control the timing of the reversal of these temporary differences and it is probable that they will not reverse in the foreseeable
future. The temporary differences at September 30 2015 represent only the unremitted earnings of those overseas subsidiaries where remittance to
the UK of those earnings may still result in a tax liability, principally as a result of dividend withholding taxes levied by the overseas tax jurisdictions in
which these subsidiaries operate.
Under IFRS deferred tax is calculated at the tax rate that has been enacted or substantively enacted at the balance sheet date. Legislation was
substantively enacted in October 2015, after the balance sheet date, to reduce the main rate of UK corporation tax from 20% to 19% from April 1
2017 and for a further reduction from 19% to 18% from April 1 2020. If UK deferred tax balances were to be revalued at these rates the impact
would not be material.
22 CAlled uP shARe CAPiTAl
Allotted, called up and fully paid
128,248,894 ordinary shares of 0.25p each (2014: 128,133,417 ordinary shares of 0.25p each)
2015
£000
2014
£000
320
320
During the year, 115,477 ordinary shares of 0.25p each (2014: 1,676,093 ordinary shares) with an aggregate nominal value of £289 (2014: £4,191)
were issued following the exercise of share options granted under the company’s share option schemes for a cash consideration of £0.5m (2014:
£0.3m).
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 23 shARe-bAsed PAymeNTs
The group’s long-term incentive credit/(expense) at September 30 comprised:
equity-settled options
SAYE
CAP 2010
CAP 2014
cash-settled options
CAP 2010
CAP 2014
Structured Retail Products Limited
The total carrying value of cash-settled options at September 30 included in the Statement of Financial Position is:
Current liabilities
Non-current liabilities
123
2014
£000
(144)
165
(2,057)
(2,036)
183
(466)
(48)
(331)
(2,367)
2014
£000
147
466
613
2015
£000
(102)
34
2,057
1,989
35
466
–
501
2,490
2015
£000
71
–
71
Equity-settled options
The options set out on page 124 are outstanding at September 30 and are options to subscribe for new ordinary shares of 0.25p each in the company.
The total credit recognised in the year from equity-settled options was £2.0m, representing 80% of the group’s long-term incentive credit (2014: charge
£2.0m, 86%).
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 124
Notes to the Consolidated Financial Statements
continued
23 shARe-bAsed PAymeNTs continued
Number of ordinary shares under option: 2015
Period during which option may be exercised:
SAYE
Between February 1 2015 and July 31 2015
Between February 1 2016 and July 31 2016
Between February 1 2017 and July 31 2017
Between February 1 2018 and July 31 2018
CAP 2010
Before September 30 2020 (tranche 2)
CSOP 2010
Before February 14 2020 (UK)
CAP 2014
Before September 30 20231
CSOP 2014
Before September 30 2023 (UK)
Before September 30 2023 (Canada)
2014
106,243
53,851
60,523
–
55,421
279
2,097,363
400,512
116,519
2,890,711
Granted
during
year
exercised
during
year
lapsed/
forfeited
during
year
option
price
(£)
2015
weighted
average
market
price at
date of
exercise
(£)
–
–
–
152,917
(106,243)
(1,955)
(680)
–
–
(7,840)
(12,861)
(22,360)
–
44,056
46,982
130,557
4.97
6.39
9.17
8.15
10.43
11.24
10.99
–
(6,599)
(7,889)
40,933
0.0025
10.47
–
–
–
–
–
(279)
–
6.03
–
2,097,363
0.0025
–
–
152,917
–
–
(115,477)
–
–
400,512
116,519
(51,229) 2,876,922
11.16
11.16
The options outstanding at September 30 2015 had a weighted average exercise price of £2.62 and a weighted average remaining contractual life of
7.52 years.
Number of ordinary shares under option: 2014
Granted
during
year
Exercised
during
year
2013
Lapsed/
forfeited
during
year
Option
price
(£)
2014
Weighted
average
market
price at
date of
exercise
(£)
8,000
–
(8,000)
–
–
4.19
12.32
19,193
126,153
63,000
–
10,468
1,709,846
–
–
–
67,309
(18,238)
(4,273)
(187)
–
(955)
(15,637)
(8,962)
(6,786)
–
106,243
53,851
60,523
5.65
4.97
6.39
9.17
(10,468)
–
– (1,611,158)
–
(43,267)
–
55,421
0.0025
0.0025
12.63
11.74
11.06
–
12.48
12.48
24,048
–
(23,769)
–
2,097,363
–
–
–
2,097,363
0.0025
279
6.03
12.48
–
–
1,960,708
400,512
116,519
–
–
2,681,703 (1,676,093)
–
–
400,512
116,519
(75,607) 2,890,711
11.16
11.16
Period during which option may be exercised:
Executive options
Before January 28 2014
SAYE
Between February 1 2014 and July 31 2014
Between February 1 2015 and July 31 2015
Between February 1 2016 and July 31 2016
Between February 1 2017 and July 31 2017
CAP 2010
Before September 30 2020 (tranche 1)
Before September 30 2020 (tranche 2)
CSOP 2010
Before February 14 2020 (UK)
CAP 2014
Before September 30 20231
CSOP 2014
Before September 30 2023 (UK)
Before September 30 2023 (Canada)
–
–
–
–
–
–
–
The options outstanding at September 30 2014 had a weighted average exercise price of £2.49 and a weighted average remaining contractual life of
8.38 years.
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EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 125
23 shARe-bAsed PAymeNTs continued
1 The allocation of the number of options granted under each tranche of the CAP and CSOP UK and CSOP Canada represents the directors’ best
estimate. The CAP award is reduced by the number of options vesting under the respective CSOP schemes (see the Directors’ Remuneration Report
for further details).
Cash-settled options
The group has liabilities in respect of two share option schemes that are classified by IFRS 2 ‘Share-based Payments’ as cash-settled. These consist of the
cash element of the CAP 2010 and the CAP 2014 scheme.
Share Option Schemes
The company has three share option schemes for which an IFRS 2 ‘Share-based payments’ charge has been recognised. Details of these schemes are
set out in the Directors’ Remuneration Report on pages 60 to 62. The fair value per option granted and the assumptions used in the calculation are
shown below.
Save as You Earn (SAYE) options
date of grant
Market value at date of grant (p)
Option price (p)
Option life (years)
Expected term of option (grant to exercise (years))
Exercise price (p)
Risk-free rate
Dividend yield
Volatility
Fair value per option (£)
sAye
14
december 20
2012
15
december 12
2013
16
december 22
2014
798
639
3.5
3.0
639
0.53%
2.31%
27%
1.93
1,146
917
3.5
3.0
917
0.53%
2.50%
22%
2.42
1,019
815
3.5
3.0
815
0.61%
2.29%
24%
2.34
The SAYE options were valued using the Black–Scholes option-pricing model. Expected volatility was determined by calculating the historical volatility
of the group’s share price over a period of three years. The expected term of the option used in the model has been adjusted, based on management’s
best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
Capital Appreciation Plan (CAP) and Company Share Option Plan (CSOP)
date of grant
Market value at date of grant (p)
Option price (p)
Option life (years)
Expected term of option (grant to exercise (years))
Exercise price (p)
Risk-free rate
Dividend growth
Fair value per option (£)
cAP 2010
tranche 2
march 30
2010
501
0.25
10
5
0.25
2.75%
7.00%
4.20
tranche 1
June 20
2014
1,115.67
0.25
9.28
4
0.25
1.50%
8.43%
9.89
cAP 2014
tranche 2
June 20
2014
1,115.67
0.25
9.28
5
0.25
1.90%
8.43%
9.57
tranche 3
June 20
2014
1,115.67
0.25
9.28
6
0.25
2.30%
8.43%
9.19
csoP 2014
uK
June 20
2014
canada
June 20
2014
1,115.67
1,115.67
9.28
4
1115.67*
1.50%
8.43%
9.89
1,115.67
1,115.67
9.28
4
1115.67*
1.50%
8.43%
9.89
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 126
Notes to the Consolidated Financial Statements
continued
23 shARe-bAsed PAymeNTs continued
Each CAP award comprises two elements – an option to subscribe for ordinary shares of 0.25p each in the company at an exercise price of 0.25p per
ordinary share, and a right to receive a cash payment.
The CAP options were valued using a fair value model that adjusted the share price at the date of grant for the net present value of expected future
dividend streams up to the date of expected exercise. The expected term of the option used in the models has been adjusted, based on management’s
best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
The number of CSOP 2014 awards that vest proportionally reduce the number of shares that vest under the CAP 2014 respectively. The CSOP is
effectively a delivery mechanism for part of the CAP award. The CSOP 2014 options have an exercise price of £11.16, which will be satisfied by a
funding award mechanism which results in the same net gain1 on these options delivered in the equivalent number of shares to participants as if the
same award had been delivered using 0.25 pence CAP options. The amount of the funding award will depend on the company’s share price at the date
of vesting. Because of the above and the other direct links between the CSOP 2014 and the CAP 2014, including the identical performance criteria,
IFRS 2 ‘Share based payments’ combines the two plans and treats them as one plan.
1 Net gain on the CSOP options is the market price of the company’s shares at the date of exercise less the exercise price multiplied by the number of options exercised.
* Exercise price excludes the effect of the funding award.
24 ACquisiTioN CommiTmeNTs ANd deFeRRed CoNsideRATioN
The group is party to contingent consideration arrangements in the form of both acquisition commitments and deferred consideration payments. The
group recognises the discounted present value of the contingent consideration. This discount is unwound as a notional interest charge to the Income
Statement. The group regularly performs a review of the underlying businesses to assess the impact on the fair value of the contingent consideration.
Any resultant change in these fair values is reported as a finance income or expense in the Income Statement.
At October 1
Reduction from disposals during the year
Net movements in finance income and expense during the year (note 7)
Exercise of commitments
Paid during the year
Exchange differences to reserves
At september 30
Acquisition commitments
deferred consideration
2015
£000
13,365
–
(4,748)
(109)
–
663
9,171
2014
£000
15,037
–
(1,298)
(247)
(111)
(16)
13,365
2015
£000
8,503
(269)
2,851
–
(11,558)
(116)
(589)
2014
£000
11,646
(2,214)
1,873
–
(2,738)
(64)
8,503
Included in the movements of acquisition commitments and deferred consideration are fair value adjustments of £3.5m and £1.7m respectively for CIE
(for further detail see note 2).
Exchange differences to reserves were recorded within net exchange differences on translation of net investments in overseas subsidiary undertakings
in the Statement of Comprehensive Income.
Reconciliation of finance income and expense (note 7):
Fair value adjustment during the year
Imputed interest
Net movements in finance income and expense during the year
Acquisition commitments
deferred consideration
2015
£000
(5,727)
979
(4,748)
2014
£000
(2,682)
1,384
(1,298)
2015
£000
2,617
234
2,851
2014
£000
800
1,073
1,873
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EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 127
24 ACquisiTioN CommiTmeNTs ANd deFeRRed CoNsideRATioN continued
Maturity profile of contingent consideration:
Assets
Within one year (included in current assets)
In more than one year (included in non-current assets)
liabilities
Within one year (included in current liabilities)
In more than one year (included in non-current liabilities)
Net liabilities/(assets)
Acquisition commitments
deferred consideration
2015
£000
2014
£000
2015
£000
2014
£000
–
–
–
–
9,171
9,171
9,171
–
–
–
2,088
11,277
13,365
13,365
(331)
(258)
(589)
–
–
–
(589)
(354)
(1,532)
(1,886)
10,389
–
10,389
8,503
There is a deferred tax asset of £nil (2014: £40,000) related to the acquisition commitments.
The value of the acquisition commitments and deferred consideration is subject to a number of assumptions. The potential undiscounted amount of all
future payments that the group could be required to make under the acquisition contingent consideration arrangements is as follows:
NDR
Insider Publishing
TTI/Vanguard
CIE
2015
2014
maximum
£000
minimum
£000
Maximum
£000
Minimum
£000
40,121
–
–
–
40,121
–
–
–
–
–
37,404
11,653
4,026
5,582
58,665
–
–
–
–
–
The potential undiscounted amount of all future receipts that the group could receive under the disposal contingent consideration arrangement is as
follows:
MIS Training
II Newsletters
2015
2014
maximum
£000
minimum
£000
Maximum
£000
Minimum
£000
330
258
–
–
3,466
–
–
–
The discounted acquisition commitment and deferred consideration are based on pre-determined multiples of future profits of the businesses, and have
been estimated on an acquisition-by-acquisition basis using available performance forecasts. The directors derive their estimates from internal business
plans and financial due diligence. At September 30 2015, the weighted average growth rates used in estimating the expected profits range was 23%.
A one percentage point increase or decrease in growth rate in estimating the expected profits, results in the acquisition commitment at September
30 2015 increasing or decreasing by £0.1m with the corresponding change to the value at September 30 2015 charged to the Income Statement in
future periods.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 128
Notes to the Consolidated Financial Statements
continued
25 oPeRATiNg leAse CommiTmeNTs
At September 30 the group had committed to make the following payments in respect of operating leases on land and buildings:
Within one year
Between two and five years
After five years
2015
£000
6,749
19,671
26,388
52,808
2014
£000
9,804
21,558
26,810
58,172
The group’s operating leases do not include any significant leasing terms or conditions.
At September 30 the group had contracted with tenants to receive the following payments in respect of operating leases on land and buildings:
Within one year
Between two and five years
After five years
2015
£000
1,614
2,882
1,114
5,610
2014
£000
1,195
2,646
–
3,841
26 ReTiRemeNT beNeFiT sChemes
Defined contribution schemes
The group operates the following defined contribution schemes: DMGT PensionSaver and the Metal Bulletin Group Personal Pension Plan in the UK and
the 401(k) savings and investment plan in the US. It also participates in the Harmsworth Pension Scheme, a defined benefit scheme which is operated
by Daily Mail and General Trust plc (DMGT) but is accounted for in Euromoney Institutional Investor PLC as a defined contribution scheme.
In compliance with legislation the group operates a defined contribution plan, DMGT PensionSaver, into which relevant employees are automatically
enrolled.
The pension charge in respect of defined contribution schemes for the year ended September 30 comprised:
DMGT Pension Plan/PensionSaver
Metal Bulletin Group Personal Pension Plan
Private schemes
Harmsworth Pension Scheme
2015
£000
1,991
16
1,020
89
3,116
2014
£000
1,780
15
967
90
2,852
Euromoney PensionSaver and Euromoney Pension Plan
During the year the Euromoney PensionSaver was amalgamated into the “DMGT PensionSaver” together with other DMGT group PensionSaver
arrangements. DMGT PensionSaver is a group personal pension plan and is the principal pension arrangement offered to employees of the group.
Contributions are paid by the employer and employees. Employees are able to contribute a minimum of 2% of salary with an equal company
contribution in the first three years of employment and thereafter at twice the employee contribution rate, up to a maximum employer contribution
of 10% of salary. Assets are invested in funds selected by members and held independently from the company’s finances. The investment and
administration is undertaken by Fidelity Pension Management.
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26 ReTiRemeNT beNeFiT sChemes continued
The Euromoney Pension Plan was part of the DMGT Pension Trust, an umbrella trust under which DMGT UK trust-based defined contribution plans
were held. The benefits for all members of this scheme were transferred to individual policies held in the member’s own name during 2014. This process
was completed in November 2014 and the scheme was formally wound up. Insured death benefits previously held under this trust have also been
transferred to a new trust-based arrangement specifically for life assurance purposes.
Metal Bulletin Group Personal Pension Plan
The Metal Bulletin Group Personal Pension Plan is a defined contribution arrangement under which contributions are paid by the employer and
employees. The scheme is closed to new members.
The plan’s assets are invested under trust in funds selected by members and held independently from the company’s finances. The investment and
administration of the plan is undertaken by Skandia Life Group.
Private schemes
Institutional Investor LLC contributes to a 401(k) savings and investment plan for its employees which is administered by an independent investment
provider. Employees are able to contribute up to 50% of salary (maximum of US$52,000 a year) with the company matching up to 50% of the
employee contributions, up to 6% of salary.
Harmsworth Pension Scheme
The Harmsworth Pension Scheme is a defined benefit scheme operated by DMGT. The scheme is closed to new entrants. Existing members still in
employment can continue to accrue benefits in the scheme on a cash balance basis, with members building up a retirement account that they can use
to buy an annuity from an insurance company at retirement.
Full actuarial valuations of the defined benefit schemes are carried out triennially by the Scheme Actuary. As a result of the valuations of the main
schemes as at March 31 2013, DMGT makes annual contributions of 12% or 18% of members’ basic pay (depending on membership section). In
addition, in accordance with the agreed recovery plan, DMGT made payments of £23.2m in the year to September 30 2015. In February 2014 DMGT
agreed with the trustees that should it continue its share buy-back programme it would make payments to the schemes amounting to 20% of the value
of shares bought back. Contributions of £14.4m relating to this agreement were made in the year to September 30 2015.
DMGT enabled the trustee of the scheme to acquire a beneficial interest in a Limited Partnership investment vehicle (LP). The LP was designed to
facilitate payment of part of the deficit funding payments described above over a period of 15 years to 2026. In addition, the LP is required to make
a final payment to the scheme of £150.0m or the funding deficit within the scheme on an ongoing actuarial valuation basis at the end of the 15 year
period if this is less. For funding purposes, the interest held by the trustee in the LP is treated as an asset of the scheme and reduces the actuarial deficit
within the scheme. However, under IAS 19 ‘Employee Benefits’ the LP is not included as an asset of the scheme and therefore is not included in the
calculation of the deficit.
The group is unable to identify its share of the underlying assets and liabilities in the Harmsworth Pension Scheme. The scheme is operated on an
aggregate basis with no segregation of the assets to individual participating employers and, therefore, the same contribution rate is charged to all
participating employers (i.e. the contribution rate charged to each employer is affected by the experience of the schemes as a whole). The scheme is
therefore accounted for as a defined contribution scheme by the group. This means that the pension charge reported in these financial statements is
the same as the cash contributions due in the period. The group’s pension charge for the Harmsworth Pension Scheme for the year ended September
30 2015 was £89,000 (2014: £90,000). The expected cash contribution for the year to September 30 2016 is £70,000. There are six active Euromoney
members in the scheme, out of a total of 728 active members.
DMGT is required to account for the Harmsworth Pension Scheme under IAS 19. The IAS 19 disclosures in the Annual Report and Accounts of DMGT
have been based on the formal valuation of the scheme as at March 31 2013, and adjusted to September 30 2015 taking account of membership data
at that date. The calculations are adjusted to allow for the assumptions and actuarial methodology required by IAS 19. These showed that the market
value of the scheme’s assets was £1,915.3m (2014: £1,820.5m) and that the actuarial value of these assets represented 91.6% (2014: 90.0%) of the
benefits that had accrued to members (also calculated in accordance with IAS 19).
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 130
Notes to the Consolidated Financial Statements
continued
26 ReTiRemeNT beNeFiT sChemes continued
Defined benefit scheme
Metal Bulletin Pension Scheme
The company operates the Metal Bulletin plc Pension Scheme (MBPS), a defined benefit scheme which is closed to new entrants.
A reconciliation of the net pension deficit reported in the Statement of Financial Position is shown in the following table:
Present value of defined benefit obligation
Fair value of plan assets
deficit reported in the statement of financial Position
The deficit for the year excludes a related deferred tax asset of £0.4m (2014: asset £1.0m).
The movements in the defined benefit liability over the year is as follows:
2015
At September 30 2014
Current service cost
Interest (expense)/income
total charge recognised in income statement
Remeasurements:
Return on plan assets, excluding amounts in interest expense/income
Gain due to change in demographic assumptions
Gain due to change in financial assumptions
total gains/(losses) recognised in statement of comprehensive income
Contributions - employers
Payments from the plans – benefit payments
At september 30 2015
2015
£000
(34,452)
32,479
(1,973)
2014
£000
(36,218)
31,431
(4,787)
Present
value of
obligation
2015
£000
fair value of
plan assets
2015
£000
Net defined
benefit
liability
2015
£000
(36,218)
31,431
(4,787)
(57)
(1,363)
(1,420)
–
2,447
19
2,466
–
720
–
1,193
1,193
(45)
–
–
(45)
620
(720)
(57)
(170)
(227)
(45)
2,447
19
2,421
620
–
(34,452)
32,479
(1,973)
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 131
Present
value of
obligation
2014
£000
Fair value of
plan assets
2014
£000
Net defined
benefit
liability
2014
£000
(32,702)
29,819
(2,883)
(55)
(1,380)
(1,435)
–
(774)
(3,184)
298
(3,660)
–
(12)
1,591
(36,218)
–
1,260
1,260
1,363
–
–
–
1,363
568
12
(1,591)
31,431
2015
£000
10,853
18,923
2,567
136
32,479
(55)
(120)
(175)
1,363
(774)
(3,184)
298
(2,297)
568
–
–
(4,787)
2014
£000
9,117
19,977
2,050
287
31,431
26 ReTiRemeNT beNeFiT sChemes continued
2014
At September 30 2013
Current service cost
Interest (expense)/income
total charge recognised in income statement
Remeasurements:
Return on plan assets, excluding amounts in interest expense/income
Loss from changes in demographic assumptions
Loss from changes in financial assumptions
Experience gain
total (losses)/gains recognised in statement of comprehensive income
Contributions – employers
Contributions – plan participants
Payments from the plans – benefit payments
At september 30 2014
The major categories and fair values of plan assets are as follows:
Equities
Bonds
With profits policy
Cash and cash equivalents
All the assets listed above excluding cash and cash equivalents have a quoted market price in an active market. The assets do not include any of the
group’s own financial instruments nor any property occupied by, or other assets used by, the group. The actual return on plan assets was £1.1m (2014:
£2.6m).
The figures in this note are based on calculations carried out in connection with the actuarial valuation of the scheme as at June 1 2013 adjusted to
September 30 2015 by the actuary. The key financial assumptions adopted are as follows:
Discount rate
Inflation
Salary growth rate
Pension increase in deferment
Pension increases in payment:
– Pensions earned from June 1 2002 to June 30 2006
– Pensions earned from July 1 2006
2015
2014
3.7% p.a.
2.95% p.a.
2.5% p.a.
2.8% p.a.
3.8% p.a.
3.3% p.a.
2.5% p.a.
3.3% p.a.
2.8% p.a.
2.8% p.a.
3.3% p.a.
2.5% p.a.
The discount rate for scheme liabilities reflects yields at the balance sheet date on high quality corporate bonds. All assumptions were selected after
taking actuarial advice.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 132
Notes to the Consolidated Financial Statements
continued
26 ReTiRemeNT beNeFiT sChemes continued
The average duration of the defined benefit obligation at the end of the year is approximately 21 years (2014: 21 years).
Assumed life expectancy in years, on retirement at 62
2015
2014
Retiring at the end of the reporting year:
Males
Females
Retiring 20 years after the end of the reporting year:
Males
Females
25.1
26.9
27.3
29.2
26.3
28.6
29.6
31.9
Pension costs and the size of any pension surplus or deficit are sensitive to the assumptions adopted. The sensitivity of the defined obligation to changes
in the weighted principal assumptions is:
Assumption
Discount rate
Rate of inflation
Rate of salary growth
Life expectancy
change in
assumption
change in
liabilities
increase by 0.1%
decrease by 2.0%
increase by 0.1%
increase by 0.5%
increase by 0.25%
increase by 0.1%
increase by one year
increase by 3.0%
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice it is unlikely to occur,
and changes in some of the assumptions may be correlated. The sensitivity of the defined benefit obligation to significant actuarial assumptions has
been estimated by projecting the results of the last full actuarial valuation as at June 1 2013 forward to September 30 2015.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.
Through the MBPS, the group is exposed to a number of risks, the most significant of which are detailed below:
Asset volatility
The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets underperform this yield, this will create
a deficit. The actual investment strategy adopted by the trustees is not to be fully invested in corporate bonds and holds a significant proportion of
equities which are expected to outperform corporate bonds in the long term while providing volatility and risk in the short term. As the plans mature,
the group tends to reduce the level of investment risk by investing more in assets that better match the liabilities.
Changes in bond yields
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value in the plans’ bond
holdings.
Inflation risk
A significant proportion of the defined benefit obligation is linked to inflation; therefore, higher inflation will result in a higher defined benefit obligation
(subject to the appropriate caps in place). The majority of the plan’s assets are either unaffected by inflation or only loosely correlated with inflation,
meaning that an increase in inflation will also decrease the deficit.
Salary risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of
the plan participants will increase the plan’s liabilities.
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26 ReTiRemeNT beNeFiT sChemes continued
Life expectancy
The present value of the defined pension plan liability is calculated by reference to the best estimate of the mortality of plan participants both during
and after their employment. An increase in life expectancy will increase the plan’s liabilities.
A full actuarial valuation of the defined benefit scheme is carried out triennially by the Scheme Actuary. The latest valuation of the MBPS was completed
as at June 1 2013. As a result of the valuation, the company agreed to make annual contributions of 38.9% per annum of pensionable salaries, plus
£42,400 per month to the scheme. The next triennial is due to be completed as at June 1 2016. The group considers that the contributions set at the
last valuation date are sufficient to eliminate the deficit and that regular contributions, which are based on service costs, will not increase significantly.
The group expects to contribute approximately £0.5m (2014: expected contribution in 2015 of £0.5m) to the MBPS during the 2016 financial year.
Expected maturity analysis of discounted pension benefits:
term to retirement
Pensioners
within
1 year
Between
1 and 2 years
Between
2 and 5 years
over
5 years
Proportion of total liabilities (funding basis)
55.7%
0.6%
5.0%
8.0%
30.7%
27 CoNTiNgeNT liAbiliTies
Claims in Malaysia
Four writs claiming damages for libel were issued in Malaysia against the company and three of its employees in respect of an article published in one
of the company’s magazines, International Commercial Litigation, in November 1995. The writs were served on the company on October 22 1996.
Two of these writs have been discontinued. The total outstanding amount claimed on the two remaining writs is Malaysian ringgit 82.6m (£12.4m). No
provision has been made for these claims in these financial statements as the directors do not believe the company has any material liability in respect
of these writs.
28 RelATed PARTy TRANsACTioNs
The group has taken advantage of the exemption allowed under IAS 24 ‘Related Party Disclosures’ not to disclose transactions and balances between
group companies that have been eliminated on consolidation. Other related party transactions and balances are detailed below:
i.
The group had borrowings under a US$160m multi-currency facility with Daily Mail and General Holdings Limited (DMGH), a Daily Mail and
General Trust plc (DMGT) group company, as follows:
2015
us$000
2015
£000
2014
US$000
2014
£000
38,543
7,895
(761)
45,677
–
–
–
–
62,486
–
(1,234)
61,252
733
–
417
Amounts owing under US$ facility at September 30
Amounts owing under GBP facility at September 30
Amounts due under current account facility at September 30
Fees on the available facility for the year
The loan was fully paid at September 2015.
–
–
–
–
–
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 134
Notes to the Consolidated Financial Statements
continued
28 RelATed PARTy TRANsACTioNs continued
ii. On August 3 2015 the company entered into a deposit agreement with DMGH:
Deposits denominated in US$ at September 30
Deposits denominated in GBP at September 30
2015
us$000
1,787
–
1,787
2015
£000
1,182
8,617
9,799
2014
US$000
–
–
–
iii. During the year the group expensed services provided by DMGT, the group’s parent, and other fellow group companies, as follows:
Services expensed
2015
£000
849
2014
£000
–
–
–
2014
£000
503
iv. During the year DMGT group companies surrendered tax losses to Euromoney Consortium Limited under an agreement between the two groups.
These tax losses are relievable against UK taxable profits of the group under HMRC’s consortium relief rules:
Amounts payable
Tax losses with tax value
Amounts owed by DMGT group at September 30
2015
£000
1,787
2,383
(313)
2014
£000
1,626
2,168
(387)
v. DMGT group companies have an agreement to surrender tax losses to Euromoney Consortium 2 Limited. These tax losses are relievable against
UK taxable profits of the group under HMRC’s consortium relief rules:
Amounts payable
Tax losses with tax value
Amounts owed by DMGT group at September 30
2015
£000
–
–
(202)
2014
£000
226
302
(226)
vi. During the year, in an arm’s length transaction, the group sold a property to Mintel Limited for a consideration of £2.3m. N Berry, a director of
DMGT, owns 97% of Mintel Limited through a family holding.
vii. NF Osborn serves as an advisor to the boards of both DMG Events and dmgi, fellow group companies, for which he received a combined fee of
US$18,600 (2014: US$23,638).
viii. During the year the group received dividends from its associate undertakings:
Capital NET Limited
GGA Pte. Limited
2015
£000
123
–
123
2014
£000
291
32
323
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28 RelATed PARTy TRANsACTioNs continued
ix. The directors who served during the year received dividends of £0.2m (2014: £0.2m) in respect of ordinary shares held in the company.
x.
The compensation paid or payable for key management is set out below. Key management includes the executive and non-executive directors as
set out in the Directors’ Remuneration Report and other key divisional directors who are not on the board.
Key management compensation
Salaries and short-term employee benefits
Non-executive directors’ fees
Post-employment benefits
Of which:
Executive directors
Non-executive directors
Divisional directors
2015
£000
12,276
223
278
12,777
7,596
223
4,958
12,777
2014
£000
13,119
223
268
13,610
8,977
223
4,410
13,610
Details of the remuneration of directors is given in the Directors’ Remuneration Report.
29 eVeNTs AFTeR The bAlANCe sheeT dATe
A board meeting was held on November 18 2015 and a number of board changes were implemented as proposed by the nominations committee. The
nominations committee agreed that:
●● the chairman of the board be changed to a non-executive role and that JC Botts be appointed as the non-executive chairman in an interim capacity
until such time as the company appoints a permanent independent non-executive chairman;
●● A Rashbass’s role as executive chairman be changed to the new role of chief executive officer;
●● A Rashbass to step down as chairman of the nominations committee and JC Botts to replace A Rashbass as chairman of the nominations committee
until an independent non-executive chairman has been appointed;
●● CHC Fordham to step down from the nominations committee; and
●● the number of executive directors on the board to reduce and accordingly CHC Fordham, NF Osborn, JL Wilkinson, DE Alfano and B AL-Rehany not
to seek re-election at the company’s next AGM in January 2016.
The directors propose a final dividend of 16.40p per share (2014: 16.00p) totalling £20.7m (2014: £20.2m) for the year ended September 30 2015.
The dividend will be submitted for formal approval at the AGM to be held on January 28 2016. In accordance with IAS 10 ‘Events after the Reporting
Period’, these financial statements do not reflect this dividend payable but will be accounted for in shareholders’ equity as an appropriation of retained
earnings in the year ending September 30 2016.
There were no other events after the balance sheet date.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 136
Notes to the Consolidated Financial Statements
continued
30 ulTimATe PAReNT uNdeRTAkiNg ANd CoNTRolliNg PARTy
Rothermere Continuation Limited (RCL) is a holding company incorporated in Bermuda. The main asset of RCL is its 100% holding of Daily Mail and
General Trust plc (DMGT) Ordinary Shares. RCL has controlled DMGT for many years and as such is DMGT’s immediate parent company.
RCL is owned by a trust which is held for the benefit of The Viscount Rothermere and his immediate family. The trust represents the ultimate controlling
party of the company.
Both RCL and the trust are administered in Jersey, in the Channel Islands. RCL and its directors, and the trust and its beneficiaries, are related parties of
the company.
The immediate parent of the company is DMG Charles Limited, a wholly owned subsidiary of DMGT.
The largest and smallest group of which the company is a member and for which group accounts are drawn up is that of DMGT, incorporated in Great
Britain and registered in England and Wales. Copies of its report and accounts are available from:
The company secretary
Daily Mail and General Trust plc
Northcliffe House, 2 Derry Street
London W8 5TT
www.dmgt.co.uk
31 lisT oF subsidiARies
In accordance with Section 409 of the Companies Act 2006, a full list of subsidiaries and partnerships, the country of incorporation and the effective
percentage of equity owned included in these consolidated financial statements at September 30 2015 are disclosed below:
company
Euromoney Institutional Investor PLC
ABF 1 Limited
ABF 2 Limited
Adhesion Asia Limited
Adhesion Group S.A.
Asia Business Forum (Singapore) Pte Ltd
Asia Business Forum (Thailand) Limited
Asia Business Forum SDN. BHD
BCA Research, Inc.
Benchmark Financials Ltd
BPR Associados Limitada
BPR Benchmark Limitada
Bright Milestone Limited
Business Forum Group Holdings Ltd
CEIC Data - Internet Securities Japan K.K
CEIC Data (SG) Pte Ltd
CEIC Data (Shanghai) Co Ltd
CEIC Data (Thailand) Co Ltd
CEIC Data Korea Limited
CEIC Holdings Limited
CEICdata.com (Malaysia) Sdn Bhd
Centre for Investor Education (UK) Limited
Centre for Investor Education Pty Limited
EII (Ventures) Limited
EII Holdings, Inc.
EII US, Inc.
EIMN LLC
Euromoney (Singapore) Pte Limited
Proportion
held
n/a
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
75%
100%
100%*
100%
100%
100%
Principal activity
and operation
Investment holding company
Dormant
Dormant
Events
Events
Dormant
Dormant
Dormant
Research and data services
Dormant
Dormant
Dormant
Investment holding company
Dormant
Information services
Information services
Information services
Information services
Information services
Information services
Information services
Investment holding company
Events
Investment holding company
Investment holding company
Investment holding company
Events
Events
country of
incorporation
United Kingdom
United Kingdom
United Kingdom
Hong Kong
France
Singapore
Thailand
Malaysia
Canada
Colombia
Colombia
Colombia
Hong Kong
Thailand
Japan
Singapore
China
Thailand
Korea
Hong Kong
Malaysia
United Kingdom
Australia
United Kingdom
US
US
US
Singapore
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EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com 137
country of
incorporation
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
US
Jersey
Jersey
Luxembourg
United Kingdom
Poland
Jersey
United Kingdom
US
United Kingdom
United Kingdom
Singapore
United Kingdom
Switzerland
United Kingdom
US
United Kingdom
United Kingdom
US
United Kingdom
India
Colombia
Argentina
Brazil
Bulgaria
Chile
Mexico
Egypt
Hong Kong
Turkey
United Kingdom
Hungary
China
US
South Africa
US
US
US
United Kingdom
United Kingdom
Singapore
United Kingdom
US
company
Euromoney Canada Limited
Euromoney Charles Limited
Euromoney Consortium 2 Limited
Euromoney Consortium Limited
Euromoney ESOP Trustee Ltd
Euromoney Global Limited
Euromoney Guarantee Limited
Euromoney Holdings US, Inc
Euromoney Institutional Investor (Jersey) Limited
Euromoney Jersey Limited
Euromoney Luxembourg S.a.r.l
Euromoney Partnership LLP
Euromoney Polska SP Zoo
Euromoney Publications (Jersey) Limited
Euromoney Trading Limited
Euromoney Training, Inc.
Family Office Network Limited
Fantfoot Limited
GGA Pte. Limited
Glenprint Limited
Global Commodities Group Sarl
GSCS Benchmarks Limited
Gulf Publishing Company, Inc.
HedgeFund Intelligence Limited
Insider Publishing Limited
Institutional Investor LLC
Institutional Investor Networks UK Limited
Internet Data Services (I) Pvt Ltd
Internet Securities (BVI) Ltd
Internet Securities Argentina S.A.
Internet Securities Brazil Ltda
Internet Securities Bulgaria EOOD
Internet Securities de Chile Ltda
Internet Securities de Mexico SDeRLdeCV
Internet Securities Egypt Ltd
Internet Securities Hong Kong Ltd
Internet Securities Istanbul Bilgi Merkezi Ltd STI
Internet Securities Limited
Internet Securities Magyarorszag Kft
Internet Securities Shanghai Limited
Internet Securities, Inc.
ISI Emerging Markets, South Africa (Pty) Ltd
Latin American Financial Publications, Inc.
Metal Bulletin Holdings LLC
Ned Davis Research, Inc.
Redquince Limited
Steel First Limited
Storas Holdings Pte Ltd
Tipall Limited
TTI Technologies LLC
Proportion
held
100%
100%
99.7%
99.7%
100%
99.7%
100%
100%
100%†
100%‡
100%
100%
100%
100%
99.7%
100%
100%
100%
100%
99.7%
100%
99.7%
100%
99.7%
99.7%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
84.5%
100%
100%
100%
100%
100%
Principal activity
and operation
Investment holding company
Investment holding company
Investment holding company
Investment holding company
Dormant
Publishing and events
Dormant
Investment holding company
Publishing, training and events
Investment holding company
Investment holding company
Investment holding company
Information services
Investment holding company
Publishing, training and events
Training
Information services
Investment holding company
Events
Publishing
Events
Dormant
Publishing
Dormant
Publishing
Publishing and events
Information services
Information services
Dormant
Dormant
Information services
Information services
Information services
Information services
Information services
Information services
Dormant
Information services
Dormant
Information services
Information services
Dormant
Publishing
Investment holding company
Research and data services
Investment holding company
Information services
Dormant
Property holding
Events
* 100% preference shares held in addition.
† Euromoney Institutional Investor (Jersey) Limited’s principal country of operation is Hong Kong.
‡ Euromoney Jersey Limited’s principal country of operation is United Kingdom.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 Group accounts ❯ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 138
Notes to the Consolidated Financial Statements
continued
31 lisT oF subsidiARies continued
All holdings are of ordinary shares. In addition, the group has a small number of branches outside the United Kingdom.
A list of associates, joint ventures and joint arrangements is disclosed in note 13.
For the year ended September 30 2015, the following subsidiary undertakings of the group were exempt from the requirements of the Companies Act
2006 relating to the audit of individual accounts by virtue of section 479A of the Companies Act 2006:
company
Euromoney Canada Limited
Euromoney Charles Limited
EII (Ventures) Limited
Euromoney Partnership LLP
Fantfoot Limited
Internet Securities Limited
Redquince Limited
Steel First Limited
Family Office Network Limited
company
registration
number
01974125
04082590
05885797
0C363064
05503274
02976791
05994621
04002471
08667050
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Company accounts ❯ comPANy BAlANce sheet
139
Company Balance Sheet
As at September 30 2015
fixed assets
Tangible assets
Investments
current assets
Debtors
Cash at bank and in hand
Creditors: Amounts falling due within one year
Net current liabilities
total assets less current liabilities
Creditors: Amounts falling due after more than one year
Net assets
capital and reserves
Called up share capital
Share premium account
Other reserve
Capital redemption reserve
Capital reserve
Own shares
Reserve for share-based payments
Fair value reserve
Profit and loss account
equity shareholders’ funds
Notes
2015
£000
2014
£000
4
5
6
7
8
11
15
15
15
15
15
15
15
15
16
555
1,005,700
1,006,255
48,527
9
48,536
(61,888)
(13,352)
992,903
3,130
937,499
940,629
31,954
13
31,967
(44,885)
(12,918)
927,711
(115,456)
877,447
(101,172)
826,539
320
102,557
64,981
8
1,842
(21,582)
37,169
1,358
690,794
877,447
320
102,011
64,981
8
1,842
(21,582)
39,158
1,358
638,443
826,539
Euromoney Institutional Investor PLC (registered number 954730) has taken advantage of section 408 of the Companies Act 2006 and has not included
its own profit and loss account in these accounts. The profit after taxation of Euromoney Institutional Investor PLC included in the group profit for the
year is £81.4m (2014: £19.1m).
The accounts were approved by the board of directors on December 14 2015.
christoPher fordhAm
coliN JoNes
Directors
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 140
Notes to the Company Accounts
1 ACCouNTiNg P oliCies
Basis of preparation
The accounts have been prepared under the historical cost convention
Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation and
any recognised impairment loss. Depreciation of tangible fixed assets is
except for financial instruments which have been measured at fair value
provided on a straight-line basis over their expected useful lives at the
and in accordance with applicable United Kingdom accounting standards
following rates per year:
and the United Kingdom Companies Act 2006. The accounting policies
set out below have, unless otherwise stated, been applied consistently
throughout the current and prior year. Having assessed the principal risks
and the other matters discussed in connection with the viability statement,
the directors consider it appropriate to adopt the going concern basis of
accounting in preparing these accounts.
The company has taken advantage of the exemption from presenting
a cash flow statement under the terms of FRS 1 (Revised) ‘Cash Flow
Statements’.
The company is also exempt under the terms of FRS 8 ‘Related Party
Disclosures’ from disclosing related party transactions with members of a
group that are wholly owned by a member of that group.
Short-term leasehold premises:
over term of lease.
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at
amounts expected to be paid (or recovered) using the tax rates and laws
that have been enacted or substantively enacted by the balance sheet
date.
Deferred taxation is calculated under the provisions of FRS 19 ‘Deferred
Taxation’, and is provided in full on timing differences that result in an
obligation at the balance sheet date to pay more tax, or a right to pay
less tax, at a future date, at rates expected to apply when the timing
differences crystallise based on current tax rates and law. Deferred tax is
not provided on timing differences on unremitted earnings of subsidiaries
Further, the company, as a parent company of a group drawing up
and associates where there is no commitment to remit these earnings.
consolidated financial statements that meet the requirements of IFRS 7
Deferred tax assets are only recognised to the extent that it is regarded as
‘Financial Instruments: Disclosure’, is exempt from disclosures that comply
more likely than not that they will be recovered.
with its UK GAAP equivalent, FRS 29 ‘Financial Statements: Disclosures’.
Turnover
Turnover represents income from subscriptions, net of value added tax.
Derivatives and other financial instruments
The company uses various derivative financial instruments to manage its
exposure to interest rate risks, including interest rate swaps.
Subscription revenues are recognised in the income statement on a
All derivative instruments are recorded in the balance sheet at fair
straight-line basis over the period of the subscription.
value. Recognition of gains or losses on derivative instruments depends
on whether the instrument is designated as a hedge and the type of
Turnover invoiced but relating to future periods is deferred and treated as
exposure it is designed to hedge.
deferred income in the balance sheet.
Leased assets
Operating lease rentals are charged to the profit and loss account on a
straight-line or other systematic basis as allowed by SSAP 21 ‘Accounting
for Leases and Hire Purchase Contracts’.
Pension schemes
Details of the company’s pension schemes are set out in note 26 to the
group accounts. The company participates in the Harmsworth Pension
Scheme, a defined benefit pension scheme which is operated by Daily
The effective portion of gains or losses on cash flow hedges are deferred
in equity until the impact from the hedged item is recognised in the
profit and loss account. The ineffective portion of such gains and losses is
recognised in the profit and loss account immediately.
Gains or losses on the qualifying part of the foreign currency loans are
recognised in the profit or loss account along with the associated foreign
currency movement on the designated portion of the investment in
subsidiaries.
Mail and General Trust plc. As there is no contractual agreement or stated
Changes in the fair value of the derivative financial instruments that do
policy for charging the net defined benefit cost for the plan as a whole
not qualify for hedge accounting are recognised in the profit and loss
to the individual entities, the company recognises an expense equal to its
account as they arise.
contributions payable in the period and does not recognise any unfunded
liability of this pension scheme on its balance sheet.
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141
1 ACCouNTiNg PoliCies continued
Subsidiaries
Investments in subsidiaries are accounted for at cost less impairment.
Share-based payments
The company makes share-based payments to certain employees which
are equity-settled. These payments are measured at their estimated fair
Cost is adjusted to reflect amendments from contingent consideration.
value at the date of grant, calculated using an appropriate option pricing
model. The fair value determined at the grant date is expensed on a
straight-line basis over the vesting period, based on the estimate of the
number of shares that will eventually vest. At the period end the vesting
assumptions are revisited and the charge associated with the fair value
of these options updated. In accordance with the transitional provisions,
FRS 20 ‘Share-based Payments’ has been applied to all grants of options
after November 7 2002 that were unvested at October 1 2004, the date
of application of FRS 20.
Cost also includes directly attributable cost of investment.
Trade and other debtors
Trade receivables are recognised and carried at original invoice amount,
less provision for impairment. A provision is made and charged to the
profit and loss account when there is objective evidence that the company
will not be able to collect all amounts due according to the original terms.
Cash at bank and in hand
Cash at bank and in hand includes cash, short-term deposits and other
short-term highly liquid investments with an original maturity of three
months or less.
Dividends
Dividends are recognised as an expense in the period in which they are
approved by the company’s shareholders. Interim dividends are recorded
in the period in which they are paid.
Provisions
A provision is recognised in the balance sheet when the company has a
present legal or constructive obligation as a result of a past event, and it is
probable that economic benefits will be required to settle the obligation.
If material, provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risks specific to the
liability.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 142
Notes to the Company Accounts
continued
2 sTAFF CosTs
Salaries, wages and incentives
Social security costs
Share-based compensation income/(costs) (note 12)
2015
£000
271
37
68
376
Details of directors’ remuneration are set out in the Directors’ Remuneration Report on pages 46 to 69 and in note 6 to the group accounts.
The executive directors do not receive emoluments specifically for their services to this company.
3 RemuNeRATioN oF AudiToR
Fees payable for the audit of the company’s annual accounts
2015
£000
12
2014
£000
255
35
(21)
269
2014
£000
390
PricewaterhouseCoopers LLP was appointed as the group’s auditor for the year ended September 30 2015. Accordingly comparative figures in the table
above for the year ended September 30 2014 are in respect of remuneration paid to the group’s previous auditor, Deloitte LLP and other member firms
of Deloitte Touche Tohmatsu Limited.
4 TANgible A sseTs
cost
At October 1 2014
Disposals
At september 30 2015
depreciation
At October 1 2014
Charge for the year
Disposals
At september 30 2015
Net book value at september 30 2015
Net book value at September 30 2014
short-term
leasehold
premises
£000
9,488
(8,760)
728
6,358
153
(6,338)
173
555
3,130
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143
5 iNVesTmeNTs
At October 1
Additions
Disposal
Exchange differences
At september 30
2015
investments
in associated
undertakings
£000
subsidiaries
£000
2014
Investments
in associated
undertakings
£000
total
£000
Subsidiaries
£000
937,470
29,154
(1,469)
8,590
973,745
29
31,955
(29)
–
31,955
937,499
61,109
(1,498)
8,590
1,005,700
934,179
–
–
3,291
937,470
29
–
–
–
29
Total
£000
934,208
–
–
3,291
937,499
In April 2015, the company subscribed to 45,000 new ordinary shares of US$1 each in Fantfoot Limited for a total consideration of $45.0m.
Details of the principal subsidiary and associated undertakings of the company at September 30 2015 can be found in note 31 to the group accounts.
6 debT oRs
Amounts owed by DMGT group undertakings
Amounts owed by group undertakings
Other debtors
Deferred tax (note 10)
Prepayments and accrued income
Corporate tax
2015
£000
9,991
20,395
13,544
–
–
4,597
48,527
2014
£000
485
26,022
–
148
473
4,826
31,954
Amounts owed by DMGT group undertakings is a deposit agreement entered into with DMGT in August 2015 to place any excess operating funds on
deposit with DMGT at LIBID plus 0.5%.
Amounts owed by group undertakings include two (2014: three) loans totalling £20.4m (2014: £26.0m) that bore interest rates of 4.82% (2014:
3.92%) and repayable in September 2016.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 144
Notes to the Company Accounts
continued
7 CRediToRs: AmouNTs FAlliNg due WiThiN oNe yeAR
Bank overdrafts
Trade creditors
Amounts owed to group undertakings
Accruals and other creditors
Other taxation and social security
Provisions (note 9)
Loan notes
2015
£000
(6,816)
(4)
(54,444)
(18)
–
(339)
(267)
(61,888)
2014
£000
(1,786)
–
(40,826)
(16)
(282)
(1,485)
(490)
(44,885)
Amounts owed to group undertakings include two loans totalling £31.1m (2014: one loan of £28.5m) with interest rates from zero percent to LIBOR
(2014: zero percent) and repayable in October 2015 and September 2016. All other amounts owed to group undertakings are current account balances
that are settled on a regular basis. As such the amounts owed to subsidiary undertakings are interest free and repayable on demand.
8 CRediToRs: AmouNTs FAlliNg due AFTeR moRe ThAN oNe yeAR
Amounts owed to group undertakings
Committed loan facility (see note 19 in the group accounts)
Provisions (note 9)
Other creditors
2015
£000
2014
£000
(114,696)
–
(274)
(486)
(115,456)
(54,737)
(45,677)
(758)
–
(101,172)
Amounts owed to group undertakings include two loans totalling £114.7m (2014: £54.7m) with interest rates of 2.14% and repayable in February
2019.
9 PRoVisioNs
At October 1
Release/(provision) in the year
Used in the year
At september 30
maturity profile of provisions:
Within one year
Between two and five years
onerous
lease
provision
£000
2015
dilapidations
on leasehold
properties
£000
741
–
(741)
–
1,502
(664)
(225)
613
total
£000
2,243
(664)
(966)
613
Onerous
lease
provision
£000
2014
Dilapidations
on leasehold
properties
£000
–
741
–
741
2,302
(789)
(11)
1,502
2015
£000
339
274
613
Total
£000
2,302
(48)
(11)
2,243
2014
£000
1,485
758
2,243
The provision represents the directors’ best estimate of the amount likely to be payable on expiry of the company’s property leases.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Company accounts ❯ Notes to the comPANy AccouNts
10 deFeRRed TAx
The deferred tax asset at September 30 comprised:
Other short-term timing differences
movement in deferred tax:
Deferred tax asset at October 1
Deferred tax credit in the profit and loss account
deferred tax asset at september 30
A deferred tax asset of £nil (2014: £148,000) has been recognised in respect of other short-term timing differences.
11 CAlled uP shARe CAPiTAl
Allotted, called up and fully paid
128,248,894 ordinary shares of 0.25p each (2014: 128,133,417 ordinary shares of 0.25p each)
145
2014
£000
148
2014
£000
-
148
148
2015
£000
–
2015
£000
148
(148)
–
2015
£000
2014
£000
320
320
During the year, 115,477 ordinary shares of 0.25p each (2014: 1,676,093 ordinary shares) with an aggregate nominal value of £289 (2014: £4,191)
were issued following the exercise of share options granted under the company’s share option schemes for a cash consideration of £0.5m (2014:
£0.3m).
12 shARe-bAsed PAymeNTs
An explanation of the company’s share-based payment arrangements is set out in the Directors’ Remuneration Report on pages 60 to 62. The number
of shares under option, the fair value per option granted and the assumptions used to determine their values are given in note 23 to the group accounts.
Their dilutive effect on the number of weighted average shares of the company is given in note 10 to the group accounts.
Share option schemes
The Save as You Earn (SAYE) Options were valued using the Black-Scholes option-pricing model. Expected volatility was determined by calculating the
historical volatility of the group’s share price over a three year period. The charge recognised in the year in respect of these options was £0.1m (2014:
£0.1m). Details of the SAYE options are set out in note 23 to the group accounts.
Capital Appreciation Plan 2010 (CAP 2010) and Company Share Option Plan 2010 (CSOP 2010)
The CAP 2010 and CSOP 2010 options were valued using a fair value model that adjusted the share price at the date of grant for the net present value
of expected future dividend streams up to the date of expected exercise. The expected term of the option used in the models has been adjusted, based
on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share-based expense
recognised in the year for the CAP 2010 and CSOP 2010 options was a credit of £34,000 (2014: £0.2m). Details of the CAP 2010 and CSOP 2010
options are set out in note 23 to the group accounts (excludes cash-settled options).
Capital Appreciation Plan 2014 (CAP 2014) and Company Share Option Plan 2014 (CSOP 2014)
The CAP 2014 and CSOP 2014 options were valued using a fair value model that adjusted the share price at the date of grant for the net present value
of expected future dividend streams up to the date of expected exercise. The expected term of the option used in the models has been adjusted, based
on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share-based expense
recognised in the year for the CAP 2014 and CSOP 2014 options was £nil (2014: £nil). Details of the CAP 2014 and CSOP 2014 options are set out in
note 23 to the group accounts (excludes cash-settled options).
There is no cost or liability for the cash element of the CAP 2010 or CAP 2014 option scheme. These are borne by the company’s subsidiary undertakings.
A reconciliation of the options outstanding at September 30 2015 is detailed in note 23 to the group accounts.
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 146
Notes to the Company Accounts
continued
13 CommiTmeNTs ANd CoNTiNgeNT liAbiliTy
At September 30 the company has committed to make the following payments in respect of operating leases on land and buildings:
operating leases which expire:
Within one year
Between two and five years
Over five years
2015
£000
6
692
18
716
2014
£000
328
676
260
1,264
Cross-guarantee
The company, together with the ultimate parent company and certain other companies in the Euromoney Institutional Investor PLC group, have given
an unlimited cross-guarantee in favour of its bankers.
14 FiNANCiAl iNsTRumeNTs
Hedge of net investment in foreign entity
The company has US dollar denominated borrowings which it has designated as a fair value hedge of its subsidiaries which have US dollars as their
functional currency. The change in fair value of these hedges resulted in an increased liability of £8.6m (2014: increase in liability of £3.3m).
Fair values of non-derivative financial assets and financial liabilities
Where market values are not available, fair values of financial assets and financial liabilities have been calculated by discounting expected future cash
flows at prevailing interest rates and by applying year end exchange rates. The carrying amounts of short-term borrowings approximate the book value.
15 ReseRVes
At September 30 2013
Profit for the year
Own shares acquired
Charge for share-based payments
Cash dividends paid
Exercise of share options
At september 30 2014
Profit for the year
Credit for share-based payments
Cash dividends paid
Exercise of share options
At september 30 2015
called
up
share
capital
£000
share
premium
account
£000
capital
redemp-
tion
reserve
£000
other
reserve
£000
capital
reserve
£000
own
shares
£000
316
–
–
–
–
4
320
–
–
–
–
320
101,709
–
–
–
–
302
102,011
–
–
–
546
102,557
64,981
–
–
–
–
–
64,981
–
–
–
–
64,981
8
–
–
–
–
–
8
–
–
–
–
8
1,842
(74)
–
–
– (21,508)
–
–
–
–
–
–
1,842 (21,582)
–
–
–
–
1,842 (21,582)
–
–
–
–
reserve
for
share-
based
pay-
ments
£000
37,122
–
–
2,036
–
–
39,158
–
(1,989)
–
–
37,169
fair
value
reserve
£000
Profit
and loss
account
£000
total
share-
holders’
funds
£000
–
–
–
–
–
1,358 648,114 855,376
19,100
19,100
(21,508)
–
2,036
–
(28,771)
(28,771)
306
–
1,358 638,443 826,539
81,415
81,415
(1,989)
–
(29,064)
(29,064)
546
–
1,358 690,794 877,447
–
–
–
–
The investment in own shares is held by the Euromoney Employees’ Share Ownership Trust (ESOT) and Euromoney Employee Share Trust (EEST). The
EEST was incorporated in February 2014 to facilitate the purchase of shares for the Capital Appreciation Plan 2014. 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.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Company accounts ❯ Notes to the comPANy AccouNts
147
15 ReseRVes continued
Euromoney Employees’ Share Ownership Trust
Euromoney Employee Share Trust
total
Nominal cost per share (p)
Historical cost per share (£)
Market value (£000)
2015
Number
2014
Number
58,976
1,747,631
1,806,607
0.25
11.95
17,163
58,976
1,747,631
1,806,607
0.25
11.95
18,337
The other reserve represents the share premium arising on the shares issued for the purchase of Metal Bulletin plc in October 2006.
Of the reserves above the share based payments reserves of £37.2m (2014: £39.2m) and £587.6m (2014: £535.3m) of the profit and loss account is
distributable to equity shareholders of the company. The remaining balance of £103.2m (2014: £103.2m) is not distributable.
16 ReCoNCiliATioN oF moVemeNTs iN equiTy shAReholdeRs’ FuNds
Profit for the financial year inclusive of dividends
Dividends paid
Issue of shares
Own shares acquired in the year
Credit to equity for share-based payments
Net increase/(decrease) in equity shareholders’ funds
Opening shareholders’ funds
closing shareholders’ funds
17 RelATed PARTy TRANsACTioNs
Related party transactions and balances are detailed below:
2015
£000
81,415
(29,064)
52,351
546
–
(1,989)
50,908
826,539
877,447
2014
£000
19,100
(28,771)
(9,671)
306
(21,508)
2,036
(28,837)
855,376
826,539
i.
The company had borrowings under a US$160m multi-currency facility with Daily Mail and General Holdings Limited (DMGH), a fellow group
company (note 19 to the group accounts):
2015
us$000
2015
£000
2014
US$000
2014
£000
38,543
7,895
(761)
45,677
–
–
–
–
62,486
–
(1,234)
61,252
733
–
417
Amounts owing under US$ facility at September 30
Amounts owing under GBP facility at September 30
Amounts due under current account facility at September 30
Fees on the available facility for the year
The loan was fully paid at September 2015.
–
–
–
–
–
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 148
Notes to the Company Accounts
continued
17 RelATed PARTy TRANsACTioNs continued
ii. On August 3 2015 the company entered into a deposit agreement with DMGH:
Deposits denominated in US$ at September 30
Deposits denominated in GBP at September 30
2015
us$000
1,787
–
1,787
2015
£000
1,182
8,617
9,799
2014
US$000
–
–
–
2014
£000
–
–
–
iii. During the year, in an arm’s length transaction, the group sold a property to Mintel Limited for a consideration of £2.3m. N Berry, a director of
DMGT, owns 97% of Mintel Limited through a family holding.
iv. During the year the company received a dividend of £0.1m (2014: £0.3m) from Capital NET Limited, an associate of the company.
v. During the year the company entered into the following trading transactions with Euromoney Trading Limited:
Guarantee fee
Licence fee
Management fee
2015
£000
1,300
6,747
(708)
7,339
2014
£000
1,300
6,931
(1,002)
7,229
Amounts due under current account
(42,211)
(33,214)
18 PosT bAlANCe sheeT eVeNT
A board meeting was held on November 18 2015 and a number of board changes were implemented as proposed by the nominations committee. The
nominations committee agreed that:
●● the chairman of the board be changed to a non-executive role and that JC Botts be appointed as the non-executive chairman in an interim capacity
until such time as the company appoints a permanent independent non-executive chairman;
●● A Rashbass’s role as executive chairman be changed to the new role of chief executive officer;
●● A Rashbass to step down as chairman of the nominations committee and JC Botts to replace A Rashbass as chairman of the nominations committee
until an independent non-executive chairman has been appointed;
●● CHC Fordham to step down from the nominations committee; and
●● the number of executive directors on the board to reduce and accordingly CHC Fordham, NF Osborn, JL Wilkinson, DE Alfano and B AL-Rehany not
to seek re-election at the company’s next AGM in January 2016.
The directors propose a final dividend of 16.40p per share (2014: 16.00p) totalling £20.7m (2014: £20.2m) for the year ended September 30 2015
subject to approval at the AGM to be held on January 28 2016. In accordance with FRS 21 ‘Post Balance Sheet Events’, these financial statements do
not reflect this dividend payable but will be accounted for in shareholders’ equity as an appropriation of retained earnings in the year ending September
30 2016.
There were no other events after the balance sheet date.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Company accounts ❯ Notes to the comPANy AccouNts
149
19 ulTimATe PAReNT uNdeRTAkiNg ANd CoNTRolliNg PARTy
Rothermere Continuation Limited (RCL) is a holding company incorporated in Bermuda. The main asset of RCL is its 100% holding of Daily Mail and
General Trust plc (DMGT) Ordinary Shares. RCL has controlled DMGT for many years and as such is DMGT’s immediate parent company.
RCL is owned by a trust which is held for the benefit of The Viscount Rothermere and his immediate family. The trust represents the ultimate controlling
party of the company.
Both RCL and the trust are administered in Jersey, in the Channel Islands. RCL and its directors, and the trust and its beneficiaries, are related parties of
the company.
The immediate parent of the company is DMG Charles Limited, a wholly owned subsidiary of DMGT.
The largest and smallest group of which the company is a member and for which group accounts are drawn up is that of DMGT, incorporated in Great
Britain and registered in England and Wales. Copies of its report and accounts are available from:
The company secretary
Daily Mail and General Trust plc
Northcliffe House, 2 Derry Street
London W8 5TT
www.dmgt.co.uk
24254.04 - 15 December 2015 11:57 AM - Proof 8
Annual Report and Accounts 2015 150
Five Year Record
Other ❯ five yeAr record
CoNsolidATed iNCome sTATemeNT exTRACTs
2011
£000
2012
£000
2013
£000
2014
£000
2015
£000
total revenue
363,142
394,144
404,704
406,559
403,412
operating profit before acquired intangible amortisation,
long-term incentive (expense)/credit and exceptional items
Acquired intangible amortisation
Long-term incentive (expense)/credit
Additional accelerated long-term incentive expense
Exceptional items
operating profit
Share of results in associates and joint ventures
Net finance (costs)/income
Profit before tax
Tax expense on profit
Profit for the year
Attributable to:
Equity holders of the parent
Equity non-controlling interests
108,967
(12,221)
(9,491)
(6,603)
(3,295)
77,357
408
(9,568)
68,197
(22,527)
45,670
45,591
79
45,670
118,175
(14,782)
(6,301)
–
(1,617)
95,475
459
(3,566)
92,368
(22,528)
69,840
69,672
168
69,840
121,088
(15,890)
(2,100)
–
2,232
105,330
284
(10,354)
95,260
(22,235)
73,025
72,623
402
73,025
119,809
(16,735)
(2,367)
–
2,630
103,337
264
(2,126)
101,475
(25,610)
75,865
104,234
(17,027)
2,490
–
33,421
123,118
(381)
548
123,285
(17,599)
105,686
75,264
601
75,865
105,444
242
105,686
Basic earnings per share
Diluted earnings per share
Adjusted diluted earnings per share
Diluted weighted average number of ordinary shares
Dividend per share
38.02p
37.34p
56.05p
122,112,168
18.75p
56.74p
55.17p
65.91p
126,290,412
21.75p
57.88p
56.70p
70.96p
128,077,588
22.75p
59.49p
59.15p
70.60p
127,236,311
23.00p
83.42p
83.38p
70.12p
126,460,787
23.40p
Adjusted profit before tax
Adjusted profit after tax
92,684
68,520
106,769
83,410
116,527
91,286
116,155
90,433
107,810
88,920
coNsolidAted stAtemeNt of fiNANciAl PositioN extrActs
Intangible assets
Non-current assets
Accruals
Deferred income liability
Other net current (liabilities)/assets
Non-current liabilities
Net assets
490,042
33,824
(56,249)
(105,507)
(12,304)
(124,231)
225,575
469,308
26,357
(54,170)
(105,106)
32,151
(80,616)
287,924
505,613
23,255
(48,381)
(106,051)
5,371
(46,048)
333,759
545,443
18,707
(47,973)
(109,842)
34,933
(84,745)
356,523
531,379
47,760
(55,743)
(112,129)
66,902
(33,225)
444,944
The five year record is does not form part of the audited financial statements.
The 2014 and 2013 comparatives have been re-presented to reflect a reclassification to net down certain balances within net current (liabilities)/assets
and deferred subscription income. This reclassification has no impact on net assets (note 15 to the group accounts). No similar adjustments have been
made to the 2012 and 2011 comparatives as the information is not readily available.
24254.04 - 15 December 2015 11:57 AM - Proof 8
EuromonEy InstItutIonal InvEstor PlC www.euromoneyplc.com Other ❯ sharEhoLdEr InformatIon
151
Shareholder Information
Thursday November 19 2015
Thursday November 26 2015
Friday November 27 2015
Thursday January 28 2016*
Thursday January 28 2016
Thursday February 11 2016
Thursday May 19 2016*
Thursday May 26 2016*
Friday May 27 2016*
Thursday June 23 2016*
Thursday November 24 2016*
Thursday December 31 2015
Thursday June 30 2016
FiNaNcial caleNDar
2015 final results announcement
Final dividend ex-dividend date
Final dividend record date
Trading update
2016 AGM (approval of final dividend)
Payment of final dividend
2016 interim results announcement
Interim dividend ex-dividend date
Interim dividend record date
Payment of 2016 interim dividend
2016 final results announcement
Loan note interest paid to holders on
* Provisional dates and are subject to change
compaNy Secretary aND regiStereD oFFice
Bridget Hennigan
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
registrar, 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.
loaN Note reDemptioN iNFormatioN
Loan notes can be redeemed twice a year on the interest payment dates above by depositing the Notice of Repayment printed on the Loan Note
Certificate at the company’s registered office. At least 20 business days’ written notice prior to the redemption date is required.
aDviSorS
Auditor
PricewaterhouseCoopers LLP
Brokers
UBS
1 Embankment Place
London, WC2N 6RH
1 Finsbury Avenue,
London, EC2M 2PP
Solicitors
Nabarro
125 London Wall,
London, EC2Y 5AL
Registrars
Equiniti
Aspect House,
Spencer Road, Lancing,
West Sussex, BN99 6DA
24254.04 - 15 December 2015 11:52 AM - Proof 8
Annual Report and Accounts 2015 www.euromoneyplc.com
Euromoney Institutional Investor plc
8 Bouverie Street
London EC4Y 8AX
24254.04 - 15 December 2015 11:52 AM - Proof 8