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8
Annual Report
and Accounts 2018
Contents
Strategic Report
Who we are
Group at a glance
Chairman’s introduction
Market overview
Our business model
Chief Executive’s Strategic Review
Our strategy in action
Key performance indicators
Segment review
Corporate and social responsibility
Operating and financial review
Risk management
Governance
Board of Directors
Corporate Governance Report
Nominations Committee Report
Audit Committee Report
Directors’ Remuneration Report
Directors’ Report
Financial Statements
Independent Auditors’ Report
Consolidated Financial Statements
Company Accounts
Additional Information
Five year record
Shareholder information
01
02
04
06
08
10
14
18
20
22
24
31
40
42
49
50
56
75
79
88
148
155
156
Financial highlights
Total revenue: £414.1m
Statutory revenue: £390.3m
406.6
403.4
403.1
428.4
414.1
372.4
368.6
366.1
386.9
390.3
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
Adjusted profit before tax: £109.2m
Statutory profit before tax: £161.2m
116.2
107.8
102.5
106.5
109.2
161.2
118.0
94.4
33.4
40.7
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
Adjusted diluted earnings per share: 81.3p
Statutory diluted earnings per share: 187.0p
70.6
70.1
66.5
81.3
76.4
187.0
83.4
59.2
37.9
24.3
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
Dividend per share: 32.5p
Further information can be found
online by visiting our website at
euromoneyplc.com
23.0
23.4
23.4
32.5
30.6
2014
2015
2016
2017
2018
A detailed reconciliation of the Group’s statutory and adjusted results is set out on pages 27 and 28.
Adjusted measures include the results of continuing and discontinued operations and exclude the impact of amortisation
of acquired intangible assets, exceptional items and other adjusting items in accordance with the Group’s policy set out
on page 27.
Total revenue represents the combined reported revenue from continuing and discontinued operations.
Euromoney is a global, multi-brand
information business which provides
critical data, price reporting, insight,
analysis and must-attend events
to financial services, commodities,
telecoms and legal markets.
We are listed on the London Stock
Exchange and a member of the
FTSE 250 share index.
Our strategy is to manage a portfolio
of businesses in markets where
information, data and convening
market participants are valued.
We deliver products and services that support
our clients’ critical activities.
See Chief Executive’s Strategic Review on page 10
We look to serve markets which are semi-opaque; that is,
where the information which organisations need in order
to operate effectively is hard to find.
See Group at a glance on page 2
Our ambition is to generate consistent and meaningful
returns for our shareholders at relatively low risk.
See our business model on page 8
01
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Group at a glance
The Group actively manages a portfolio of information B2B
businesses across Asset Management; Pricing, Data & Market
Intelligence; Banking & Finance; and Commodity Events.
We operate where information, data and convening market
participants support our clients’ critical activities
Asset Management
Pricing, Data &
Market Intelligence
Focus
Provides information services and networking events
to the global asset management industry
Focus
Provides prices, data, analysis and events that
are critical for our clients’ business processes and
workflow across a number of industries
Divisions
• Institutional Investor
• Investment Research
Segment revenue
£151.0m
Segment adjusted operating profit
£61.1m
Number of employees
417
Key brands
• Institutional Investor
• BCA
• NDR
Divisions
• Fastmarkets
• Specialist Information
• Telecoms
Segment revenue
£144.7m
Segment adjusted operating profit
£53.2m
Number of employees
668
Key brands
• Fastmarkets
• AirFinance Journal
• Insurance Insider
• Capacity Media
October 2017
• Sale of wine
exhibition
businesses,
Adhesion and
World Bulk Wine,
to Comexposium
November 2017
• Board announces
December 2017
• Acquisition of
appointment
of three new
independent Non-
Executive Directors
to the Board (Jan
Babiak, Imogen
Joss and Lorna
Tilbian)
TowerXchange,
the leading source
of information
on the telecoms
tower and mobile
infrastructure
markets
• Disposal of minority
stake in Dealogic
to Ion Investment
Group
January 2018
• Sale of Institutional
Investor Journals
business to Pageant
Media
February 2018
• Chairman, John
Botts, retires from
the Board and
Acting Chairman,
David Pritchard,
appointed
• Board approves
appointment
of Colin Day as
independent Non-
Executive Director
to the Board
Our year
in review
02
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Banking & Finance
Commodity Events
Focus
Provides market intelligence, thought leadership,
news, training and conferences to the global
finance industry
Focus
Provides leading conferences in various
commodity areas
Divisions
• Banking & Finance
Segment revenue
£70.7m
Divisions
• Fastmarkets
• Mining Indaba
Segment revenue
£20.8m
Segment adjusted operating profit
Segment adjusted operating profit
£17.7m
Number of employees
230
Key brands
• Euromoney
• Global Capital
• IMN
£9.1m
Number of employees
50
Key brands
• Fastmarkets MB Events
• Coaltrans
• Global Grain
• RISI
March 2018
• Acquisition of
April 2018
• Sale of Global
May 2018
• Sir Patrick Sergeant,
June 2018
• Colin Jones,
August 2018
• Acquisition of
Extel, the annual
independent survey
of quality across
the European
equities investment
community
Market Intelligence
Division (CEIC and
EMIS) to CITIC
Capital Holdings
and Caixin Global
• II Magazine and
Alpha merge and
become digital only
the Company’s
founder, retires
from the Board of
Directors and is
appointed as Life
President
Finance Director,
retires and steps
down from the
Board
• Interim dividend of
10.2p per share
Random Lengths
to further reinforce
the Group’s position
as a global leader
in the commodity
price reporting
industry
• Wendy Pallot joins
as Chief Financial
Officer and is
appointed to the
Board
October 2018
• Sale of Mining
Indaba to ITE
Group plc
03
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Chairman’s introduction
Our 2018 results have
exceeded expectations
Our Board composition has changed significantly
and is now more diverse and independent
After serving as a Non-Executive Director on the Board for
nine years, it is a privilege to be Acting Chairman following the
retirement of John Botts.
John served on the Company’s Board for over 25 years, including
as Chairman for two years. He led the Company through important
changes when the Company became fully independent following
DMGT’s sell down in 2017.
The Company benefited greatly from his wisdom and
experience over the years. We thank him warmly for his service
and contribution.
Strategy
We are now in the third year of the strategy we announced in
March 2016. The strategy has delivered growth powered by our
best-of-both-worlds operating model where business units which
are close to customers are enabled by capable central services.
Successful M&A has long been a Euromoney strength and it
remains crucial to our strategy. During the year, we successfully
sold CEIC and EMIS (together our Global Markets Intelligence
Division) as well as our minority stake in Dealogic. These disposals
generated significant capital for the Group which we have
invested and will continue to invest in other areas aligned with our
big themes.
Dividend
Last year, the Company approved a new, progressive dividend
policy based around paying out approximately 40% of adjusted
earnings. This year the Board approved a 16% increase in the
interim dividend to 10.2p per share which was paid to shareholders
in June.
Following a strong financial performance over the full year, with
underlying revenue growth of 3% and a 2% improvement in Group
adjusted operating profit margin, the Board is recommending to
shareholders a 2% increase in the final dividend to 22.3p per share
to be paid on 14 February 2019. This will result in a total dividend
for the year of 32.5p (2017: 30.6p).
Board changes
Our Board’s composition has changed significantly during the
year. We have welcomed four new independent Non-Executive
Directors onto the Board – Jan Babiak, Colin Day, Imogen Joss
and Lorna Tilbian. Following the appointment of Wendy Pallot
in August 2018 as Chief Financial Officer, we are delighted to
have increased female representation on the Board to 36%.
Gender is only one aspect of diversity and we continue to work
hard at improving opportunities for all across every level of
the organisation.
.
A strong set of 2018
results reflect the hard
work our people continue
to invest into developing
the business.
David Pritchard
Acting Chairman
04
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 During the year, our largest shareholder, DMGT, rotated
its representative directors with Lord Rothermere and Paul
Zwillenberg retiring from the Board. Tim Collier, DMGT’s CFO,
and Kevin Beatty, CEO of dmg media, joined the Board in their
place. Particular thanks go to Lord Rothermere who had served
on the Board since 1998 and whose support and insight have
been critical to Euromoney’s success. We would also like to thank
Colin Jones, who retired as Finance Director in June 2018, for his
dedicated service and we wish him well.
Sir Patrick Sergeant
During the year, Sir Patrick Sergeant retired from the Board.
Sir Patrick has made a unique contribution to the Group over
nearly 50 years. Sir Patrick founded Euromoney in 1969 and his
entrepreneurial spirit has guided and influenced the Group’s
success over the following five decades, first as Managing
Director, then as Chairman and latterly as Non-Executive Director.
We are delighted that following his retirement from the Board, Sir
Patrick agreed to become Life President of the Company.
Corporate social responsibility
I want to say a few words about our employees around the world.
Our best-of-both-worlds operating model is enabling us to take
a more joined-up look at our impact as a Company on the world
around us.
Andrew Rashbass invited our staff this year to help make
Euromoney a great place to work. We are conscious that staff
make choices about where to work based on a range of factors
and we must ensure that Euromoney can attract and retain
talented people.
There is more to do but I am delighted to see that our staff have
embraced these initiatives which we will continue to support.
Governance
I have already referred to the more diverse Board we now have.
In addition, independent Non-Executive Directors now form a
majority on the Board for the first time. The appointment of new
Non-Executive Directors has enabled us to increase the number
of Directors with relevant financial experience sitting on our
Audit Committee. This year also saw the formal closure of profit-
share and long-term incentive schemes, now replaced by the
Performance Share Plan we introduced in 2015.
My current focus is leading the process to appoint a new
Chairman. We are making good progress and expect to make our
appointment shortly.
With the support of our shareholders, the work of our colleagues
and the expertise of our Board, I am confident the Company will
continue to thrive.
David Pritchard
Acting Chairman
21 November 2018
Becoming a 3.0 business
B2B Information 1.0
B2B Information 2.0
B2B Information 3.0
Print
Digital
Embedded in workflow
Monologue
Dialogue
Part of the industry structure
Advertising-centric
Subscriptions
Licensing revenues based on
customer outcomes
Product-centric
Customer-centric
Solution-centric
We aim to anticipate our markets’ development to become 3.0
05
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Market overview
We serve markets that are or have the potential to
become what we call B2B 3.0 information markets
Asset Management
Pricing, Data &
Market Intelligence
Headwinds are squeezing asset management
fees. However, cost cutting, an increase in assets
under management and a strong stock market have
increased absolute industry profits.
MiFID II has changed the way that asset managers
pay for research which is increasing competition for
research revenue.
Price discovery is being used more deeply and
broadly. Benchmark prices are used for new
resources and new technology. Benchmarks are used
by suppliers, manufacturers and end users to give
pricing certainty across product life cycles.
The method of price discovery varies by industry but
prices are used in contracts for metals, telecoms and
infrastructure development among other segments.
Key market drivers
Key market drivers
• MiFID II is reshaping the way that asset managers
• Growth in the pricing market is driven by increased use of
buy research
benchmarks in financial contracts
• Strong stock market performance is increasing short-
• Technology and telecoms developments are creating
term revenue
new requirements
• Fees for traditional asset managers are being eroded
• New benchmarks are being developed for a wider range
of non-traditional commodities
Asset management income mix
Assets under Management Index (2011 = 100)
Metals market growth
LME Index price ($/tonne)
400
300
200
100
● Active Managers
● Passive Managers
3500
3000
2500
0
2011
2012
2013
2014
2015
2016
2017
2018
2000
2015
2016
2017
2018
Source: NDR Multi-Cap Institutional (Universe), S&P Capital IQ and MSCI, Inc (GICS).
Source: London Metal Exchange data from Bloomberg
Thomson Reuters, IHS Markit, S&P Dow Jones Indices
How we are responding
How we are responding
• We restructured our Investment Research Division to better
• We are entering new market segments through specialist
respond to the headwinds faced by our customers
events and prices
• We are investing in product development to increase value
for our customers
• We are simplifying our product portfolio to ensure focused
use of capital
• We have acquired Extel to bolster our rankings expertise
• We have acquired businesses which drive our growth such
as Random Lengths (price reporting) and TowerXchange
(telecoms)
• We constantly review our product-suite to identify new
opportunities for benchmark reporting
Links to strategic pillars
Links to strategic pillars
Our strategic pillars are described on page 12
06
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018
These markets are semi-opaque, where the information which
organisations need in order to operate effectively is hard to find.
This is how we are responding to the issues driving those markets
Banking & Finance
Commodity Events*
Central banks have begun to increase interest rates.
Benchmark rates in the UK and USA are at eight-
year highs, increasing banks’ revenue.
Recent tariffs and sanctions are impacting the
market, creating uncertainty and increasing prices
for some commodities.
Innovation in finance has reached a new level from
open banking and AI customer service to FinTech
and Bitcoin.
Regulatory relief and lower taxes in the USA are
encouraging investment and increasing competition.
US tariffs on steel and aluminium, along with
sanctions on some Russian producers, have
impacted the global metals trade. This has
increased volatility with prices rising sharply in
some markets while others are cautious.
Key market drivers
Key market drivers
• Rising interest rates result in increasing revenue for banks
• Electric vehicles are increasing demand for battery
• Digital capabilities are becoming more important
• US banks are investing and competing more aggressively
with their European counterparts
• Brexit continues to cause uncertainty in the sector
minerals, in particular lithium
• Chinese trade tariffs impact corn, soy beans, grain
and oilseeds
• Coal prices have stabilised after several years of decline
due to increasing demand in Asia
Banking market
S&P Banks Select Industry Index
1500
1250
1000
750
500
Commodity prices
Dow Jones Commodity Index
400
300
200
100
2015
2016
2017
2018
0
2015
2016
2017
2018
Source: S&P Dow Jones data from Bloomberg
Source: S&P Dow Jones data from Bloomberg
How we are responding
How we are responding
• We are expanding our marketing services for digital content
• We are developing new and expanded events for investors
marketing and thought leadership
in growing segments
• We are increasing our bank polls, awards and data
franchises to cover more markets in more detail
• We are using our global footprint in order to react to
favourable market conditions wherever they occur
• We are enabling banks to understand and communicate
• We are increasing our focus on the fast growing coal
their relative strengths to their customers
markets in Asia
Links to strategic pillars
Links to strategic pillars
* Following the disposal of Mining Indaba, the Commodity Events segment will be incorporated into the Pricing, Data & Market Intelligence segment in 2019
07
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Our business model
Our business model provides an operating framework for each
of our segments, enabling our businesses to serve our customers’
needs, thereby creating value for all of our stakeholders
Our people, brands and products
convene to meet our customers’ needs
We map our businesses along two
dimensions, industry structure and
cycle, to create our quadrants
>
People and culture
• Euromoney is known for its entrepreneurial culture.
We empower our teams to deliver the best for their
customers, businesses and fast-moving markets
• Our people are creative, action-orientated, close
to their customers, passionate about their brands,
knowledgeable about the industries they serve
and accountable for their results
• We have more than 1,600 staff working in 32 offices
across more than 10 countries who contribute to
our success
Customers
• We have a global customer base with revenues
split across UK (41%), North America (52%) and
Rest of World (7%)
• Our customers are financial institutions, investment
banks, commodity traders, miners, asset managers,
governments, corporations, professional service
providers, consultants and technology providers
• Our customers’ level of spend is affected by their
profitability, expectations of market developments
and the regulatory environment
• Our products enable our customers to operate
effectively in their market
Trusted brands
• We deliver products and services which are part
of our customers’ daily workflow
This creates our quadrants that identify
when and where to invest and where to
withdraw capital:
+
B2B information 3.0
3
Prepare for
the upturn
4
Invest
• Protect and enhance
• Develop new products
market position
• Invest for when the
cycle turns
• Acquire
• Invest in sales and
marketing
• Acquire
• Fix any operational
• Tighten cost control
deficit
• Fix any operational deficit
• Accelerate transition
to 3.0
-
Challenged
market
1
+
Strong
market
tailwinds
2
Disinvest
Use the time wisely
• We have globally recognised and trusted brands
• Maximise short-term
• Invest modestly to move
• We have long-standing relationships with buyers
and sellers
Agile products and technology
• We use a central stack that provides a scaleable
technology platform for our businesses
• Our technology teams implement and maintain
specific systems within their own businesses that
enable them to operate effectively
• Where possible we use cloud-based non-configured
services to reduce cost and complexity
• We benefit from a best-of-both-worlds approach to IT
that creates scale and flexibility
profit and cash
to top-right
• Divest
• Prevent future build-up
• Maximise short-term
profit and cash
• Fix any operational deficit
• Consider divestment
-
B2B information 1.0
The quadrants guide our investment decisions, capital
allocation and define our strategic priorities
Read more on page 12
08
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 We create content such as data, research, analysis and
rankings that can be used across a range of different services
The characteristics of our businesses mean
that our products and services are scalable
and cash generative
>
Creating value for
our stakeholders
Create once, sell many
We create content such as data,
research, analysis and rankings that
can be used across a range of different
services. This reduces production costs
and increases margin.
Must-have content
We provide must-have and hard to get
information. We serve markets where
the information organisations need in
order to operate effectively is hard to
find. Therefore, in the markets we serve,
many of our customers do not regard our
services as a discretionary spend.
Recurring revenues
The majority of our revenues are
subscription based and therefore
predictable and recurring. The majority
of our events are repeat events. This
enables us to accurately predict revenues
and results in stability for our businesses.
+
>
Low capital intensity
Our businesses and products use
common infrastructure, skill sets and
have a high cash conversion rate. This
reduces working capital requirements
and improves cash flow.
We generate revenue in the following ways
Subscriptions and
content revenues
are the recurring subscription and
licence fees that customers pay
to receive access to the Group’s
information through tools and platforms
which form part of our customers’ daily
workflow. Asset managers also subscribe
to Institutional Investor’s exclusive
membership groups.
+
Delegate revenues
are fees paid by customers to attend
conferences, training courses or
seminars.
Sponsorship revenues
are fees paid by customers to sponsor or
be associated with an event.
Advertising revenues
are fees paid by customers to place an
advertisement in one or more of our
publications.
As well as selling more traditional brand
and product advertising, we also meet
our customers’ thought-leadership
marketing needs.
Shareholders
We allocate and recycle capital
efficiently to good organic and
inorganic opportunities via our
investment quadrants. Our ambition is
to generate consistent and meaningful
returns for our shareholders at
relatively low risk.
We have increased our dividend
payment from 30.6p to 32.5p.
Customers
We deliver products and services that
support our clients’ critical activities
and in particular serve markets which
are semi-opaque, that is, where there
is information which our customers
need in order to operate effectively but
is hard to find.
We are developing into a 3.0 business
to more effectively serve our customers.
Partners
We collaborate with our partners in
mutually beneficial ways to enable us
both to understand and serve each
other’s markets better.
We are building strong and long-term
relationships with key partners to help
us execute our strategy.
Employees
We serve our four segments through
six divisions supported by strong
central functions. This ensures that our
employees can be expert, creative,
action-oriented and customer-focused
and take advantage of Euromoney’s
scale, share best practice, operate
strategically and create career paths
for themselves and their colleagues
across the Group.
We have developed new training for
our leaders, managers, sales people
and recruiters among others.
09
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Chief Executive’s Strategic Review
Our best-of-both-worlds
operating model enables
us to serve our customers
more effectively
Overview
At our Investor Day in March 2016 we said that 2017 would be a
year of transition and 2018 a year of growth. In fact, we returned
to growth in 2017 and that growth has continued during 2018.
Both underlying profit and revenue are ahead of last year.
We continue to invest in Pricing, Data & Market Intelligence
and have seen strong growth in this segment. This growth has
outpaced the headwinds buffeting our Asset Management
segment which continued to challenge our investment research
businesses, BCA and NDR, whose customers are reducing
research spend, a trend which has been accelerated by MiFID II.
We have taken action to address these challenges by reducing
costs significantly. We are also prioritising investment in product
development for research areas where we see growth and in sales
and marketing.
M&A remains a core part of our strategy and we recycled capital
this year by selling businesses which do not align with our strategy.
The sales of our Global Markets Intelligence Division (GMID), our
minority stake in Dealogic, and Mining Indaba (completed shortly
after year-end) are examples of this.
Our strong balance sheet means when assets become available
we can make acquisitions which align with our strategy. During the
year, we acquired Random Lengths, TowerXchange and Extel.
We are investing time and money in developing our people. I am
delighted at the response from our staff across the world to our
challenge to them to help us make Euromoney a better place to
work. Although there remains much to do, it is rewarding to see
how engaged our people are in this. Our Group Management
Board sponsored a range of activities to make all staff feel
Euromoney is a place where they can thrive personally and
professionally. As a result, we now have a wide range of groups
which are run by our staff. These include Women@Euromoney,
environment@Euromoney, a LGBT&A group, a Race, Faith &
Inclusion group and a Well-being Forum. You can read more
about these initiatives in the CSR section on page 22.
Strategy
Our strategy is to manage a portfolio of businesses in markets
where information, data and convening market participants are
valued. We deliver products and services that support our clients’
critical activities. We look to serve markets which are semi-opaque,
that is, where the information which organisations need to operate
effectively is hard to find.
Our strategy is designed to develop the businesses we own and
deliver strategic, timely and well-executed acquisitions and
disposals. We aim to allocate and recycle capital efficiently to
good organic and inorganic opportunities via our investment
quadrants. Our ambition is to generate consistent and meaningful
returns for our shareholders at relatively low risk.
I am constantly impressed
by the commitment, energy
and determination of our
exceptional people – our
results are down to them.
Andrew Rashbass
Chief Executive Officer
10
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 We characterise the business models of B2B information
companies into three generations, which we call B2B Information
1.0, 2.0 and 3.0. Their characteristics are set out on page 5.
Capacity Media, one of our largest events, welcomes more than
2,000 visitors
As we manage our portfolio to achieve our strategy and to
become a 3.0 business, we categorise our businesses into four
quadrants. We allocate capital to the top two quadrants and
withdraw capital from the bottom two. This quadrant-based
assessment leads to three pillars of strategic activity which we
describe on pages 12 and 13.
Performance for the year
We have delivered a robust performance over the year. Overall,
statutory revenue is up 1% year-on-year. The adjusted operating
profit and adjusted profit before tax are both up 3% on last
year. Total revenue is down 3%, reflecting only seven months
of revenue from GMID, which we sold during the year, and
currency headwinds.
The Pricing, Data & Market Intelligence and Commodity Events
segments performed very strongly, contributing to our growth,
whereas the Asset Management segment, in particular BCA
and NDR, continued to hold back the Group’s performance.
We have taken strategic actions to address these challenges.
Advertising revenues continued to decline, though they now make
up less than 9% of the Group’s adjusted revenues.
Our full-year adjusted profit before tax of £109.2m represents an
encouraging performance for the Group, with adjusted diluted
earnings per share growing 6% to 81.3p from 76.4p last year.
Statutory profit before tax of £161.2m is higher than adjusted
profit before tax largely due to exceptional gains relating to
our disposals. In addition, we continue to achieve strong cash
conversion with underlying conversion of adjusted operating profit
to cash in the year at 102%.
Outlook
We remain confident about the prospects for continued, strong
growth for our Pricing, Data & Market Intelligence segment which
includes the majority of what we call our B2B 3.0 businesses.
Our investment research businesses will continue to face
tough market conditions. We therefore expect to see continued
divergence in subscriptions performance between the Pricing,
Data & Market Intelligence and Asset Management segments.
Our strategy continues to deliver growth in our businesses and
value for our shareholders. However, we enter the new financial
year with uncertainty around Brexit and this could disrupt our
customers and therefore us. That said, Euromoney is made up
of exceptional people and I am constantly impressed by their
commitment, energy and determination to win whatever the world
throws our way. I would like to thank them all for their hard work –
our results are down to them.
Adjusted profit before tax
+3%
Statutory profit before tax
£161.2m
Underlying revenue growth
+3%
Our Board
In closing, I would like to note two retirements and one joiner.
Colin Jones became Euromoney’s Finance Director in 1996.
Colin has a well-deserved reputation among our shareholders
for his part in stewarding Euromoney for more than two decades.
I would like to thank Colin for his outstanding contribution and
for his openness to change over the past three years. At the same
time, I would like to welcome Wendy Pallot who succeeds Colin.
In her first few months, Wendy has already demonstrated how her
skills and experience will help us seize opportunities in potentially
turbulent times for our customers and for information businesses.
Finally, I would like to thank Sir Patrick Sergeant who retired from
the Board this year. Euromoney will be 50 years old in 2019 and our
plans for celebrating this milestone of course include recognising
Sir Patrick’s foundational role. I did not know Sir Patrick before I
joined Euromoney and I have been amazed at his openness to
change in the business he started. I have gained enormously from
his clear-sighted sense of priorities. I am delighted that I and the
rest of the Board will continue to tap into Sir Patrick’s wisdom in his
role as Life President.
Andrew Rashbass
Chief Executive Officer
21 November 2018
11
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Chief Executive’s Strategic Review
continued
Active quadrants
Non-active quadrants
3
Prepare for
the upturn
1
Disinvest
4
Invest
2
Use the
time wisely
3
Prepare for
the upturn
1
Disinvest
4
Invest
2
Use the
time wisely
Strategic pillars
3
Prepare for
the upturn
1
Disinvest
4
Invest
2
Use the
time wisely
Invest around
the big themes
Transform the
operating model
Actively manage
the portfolio
• Price discovery
• Proprietary, must-have market
intelligence
• Post-trade activities
• Telecoms
We deploy capital to invest in
the themes which best serve our
customers’ critical needs. We invest
in our existing businesses and also
through acquisitions.
• Our target business model
• Dispose of non-strategic assets
to free up capital
• Acquire businesses consistent
with our investment priorities
We continue to manage our portfolio
by investing in our big themes,
removing the bottom-left quadrant
drag of businesses that are structurally
challenged and finding better owners
for businesses that do not fit our strategy.
(page 8)
• A best-of-both-worlds operating
model encompassing four
segments, six divisions and
central functions
• An entrepreneurial culture
combined with the benefits of an
efficient, capable corporation
Our best-of-both-worlds operating
model continues to strengthen under the
leadership of our Group Management
Board where the heads of our business
divisions come together with the
heads of our functions to serve our
four segments.
12
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Strategic progress in 2018
Invest around
the big themes
Transform the
operating model
Actively manage
the portfolio
Acquisitions remain an important part
of our strategy. We have a record of
identifying good businesses where our
ownership adds value. We also sell
businesses where we believe we are
not the best owners. This generates
capital to invest in other parts of our
business and in acquisitions which fit
our strategy.
Progress made in 2018
• Disposed of Adhesion and World
Bulk Wine, II Journals, GMID and our
minority stake in Dealogic
• Acquired Random Lengths,
TowerXchange and Extel
• Successfully integrated RISI
How we measure progress
We have invested £30m in acquiring
new businesses aligned with
our strategy.
Priorities for 2019
M&A will continue to be important
to our strategy to accelerate the
Group’s transition towards a B2B 3.0
information business. We will also
continue to disinvest where a business
does not align with our strategy, as
demonstrated by the sale of Mining
Indaba in October 2018.
We look to serve semi-opaque markets
where the information organisations’
need to operate effectively is hard to
find. This determines our big themes
which include price discovery, post-
trade activities, proprietary, must-have
market intelligence and telecoms.
Progress made in 2018
• Investment in the creation of
Fastmarkets (encompassing Metal
Bulletin, American Metal Markets
and Industrial Minerals) to provide
our customers with one definitive
source for commodities pricing, data
insights and events
• The successful integration of
RISI and Random Lengths
into Fastmarkets
• Acquisition of TowerXchange to
provide our Telecoms customers
with access to the leading source of
information on the telecoms tower
and mobile infrastructure markets
How we measure progress
The Pricing, Data & Market Intelligence
segments underlying revenue
increased by 9% and underlying
operating profit by 18% (see page 20).
Priorities for 2019
We will continue to invest in
Pricing, Data & Market Intelligence.
Fastmarkets and Telecoms will remain
an important theme and we will
continue to look out for acquisitions.
We have developed what we call
a best-of-both-worlds operating
model. Euromoney is known for its
entrepreneurial culture – our people
are creative, action-orientated, close
to their customers, passionate about
their brands, knowledgeable about the
industries they serve and accountable
for their results. Across four segments we
are structured as six divisions supported
by central functions. This ensures we take
advantage of Euromoney’s scale, share
best practice, operate strategically and
create career paths for staff across the
whole company.
Progress made in 2018
• Launched our Global Finance
Transformation Programme to improve
the Group’s reporting and analytical
capabilities while reducing cost and
standardising controls
• Developed an action-oriented
approach to risk management,
for example, in the creation of
risk-management tools for our
events businesses
• A more rigorous approach to hiring
senior roles
• Created a Senior Management Group
of approximately 75 people across
the Group
• Investing in our people through
leadership and management courses
and an early career academy
How we measure progress
More than 200 staff have attended
at least one of our new development
courses during the year.
Priorities for 2019
Continued investment in our staff to
ensure continued collaboration between
our divisions and central functions to
ensure that our best-of-both-worlds
operating model delivers value across
our segments to our customers. In 2019,
we will roll out a company-wide
sales academy.
13
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Strategic Report
Our strategy in action
Bringing together
commodities pricing
under a single brand
Case study: consolidating our price reporting businesses
range through a common brand
We have been identifying price benchmarks for commodities
since 1882. Over the last year, we have consolidated our cross-
sector price-reporting businesses under Fastmarkets, a common
brand. As a result, we can now provide our customers with a
single, definitive source for commodities data and insights.
The Fastmarkets team is made up of 400 employees across
14 global offices providing over 5,000 price references and
benchmarks to enable the international trade of metals,
minerals, lumber, pulp, paper and container board.
Fastmarkets prices are supplemented with world-class events,
news, market intelligence and forecasts for its markets.
In addition, we have completed the successful integration
of RISI into our business and continued to invest through the
acquisition of Random Lengths, a leader in wood products
pricing, which is complementary to our existing strength in
global pulp and paper prices.
We are investing in our products by developing prices for
commodity exchanges and transforming our prices into
benchmarks. We were selected this year by the London Metal
Exchange to provide settlement prices for five cash-settled
derivatives, which are expected to launch in 2019. In addition,
NASDAQ announced the launch of its first metal derivative
with a contract settled against our AMM Midwest Shredded
benchmark price.
We are investing in technology by developing a new
consolidated platform that will better serve our customers,
providing a dedicated portal for our pricing, workflow and
advanced data tools. Finally, we continue to lead the market
through our alignment to the International Organization of
Securities Commissions (IOSCO) principles, providing our
customers with confidence in the integrity and accuracy of
our prices.
Our success is built on
providing value for our
clients through the
way we deliver and
develop our prices.
Raju Daswani
CEO, Fastmarkets
14
Euromoney Institutional Investor PLC Annual Report and Accounts 2018
Our strategy in action
Selling good
businesses to buy
strategic ones
Case study: recycling capital
Active portfolio management and recycling capital are
fundamental parts of our strategy. We are evolving our
portfolio of businesses to provide our customers with B2B 3.0
information services.
In September 2017, we announced our intention to explore our
strategic options for our Global Markets Intelligence Division
(GMID), consisting of the CEIC and EMIS brands. We began a
sales process and in April 2018, we concluded the sale of GMID
to CITIC Capital Holdings and Caixin Global for an equity value
of $180.5m.
GMID was and remains a leader in emerging market data and
analysis, however, as a business it did not match our big themes.
It is an example of how we will sell good businesses which do not
fit our strategic priorities or main investment themes, to enable
us to invest in new businesses that will continue our acceleration
towards becoming a B2B 3.0 business.
Our acquisitions of Random Lengths, Extel and TowerXchange
are examples of the recycling of this capital towards our
big investment themes. These will support the continued
development of our Fastmarkets, Institutional Investor and
Telecoms divisions.
We will sell good
businesses that do not
fit our strategy in order
to generate capital for
ones that do.
Andrew Himsley
Global Head of
Corporate Development
Euromoney Institutional Investor PLC Annual Report and Accounts 2018
15
Strategic Report Strategic Report
Our strategy in action
Consolidating as
one digital brand
Case study: moving Institutional Investor to digital only
In April 2018, we took the decision to cease printing Institutional
Investor magazine after 51 years and 588 issues.
We had started to migrate Institutional Investor away from print
and towards digital media many years ago. The decision to
cease printing was the final step to ensure we can deliver on
our customers’ need to measure the return on investment of their
advertising spend.
Our Institutional Investor business has performed well this year,
but our flagship print title had over the last few years moved into
our bottom-left disinvest quadrant. Disinvesting is not only about
selling businesses; it’s also about redirecting capital away from
products which could create a drag on an individual business,
and moving it towards services which are growing and therefore
merit increased investment.
At Institutional Investor we are investing in our industry-renowned
research businesses and in-person events businesses. We will
continue to serve our loyal readership through the strongly
growing Institutional Investor website and investing in the
awards and events which enable its readership to network
and convene in person.
Our investor
community values our
ability to bring them
together at ‘must
attend’ events.
Kip McDaniel
Chief Content Officer
and Editor-in-Chief,
Institutional Investor
16
Euromoney Institutional Investor PLC Annual Report and Accounts 2018
Our strategy in action
Risk management
in context
Case study: risk management in action
Successful risk management results in better business outcomes,
which is why we have invested time this year designing a risk
management framework for our events businesses across the
Group. For example, our Telecoms division hired a full-time
Risk and Compliance Officer to work closely with the division’s
event teams at both the planning, operational and post-event
stage. As a result, we are embedding risk management into our
processes and creating a more risk-aware culture.
Our framework enables our event managers to identify and
manage risks specific to an event in a consistent way. It covers a
range of areas including business continuity, disaster recovery,
health and safety, venue risk assessments and compliance.
Our events and risk teams worked closely together at one of
our largest commodity events of the year on areas as diverse as
event security, media planning and health and safety standards.
The results have been mutually beneficial; the risk team now has
a better understanding of the logistical challenges of running
an event in real-time, improving their approach to the practical
management of risk, while the events team benefits from seeing
risks managed in a systematic way.
We have seen the benefits of the policy in action, for example,
by navigating the potential hazards of a drought in one of our
event host cities and the successful operation of an event in
another city at a time of political instability.
The work we have done in this area is an example of our
best-of-both-worlds operating model in action. We plan to build
on it in the coming year.
We recognise that
successful risk
management results
in better business
outcomes.
Brenda Begg
Risk and
Compliance
Officer
Ros Irving
Divisional
Director
Euromoney Institutional Investor PLC Annual Report and Accounts 2018
17
Strategic Report Key performance indicators
The Group monitors its performance against its strategy
using the following key performance indicators
Key
Invest around big themes
Transform the operating model
Actively manage the portfolio
Relevance
Performance
Narrative
Adjusted profit before tax (£m)
Euromoney actively manages its
portfolio and allocates capital to
increase adjusted profit before tax over
the long term. The definition of adjusted
profit before tax is set out on pages 27
and 28.
116.2
107.8
102.5
106.5
109.2
Adjusted profit before tax increased by 3%
to £109.2m, reflecting the successful delivery
of our strategy and portfolio management,
assisted by a continued focus on cost control
and lower interest costs following the
repayment of our term loans in May 2018.
2014
2015
2016
2017
2018
Underlying revenue growth
Underlying revenue growth compares
revenues on a like-for-like basis and
is an important indicator of the health
and trajectory of our segments and
the Group as a whole. The definition
of underlying revenue is set out on
page 29.
3%
3%
(1%)
(4%)
(4%)
2014
2015
2016
2017
2018
Underlying revenues grew by 3% mainly due
to continued strong performance from the
Pricing, Data & Market Intelligence segment
and improved sentiment in the banking and
commodities markets. This growth was partly
offset by weak performance in the Asset
Management segment (in particular in our
BCA and NDR businesses). The headwinds
faced by the Asset Management segment
from the reduction in clients’ research spend
have been accelerated by MiFID II.
Subscription Book of Business
Book of Business (‘BoB’) represents
the annual contracted values for
subscriptions across the Group and
reflects the impact of new sales, price
increases, upgrades, downgrades and
full cancellations. It is a key indicator of
the Group’s subscriptions growth.
1.4%
0.8%
0.9%
0.4%
2015
2016
2017
2018
The subscription BoB growth was 0.9% at
the end of September 2018 reflecting the
continued headwinds affecting our Asset
Management segment offsetting most of the
strong growth in the Price, Data & Market
Intelligence segment.
Subscription share of total revenues
Subscription-based products usually
have the advantage of premium prices,
high renewal rates and high margins.
55%
58%
51%
61%
59%
The Group’s proportion of revenues derived
from subscription and content-related
products has reduced slightly to 59% of its
total revenues.
2014
2015
2016
2017
2018
The key performance indicators are all within the Board’s expectations and are discussed in detail in the operating and financial review on pages 24 to 30.
A detailed reconciliation of the Group’s adjusted and underlying results to the equivalent statutory measures is set out on pages 27 to 29.
All adjusted measures combine the results of the Group’s continuing and discontinued operations as the discontinued operations were managed as part of the Group until their disposal in April
2018. Underlying measures reported in 2017 included the adjusted results of continuing and discontinued operations and are stated at constant exchange rates, including pro forma prior year
comparatives for acquisitions and excluding disposals and significant event timing differences. In 2018, the underlying measures are on the same basis but exclude discontinued operations. This
means that the 2018 underlying measures only reflect the performance of the continuing businesses.
18
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Relevance
Performance
Narrative
Adjusted operating margin
The movement in adjusted operating
margin measures the efficiency of the
Group. Consistent operating margin
improvement is a business imperative,
driven by investment choices, our focus
on driving out costs and improving mix.
The calculation of adjusted operating
margin is set out on page 28.
30%
26% 25% 25%
27%
The adjusted operating margin increased
from 25% to 27% due to the impact of our
strategic pillars: investing around the big
themes, transforming the operating model
and actively managing the portfolio.
Adjusted diluted earnings per share
2014
2015
2016
2017
2018
Management seeks sustained long-
term growth in adjusted diluted
earnings per share to maximise
overall returns to our shareholders.
The definition of adjusted diluted
earnings per share is included on
page 111.
70.6p
70.1p
66.5p
76.4p
81.3p
The increase from 76.4p to 81.3p reflects the
improvement in adjusted profit before tax
and the benefit of the share buyback.
Adjusted cash conversion rate
2014
2015
2016
2017
2018
Cash conversion is a measure of
the quality of Euromoney’s earnings.
The objective is to achieve consistent
conversion of earnings into cash in
excess of 100%. This KPI measures the
percentage by which cash generated
from operations covers adjusted
operating profit. The definition of
adjusted cash conversion rate is set out
on page 29.
105% 102%
110%
98%
92%
The adjusted operating cash conversion
rate was 98% (2017: 110%). Last year’s rate
was inflated following a concerted effort to
improve working capital. After adjusting for
timing differences and exceptional items, the
underlying cash conversion rate was 102%
(2017: 118%).
2014
2015
2016
2017
2018
Adjusted net (cash)/debt to EBITDA
The Group’s strategic priority is to keep
net debt below three times EBITDA.
The amount of the Group’s net (cash)/
debt to adjusted operating profit and
share of results in associates and joint
ventures before depreciation and
amortisation of licences and software
is adjusted for the timing of acquisitions
and disposals. The calculation of
adjusted net (cash)/debt to EBITDA is
set out on page 30.
Employee engagement
1.24
0.30
(0.15)
(0.74)
(0.69)
2014
2015
2016
2017
2018
At 30 September, the Group has net cash
of £78.3m, reflecting the net proceeds from
the disposal of GMID and the minority stake
in Dealogic. Following these large disposals
and continued strong operating cash flows,
in May 2018 the Group repaid the term loans
used to fund last year’s share buyback and
increased the maximum size of its revolving
credit facility to £240m (from £130m).
In 2018, we launched our first global staff survey. Ensuring our employees have a voice and are heard is important to us and is
key to the successful delivery of the Group’s strategy. We will be monitoring the percentage of our staff, worldwide, who choose to
participate in the survey as a benchmark for monitoring the progress we make in our employee engagement in the future. We may
in future derive other KPIs from the survey once it becomes embedded across the Group.
The percentage of people participating in our global staff survey was 62%.
19
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Segment review
We operate as four segments which are served through six divisions
Asset Management
The Asset Management segment includes our brands and
businesses that serve the global asset management industry.
This segment provides independent research that enables our
clients to make informed investment decisions; runs networks
and conferences that bring asset allocators and asset
managers together in an effective and efficient way; and
provides news and data that are critical for the industry to stay
informed and make deals in an increasingly complex world.
Its main brands include BCA, Ned Davis Research (NDR) and
the Institutional Investor family of businesses.
Almost 80% of the segment revenues are derived from
subscriptions to research and data products and from annual
membership fees.
Segment**
Revenue
Adjusted operating profit
2018
£m
151.0
61.1
2017*
£m
Movement
%
Underlying
%
167.9
68.2
(10)
(10)
(4)
(4)
Adjusted operating margin 40% 41%
Asset Management revenues decreased by 10% to £151.0m.
Underlying revenues also declined by 4%, mainly reflecting
the reduction in client research spend which has been
accelerated by MiFID II.
As a result of these headwinds, the adjusted operating
margin declined from 41% to 40%. Operating margins fell,
however, this was kept to a 1% decline due to the Group’s
rigorous approach to capital allocation and cost control as
the challenging headwinds in asset management continued.
During the year, our asset management businesses shifted
from the top-left to become quasi bottom-left quadrant
(treating the businesses as bottom-left although they are
not). Strategic actions were taken to tackle these challenges
and the segment’s businesses took quasi bottom-left actions,
implementing profit protection measures to minimize the
impact on the adjusted operating profit, which also declined
4% on an underlying basis.
Pricing, Data & Market
Intelligence
The Pricing, Data & Market Intelligence segment houses
businesses spanning many industries that provide
information and analysis critical for our clients’ business
processes and workflows. The segment’s largest business
is Fastmarkets, a leading price reporting agency for the
metals and mining industries. It also includes our businesses
active in the telecoms, insurance and airline industries.
Approximately two-thirds of the segment’s revenues are
derived from subscriptions.
Price discovery is a big theme and is expected to grow
significantly as industries seek more transparency around the
prices and risks they face in their traditionally opaque markets.
In April 2018, we disposed of GMID which was included in this
segment and contributed significant revenue.
Segment**
Revenue
Adjusted operating profit
53.2
45.8
Adjusted operating margin 37% 37%
2018
£m
2017*
£m
Movement
%
Underlying
%
144.7 124.0
17
16
9
18
Excluding GMID, revenue increased by 17% to £144.7m.
Excellent performances from Fastmarkets, Insurance Insider
and strong growth from RISI, since its acquisition in April 2017,
increased underlying revenues by 9%. The disposal of GMID
and a strong focus on cost control retained the segment’s
adjusted operating margin at 37%. The segment has seen
significant investment and allocation of capital continues to
drive revenue opportunities. On an underlying basis, adjusted
operating profit was up 18%.
Segment revenue by type (%)
Segment revenue by type (%)
Subscriptions and content
Subscriptions and content
13
8
Advertising
Events
79
Advertising
Events
25
12
63
*
The 2017 adjusted operating profit by segment has been restated to reflect a change in the way unallocated corporate costs are recharged. From 1 October 2017, central costs, over
which a segment had no influence, were not recharged to that segment. This restatement has no effect on the total Group results but reflects the operating profit of each segment as if the
new recharge methodology had been applied from 1 October 2016. Central costs of £17.6m were reallocated to unallocated corporate costs.
** Revenue and adjusted operating profit by segment excludes all sold/closed businesses.
20
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Banking & Finance
Commodity Events
Banking & Finance provides market intelligence, news,
training and conferences to the global finance industry.
It includes the flagship Euromoney magazine, a leading
publication for the global banking sector, which, through
its awards for excellence, has been the arbiter of status for
banks for over 45 years. Its conferences under the Euromoney
and IMN brands are the pre-eminent events for their industry
sectors. This segment derives over 70% of its revenues from
delegates and sponsorships for its events.
Segment**
Revenue
Adjusted operating profit
2018
£m
70.7
17.7
2017*
£m
Movement
%
Underlying
%
69.7
17.0
1
4
5
10
Adjusted operating margin 25% 24%
The strong performance of IMN events increased revenues
by 1% to £70.7m. We eliminated low-margin events and
training courses to focus on large events which increased
underlying revenues by 5%. This was supported by success
in the strategic investment in thought-leadership products in
Euromoney magazine.
The focus on larger events and training courses and strong
performance in the IMN business, improved adjusted
operating margin from 24% to 25%. As a result, on an
underlying basis, adjusted operating profit increased by 10%.
We convene the leading conferences in the metals,
agriculture and energy sectors with our commodity events.
Most of the conferences are large deal-making events,
bringing the whole industry together to conduct business and
exchange market intelligence.
Segment**
Revenue
Adjusted operating profit
2018
£m
20.8
9.1
2017*
£m
Movement
%
Underlying
%
19.7
7.7
6
18
9
25
Adjusted operating margin 44% 39%
Strong performance in core events increased revenue by 6%
to £20.8m and underlying revenue by 9%.
Due to the focus on cost control and an excellent performance
in Mining Indaba, adjusted operating margin increased from
39% to 44%. Underlying operating profit increased by 25%.
In October 2018 we announced the sale of Mining Indaba
to ITE Group plc. This is in line with the strategy of actively
managing our portfolio and selling businesses which do not
fully align with our strategic priorities in order to recycle capital
towards our big investment themes. Following this disposal,
the Commodity Events segment will be removed for reporting
purposes. We will move the remaining commodity events into
the Pricing, Data & Market Intelligence segment to reflect how
they will be managed in future.
Segment revenue by type (%)
Segment revenue by type (%)
1
2
12
12
Subscriptions and content
Advertising
Events
Other
Events
Other
74
99
21
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Corporate and social responsibility
Last year, we said we had more to do in the area of corporate
and social responsibility. Our staff have helped us make significant
progress in a range of areas, but there remains much to do
Staff survey
This year we conducted a global staff survey for the first time.
The feedback was clear: our people want to feel more valued.
Let me give you two examples. Pay is towards the top of the
list. As a result, we will benchmark more against the market.
Flexible working is also important to our staff. Therefore, we have
introduced a global flexible working framework and are training
all our managers on how to accommodate flexible working within
their teams. We will assess our progress in these and other areas
raised by our staff by conducting regular surveys.
Investing in talent
At Euromoney we have always given people responsibility early
in their careers. This year we have focused on training managers
and our future leaders. Over the year, more than 200 colleagues
have attended courses run in London, Hong Kong, Montreal,
and New York, learning the core skills needed to be a successful
manager and leader at Euromoney. We have also introduced an
early career Academy for staff in the first five years of their career to
learn about key business and career-development themes.
Making Euromoney a great place to work
We have set our colleagues across the world a challenge – to
help us make Euromoney a great place to work. They have
responded enthusiastically.
Our Women@Euromoney group hosts monthly meetings and
workshops, often with guest speakers, to empower and inspire
women to go further in their careers.
Our Well-being Forum focuses on the important issue of well-being
in the workplace, with a particular emphasis on mental health.
The London group recently hosted a mental health workshop
with a speaker from the Samaritans. We want to support our staff
whatever the health issues they face.
Passionate environmentalists run our environment@Euromoney
group. Early initiatives include ‘bee hotels’ and bee-friendly plants
on the roof of our London office. The group members have
also used their volunteer days to clear litter from
riverbanks and beaches, with more projects
planned for the coming year.
Empowering and
inspiring women
Case study: Women@Euromoney
Women@Euromoney launched in November 2017 and we
have run at least one event or workshop every month since.
I chose to get involved because I loved the idea of having
a creative outlet for an already deep-seated passion for
diversity and gender equality.
We now have a membership of almost 400 people from
many different functions and regions across the Group.
Our purpose is to empower and inspire women to go further
in their careers; drive constructive dialogue on gender issues;
build a stronger community across Euromoney businesses
and functions; and make Euromoney a better place to work
for everyone.
Over the last year, we have run a wide range of successful
events for both female and male staff across the Group.
These have included the ‘How to be a better boss with
Radical Candor’ presentation by the best-selling author,
CEO advisor and ex-Googler Kim Scott; various workshops
on mortgages, Euromoney’s gender pay report and personal
branding; and an inspiring talk from the acclaimed tech
entrepreneur and philanthropist Dame Stephanie Shirley.
The initiative has succeeded because we listen to the insights
and feedback provided by our members when organising
events and the strong can-do attitude that fuels the Women@
Euromoney steering committee. We love working together and
seeing the impact that we have made so far and this is just
the beginning!
Our plans for 2019 include a big event for International
Women’s Day, a ‘Where’s the Line?’ campaign to address the
grey areas of inappropriate behaviour and more workshops
on issues such as pensions and investing.
Women@Euromoney
is already making an
impact and we have
lots of initiatives
planned for 2019.
Izzy Griffin-Smith
Co-network Chair,
Women@Euromoney
22
Euromoney Institutional Investor PLC Annual Report and Accounts 2018
Strategic Report
Our LGBT&A and Race, Faith & Inclusion groups are also working
hard to enable our colleagues to reflect their full personality and
backgrounds at work, which we believe leads to greater staff
engagement and better performance.
For Euromoney these are welcome developments and we are lucky
to have an engaged workforce keen to participate for the benefit
of all.
Gender diversity
Our Board is now more diverse than ever. This year, Imogen
Joss, Lorna Tilbian, Jan Babiak and Wendy Pallot joined. We are
delighted to have attracted such talented executives to join
the Company.
We still have more to do to make sure we are recruiting and
promoting more women to senior positions. The charts below
summarise our gender split at Board, Group Management Board,
senior management and Company level.
Our Code of Conduct states that recruitment, promotion and
remuneration decisions must be made on merit, irrespective of, for
example, gender, sexual orientation, disability, race or age.
Our gender pay gap analysis (available on our website) shows
that although men and women are paid equally for doing
equivalent jobs across the business in the UK, the average pay
for women is substantially lower than the average pay for men.
This gap is driven by the under-representation of women in
more senior roles. We are taking steps to reduce the imbalance,
including, for example, making sure shortlists for senior roles
include talented female candidates.
Staff forum
We will shortly introduce an elected employee forum to allow us
to consult staff on issues such as working conditions, employee
relations, pay and staff engagement.
Volunteer days
This year we introduced two paid volunteering days each
year, making it easier for staff to participate in the causes they
care about.
Gender diversity charts
Board
Group Management Board
Male
Female
4
11
7
4
10
6
Male
Female
Senior managers
Total employees
Male
Female
Male
Female
755
1,655
900
25
82
57
Environment
Last year, we said we would ask our staff for their ideas around
the environment. The result was the creation of our environment@
Euromoney group. In the UK, the Group has spent time
understanding how we procure our utilities and recycle our waste
– our London business now uses a zero emissions green electricity
tariff, recycled printing paper and we work with First Mile recycling
to dispose of the office’s waste. In January, we won the Gold
Award at the City of London Clean City Awards Scheme for our
approach to recycling.
The environment group is now thinking about how to reduce the
Company’s total carbon footprint. We continue to do the easy
things like switching the lights off at night and including shower
facilities for staff who cycle or run to work, as well as participating
in the UK Bike2Work scheme.
We aim to roll out the environment group beyond London.
Social investment
Our staff drive our charity fundraising which comes from both
individual fundraising efforts and the Group’s charitable budget.
In New York, our colleagues have volunteered at The Bowery
Mission, a rescue mission which supports homeless New Yorkers.
The US team has also assembled backpacks for The Children’s
Village, which assists vulnerable children across the world, and
participated in City Harvest’s ‘Skip Lunch Fight Hunger’ fundraising
drive. In Asia, employees from our Hong Kong office used their
volunteer days to help Hong Kong Cleanup, collecting rubbish
from Big Wave Bay Beach following a typhoon. The environment@
Euromoney team in London used their volunteer days helping
on a wood clearance project. In addition, our Capacity Media
team organised a charity run at ITW supporting Telecoms Sans
Frontieres. Overall, through a combination of Group donations
and staff fundraising, approximately £0.3m has been raised for
charitable causes, including significant donations or pledges
to Haller, Afghan Connection, Haven House, AbleChildAfrica
and Orbis.
2019
We said last year, and it continues to be largely true, that
Euromoney is well known as a place where entrepreneurs do
well. We also said that in the past this might have meant we have
overlooked people with different skills and motivations as well as
some of the benefits of being a large group. Our aim is to create
an environment where we have the best of both these models.
We are proud of how our staff are now taking the lead to ensure
that Euromoney really can be a place where staff experience, and
benefit from, our best-of-both-worlds operating model.
This will enable us to attract and retain the right talent, which in
turn has benefits for our other stakeholders – our customers, our
shareholders and the communities in which we operate.
If we can attract and retain the
right talent, this will benefit our
customers, shareholders and the
communities in which we operate.
Andrew Rashbass
Chief Executive Officer
23
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Operating and financial review
2018 was a successful
year for Euromoney
Underlying revenue
grew 3%, driven by a
strong performance in our
Pricing, Data & Market
Intelligence segment.
Wendy Pallot
Chief Financial Officer
24
Revenue
Underlying revenue grew 3%, driven by a strong performance in
our Pricing, Data & Market Intelligence segment as we continue
to evolve towards a 3.0 business model. Total revenue for the
year decreased by 3% to £414.1m, largely because of the disposal
of GMID in April 2018 and stronger sterling compared to the US
dollar. Statutory revenue increased by 1% to £390.3m.
The Group’s businesses focused on price discovery, data
and market intelligence, performed strongly, with underlying
operating profit growing 18%. Subscription revenues increased
by an underlying 12%, mainly due to an excellent performance
from Fastmarkets, our price reporting agency. In August 2018, we
acquired Random Lengths for $18.8m, a wood-pricing provider
and leading news source for the North American lumber industry,
filling a gap in the Group’s forest products
price-reporting coverage.
Structural and cyclical industry issues facing investment research
continued to affect our Asset Management segment. This led to a
decline in revenues and profits in the segment. The performance
of Institutional Investor where revenues are sourced from asset-
management marketing rather than research budgets, improved
during the year. We have conducted a strategic review to help
our investment research businesses (BCA and NDR) adapt to
this challenging business environment. This review has delivered
significant cost savings of around £7m across the investment
research businesses, which have been partly reinvested in sales
and marketing, digital technology and product development.
The outlook for our investment research businesses continues to
be challenging, but our strategic review should mitigate some
of the revenue downsides in 2019. We transitioned Institutional
Investor magazine to digital-only during 2018. Institutional Investor
is now largely a membership, events and research business, with
publishing making up just 9% of its revenue.
The Commodity Events and Banking & Finance segments, which
together accounted for 22% of total revenue, returned to growth
following the strategic measures taken during 2017, which focused
events revenues on large core events and eliminated low-margin
events and training courses. In October 2018, we sold Mining
Indaba as it did not align with our strategy. Following this disposal,
the Commodity Events segment will be removed for reporting
purposes, with the remaining commodity events being moved into
the Pricing, Data & Market Intelligence segment, reflecting how
they will be managed in future.
In line with disclosure in 2017, GMID which was sold in April 2018, has met the
recognition criteria of discontinued operations and therefore has been presented as
such in the Group’s Financial Statements. As the division was managed as part of the
Group up until disposal in April, its results have been included in the Group’s review of
its adjusted performance until disposal.
Total and adjusted measures combine the results from the Group’s continuing and
discontinued operations. The underlying results only include results pertaining to
continuing operations. Detailed reconciliations of the Group’s statutory, adjusted and
underlying results are set out on pages 27 to 29.
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Revenue (£m)1
Asset Management
Pricing, Data & Market Intelligence
Banking & Finance
Commodity Events
Foreign exchange gains on forward contracts
Underlying revenue
Sold/closed businesses2
Total revenue
Subscriptions/
Content
Advertising
Events
Other
Total
119.7
90.6
8.6
–
(5%)
12%
2%
–
11.9
16.9
8.7
–
(7%)
–
(9%)
–
19.4
36.7
52.3
20.6
218.9
2%
37.5
(5%)
129.0
6%
6%
8%
9%
7%
–
(62%)
151.0
(4%)
0.5
1.1
0.2
1.8
(43%)
144.7
8%
(40%)
70.7
20.8
–
387.2
1.2
388.4
25.7
414.1
9%
5%
9%
–
–
3%
–
(3%)
1 Percentages are underlying growth rates compared to last year. Underlying measures as defined on page 29
2 Sold/closed businesses include continued and discontinued operations
Underlying subscription revenues, which make up 56% of Group
underlying revenue, increased by 2%, with strong growth in
Pricing, Data & Market Intelligence more than offsetting the
reduction in the Asset Management segment. Although underlying
advertising revenues declined by 5%, the rate slowed from 2017 (a
reduction of 8%), reflecting success in the investment in thought-
leadership products and in directories. Advertising revenue now
represents only 9% of total revenue. Underlying event revenues
increased 7%, with the Banking & Finance and Commodity Events
segments the most significant growth areas, but with all segments
performing well. The strategic focus to build large, repeat,
high-margin events is delivering strong results. Mining Indaba
performed well during the year, with underlying revenue growth
of 18%.
Profit
The adjusted operating profit margin increased by two percentage
points to 27%, largely due to our choices on allocation of capital,
our focus on driving out costs and improving sales mix. 2018 saw
significant investment in the Pricing, Data & Market Intelligence
segment and the integration of RISI. The drag from our accelerated
investment in central functions following the DMGT sell down in
2017 slowed in the second half of 2018, with that team now largely
complete. Adjusted operating profit increased by 3% to £110.7m.
Adjusted profit before tax increased by 3% to £109.2m.
Adjusted diluted earnings per share increased by 6% to 81.3p
(2017: 76.4p), largely reflecting the combined benefit of the
improvement in earnings and the reduced number of shares in
issue following the share buyback. Underlying adjusted profit
before tax grew by 8% reflecting operational gearing and
cost control.
The statutory profit before tax of £161.2m is higher than the
adjusted profit before tax due to exceptional items of £81.4m,
offset by acquired intangible amortisation of £22.7m and a £6.6m
contribution from discontinued operations. Statutory profit before
tax increased from £40.7m to £161.2m resulting in an improvement
in the operating margin from 11% to 41%.
Exceptional items
Profit on disposal
Impairment charges
Release of overseas sales tax provision
Restructuring and other exceptional costs
Continuing operations
Discontinued operations
Total
2018
£m
86.8
(3.0)
–
(2.4)
81.4
90.3
171.7
2017
£m
2.9
(29.7)
3.9
(8.4)
(31.3)
(2.4)
(33.7)
The Group recognised a £3.0m impairment charge in relation to
one of its recent acquisitions, Layer123, following its disappointing
financial performance post acquisition.
During the year, in addition to the disposal of GMID, the Group
sold Adhesion, World Bulk Wine and II Journals resulting in a
net profit of £15.1m (note 15). The disposal of the Group’s stake in
Dealogic resulted in a gain of £71.7m.
Restructuring and other exceptional items consist of severance
costs, product closures, professional fees and other costs arising
from the strategic review of the Investment Research business.
Normal restructuring costs amounting to £0.7m are included
in operating profit. Restructuring and other exceptional items
also include deferred compensation costs for the acquisition of
TowerXchange, Random Lengths and Layer123 and costs for the
acquisition of Random Lengths partly offset by the favourable
settlement of the legal dispute with the previous owners of
Centre for Investor Education (CIE). Acquisition costs for smaller
transactions have not been treated as exceptional consistent with
the Group’s policy.
The exceptional items of £90.3m relating to discontinued
operations all relate to the disposal of GMID. More detail is
included in note 15.
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 cash/
(debt)
Net cash/(debt)
Net cash classified as held
for sale
Total net cash/(debt)
Net assets
2018
£m
588.2
16.1
4.3
0.5
(120.4)
2017
£m
Change
£m
594.0
17.2
30.4
(11.5)
(117.0)
(5.8)
(1.1)
(26.1)
12.0
(3.4)
(32.2)
(31.1)
(1.1)
(41.2)
(30.6)
(10.6)
415.3
78.3
–
78.3
493.6
451.4
(164.5)
9.9
(154.6)
296.8
(36.1)
242.8
(9.9)
232.9
196.8
25
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Operating and financial review
continued
• Goodwill and other intangible assets – the movement reflects
amortisation charge of £25.6m, reclassification of £12.8m to
assets held for sale and impairment of £3.0m for Layer123,
partially offset by favourable exchange movement of £11.5m
from the predominantly US dollar denominated balance
and additions of £21.5m following the acquisitions of Extel,
TowerXchange and Random Lengths.
• Investments – the movement is predominantly due to the
disposal of Dealogic of £26.2m.
• Acquisition commitments and deferred consideration
– primarily reflects the exercise of the NDR and Layer123
put options.
• Deferred income – excluding exchange differences, acquisitions
and disposals, deferred income increased £0.5m mainly due to
underlying subscriptions revenue growth.
• Other non-current assets and liabilities – mainly reflects an
increase in deferred tax liabilities of £5.1m due to the utilisation
of tax losses and other tax attributes, partially offset by the
revaluation of deferred tax following the reduction in the US
federal tax rate from 35% to 21%. In addition, the net retirement
benefit liability decreased by £7.0m due to changes in the
financial and demographic assumptions.
• Other current assets and liabilities – the movement is due to an
increase in the net income tax liability of £16.2m resulting from
the increase in an uncertain tax position relating to a HMRC
enquiry and Canadian withholding tax due to an intercompany
dividend partially offset by other working capital movements.
Net cash/(debt)
The main movements in the cash flow were as follows:
Cash generated from
operations
Capex and other movements
Taxation
Free cash flow
Dividends paid
Net M&A
Share buyback
Opening net (debt)/cash
Effect of foreign exchange
rate and other non cash
movements
Closing net cash/(debt)
2018
£m
2017
£m
Change
£m
108.6
(5.0)
(38.9)
64.7
(34.8)
195.7
–
225.6
(154.6)
118.2
(17.4)
(21.8)
79.0
(30.8)
(102.2)
(193.5)
(247.5)
83.8
(9.6)
12.4
(17.1)
(14.3)
(4.0)
297.9
193.5
473.1
(238.4)
7.3
78.3
9.1
(154.6)
(1.8)
232.9
Net cash at 30 September 2018 was £78.3m compared with
net debt of £37.0m at 31 March 2018 and net debt of £154.6m at
30 September 2017. The move to a net cash position follows receipt
of net proceeds of £226.5m from disposals including Dealogic
and GMID, as well as strong underlying operating cash flows
of £113.3m. The increase in cash was partly offset by dividend
payments of £34.8m and payments for acquisitions and increased
subsidiary holdings of £30.8m.
Following the share buyback in January 2017, the Group
arranged five-year external borrowing facilities comprising term-
loans of $100m and £40m (total £114.6m) and a £130m multi-
currency revolving credit facility. There is a further uncommitted
accordion facility of £130m should the Group wish to request
it. Following large disposals and continued strong operating
cash flows, in May 2018 the Group repaid its $100m and £40m
term loans and increased the size of its revolving credit facility to
£240m. Cash used in financing activities was £213.7m (2017: cash
26
generated £21.7m), principally from the repayment of borrowings
of £167.7m and the purchase of additional interest in subsidiary
undertakings of £10.1m. Drawings under the revolving credit facility
bear interest charged at LIBOR plus a margin, the applicable
margin being based on the Group’s ratio of adjusted net debt to
EBITDA. At 30 September 2018, the Group’s ratio of adjusted net
cash to EBITDA was (0.69) times and the committed undrawn
facility available to the Group was £240m. The reconciliation to
statutory cash flow is included in note 19.
The Group’s underlying operating cash conversion for the
12 months to September 2018 was 102% (2017: 118%). The 2017
cash conversion included one-off improvements in working
capital performance.
Currency
The Group generates approximately two-thirds of its revenues,
including approximately 40% of its UK revenues and
approximately two-thirds of operating profits in US dollars.
The exposure to US dollar revenues in our UK businesses is
partially hedged using forward contracts to sell US dollars, which
delays the impact of movements in exchange rates for at least a
year. The Group however, does not hedge the foreign exchange
risk on the translation of overseas profits.
The average sterling-US dollar rate for the year to 30 September
2018 was $1.35 (2017: $1.27). This had a negative impact on
headline revenue growth rates for the year by approximately two
percentage points though benefited adjusted profit before tax
by £1.5m. Each one cent movement in the US dollar rate has an
impact on profits, on translated profits, net of UK revenue hedging,
of approximately £0.7m on an annualised basis. The Group also
translates its non-sterling denominated balance sheet items
resulting in a loss in 2018 of £1.5m (2017: £0.4m).
Dividends
The Group has a progressive dividend policy targeting a dividend
pay-out ratio of 40% of adjusted diluted earnings per share.
The Directors are recommending a final dividend of
22.3 pence per share, which is subject to shareholder approval
at our AGM on 1 February 2019 and will be paid on 14 February
2019 to shareholders on the register at the close of business
on 30 November 2018. Together with the interim dividend, this
makes a total dividend for the year ended 30 September 2018 of
32.5 pence per share, a 6% increase on the 30.6 pence dividend
for the year ended 30 September 2017.
Treasury
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.
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 and up to 50% for a
further six months. As a result of this hedging strategy, any profit
or loss from the strengthening or weakening of 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.
The Group’s revolving credit facility allows for drawing in multiple
currencies with the related interest tied to LIBOR. It is the Group’s
policy to hedge up to 80% of its term loan interest exposure,
converting its floating rate debt into fixed debt by means of interest
rate swaps. The predictability of interest costs is deemed to be
more important than the possible opportunity cost foregone of
achieving lower interest rates. At 30 September 2018, the Group’s
revolving credit facility remained undrawn and subsequently there
were no interest rate hedges in place.
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Details of the financial instruments used are set out in note 19 to the
Group’s Financial Statements.
Tax
The adjusted effective tax rate is 20% (2017: 19%) which is based
on adjusted profit before tax and excludes deferred tax movements
on intangible assets, tax on exceptional items, prior year items and
other tax adjusting items as described further below. The tax rate
in each year depends mainly on the geographic mix of profits and
applicable tax rates. US tax reform did not have a material impact
on the adjusted effective tax rate for 2018.
Adjusted measures
The Directors believe that the adjusted measures provide additional
useful information for shareholders to evaluate and compare the
performance of the business from period to period. These measures
are used by management for budgeting, planning and monthly
reporting purposes and are the basis on which executive
management is incentivised. The non-IFRS measures also enable
the Group to track more easily and consistently the underlying
operational performance by separating out the following types of
exceptional income, charges and non-cash items.
The Group’s statutory effective tax rate increased to 32%
compared to 8% in 2017. The increase in rate is driven by the
tax on disposal of shares in GMID and non-recoverable foreign
withholding tax on the payment of a $380m intercompany
dividend from our Canadian subsidiary to the UK in the year.
Significant reconciling items between the adjusted and statutory
tax expense include: a tax charge of £16.8m that arises from the
disposal of GMID and Dealogic, non-recoverable withholding
tax of £14.6m that arises from the $380m intercompany dividend
and the impact of US tax reform including a deferred tax credit of
£4.7m arising from the revaluation of the Group’s US net deferred
tax liabilities and a one-time deemed repatriation tax charge of
£3.2m. Prior year items primarily reflect an increase in a provision
for an uncertain tax position in relation to a HMRC enquiry.
These items are excluded from adjusted tax as they are significant
and not in the ordinary course of business. Full details are included
in note 8.
Following a review of the impact of US tax reform on the Group’s
debt profile, certain financing arrangements have partially been
unwound during the year (and will be fully unwound by the end of
the next financial year) and the dividend was paid from Canada.
The result is that the adjusted effective tax rate is now expected to
remain at 20% in 2019 rather than 23% as previously advised.
The net deferred tax liability held is £27.2m (2017: £21.9m) and
relates primarily to capitalised intangible assets and tax deductible
goodwill, net of short-term temporary differences and tax losses.
The increase in the net deferred tax liability relates to utilisation of
tax losses and other tax attributes, partially offset by revaluation of
deferred tax assets and liabilities following the reduction in the US
federal tax rate from 35% to 21%.
The Group continues to have a number of uncertain tax positions,
primarily the Canadian and UK exposures which have been
highlighted in previous periods for which the maximum exposures
are explained in note 2.
Headcount
The number of people employed is monitored monthly to ensure
there are sufficient resources to meet the forthcoming demands of
each business and to make sure that the businesses continue to
deliver sustainable profits. During 2018, the Directors have focused
on hiring new heads only where it was considered essential
or for investment purposes. Headcount has fallen by 573 since
September 2017 to 1,655 mainly attributable to the disposals of
GMID, World Bulk Wine, Adhesion and II Journals and measures
undertaken in the Asset Management segment following the
structural review offset by the acquisitions of TowerXchange, Extel
and Random Lengths.
Total revenue represents the combined reported revenue from
continuing and discontinued operations.
Adjusted results include continuing and discontinued operations.
The discontinued operations for the GMID have been included in
the adjusted results as it was owned and managed as part of the
Group for the period to 30 April 2018.
Adjusted figures are presented before the impact of amortisation
of acquired intangible assets (comprising trademarks and brands,
databases and customer relationships); exceptional items, share
of associates’ and joint ventures’ acquired intangibles amortisation
and exceptional items; net movements in deferred consideration
and acquisition commitments; related tax items and other
adjusting items described below.
The amortisation of acquired intangible assets is adjusted as
the premium paid relative to the net assets on the balance
sheet of the acquired business is classified as either goodwill
or as an intangible asset arising on a business combination
and is recognised on the Group’s balance sheet. This differs to
organically developed businesses where assets such as employee
talent and customer relationships are not recognised on the
balance sheet. Impairment and amortisation of intangible assets
and goodwill arising on acquisitions are excluded from adjusted
results as they are balance sheet items that relate to historical
M&A activity rather than the trading performance of the business.
Exceptional items are items of income or expense considered
by the Directors as being significant, non-recurring and not
attributable to underlying trading. It is Group policy to treat, as
exceptional, significant earn-out payments required by IFRS to be
recognised as a compensation cost. IFRS requires that earn-out
payments to selling shareholders retained in the acquired business
for a contractual time period are treated as a compensation cost.
Given that these payments are in substance part of the cost of an
investment and will not recur once the earn-out payments have
been made, they have been excluded from adjusted profit.
In 2018, adjusted finance costs exclude a net gain realised on the
close-out of interest rate swaps of £1.2m following the repayment
of the Group’s term-loan. The net gain has been excluded from
adjusted finance costs as it would not have crystallised had the
disposal of GMID not completed. In addition, interest of £0.6m
on the £7.9m increase in uncertain tax provisions described on
page 28 has also been excluded from adjusted finance costs.
Adjusted share of results in associates and joint ventures excludes
the share of exceptional items that relates to restructuring and
earn-out costs in Dealogic, which was sold in December 2017.
In respect of earnings, adjusted amounts reflect a tax rate that
includes the current tax effect of goodwill and intangible assets.
Many of the Group’s acquisitions, particularly in the US, give rise
to significant tax savings as the amortisation of goodwill and
intangible assets on acquisition is deductible for tax purposes.
The Group considers that the resulting adjusted effective tax
rate is therefore more representative of its tax payable position.
Since 30 September 2017, there have been changes to US tax rules
27
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Operating and financial review
continued
as a result of US Tax Reform. The federal tax rate has reduced
to 21% from 35% from 1 January 2018 and the US group has a
blended federal tax rate for the year of 24.5%. As a consequence
of this change, the revaluation of the Group’s net US deferred tax
liabilities has resulted in a one-off deferred tax credit of £4.7m
that is excluded from adjusted tax. In addition, there is a one-time
deemed repatriation tax charge of £3.2m arising from US tax
reform. As a result of the change in attribution rules that dictate
which entities are treated as a controlled foreign corporation
(CFC) for US income tax purposes, the disposal of shares in
Dealogic and GMID crystallised a gain that is subject to US tax.
The tax charge on these exceptional gains is £16.8m. Following the
disposal of GMID and other restructuring that took place during
the year, a dividend payment of $380m was made in September
2018 from BCA Research Inc. to Euromoney Canada Limited, a
UK group entity. Canadian withholding tax of £14.6m arose on the
dividend payment and was paid in full to the Canadian Revenue
Agency in October 2018. Prior year items primarily reflect a further
provision of £7.9m made in respect of uncertain tax positions
in relation to a HMRC enquiry. These items are excluded from
adjusted tax as they are significant and not in the ordinary course
of business.
Further analysis of the adjusting items is presented in notes 3, 5, 7,
8, 12 and 14 to the Group Financial Statements.
The Group has consistently applied these principles in calculating
adjusted measures, as it has reported on its financial performance
in the past and it is the Group’s intention to continue to consistently
apply these principles in the future.
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 to provide useful and comparable information about the Group’s adjusted trading performance.
Revenue
Adjusted operating profit
Acquired intangible
amortisation
Exceptional items
Operating profit
Operating profit margin
Share of results in associates
and joint ventures
Finance income
Finance expense
Net finance (costs)/income
Profit before tax
Tax expense on profit
Profit for the year
Profit for the year from
discontinued operations
Profit for the year
Attributable to:
Equity holders of the parent
Equity non-controlling interests
2018
Statutory
£000
Discontinued
operations
£000
390,279
23,815
103,198
7,510
Adjustments
£000
Adjusted
£000
Statutory
£000
2017
Discontinued
operations
£000
Adjustments
£000
–
–
414,094
386,923
41,490
110,708
95,253
11,886
–
–
Adjusted
£000
428,413
107,139
(22,739)
81,396
–
22,739
(969)
(80,427)
–
–
(20,566)
(31,253)
(249)
(2,437)
20,815
33,690
–
–
161,855
41%
6,541
(57,688)
110,708
43,434
27%
–
27%
11%
9,200
22%
54,505
107,139
–
25%
157
–
953
1,110
(1,890)
–
5,183
3,293
5,248
(6,034)
(786)
43
(11)
32
(4,468)
2,583
(1,885)
823
(3,462)
(2,639)
3,290
(4,146)
(856)
107
(74)
33
(3,147)
–
(3,147)
250
(4,220)
(3,970)
Notes
3
3
12
5
14
7
7
7
161,226
6,573
(58,620)
109,179
40,688
8
(51,360)
200
29,550
(21,610)
(3,390)
109,866
6,773
(29,070)
87,569
37,298
9,233
(3,344)
5,889
56,541
106,462
(13,111)
(19,845)
43,430
86,617
11
91,342
(6,773)
(84,569)
–
201,208
–
(113,639)
87,569
5,889
43,187
(5,889)
–
–
–
43,430
86,617
201,069
139
201,208
–
–
–
(113,639)
87,430
42,718
–
139
469
(113,639)
87,569
43,187
–
–
–
43,430
86,148
–
469
43,430
86,617
Diluted earnings per share
10
186.96p
81.30p
37.91p
76.44p
28
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Underlying measures
When assessing the performance of our businesses, the Board
considers the adjusted results. The year-on-year change
in adjusted results may not, however, be a fair like-for-like
comparison as there are a number of factors which can influence
growth rates but which do not reflect underlying performance.
When calculating underlying growth, adjustments are made to
give a like-for-like comparison. For example, the adjusted results in
2018 were adversely impacted by the weakening of the US dollar
relative to sterling. To calculate underlying growth, the prior year
comparatives are restated using 2018 exchange rates. Similarly,
adjustments are made to exclude disposals from both years.
In 2018, discontinued operations have been treated the same
as a disposal, as the sale of GMID completed during the current
financial year. This is a change from the treatment in 2017 where
GMID was included in the underlying results. When businesses are
acquired, the prior year comparatives are adjusted to include the
acquisition. The timing of events can also be a distortion. To give a
fair like-for-like comparison when calculating underlying growth,
significant event timing differences are excluded from the year
in which they were held. There were no significant event timing
differences in the current or prior periods.
The Group’s adjusted and underlying measures should not
be considered in isolation from, or as a substitute for, financial
information presented in compliance with IFRS. The adjusted
and underlying measures used by the Group are not necessarily
comparable with those used by other companies.
The following table sets out the reconciliation from statutory to
underlying for revenues and profit before tax:
Statutory revenue
Discontinued operations
Total revenue
Discontinued operations
M&A
Timing differences
Foreign exchange
Underlying revenue
Statutory profit before tax
Adjustments
Discontinued operations
Adjusted profit before tax
Discontinued operations
M&A
Foreign exchange
Underlying profit before tax
2018
£000
390,279
23,815
414,094
(23,815)
(1,835)
–
–
388,444
161,226
(58,620)
6,573
109,179
(7,542)
(1,005)
–
100,632
2017
£000
386,923
41,490
428,413
(41,490)
(577)
(502)
(7,462)
378,382
40,688
56,541
9,233
106,462
(11,919)
(2,359)
597
92,781
Change %
1%
(3%)
3%
296%
3%
8%
Cash conversion
Cash conversion measures the percentage by which cash generated from operations covers adjusted operating profit.
Adjusted operating profit
Cash generated from operations
Exceptional items
Other working capital movements
Underlying cash generated from operations
Adjusted cash conversion %
Underlying cash conversion %
2018
£000
2017
£000
110,708
107,139
108,560
5,580
(868)
113,272
98%
102%
118,201
12,375
(4,551)
126,025
110%
118%
The underlying basis is after adjusting for significant timing differences affecting the movement on working capital and exceptional items.
For the year ended 30 September 2018, exceptional items mainly consist of restructuring payments and cash payments for the legal
and professional fees in relation to acquisitions and disposals, net of the favourable settlement of a legal dispute. For the year ended
30 September 2017, exceptional items largely consist of cash payments for restructuring costs, legal and professional fees and share
buyback costs. The other working capital movements in 2018 and 2017 are mainly the result of the landlord’s contribution to the fit-out of
the New York office which will be amortised over the period of the lease and the rent-free period of the London and New York offices.
As cash generated from operations in the Consolidated Statement of Cash Flows includes those from discontinued operations, the
statutory cash conversion rate has not been provided as it would not give a fair indication of the Group’s cash conversion performance.
29
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Operating and financial review
continued
Net cash/(debt)
At 1 October
Net increase in cash and cash equivalents
Decrease/(increase) in borrowings
Deposit received with DMGT group company
Redemption of loan notes
Other non-cash changes
Effect of foreign exchange rate movements
At 30 September
Net cash/(debt) comprises:
Cash at bank and short-term deposits
Classified as held for sale
Total cash and cash equivalents
Borrowings
Net cash/(debt)
Average exchange rate adjustment
Adjusted net cash/(debt)
Adjusted operating profit
Share of results in associates and joint ventures
Add back:
Intangible amortisation on licences and software
Depreciation of property, plant and equipment
Share of associates' interest, depreciation and amortisation
M&A annualised adjustment
Adjusted EBITDA
Adjusted net (cash)/debt to EBITDA ratio
2018
£000
(154,621)
57,875
167,740
–
–
(955)
8,234
78,273
78,273
–
78,273
–
78,273
(2,216)
76,057
110,708
1,110
2,908
3,356
721
(8,774)
110,029
(0.69)
2017
£000
83,782
4,459
(178,504)
(73,618)
185
–
9,075
(154,621)
4,426
9,846
14,272
(168,893)
(154,621)
(2,188)
(156,809)
107,139
3,293
3,965
3,202
4,632
3,912
126,143
1.24
The Group’s borrowing facility contains certain covenants, including adjusted net debt to EBITDA. The amounts and foreign exchange
rates used in the covenant calculations are subject to adjustments as defined under the terms of the arrangement. The facility’s covenant
requires the Group’s net debt to be no more than three times adjusted EBITDA and requires minimum levels of interest cover of three times
on a rolling 12-month basis.
The bank covenant ratio uses an average exchange rate in the calculation of net debt and includes an annualised adjustment
attributable to acquisitions and disposals in the calculation of adjusted EBITDA. When businesses are acquired after the beginning of the
financial year, the calculation of adjusted EBITDA includes EBITDA attributable to the business as if the acquisition had been completed
on the first day of the financial year. The calculation excludes the EBITDA of any businesses disposed of during the year. The full
reconciliation to statutory cash flow is included in note 19.
30
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Risk management
We continue to place an emphasis on the
management and reporting of risk. We will review
our risk management framework in 2019
The principal risks and uncertainties the Group faces vary across
its different businesses. Management of significant risk is the
responsibility of the Board and during the year was overseen by
the Risk Committee. For the year ahead, the Risk Committee will
continue to operate as a management committee, reporting
into our reconstituted Audit and Risk Committee which will result
in management providing the Board with a more regular and
detailed review of the management of the Group’s principal risks.
In tandem with this, the Group plans to review the controls in place
across the business and update its risk management framework.
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 (bottom-
up approach). The risk register of each business considers
the likelihood of a risk occurring and both the monetary and
reputational impact of the risk crystallising. The risk assessment
process also considers the view of the principal risk owners and
appetite for the respective risk (top-down approach).
Like most UK public companies, as at the date of this report
the increasing likelihood of the UK leaving the European Union
without an agreement in place (a so-called hard Brexit) is a
fast-approaching risk which is reflected in the identification of a
new standalone EU exit-related principal risk. This was previously
addressed as part of the Group’s market downturn (cyclical) risk.
The structural shifts being seen in the asset management
sector, one of the Group’s four segments, continue to pose the
most significant operational risk and the most challenging risk
to manage.
The Risk Committee has completed a robust and detailed
assessment of both the risk management processes and the risk
register and has considered the impact of significant risks on
the Group including our principal risks. Further details of the risk
management processes, the governance structure for risk and the
Risk Committee can be found in the Governance section.
We use a number of tools to analyse risks and facilitate discussions
at the Board, Group Management Board and Risk Committee.
In the coming year this will also involve the newly reconstituted
Audit and Risk Committee.
The following risk matrix shows the relative likelihood of the
principal risks crystallising and their potential impact on the
Group. The risks are shown as post-mitigation, residual risks.
We also consider 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 well
understood. The risk radar maps the principal risks using these
criteria, with increasing risk indicated by the larger circles.
The arrows indicate the change in level of perceived risk
compared to last year.
Risk matrix
8
10
2
1
4
5
7 3
11
6
9
e
r
e
v
e
S
t
c
a
p
m
I
w
o
l
y
r
e
V
Unlikely
Likelihood
Almost certain
Risk radar
Established risks
Emerging risks
7
1
8
E
x
t
e
r
n
a
l
11
5
2
4
Established/known
Emerging/new
6
3
9
10
Risk change
X
X
This level of risk
is increasing
No change to
the level of risk
Risk movement
l
a
n
r
e
t
n
I
Established operations
Emerging operations
The Group registers its risks based on a residual risk rating after
taking account of mitigating controls.
1 Downturn in key geographic
region or market sector
(cyclical downturn)
2 Product and market
transformation/disruption
(structural change)
3 Exposure to US dollar
exchange rate
4 Information security breach
resulting in challenge to
data integrity
5 Reputational damage
from a legal, regulatory or
behavioural issue arising
from operational activities
6 Disruption to operations from
a business continuity failure
7 Catastrophic or high impact
incident affecting key events
or wider business
8 Acquisition or disposal fails to
generate expected returns
9 Uncertain tax liabilities
10 Failure to implement the
strategy effectively due to
a loss of key staff
11 Impact on people and
operations of the UK exiting
the EU
31
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Risk management
continued
The Group’s principal risks and uncertainties are summarised below
Link to
strategic
pillars
Key factors
Mitigation
Risk appetite
Downturn in key geographic region or market sector (cyclical downturn)
• Concentration of customers in financial
• The Group actively manages cyclical risk
services sector makes this exposure acute
• Global economic and geopolitical risk
has further increased this year driven by
continuing uncertainty in the UK and Europe
over the UK’s EU exit and the increasingly
protectionist trade policies of the US
and China
• Headwinds in the asset management
market including the shift towards passive
portfolio management, new technologies
and the impact of MiFID II continue to affect
clients in the sector
Board’s view
There are limited options to mitigate impact
of a significant cyclical downturn in the short
and medium term. The residual risk will
remain high.
The Board also wishes to continue to serve
the Asset Management segment because it
considers it to be sufficiently attractive over
the medium term.
through its strategic framework
• The Group continues to carry out
comprehensive risk reviews of its asset
management businesses resulting in
detailed mitigation plans for each business
and continuous tracking of effective
risk management
• A significant restructuring exercise has
been carried out to ‘right-size’ our BCA
and NDR businesses and ensure focus on
core products
• The Group operates in many
geographical markets
• Some diversification in sector mix
• Ability to cut some costs temporarily
and quickly
Risk tolerant
Prior years
(relative position)
2017: Risk tolerant
2016: Risk tolerant
2015: Risk tolerant
Post-mitigation risk trend
Increasing
Description of risk change
Global economic and
geopolitical uncertainty
is increasing following
the US election, US and
Chinese protectionism,
limited progress of the
UK’s EU exit negotiations
and disruption in a sector
with concentrated Group
revenues
Product and market transformation/disruption (structural change)
• Competition from existing competitors, new
• Strategy designed to appraise and
evaluate structural risks and respond to
them, taking advantage of opportunities
where identified
• Regular CEO-led reviews across
all divisions
• Entrepreneurial approach
• Effective management reporting with
regular forecast reviews
• Portfolio spreads risk to some degree
• Portfolio management allows the Group to
sell structurally challenged businesses and
to buy structurally strong ones
• Cyclical review of divisional activities by
the Risk Committee
disruptive players and new entrants
• New technologies change how customers
access and use our products
• Changing demographics can affect
customer needs and opportunities
• Structural pressure on customer business
models will affect demand for the Group’s
products and services, particularly in
financial services
• Regulations such as MiFID II creating both
challenges and opportunities in asset
management sector
• Free content available via the
internet increases the threat to paid
subscription model
• Lower barriers to entry for new entrants
• Not acquiring the types of assets that the
Group’s strategy requires
Board’s view
Controls are in place but exposure to this risk
will remain moderate.
Risk tolerant
Prior years
(relative position)
2017: Risk tolerant
2016: Risk tolerant
2015: Risk tolerant
Post-mitigation risk trend
Unchanged
Description of risk change
As an entrepreneurial
business, the Group is
experienced at managing
this risk
32
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Key factors
Mitigation
Risk appetite
Link to
strategic
pillars
Exposure to US dollar exchange rate
• Approximately two-thirds of revenues and
profits are generated in US dollars, including
approximately 40% of the revenues in the
UK-based businesses. This gives significant
exposure to movements in the US dollar for
both UK revenues and the translation of
results of foreign subsidiaries
• A significant strengthening of sterling
against the US dollar could reduce profits
and dividends
• The Group also undertakes transactions
in many other currencies, although none
currently provides a significant risk to
the results
• US dollar forward contracts are used
to hedge 80% of UK based US dollar
revenues for the coming 12 months and
50% of these revenues for a further
six months
• Exposure from the translation of US
dollar-denominated earnings is not
directly hedged but is partially offset by
US dollar costs and the use of US dollar-
denominated debt when debt is required
• Sensitivity analysis is performed regularly
to assess the impact of currency
risk and is reviewed by the Tax and
Treasury Committee
• The UK’s exit from the EU may result in
• Given heightened volatility, the Group
significant currency fluctuations depending
on the terms of the exit
Board’s view
Although the Group considers this risk
unchanged, the increased volatility and
uncertainty of sterling against the US dollar
after the UK’s exit from the EU is expected to
continue for some time.
hedging strategy is under frequent review
and includes regular impact analysis of
various exchange rate scenarios together
with internal risk mitigations such as
natural hedging of non-sterling earnings
Risk tolerant
Prior years
(relative position)
2017: Risk tolerant
2016: Risk tolerant
2015: Risk tolerant
Post-mitigation risk trend
Unchanged
Description of risk change
The Group is experienced
at managing risks related
to its exposure to the US
dollar and this risk remains
unchanged
33
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Risk management
continued
Link to
strategic
pillars
Key factors
Mitigation
Risk appetite
Information security breach resulting in challenge to data integrity
• Integrity of data products is fundamental to
the success of the business
• The Group relies on large quantities of
data including customer, employee and
commercial data
• Governance provided by Risk Committee
and Information Security Steering Group
• Approved information security standards
and policies which are reviewed on a
regular basis
• Increasing number of cyber-attacks affecting
• Continuing education and awareness
organisations globally
programmes for all staff
• The Group has many websites and is reliant
on distributed technology, increasing
exposure to threats
• A successful cyber-attack could cause
considerable disruption to business
operations, lost revenue, regulatory fines
and reputational damage
• The EU General Data Protection Regulation
increases regulatory scrutiny and
potential penalties
• Active information security programme
(including access management and
cyber-resilience planning) to align all
parts of the Group with its information
security standards
• Crisis management and business continuity
frameworks cover all businesses including
disaster recovery planning for IT systems
• Multi-layered defence strategy
• New, more robust IT security due diligence
• Technological innovations in mobile
framework for acquisitions
Risk averse
Prior years
(relative position)
2017: Risk averse
2016: Risk averse
2015: Risk averse
Post-mitigation risk trend
Increasing
Description of risk change
Most industry information
security analysts agree
that this risk is increasing
and warn that companies
will continue to face more
regular and sophisticated
cyber-attacks
working, cloud-based technologies and
social media introduce new information
security risks
• Threats such as ransomware and
cryptomining require the Group to adapt to
a continually shifting landscape
• Phishing remains one of the most serious
threats to network security
Board’s view
The use of technology creates this inherent
risk. The Group strives to balance the need
to innovate through the use of technology
while responsibly managing risk, including
through the use of third party expertise.
Controls to prevent an information security
breach or cyber-attack are reviewed
regularly and, where required, enhanced.
However, the rising number of cyber-attacks
affecting organisations globally, the Group’s
greater dependency on technology and
the growing threat from cyber-crime are
increasing this risk.
• Access to key systems and data is
restricted, monitored and logged with
auditable data trails in place
• Comprehensive backups for IT
infrastructure, systems and business data
• Increase in number of dedicated IT security
roles in Central Technology
• Professional indemnity insurance provides
cover for cyber risks including cyber-attack
and data breach incidents
• Information security is reviewed as part of
our internal audit process
• Regular information security training for
employees, contractors and freelancers
• Incident response playbook
34
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Key factors
Mitigation
Risk appetite
Reputational damage from a legal, regulatory or behavioural issue
arising from operational activities
Link to
strategic
pillars
• The Group operates in many jurisdictions
• Processes and methodologies for assessing
and must be compliant with all applicable
laws and regulations
• The Group’s businesses publish, market
and license increasingly complex content
and data which in some cases is data on
which its customers may choose to rely when
executing transactions
• Success of the Group is dependent on
client confidence in integrity of products
and brands
• Claimants can forum shop when
determining where to litigate or threaten
legal proceedings
• Compliance risk is increasing for information
providers as price, benchmark and
index reporting activities are coming
under scrutiny of different regulators and
specifically into scope of new regulations
being introduced as a result of the financial
crisis of 2008 and LIBOR scandal
• Risk or reputational damage can arise
from errors in underlying data or content,
failures of data integrity, failure to educate
customers on appropriate usage of data,
inappropriate reliance on third party data
or content to create proprietary content or
errors in content creation, or a failure to
comply with applicable law or regulation
commodity prices and calculating
benchmarks and indices are clearly
defined and documented
• Compliance staff appointed in
key positions
• Compliance with International
Organization of Securities Commissions
(IOSCO) standards achieved for relevant
pricing products
• Code of conduct and other key policies in
place for price assessment, benchmark
and index reporting activities
• Refreshed anti-bribery and corruption
training and awareness programme rolled
out globally in 2018
• A review and update of the Group’s
trade sanctions controls and policy was
completed in 2018
• Review of processes for operation of events
and awards undertaken in 2018
• Specialist training in publishing law issues
provided to relevant staff
• Company-wide speak-up policy in place
• Comprehensive legal disclaimers in place
• Professional indemnity insurance
Risk averse
Prior years
(relative position)
2017: Risk averse
2016: Risk averse
2015: Risk averse
Post-mitigation risk trend
Unchanged
Description of risk change
Information providers face
increased compliance
risks as a result of the
complexity of data they
publish which customers
may rely on for certain
business decisions
Board’s view
We have a zero-tolerance approach
to certain legal and regulatory risks
such as bribery. At the same time, the
publication of data and content in
digital businesses inevitably exposes
the Group to global legal and
regulatory risk. The manner in which
we conduct our businesses can also
result in risk if policies are not complied
with. Our divisions have access to
the Group’s central functions such as
legal, risk and internal audit, which
provide more specialist resource to
raise awareness of, manage and
mitigate risk. Legal and regulatory
compliance risk for the Group is
unchanged.
35
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Risk management
continued
Key factors
Mitigation
Risk appetite
Disruption to operations from a business continuity failure
Link to
strategic
pillars
• Significant reliance on third-party
technology including hosting services
• Many products are dependent on specialist,
technical and editorial expertise
• A significant incident affecting one or more
of the Group’s key offices (London, New
York, Montreal or Hong Kong) could lead
to disruption to Group operations and
reputational damage
• Potential impact of the UK’s exit from the
EU without a deal in place could cause
disruption to global business travel.
This could affect both our employees’ and
customers’ ability to travel
• Information security breach impacting wider
business operations
• Crisis management and business continuity
framework covers all businesses including
disaster recovery planning for IT systems
• Crisis management exercise programme
for the senior management team
• Group-wide IT disaster recovery testing
conducted every six months and business
continuity testing conducted every
12 months
Risk averse
Prior years
(relative position)
2017: Risk averse
2016: Risk averse
2015: Risk averse
Post-mitigation risk trend
• Clear responsibilities for business continuity
Unchanged
planning established across divisions
• Substantial central and business group
investment in cloud-based platforms
and software
• Risk assessments for new suppliers and
technologies consider operational and
financial resilience
• Disposal of a number of businesses this
year has reduced the number of office
locations globally
• Migration of the Group’s websites to cloud
hosting solution
Description of risk change
The Group recognises that
business continuity events
will arise from time to time
and remains committed
to active management of
this risk
Board’s view
Business disruption is an unavoidable risk but can be mitigated if business continuity plans
are well developed and managed. In spite of challenges such as extreme weather in Asia
and the US and unplanned technology downtime, all businesses maintained operations
successfully throughout the year which demonstrated that effective controls are in place.
However, regular IT and business continuity planning and testing will continue to be an
important control.
Catastrophic or high impact incident affecting key events or wider business
• The Group has a number of large events
• A new event risk management framework
which are exposed to one-off risks including
natural hazards and security incidents
• Risk affects customers as well as staff and
revenue, and can also adversely impact
brand reputation
• Prolonged interruption to business travel
will harm event revenues and disrupt
management and sales operations
• The Group operates in regions with higher
risk of natural hazards
Board’s view
The Group continues to invest in training and
resources to keep staff safe when travelling
and to improve event/conference resilience.
is being rolled-out in 2019
• Divisional Directors with responsibility for
events sit on the Risk Committee
• Crisis management and business continuity
framework requires all businesses to plan
for high impact events
• Specialist security and medical assistance
services engaged to support all staff
working away from the office
• Mandatory security and risk management
training programme for event staff and
business travellers
• Close co-ordination between central
functions such as risk and information
risk with events teams to ensure robust
approach to risk management
• With sufficient notice, events can be
moved to non-affected regions
• Cancellation insurance for the Group’s
largest events
Risk averse
Prior years
(relative position)
2017: Risk averse
2016: Risk averse
2015: Risk averse
Post-mitigation risk trend
Unchanged
Description of risk change
The Group recognises
that international
events businesses are
exposed to this risk and
the introduction of its
event risk management
framework will enable
further mitigation of this
risk in 2019
36
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Key factors
Mitigation
Risk appetite
Link to
strategic
pillars
Acquisition or disposal fails to generate expected returns
• Active portfolio management means
• M&A strategy and execution is a regular
topic of Board focus
• Investment Committee established
enabling quicker decision-making
and detailed Board oversight of
M&A transactions
• CEO and CFO closely involved in
M&A execution
• Active portfolio management with a clear
framework and operating in line with
agreed strategy
• Development of key objective criteria
against which acquisition or disposal
decisions are tested
• Appropriate approvals process in place
for transactions
• Investment in a larger Corporate
Development team
• Emphasis on and investment in carrying
out external, independent commercial due
diligence at an early stage
Risk neutral
Prior years
(relative position)
2017: Risk neutral
2016: Risk neutral
2015: Risk neutral
Post-mitigation risk trend
Unchanged
Description of risk change
A need to execute
successful M&A in a
competitive market
combined with robust
risk management and
controls means this risk is
unchanged
the Group continues to make strategic
acquisitions and disposals
• Significant growth has been M&A related,
through both acquired profit and growth in
acquired businesses
• Failure to successfully acquire either the right
businesses (meaning businesses in our top-
right quadrant or which can be developed
and moved into our top-right quadrant), or
a failure to successfully make acquisitions
at all, will negatively impact our ability to
deliver the Group strategy
• Increasingly high multiples and competitive
auction processes for high quality assets can
favour private equity buyers
• Failure to integrate as intended may mean
an acquired business does not generate the
expected returns
• Risk of impairment loss if an acquired
business does not generate the
expected returns
• Disposal risks arise from failing to identify the
time at which businesses should be sold or
failing to achieve optimal price
• Group strategy relies on successful recycling
of capital and therefore M&A execution
impacts the core strategy
Board’s view
The Board’s focus on M&A combined with
management’s experience enables the
Group to remain disciplined in its approach,
minimising the risk of unsuccessful execution
or a failure to make the right acquisitions, or
any acquisitions at all.
Uncertain tax liabilities
• The Group operates within many
increasingly complex tax jurisdictions
• Changes in legislation and interpretation
Board’s view
Effective controls are in place but the Group
cannot eliminate this risk entirely due to the
complexity of the Group’s structure and the
number of jurisdictions in which it operates.
The Group has made appropriate provisions
for historical potential liabilities in line with
advice from external advisors (see note 2 on
page 102 for more details).
• Audit Committee and Tax and Treasury
Committee oversight
• New Global Head of Tax and Treasury
recruited in 2018 to lead dedicated Tax
and Treasury team
• The disposal of a number of businesses
in 2018 has reduced the number of office
locations globally
• Making financial provisions
where appropriate
• Policy to comply with tax laws in a
responsible manner
• Appropriate care taken to protect the
Group’s reputation and have open
and constructive relationships with
fiscal authorities
• Internal audit programme covers tax
Risk averse
Prior years
(relative position)
2017: Risk averse
2016: Risk averse
2015: Risk averse
Post-mitigation risk trend
Increasing
Description of risk change
The Group is experienced
at managing the tax
risks arising from its
international business
portfolio. However,
uncertainty over the
terms of the UK’s exit from
the EU means this risk is
increasing
37
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Risk management
continued
Key factors
Mitigation
Risk appetite
Failure to implement the strategy effectively due to a loss of key staff
Link to
strategic
pillars
• The strategy is embedded across the
Group and is having a positive impact on
financial performance. Its implementation
is partially dependent on the retention and
performance of key staff
• Our segments and divisions have individual
strategies dependent on divisional
staff with specific skills, expertise and
industry knowledge
• An inability to recruit, retain and train for
critical roles will adversely impact our ability
to deliver the strategy successfully
Board’s view
The Board recognises the importance of
retaining critical staff to ensure effective
delivery of Group, segmental and divisional
strategies. A range of approaches are used
to manage this risk effectively, and succession
planning accelerated in 2018.
Risk neutral: becoming
more averse
Prior years
(relative position)
2017: Risk neutral
Post-mitigation risk trend
Unchanged
Description of risk change
Successful implementation
of the Group’s strategy
remains dependent on
hiring and retaining key
staff. The Group has
invested in the recruitment
and training of staff and
accelerated succession
planning
• Significant investment in staff budgeted for
2019 across a range of areas, including
salary benchmarking and training
• Ensuring compensation for critical staff
including a balance of short-term and
long-term incentives
• Remuneration Committee oversight of
Group Management Board rewards
• Investment in training such as Leadership
3.0 and Management 3.0 programmes
• Plan to launch an employee forum
during the year, allowing for improved
employee engagement
• Proactive relationship management of
recruitment search companies to ensure
our hiring needs are met
• New recruitment policy, process and
training to be rolled out in 2019
• Maintaining the Group’s reputation for an
entrepreneurial approach, making it an
attractive place to work
• There are sufficient businesses within each
segment within the Group to mitigate the
impact of ‘business-as-usual’ departures of
critical staff
• Succession planning accelerated in
2018. Plans are now in place for most key
staff and our new succession planning
framework will help businesses identify
and manage key staff
• Contractual notice periods are designed to
manage the risk of critical staff leaving on
short notice
• Culture survey results have led to a number
of employee initiatives across the Group,
designed to improve career progression
and staff retention
38
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Key factors
Mitigation
Risk appetite
Link to
strategic
pillars
Impact on people and operations of the UK exiting the EU
• The UK is scheduled to leave the European
Union (EU) in March 2019 and the potential
consequences of that are unknown
• Contingency plans seek to address the
key risks and leverage opportunities
we identify
• The terms on which the UK will exit the EU
• The Group is assessing the potential
are unknown
• The length of any transition period following
the UK’s EU exit is unknown
• There is no precedent data or facts on which
to model the likely consequences of an EU
exit, in particular without agreed terms
in place
• The Group, its staff, customers, suppliers
and other stakeholders are unable to plan
with precision for the uncertainty resulting
from the above factors
Board’s view
The Board notes that this risk is increasing for
all UK companies. The Company is carrying
out contingency planning in a range of areas
in light of likely continued uncertainty in the
UK market during 2019.
impact on affected staff
• The Group has a global
geographical footprint
• Hedging is in place to partially offset the
impact of US dollar exchange rate risk in
the UK
• A small percentage of Group revenue is
generated in the EU outside of the UK
• Small number of EU nationals in
our workforce
• Potential travel disruption can be mitigated
by using international locations and
planning longer lead-time for travel
• We use geographically diverse
technology suppliers
Risk averse
This is a new risk
Post-mitigation risk trend
Increasing
Description of risk change
The possibility of a ‘no-
deal’ exit is increasing,
leading to increased
economic uncertainty,
therefore this risk is
increasing
Viability Statement
In accordance with provision C.2.2 of the UK Corporate
Governance Code 2016, the Directors have assessed the viability
of the Group and have selected a period of three years for the
assessment from the Balance Sheet date.
The three-year forecasting horizon has been selected because the
Directors believe there is sufficient, realistic visibility available to
assess the Group’s current and anticipated operating environment
and market conditions over this period. The three-year period is
also used for the Group’s strategic planning cycle and is therefore
considered an appropriate period for the long-term viability
statement given the portfolio strategy of the business which
reduces longer-term predictability.
The assessment conducted considered the Group’s operating
profit, revenue, 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. In making the statement, the
Directors have applied the following key assumptions from the
related principal risks in preparing the scenarios:
• The performance of the Asset Management segment continues
to decline, with a significant reduction in clients’ research spend
accelerating following the impact of MiFID II.
• Significant reversal of the foreign exchange movement linked to
the conclusion of the EU exit on 31 March 2019, with the outcome
adversely impacting the financial results of the Group.
• All material open tax items will result in a significant
cash outflow.
The Directors have also modelled an extreme scenario downside
that combines the key assumptions with a number of other risks
that are deemed to have a lower probability of occurrence or
lower impact to assess the viability of the Group. The repayment of
the term loans during the year and the Group’s net cash position
provides a strong foundation on which to model this extreme
downside scenario.
In making the assessment, the Directors have considered the
Group’s robust capital position, the cash-generative nature of
the business, the visibility of subscriptions revenue, the ability of
the Group to cut costs quickly, the access to available credit, the
absence of significant pension 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 three-year period under review.
The Strategic Report was approved by the Board of Directors on
21 November 2018 and signed on its behalf by
• The Pricing, Data & Market Intelligence segment suffers a
downturn due to the reputational fall-out from inaccuracies
in one of its reporting indexes, with a significant fall in
subscription revenues.
Andrew Rashbass
Chief Executive Officer
21 November 2018
39
Strategic ReportEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Board of Directors
The Board is delighted at the Company’s admission
during the year to the 30% Club
David Pritchard A N R
Acting Chairman
Appointed to the Board:
December 2008
Andrew Rashbass
Chief Executive Officer
Appointed to the Board:
October 2015
Skills and experience: David Pritchard has extensive board level
experience and brings a wealth of knowledge to the Board.
David has over 30 years of experience in the financial services
sector and was formerly Chairman of AIB Group (UK) plc, Chairman
of Cheltenham & Gloucester plc, Deputy Chairman of Lloyds TSB
Group and a director of Scottish Widows Group and LCH.Clearnet
Group. David also served as Chairman of Songbird Estates plc.
David is a director of The Motability Tenth Anniversary Trust.
Skills and experience: Andrew Rashbass has broad international
experience managing information businesses. Between 2013 and
2015 Andrew was Chief Executive of Reuters, the news division
of Thomson Reuters. Before joining Reuters, he spent 15 years
at The Economist Group, where for the last five years he was
Chief Executive.
Wendy Pallot
Chief Financial Officer
Appointed to the Board:
August 2018
Andrew Ballingal
Independent
Non-Executive Director
Appointed to the Board:
December 2012
Skills and experience: Wendy Pallot has over 15 years’ experience
working as Group Finance Director in UK main market listed
companies in the media sector. Between 2011 and 2018, Wendy
was Group Finance Director of Bloomsbury Publishing plc. Prior to
that, she was Group Finance Director for GCap Media plc and
GWR Group plc. Wendy is the Non-Executive Chair and
co-founder of a company which operates local radio stations,
and a Governor of the Central School of Ballet. She qualified as
a Chartered Accountant with Coopers & Lybrand.
Skills and experience: Andrew Ballingal is Chief Executive of
Ballingal Investment Advisors, an independent investment firm
based in Hong Kong. Andrew has over 20 years of experience in
senior management positions in the financial services sector as an
advisor, investor and partner in hedge and absolute return funds,
principally in the Asia Pacific region.
Jan Babiak N
Independent
Non-Executive Director
Appointed to the Board:
December 2017
Kevin Beatty N R
Non-Executive Director
Appointed to the Board:
November 2017
Skills and experience: Kevin Beatty is an experienced media
executive and is CEO of dmg media. His prior roles in the media
sector include Managing Director of the Scottish Daily Record and
Sunday Mail. Kevin has also been COO of Associated New Media
and Northcliffe Newspapers.
Skills and experience: Jan Babiak has over 25 years’ experience
in professional services in a variety of leadership roles at EY.
Jan holds non-executive director roles at Walgreens Boots Alliance,
Inc. and Bank of Montreal. Jan chairs the Audit Committee and
sits on the Finance Committee of Walgreens Boots Alliance, Inc.
and chairs the Audit and Conduct Review Committee and sits
on the Governance and Nominating Committee at the Bank of
Montreal. Jan is a US qualified Certified Public Accountant, a UK
qualified Chartered Accountant and member of the Institute of
Chartered Accountants in England and Wales, where she has
served as a Council Member since 2011. Jan is also qualified as a
Certified Information Security Manager and Certified Information
System Auditor.
40
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Key
A Member of the Audit Committee
N Member of the Nominations Committee
R Member of the Remuneration Committee
Committee Chair
Tim Collier A N
Non-Executive Director
Appointed to the Board:
November 2017
Tristan Hillgarth A N
Independent
Non-Executive Director
Appointed to the Board:
December 2012
Skills and experience: Tim Collier is Chief Financial Officer of Daily
Mail and General Trust plc. His experience spans media and
business information industries and prior to joining DMGT he was
CFO of Thomson Reuters Financial and Risk Business.
Skills and experience: 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 Global Growth & Income plc.
G
o
v
e
r
n
a
n
c
e
Colin Day A
Independent
Non-Executive Director
Appointed to the Board:
March 2018
Lorna Tilbian
Independent
Non-Executive Director
Appointed to the Board:
January 2018
Skills and experience: Lorna Tilbian is an experienced media
analyst having served as Head of the Media Sector at Numis
Corporation Plc (Numis) and as a main board director at Numis
for over ten years. Lorna has served as a Cabinet Ambassador for
Creative Britain for the Department for Culture, Media and Sport.
She is a Non-Executive Director at M&C Saatchi plc, Rightmove
plc, Jupiter UK Growth Investment Trust PLC, ProVen VCT plc and
Finsbury Growth & Income Trust plc.
Skills and experience: Colin Day has significant experience in
senior operational and financial roles gained across a variety
of sectors. He has previously held non-executive director roles
and chaired the Audit Committee at Amec Foster Wheeler plc,
WPP plc, Cadbury plc, Imperial Brands plc and EasyJet plc.
Colin spent his executive career in a range of senior roles including
Chief Executive of Essentra PLC, Chief Financial Officer at Reckitt
Benckiser Group plc and Group Finance Director of Aegis Group
plc. Colin is a Non-Executive Director at Meggitt plc, where he
chairs the Audit Committee and is a member of the Nominations
and Remuneration Committees. Colin is also a Non-Executive
Director of FM Global and Non-Executive board member for
the Department for Environment, Food and Rural Affairs, where
he chairs the Audit and Risk Assurance Committee. Colin is a
Chartered Certified Accountant.
Imogen Joss R
Independent
Non-Executive Director
Appointed to the Board:
November 2017
Skills and experience: Imogen Joss has held a number of senior
executive positions in the business information industry and most
recently served as the President of S&P Global Platts, Inc. She is
the Senior Independent Non-Executive Director and Chair of
the Remuneration Committee at Gresham Technologies plc.
Imogen also holds Non-Executive Director roles at the International
Property Securities Exchange and Grant Thornton, where she
chairs the Remuneration Committee.
41
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Corporate Governance Report
This Corporate Governance Report explains how the
Company has applied the main principles of the UK
Corporate Governance Code (the ‘Code’). We have used the
key themes of the Code as a framework:
Leadership and effectiveness are on pages 44 to 45.
Accountability: The reports of the Audit and Risk
Committees are set out on pages 50 to 55.
Relations with shareholders on page 48.
Remuneration is covered in the Directors’ Remuneration
Report on pages 56 to 74.
Statement of compliance
The Company continues substantially to comply with the provisions
of the Code and has made progress during the course of the year
remedying areas where it was previously not compliant.
The Company entered into a relationship deed with Daily Mail
General Trust (DMGT) on 8 December 2016 in light of DMGT’s
substantial shareholding in the Company. The deed contains
provisions which protect other shareholders of the Company.
The Board values the significant support provided by DMGT
to the Company and accordingly DMGT is entitled to two Non-
Executive Director positions on the Board and certain Committee
representation in accordance with the terms of the Deed. DMGT’s
representative directors are not considered independent since
they are shareholder-nominated representatives, therefore the
composition of the Company’s Board and Committees cannot be
fully Code compliant.
Prior to his retirement from the Board in May 2018, Sir Patrick
Sergeant, the Company’s founder, Life President and ex-Chairman,
was not regarded as independent under the Code due to his long
association with the Company.
The Company therefore did not comply throughout the financial
year ended 30 September 2018 with certain provisions of the Code
as set out on page 43.
In terms of progress during the year, the Company appointed
four new independent Non-Executive Directors which has resulted
in the composition of the Board and its Committees being more in
line with the requirements of the Code than in previous years.
Following those appointments, at least half of the Board,
excluding the Chairman, are now independent Non-Executive
Directors. In addition, the Audit and Remuneration Committees
are now chaired by independent Non-Executive Directors.
Following the decision of our former Chairman, John Botts, to
retire at this year’s AGM, David Pritchard was appointed Acting
Chairman and Chairman of the Nominations Committee.
David is leading the search for a new Non-Executive Chairman
and providing continuity through to the appointment of John’s
permanent successor.
The Board is committed to continuing to reduce the areas of
non-compliance with the Code. Areas of focus are described in
the Nominations Committee Report on page 49.
42
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Provision
Code requirement
Explanation of non-compliance
A.3.1
Chairman
John Botts and David Pritchard did not meet the Code’s definition of independence on
appointment as Chairman and Acting Chairman, respectively, due to their length of
service on appointment. The Board believes that David Pritchard’s recent service as Senior
Independent Director and familiarity with the Company made him a suitable candidate for
Acting Chairman and will enhance the Company’s search for a new independent Non-
Executive Chairman during the transitional period.
A.4.1
B.1.2
B.2.1
B.3.2
C.3.1
D.2.1
E.1.1
Senior Independent
Director
David Pritchard was appointed Acting Chairman in February 2018, meaning that he could
no longer continue in his role as Senior Independent Director. The Board intends to appoint
a new Senior Independent Director in 2019 to support the new Chairman following their
appointment.
Composition of the
Board
Prior to March 2018, fewer than half the Board were independent Non-Executive Directors.
The majority of the Board now comprise independent Non-Executive Directors.
Composition of the
Nominations Committee
The Nominations Committee comprises five Non-Executive Directors, including two
considered independent under the Code. The Acting Chairman is chairing the Nominations
Committee in order to manage the process to appoint a new Chairman.
Terms and conditions
of appointment of Non-
Executive Directors
Composition and
Chairmanship of the
Audit Committee
Composition and
chairmanship of
the Remuneration
Committee
During the year, the following Non-Executive Directors did not have terms and conditions
of appointment with the Company: The Viscount Rothermere, Paul Zwillenberg, Tim Collier,
Kevin Beatty and Sir Patrick Sergeant. The Directors noted above operated under the
terms of their employment contracts with DMGT and Euromoney respectively. Sir Patrick’s
retirement from the Board during the year means that only DMGT’s representatives on the
Board do not have terms of appointment with the Company.
The Audit Committee does not comprise at least three independent Non-Executive Directors.
The Committee comprises four Non-Executive Directors, two of whom are considered
independent under the Code. The Acting Chairman has served as Chair of the Committee
during part of the year and is considered by the Board to be a valuable and independently
minded member of the Committee.
Colin Day, an independent Non-Executive Director with recent and relevant financial
experience, was appointed Chair of the Committee in June 2018. Tim Collier, CFO of DMGT,
joined the Committee as a member on his appointment to the Board in November 2017
and brings significant insight and financial experience to the Committee. The Committee
as a whole has competence relevant to the sector in which the Company operates. The
Committee has agreed that the new Chairman of the Board, once appointed, will not be a
member of the Audit Committee.
The Remuneration Committee does not comprise at least three independent Non-Executive
Directors. The Committee comprises three Non-Executive Directors, one of whom is
considered independent under the Code. John Botts served as Committee Chairman during
the year and was succeeded by Imogen Joss, an independent Non-Executive Director, in
February 2018. The Board will consider appointing additional independent Non-Executive
Directors to the Committee in 2019.
Senior Independent
Director dialogue with
shareholders
The Company does not have an appointed Senior Independent Director. David Pritchard,
Acting Chairman and previously Senior Independent Director, has met with major
shareholders during the year in his capacity as Acting Chairman.
43
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Corporate Governance Report
continued
Leadership and effectiveness
Role of the Board and its Committees
Board
Meets every two months – chaired by David Pritchard
Approve and monitor strategy, identify, evaluate and manage material risks, review trading performance,
ensure adequate funding, examine major acquisition possibilities and approve reports to shareholders
>
Matters reserved to the Board and delegated authorities
The Board has delegated certain aspects of the Group’s affairs to standing Committees, each of which operates within defined
terms of reference. However, to ensure its overall control of the Group’s affairs, the Board has reserved certain matters to itself for
decision. Procedures are established to ensure that appropriate information is communicated to the Board in a timely manner to
enable it to fulfil its duties.
>
Nominations
Committee
Meets at least three times a year –
chaired by David Pritchard
Remuneration
Committee
Meets at least three times a year –
chaired by Imogen Joss
Reviews the structure, size and
composition of the Board and
its Committees, and makes
recommendations to the
Board accordingly.
Page 49
d
r
a
o
B
Responsible for determining the
contract terms, remuneration and
other benefits of Executive Directors,
including performance-related
incentives. This Committee also
recommends and monitors the overall
level of remuneration for senior
management, including Group-wide
share incentive schemes.
Page 56
Group
Management
Board
Meets each month
>
Tax and Treasury
Committee
Meets twice a year –
chaired by Wendy Pallot
A management board that
operates under the direction
and authority of the CEO and
comprises the Group’s divisional
and functional leaders. It assists
the CEO and CFO in implementing
strategy; monitoring financial
performance of our segments;
developing the Group’s approach
to managing employees; taking
joint responsibility for the Group’s
approach to corporate governance;
and ensuring that the Group’s best-
of-both-worlds operating model
works effectively.
A management committee responsible
for recommending policy to the Audit and
Risk Committee. The Group’s treasury
policies are designed to reduce the
impact of short-term currency movements
giving greater certainty and ensuring
that the Group has adequate liquidity
for working capital and debt capacity
for funding acquisitions. The Committee
is also responsible for the Group’s tax
strategy. Its members are the CEO, CFO,
Deputy CFO and General Counsel &
Company Secretary. All Non-Executive
Directors of the Company are invited to
attend the meetings.
Audit Committee
Meets at least three times a year –
chaired by Colin Day
Reviews and is responsible for oversight
of the Group’s financial reporting
processes, the integrity of the Financial
Statements and the management of risk
across the Group. It scrutinises the work
of the external and internal auditors and
any significant accounting judgements
made by management. The Committee
reports on its operations to the Board
to enable the Directors to determine
the overall effectiveness of the Group’s
internal controls system. The Committee
will be reconstituted as the Audit and
Risk Committee in 2019.
Page 50
Risk Committee
Meets four times a year –
chaired by Wendy Pallot
Oversees the Group’s risk management
processes. It reviews specific risks and
monitors developments in relevant
legislation and regulation, assessing the
impact on the Group. The Committee
reports on its operations to the Board to
enable the Directors to determine the
overall effectiveness of the Group’s risk
management. Its members are the CEO,
CFO, Chief Information Officer, General
Counsel & Company Secretary, Head of
Risk as well as two Divisional Directors
on a yearly rotating basis. All Non-
Executive Directors of the Company are
invited to attend the meetings. In 2019,
our management Risk Committee will
report to the Audit and Risk Committee
on the management of risk across
the Group.
The discussions of the Board Committees are summarised and reported to the Board following each Committee meeting,
together with recommendations on matters reserved for Board decisions.
>
s
e
e
t
t
i
m
m
o
C
t
n
e
m
e
g
a
n
a
M
44
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Board composition and roles
The Board comprises an Acting Chairman, two Executive Directors, six independent Non-Executive Directors and two Non-
Executive Directors.
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.
A summary of changes to the Board during the year and their key responsibilities are set out in the table below:
Executive Directors
Chief Executive Officer
Chief Financial Officer
Finance Director
Chairman
Acting Chairman
Andrew Rashbass
Strategy and Group performance
Wendy Pallot1
Colin Jones2
David Pritchard3
Group financial and operational performance
Board governance, performance, shareholder engagement and
leading the search for a new Chairman
Chairman
John Botts4
Board governance, performance, shareholder engagement
Non-Executive Directors
Life President
Sir Patrick Sergeant5
Independent
Non-Executive Directors
Non-Executive Directors
and directors of DMGT
Jan Babiak6
Andrew Ballingal
Colin Day7
Tristan Hillgarth
Imogen Joss8
Lorna Tilbian9
Kevin Beatty10
Tim Collier11
The Viscount Rothermere12
Paul Zwillenberg13
Bring an external perspective,
independence and objectivity
to the Board’s deliberations and
decision-making
Bring the views of the Company’s
largest shareholder to the Board
Support and constructively
challenge the Executive Directors
using their broad range of
experience and expertise.
Monitor the delivery of the
agreed strategy within the risk
management framework set by
the Board
1 Appointed to the Board on 16 August 2018
2 Resigned from the Board on 15 June 2018
3 Appointed Acting Chairman on 1 February 2018
4 Resigned from the Board on 1 February 2018
8 Appointed to the Board on 10 November 2017
9 Appointed to the Board on 1 January 2018
10 Appointed to the Board on 21 November 2017
11 Appointed to the Board on 21 November 2017
5 Resigned from the Board on 16 May 2018 and appointed Life President
12 Resigned from the Board on 21 November 2017
6 Appointed to the Board on 1 December 2017
7 Appointed to the Board on 5 March 2018
13 Resigned from the Board on 21 November 2017
Independence
The Board has determined that Jan Babiak, Andrew Ballingal,
Colin Day, Tristan Hillgarth, Imogen Joss and Lorna Tilbian are
independent within the meaning of the Code. David Pritchard has
been on the Board for more than the recommended term of nine
years under the Code. The Board believes that David Pritchard’s
recent service as Senior Independent Director and familiarity with
the Company enhances his role as Acting Chairman and that
he remains independently minded. Andrew Ballingal will not be
seeking re-election at the 2019 AGM having served on the Board
for six years.
Kevin Beatty and Tim Collier are also Executive Directors of DMGT,
a significant shareholder of the Company. Both Directors bring
valuable experience and advice to the Company, although have
no involvement in the day-to-day management of the Company.
The Board does not believe that these Non-Executive Directors are
able to exert undue influence on decisions taken by the Board, nor
does it consider their independence or objectivity to be impaired
by their positions with DMGT. However, their relationship with
DMGT as a significant shareholder in the Company means they
are not considered to be independent.
Effectiveness
The Code requires that the Board carries out an evaluation of
its own effectiveness and that of its Committees. Following the
externally facilitated evaluation by Independent Audit Limited in
2017, the Board conducted its own internal review in 2018 led by
the Acting Chairman. The review took the form of a questionnaire
and subsequent discussion between the Directors and Acting
Chairman. The evaluation focused on what the Board and its
Committees do well and areas for improvement identified by the
external review conducted in 2017. The evaluation indicated that
the Board is performing effectively and that further progress will be
made as the new Directors familiarise themselves with each other
and the Company. Areas for development identified in this year’s
evaluation process were the Company’s approach to succession
planning and allocating additional time to discuss the Company’s
strategic objectives and M&A activity. The Board has addressed
the areas identified by establishing an Investment Committee
to review and recommend strategic investments to the Board,
arranging a Board strategy offsite in March 2019 and reviewing the
Company’s succession planning for executive management at its
meeting in October 2018.
45
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Corporate Governance Report
continued
Board meetings and attendance
The Board meets at least five times each year and there is frequent contact between meetings. At least once a year, the Company’s
Chairman meets the Non-Executive Directors without the other Executive Directors being present. The Non-Executive Directors either
meet together or individually, in both cases without the Company’s Chairman present, at least annually to appraise the Chairman’s
performance and on other occasions as necessary.
Non-Executive Directors are also encouraged to meet senior management in the business without the Executive Directors present in order
to have access to a range of views and perspectives on the Company and its operation. During the year, the Board met informally with
senior management from across the Group every other month in line with the Board cycle.
The number of Board and Committee meetings and their attendance by each Director during the year was as follows:
Director
Executive Directors
Andrew Rashbass
Colin Jones
Wendy Pallot
Non-Executive Directors
Jan Babiak
Andrew Ballingal
Kevin Beatty1
John Botts
Tim Collier
Colin Day2
Tristan Hillgarth
Imogen Joss
David Pritchard
The Viscount Rothermere
Sir Patrick Sergeant
Lorna Tilbian3
Paul Zwillenberg
Board
Nominations
Committee
Audit
Committee
Remuneration
Committee
5/5
4/4
1/1
4/4
5/5
4/4
2/2
4/4
2/3
5/5
5/5
5/5
1/1
1/4
3/4
1/1
5/5
4/5
2/2
4/4
4/4
6/6
1/1
1/1
1/1
4/4
3/3
4/4
4/4
4/4
3/3
4/4
5/5
1/1
1 Kevin Beatty was unable to join the Nominations Committee in August 2018 due to a pre-existing commitment
2 Colin Day was unable to join the Board meeting in July 2018 due to a pre-existing commitment arranged prior to his appointment as a Director
3 Lorna Tilbian was unable to join the Board meeting in January 2018 due to a pre-existing commitment arranged prior to her appointment as a Director
Board activities
The key areas of Board activity in 2018 (either directly at the Board
or through its Committees) were:
Governance
• approved appointment of David Pritchard as Acting Chairman
• approved the appointment of four new independent Non-
Strategy
• monitored the implementation of the strategy as presented by
the CEO
• received regular reports from the CEO and CFO which
contained updates on the Group’s financial performance,
discussion of any proposed corporate transactions, changes in
senior management and progress against the Group strategy
Executive Directors
• approved the appointment of Imogen Joss as Chair of the
Remuneration Committee and Colin Day as Chair of the
Audit Committee
• approved the appointment of Wendy Pallot as Chief
Financial Officer
• discussed the output of the Board evaluation and agreed on
• attended the Company’s AGM in February 2018
areas of focus
• reviewed the Group’s performance against budget
• approved updated terms of reference for the
• reviewed management presentations
• monitored the terms of external borrowing facilities and
• considered M&A activity for the Group
Board’s Committees
• received reports from the Chairs of the Audit, Nominations and
Remuneration Committees and
• established an Investment Committee as a sub-committee of the
Board which meets as and when required
46
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Risk management and internal control
• received reports from the Risk Committee on the Group’s
significant and emerging risks and
Internal control and risk management
See pages 31 to 39 for the Group’s principal risks and
mitigating actions
• with the support of the Risk and Audit Committees, reviewed
the Company’s principal risks, the effectiveness of the systems
of internal control and risk management, and discussed the
Group’s risk appetite for 2018
Financial performance
• considered the financial performance of the business and
approved the annual budget
• reviewed the key financial judgements, all financial results
announcements and approved the Annual Report
• considered and approved the Group’s going concern and
viability statements, and dividend for 2018 and
• considered longer-term financial projections as part
of its regular discussions on the Group’s strategy and
funding requirements
Significant transactions
• approved the disposal of the Global Market Intelligence Division
(CEIC and EMIS) to CITIC Capital Holdings and Caixin Global
• as part of the strategy to manage the Group’s portfolio,
approved the disposals of Adhesion, World Bulk Wine and
Institutional Investor Journals
• oversaw the disposal of the Group’s minority stake in
Dealogic and
• approved the acquisition of TowerXchange, Extel and
Random Lengths
Leadership and people
• discussed succession planning, talent development and
diversity across management
• discussed employee reward schemes
• discussed the creation of a new Senior Management Group
comprising of the Group’s senior management and
• reviewed the global staff survey and discussed its conclusions
Monitoring and oversight
Fair, balanced and understandable
The Directors have responsibility for preparing the 2018 Annual
Report and Accounts and for making certain confirmations
concerning it. In accordance with the Code provision C.1.1 the
Board confirms that, taken as a whole, the 2018 Annual Report
and Accounts is fair, balanced and understandable and
provides the information necessary for shareholders to assess
the Company’s position and performance, business model and
strategy. The Board reached this conclusion after receiving advice
from the Audit Committee.
The Board as a whole is responsible for the oversight of risk, the
Group’s system of internal control and reviewing its effectiveness.
The Company aims to manage rather than eliminate risk 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 Board has delegated the
day-to-day responsibility for internal controls and financial risk to
the Audit Committee and for operational risk to the Risk Committee.
The Directors have 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. Some new controls were introduced during the year.
The Company is taking action to address any opportunities to
strengthen the controls which were identified during the course of
the review. A new, detailed self-assessment questionnaire, linked
to our principal risks, was also introduced this year to provide
greater visibility of how the Company’s controls have operated
over the course of 2018. The Company has also commenced a
project to consolidate and enhance its existing risk and control
frameworks which will be completed in 2019.
The controls to prevent an information security breach or cyber-
attack are regularly reviewed and, where appropriate, updated.
Cyber and other information security risks are increasing and the
mitigation of these risks continues to be a key focus area for the
Company’s Risk Committee and Board. The programme of work to
implement tighter information security standards and controls and
cyber resilience plans across the Group will continue into 2019.
The Board has established procedures to ensure effective internal
control. These have been in place throughout the year and up to
the date of this report, are as follows:
The Board of Directors
The Board has overall responsibility for the Group and there is a
formal schedule of matters specifically reserved for decision by the
Board. 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
• seeks assurance that effective control is being maintained
through regular reports from divisional management, Audit and
Risk Committees and various independent monitoring functions
• approves the annual budget 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 and
• approves proposals for investments and capital expenditure
beyond specified limits
47
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Corporate Governance Report
continued
Relations with shareholders
The Company’s Acting Chairman, together with the Board,
encourages regular dialogue with shareholders. Meetings with
shareholders are held, with the CEO, CFO and Chairman, to
discuss annual and interim results and highlight significant
acquisitions or disposals, or at the request of institutional
shareholders. Shareholders also have the opportunity to
participate in the AGM. In line with best practice, all shareholders
have at least 20 working days’ notice of the AGM at which the
Executive Directors, Non-Executive Directors and Committee chairs
are available for questioning. The Company’s CEO and CFO
report to the Board on matters raised by shareholders and analysts
to ensure members of the Board develop an understanding of
investors’ and potential investors’ views of the Company. All Board
members regularly receive analyst reports about the Company
to provide additional insight into how the market perceives
the Company.
Viability statement
See page 39 for the viability statement
Audit and Risk Committees
Previously, the Board determined that separate Audit and Risk
Committees, each with specific terms of reference, were required
to provide the necessary challenge and review required for the
range of businesses the Group operates. A change to committee
structure is being made for 2019 with the Audit Committee
becoming the Audit and Risk Committee. The Risk Committee
will be retained as an operational committee and will report on
the risk programme to the Audit and Risk Committee. The Risk
Committee continues to focus on the identification, management
and reporting of risk. An example of this working in practice is the
Risk Committee’s active participation in developing an event risk
framework in conjunction with the Company’s events businesses to
be rolled out company-wide in 2019.
During the year the Audit, Risk and Remuneration Committees
collaborated, as appropriate, with one another, with members
from each Committee being invited to the other Committees and
attending when able, ensuring that matters of mutual interest
raised in any of these Committees were discussed at each meeting.
The Risk Committee is also attended by other executives
possessing the requisite skills and experience to allow the
Committee to meet its obligations and to provide the relevant
assurance to the Audit and Risk Committee.
Entity level controls
Each segment, division or central function is responsible for
managing risks and operating controls within their area.
Each area confirms the operation of key controls (including with
management) to central management annually. The purpose
of the assessment is to confirm the operation of a framework
of internal controls, including business performance reviews,
financial controls and anti-fraud controls which are expected to
be in place in each business unit. They are intended to provide
standards against which the control environments of the Group’s
business units can be monitored. An annual controls assessment
is completed at the same time, detailing risks and mitigating
controls. In each case, the central management team follows up
these submissions as appropriate.
The Group Management Board meets monthly to discuss strategic,
operational and financial issues. The Group’s tax, financing and
foreign exchange positions are overseen by the Tax and Treasury
Committee. Controls and procedures over the security of data and
disaster recovery are periodically reviewed and are subject to
internal audit. Accounting controls and procedures are regularly
reviewed and communicated throughout the Group. Training and
‘how to’ guides are published internally. Authorisation levels and
segregation of duties are reviewed on a regular basis.
Internal audit
The Group has invested in its own internal audit department.
The department works closely with the Company’s CFO, the
Chairman of the Audit Committee as well as the Group’s
General Counsel & Company Secretary. It undertakes internal
control reviews across the Group and reports its findings to the
Audit Committee.
48
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Nominations Committee Report
The Nominations Committee is responsible for reviewing the structure,
size and composition of the Board. This includes responsibility
for proposing candidates for appointment to the Board and its
Committees as well as taking into account succession planning for
Directors and the skills and expertise needed on the Board
Committee members
David Pritchard1
Jan Babiak (independent)2
Kevin Beatty3
John Botts4
Tim Collier5
Tristan Hillgarth (independent)6
The Viscount Rothermere7
Paul Zwillenberg8
1 Appointed as Committee Chair on 1 February 2018
2 Appointed as a member of the Committee on 1 December 2017
3 Appointed as a member of the Committee on 21 November 2017
4 Resigned as a member of the Committee on 1 February 2018
5 Appointed as a member of the Committee on 21 November 2017
6 Appointed as a member of the Committee on 27 September 2017
7 Resigned as a member of the Committee on 21 November 2017
8 Resigned as a member of the Committee on 21 November 2017
David Pritchard
Committee Chair
Key activities
The Committee met six times during the course of the year.
The Company’s Acting Chairman, David Pritchard, succeeded
John Botts as Chair of the Nominations Committee following John’s
retirement from the Board. David’s focus is the appointment of a
new Non-Executive Chairman.
Following the appointment of three new independent Non-
Executive Directors during the early part of the year, the Committee
focused on the appointment of a new Chief Financial Officer
and Chairman as well as another new independent Non-
Executive Director.
The Committee recommended the appointment of Colin Day as
an independent Non-Executive Director and Chair of the Audit
Committee. Colin joined the Board in March 2018. In addition,
the Committee recommended the appointment of Imogen Joss to
chair the Remuneration Committee following the retirement of John
Botts, an appointment Imogen took up in February 2018.
The Committee also recommended the appointment of Wendy
Pallot as CFO who joined the Board in August 2018.
The Company has worked with Russell Reynolds and Egon
Zehnder on these appointments; neither firm has any connection
with the Company.
David is continuing to lead the process to appoint a new Non-
Executive Chairman, working closely with the Committee.
In addition to making appointments, the Committee has focused
on a range of other issues during the year. These include:
recommending appointments to Board Committees; supporting
the Executive Directors with changes at senior management level;
monitoring and planning for the rotation of independent Non-
Executive Directors; reviewing and recommending updates to
its own terms of reference; devising a skills matrix to assist with a
review of the structure, size, composition, skills and expertise of the
Board; and reviewing the current Board composition.
Focus for 2019
The key activities for the year ahead will be:
• the appointment of a new Chairman
• the appointment of a Senior Independent Director, which is likely
to happen after the Chairman is appointed
• considering the appointment of additional Non-Executive
Directors to each of the Audit and Remuneration Committees
• using the skills matrix to review the Board’s structure, skills and
expertise and
• reviewing the Board’s composition in light of the new incoming
UK Corporate Governance Code requirements
Diversity
The changes in Board composition over the last 15 months mean
that the Board now comprises four women and seven men.
The Group Management Board now comprises four women and
six men following changes to its composition during the year.
Diversity (including but not only gender diversity) will continue to
be an important consideration for the Committee when reviewing
the Board’s composition in 2019. The Group’s gender diversity
information is set out in the Strategic Report on pages 22 and 23.
The Company will consolidate its existing approach to diversity
during the course of 2019 in a policy which will be published on the
Company’s website.
David Pritchard
Chair of the Nominations Committee
21 November 2018
49
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Audit Committee Report
I am pleased to present the report of the Audit Committee for 2018
having been appointed Chair in May 2018, succeeding David Pritchard.
On behalf of the Board, I would like to thank David for his valuable
contribution to the Committee as Chair for over seven years
Committee members
All current Committee members have a high level of financial
literacy. Colin Day and Tristan Hillgarth are both independent
Non-Executive Directors and members of The Institute of Chartered
Accountants in England and Wales. David Pritchard has
considerable Audit Committee experience. Tim Collier, DMGT’s
Chief Financial Officer, brings a wealth of financial experience to
the Committee. Tim Collier and David Pritchard are not considered
to be independent under the UK Corporate Governance Code.
Role and responsibilities
The Committee meets at least three times each financial year and
is responsible for:
• monitoring the integrity of the Group’s Financial Statements,
including its annual and half-yearly reports, and
preliminary announcements
• 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 Group’s position and
performance, business model and strategy
• considering the effectiveness of the Group’s internal controls and
risk management framework
• considering the appointment or reappointment of the external
auditor and reviewing their remuneration
• monitoring and reviewing the external auditor’s independence
and objectivity and 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
• reviewing the adequacy of the Group’s arrangements for its
employees and contractors to raise concerns in confidence and
• reviewing the Group’s policy on non-audit fees payable to the
external auditor
Colin Day
Chair of the Audit Committee
21 November 2018
Committee members
Colin Day1
John Botts2
Tim Collier3
Tristan Hillgarth
David Pritchard4
1
Appointed as a member of the Committee on 5 March 2018 and Chair on 16 May 2018
2 Resigned as a member of the Committee on 1 February 2018
3 Appointed as a member of the Committee on 21 November 2017
4 Resigned as Committee Chair on 16 May 2018
Colin Day
Committee Chair
Chair’s introduction
The Committee is responsible for monitoring: the Group’s financial
reporting processes; integrity of Financial Statements; significant
judgements made by management; and the effectiveness of the
Group’s risk management and internal control framework. It also
oversees the relationship and work carried out by the external
auditor and internal audit function. As Committee Chair, I report
to the Board on the proceedings of each Committee meeting and
how the Committee has discharged its duties and responsibilities.
During the year, in addition to its core responsibilities, the
Committee oversaw the implementation of the Global Finance
Transformation Programme, assessed the impact of the US
tax reform on the Group, reviewed the structure and reporting
lines of the internal audit function, and supported the transition
of the Group’s Chief Financial Officer appointed in August.
Further information on these matters and other keys areas
considered by the Committee can be found in this report.
50
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 During the year, the Committee also focused its attention on the
following matters:
• overseeing the implementation of the Global Finance
Transformation Programme to improve the quality and efficiency
of financial reporting, and tightening of financial controls
and processes
• reviewing the programme of work across the Finance function to
facilitate compliance with GDPR
• supporting the Group Finance function during the transition
between the retirement of the Finance Director in June 2018 and
appointment of the Chief Financial Officer in August 2018
• assessing the impact of the US tax reform and uncertain tax
positions on the Group
• reviewing the structure and resources of the internal audit
function and reporting lines of the Head of Internal Audit
• recommending to the Board changes to the Committee’s Terms
of Reference, including the Committee’s reconstitution as the
Audit and Risk Committee and
• reviewing the potential impact of new standards IFRS 9
‘Financial Instruments’ and IFRS 15 ‘Revenue from Contracts with
Customers’ on the Group’s Financial Statements in 2019
There was no interaction with the Financial Reporting Council
(FRC) corporate reporting team during the year.
Looking ahead to 2019, the Committee will oversee a programme
to enhance the Group’s internal controls and risk management
framework, monitor the transition of a new lead external audit
partner for the 2020 audit and oversee the Global Finance
Transformation Programme.
Committee activities
The Committee met four times during the year. There were a
number of regular attendees at Committee meetings including the
Chief Executive Officer, Chief Financial Officer, General Counsel &
Company Secretary and representatives from the external and
internal audit teams. Members of senior management were invited
to attend as and when their specialist knowledge was required.
The Committee also met with representatives from internal and
external audit at the conclusion of each meeting without
executives present. The Committee Chair also held separate
meetings during the year with the external auditor, representatives
from internal audit and the Chief Financial Officer and her team.
The Committee’s core activities during the year included:
• identifying and assessing the matters which required significant
judgement in 2018, including discussion and review of the
exceptional items that may impact the performance of the
business and overseeing the formalisation of the Group’s policy
with regard to exceptional item classification and the use of
alternative performance measures
• monitoring the integrity of the Group’s annual and interim
Financial Statements
• advising the Board on whether the 2017 Annual Report and
Accounts was fair, balanced and understandable. The 2018
Annual Report and Accounts was reviewed by the Committee in
November 2018
• reviewing the Group’s system of internal control and
risk management
• reviewing internal audit reports and investigations, monitoring
the resolution of issues raised and assessing the 2018 internal
audit plan
• conducting a review of the effectiveness of the Group’s internal
audit function
• considering the reports of the external auditors and assessing
the 2018 external audit plan
• monitoring the level of non-audit fees paid by the Group to the
external auditor
• reviewing the Speak-Up policy and framework for employees
and contractors to raise concerns and
• maintaining the relationship with the external auditor, including
monitoring their independence and effectiveness, and
recommending their re-appointment at the 2019 AGM
51
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Audit Committee Report
continued
Financial reporting and significant financial judgements
The Committee, with input from the external auditor, assessed whether suitable accounting policies had been adopted, that
management had made appropriate estimates and judgements, and whether disclosures were balanced and fair. For the year ended
30 September 2018, the Committee reviewed the following main issues noted below and is satisfied that all issues have been addressed
appropriately and in accordance with the relevant accounting standards and principles.
Issue
Review
Fair, balanced and understandable
At the request of the Board, the Committee has considered
whether, in its opinion, the 2018 Annual Report and Accounts
is fair, balanced and understandable. The Committee has
provided oversight in formalising the Group’s exceptional and
adjusting items policy.
The Committee considered that the Group’s strategy is clearly
articulated, outlining the Group’s purpose. Business and
market performance is considered in the round with equal
prominence on strong and weak performance. A mix of both
financial and non-financial information is disclosed.
Following the Committee’s review of the Annual Report and
Accounts and after applying its knowledge of matters raised
during the year, the Committee is satisfied that, taken as a
whole, the 2018 Annual Report and Accounts is fair, balanced
and understandable.
Presentation of adjusted and underlying performance
Presentation of adjusted and underlying performance,
including identification and treatment of exceptional and
adjusting items. Management considered the latest European
Securities and Markets Authority, ESMA, and FRC guidelines
on alternative performance measures to ensure that the
Annual Report and Accounts had been prepared in line with
best practice.
Goodwill and other intangibles
The Group has goodwill of £414.7m and other intangible assets
of £173.5m. As a result of the impairment review at the half-
year, the Group recognised an impairment charge for Layer123
of £3.0m.
Investments
The Group holds balances relating to the investments in
associates and available for sale amounting to £4.3m.
The Group disposed of its minority stake of 15.5% in Diamond
TopCo Limited (Dealogic) in December 2017. The disposal is
classified as an exceptional item due to its size.
The Committee reviewed the 2018 Annual Report and
Accounts and discussed with management and the external
auditor the exceptional and adjusting items including
consideration of their consistency and the avoidance of any
misleading effect on the Financial Statements and on the
Group’s alternative performance measures. The Committee
challenged management to ensure that each item is
appropriate to classify as an exceptional or adjusting item.
The Committee concluded that the presentation of the
adjusted and underlying performance including discontinued
operations is appropriate.
The Committee has considered the assessments made in
relation to the impairment of goodwill and other intangible
assets. The Committee discussed the methodology and
assumptions used in the model supporting the carrying
value. The Committee reviewed those businesses where
headroom has decreased or where management has
identified impairments. The Committee has also understood
the sensitivity analysis used by management in its review and
disclosure of impairment.
The Committee concluded that no further impairments
were required.
The Committee reviewed the accounting treatment and
disclosure of the disposal of Dealogic and concluded
that it should be classified as an exceptional item. It also
reviewed the assessments made in relation to the valuation
of Zanbato, Inc. and Estimize, Inc. for potential impairments
at the half-year and year-end. The Committee recognised
that the Zanbato and Estimize businesses are still in start-up
phase, concluding no additional impairment was considered
necessary. The Committee also reviewed the summary
prepared by management on the investment in Zanbato and
concluded that no impairment was required at year-end.
52
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Issue
Review
Accounting for acquisitions and disposals
The Group made a number of acquisitions and disposals
during the year. There were a number of consequential
accounting considerations, including identification and fair
values of intangible assets, fair value of other assets, goodwill
arising and gain on sale of businesses recognised. The Group
also has acquisition commitments on previous acquisitions.
The Committee has reviewed the results of the work
undertaken in this area and the disclosure in the Financial
Statements and has sought further explanation where
necessary. The Committee concluded that the accounting
was appropriate.
Discontinued operations and assets held for sale
The Committee has reviewed management’s assumptions
in accordance with the requirements of IFRS 5 and agrees
with the classification as discontinued operations in the
Income Statement at 30 September 2018. The Committee
has reviewed the disclosure, including the presentation of
adjusted performance measures which include discontinued
operations and the underlying measures excluding
discontinued operations.
The Committee reviewed the disclosure of the sale of Mining
Indaba at its meeting in November 2018 and agrees with the
classification as assets held for sale at 30 September 2018 in
accordance with the requirements of IFRS 5. The Committee
also agrees its disclosure as an event after the balance
sheet date.
The Committee reviewed the tax charge at the half-year and
full-year, including the adjusted effective tax rate, deferred
tax balances and the provision for uncertain tax positions
for direct and indirect tax. The Committee also reviewed
management’s disclosure of tax-related matters in the Annual
Report and Accounts, including uncertain tax matters in note
2 to the Financial Statements. The Committee agreed with
management’s treatment of the Group’s tax matters.
The Committee Chair also attends Tax and Treasury
Committee meetings which provide valuable insight into
the tax matters, related provisions and helps establish
the appropriateness of the recognition of the deferred
tax balances.
On 30 April 2018, the Group completed the disposal of GMID.
This division meets the IFRS 5 ‘Non-current Assets Held for
Sale and Discontinued Operations’ criteria to be treated as
discontinued operations at 30 September 2018. GMID meets
the IFRS 5 criteria to be treated as discontinued operations
due to its size and the fact that the division constitutes a major
line of the Group’s business. For the year ended 30 September
2018, the results of the operations through the date of disposal
in April 2018 and the profit on disposal have been included in
discontinued operations. The results for the seven months are
included in the adjusted measures, but have been excluded
from underlying measures.
On 23 October 2018, the Group completed the disposal
of Mining Indaba to ITE Group plc for a consideration of
£30.1m. Mining Indaba meets the IFRS 5 ‘Non-current Assets
Held for Sale and Discontinued Operations’ criteria to be
classified as held for sale at 30 September 2018. The assets
and liabilities held for sale are recorded at the lower of their
carrying value and fair value less costs to sell. No impairment
of these net assets has been identified at 30 September
2018. The net assets recorded as held for sale were £11.7m.
Mining Indaba does not meet the IFRS 5 criteria to be treated
as discontinued operations.
Taxation
Taxation represents a significant cost to the Group in both
cash and accounting terms and the Group is exposed to
differing tax regimes and risks which affect both the carrying
values of tax balances (including indirect tax and deferred
tax) and the resultant Income Statement charges. There were
several significant judgement areas in respect of tax in the
year. Firstly, the Group increased its tax provision in relation
to the HMRC enquiry to the maximum exposure of £10.7m for
which the Committee requested management to obtain third
party advice to support its assessment of the challenge by
HMRC. The increase in the provision has been booked as a
prior year tax charge and is therefore treated as an adjusting
item when determining the adjusted tax charge. No provision
was required in relation to the challenge by the Canadian
Revenue Agency.
Secondly, the disposal of the GMID business was deemed
to be exceptional and therefore the tax which crystallised on
the disposal was treated as tax on an exceptional item and
classified as an adjusting item. Finally, following a review of
the impact of US tax reform on the Group’s debt profile, a
dividend of $380m was repatriated from Canada to the UK
which crystallised a non-recoverable withholding tax charge
of £14.6m. This charge has also been classified as an adjusting
item given the link to US tax reform, which is an adjusting item
in its own right, the size of the charge and the fact that this is
the first time that funds have been remitted from Canada.
53
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Audit Committee Report
continued
Effectiveness of internal control systems
The Committee has responsibility for reviewing the process for
identifying and managing risk and for reviewing internal controls.
It reviews reports from the Risk Committee and the results from
internal audit and any investigations performed. In addition,
the Committee reviews the external auditor’s assessment of the
Group’s financial controls framework.
The Group’s primary sources of risk assurance are the legal and
risk department, headed by the General Counsel & Company
Secretary, and the internal audit function. The General Counsel
& Company Secretary and Head of Internal Audit regularly report
to the Committee on their respective activities at each Committee
meeting. Initiatives during the year included: enhancing
awareness of the controls to manage bribery and corruption
risks; updating the Group’s trade sanctions processes and
procedures; monitoring the implementation of the Global Finance
Transformation Programme; and the supporting governance and
controls documentation.
The Committee supports the continued review and suitability of
the Company’s internal controls and risk management framework.
In 2019, the Chief Financial Officer will lead an initiative to
strengthen the Company’s control environment which will be
subject to the Committee’s review.
Internal audit
The function is responsible for providing independent assurance
to the Committee on the design and effectiveness of internal
controls to mitigate financial, operational and compliance risks.
The purpose, authority and responsibilities of Internal Audit
are defined in the Internal Audit Charter which is reviewed on
an annual basis by the Committee. The Head of Internal Audit
has dual reporting lines into the Audit Committee and Chief
Financial Officer.
The internal audit plan follows a risk-based approach and
is approved annually by the Committee. The plan takes into
consideration the principal risks of the Group, previous internal
audit findings, results of management self-assessments and
significant strategic Group projects such as the Global Finance
Transformation programme. Internal audit also collaborates with
the external auditors to ensure that an appropriate breadth of
audit coverage is obtained.
The Head of Internal Audit is responsible for updating the
Committee on progress against the plan and any changes to
the plan are approved by the Committee. At every meeting,
a summary of work performed, key finding and progress of
management action plans are presented to the Committee.
In order to deliver the plan and any additional work, such as fraud
investigations, internal audit makes use of external resources to
supplement in-house expertise. The Committee reviews internal
audit resource requirements at every meeting and the use of
external support is considered a practical way to scale up the
resources of the function when required.
The Committee considered the effectiveness of internal audit
during the year and confirmed that it was satisfied with the
performance of the function. Areas identified for improvement
included the materiality of issues identified, methodology of ratings
used and the need for additional resource to be allocated to
the function.
External auditor
PricewaterhouseCoopers LLP (PwC) were appointed by
shareholders as the Group’s statutory auditor in 2015 following
a formal tender process. The lead audit partner has held the
position for four years. Following the 2018/19 audit (his fifth year
as lead audit partner) a new audit partner will be appointed
in accordance with the FRC’s auditing and ethical standards.
The Committee will monitor the transition of the new lead audit
partner for the 2019/20 audit.
The external audit contract will be put out to tender at least
every ten years. The Company has complied with the Statutory
Audit Services for Large Companies Market Investigation
(Mandatory Use of Competitive Processes and Audit Committee
Responsibilities) Order 2014 for the financial year under review.
As part of its role in ensuring effectiveness, the Committee
reviewed PwC’s audit plan to ensure its appropriateness for
the Group and has completed a review which focused on the
effectiveness, independence and objectivity of the external
audit. The assessment of effectiveness is based on a framework
setting out the key areas of the audit process for the Committee
to consider, as well as the role that management has contributed
to an effective process. Results from tailored questionnaires sent
to Committee members and senior management, along with
PwC’s client satisfaction survey, were reviewed by the Committee.
The outcome of the review was that PwC had performed
effectively during the year. PwC’s areas of focus for 2018 and
beyond include working with management to accelerate more
work in advance of the financial year-end.
PwC confirmed to the Committee that it maintained appropriate
internal safeguards to ensure its independence and objectivity.
The Committee recommends the reappointment of PwC at the
2019 AGM.
Non-audit work
The Committee completes an annual assessment of the type of
non-audit work permissible and a maximum level of non-audit
fees incurred. Any non-audit work performed by PwC requires
pre-approval by the Audit Committee. Fees paid to PwC for audit
services, audit-related services and other non-audit services are
set out in note 4 of the Group’s Financial Statements. PwC provided
non-audit services amounting to £0.2m during the year,
representing 7% of the total Group auditors’ remuneration.
54
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Committee effectiveness
Responsibilities
The Committee’s performance was reviewed during the year
by way of questionnaire completed by Committee members,
executive and senior management, and the external and internal
auditors. The conclusion of the review was that the Committee
functioned effectively and carried out its duties and responsibilities
for the period under review. Future areas of focus were identified
during the evaluation which included the continued oversight of
initiatives to strengthen the Company’s control environment, and
the oversight of the internal audit function and the framework in
which it operates.
Global Finance Transformation Programme
During the year, the Committee was actively involved in
approving the business case for the first phase of the Global
Finance Transformation Programme. The Committee continued its
involvement through the design and first implementation phase
in August 2018 at NDR and received regular updates during the
course of the year. The Committee has ensured that the global
design, processes and controls documentation is fit for purpose
and has been subject to independent review.
Risk Committee
The Risk Committee oversees the Group’s risk management
processes and considers the Group risk register biannually.
This report reviews specific risks and monitors developments in
relevant legislation and regulation, assessing the impact on the
Group. The Committee reports on its operations to the Board to
enable the Directors to determine the overall effectiveness of the
Group’s risk management.
Committee members
Wendy Pallot (Committee Chair)
The Risk Committee is responsible for the review and
consideration of:
• the risks which the Committee believes 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 and
• reports on any material risk incidents and the adequacy of
proposed action including management’s responsiveness to
the findings
The Committee is responsible for review of the Group’s overall risk
assessment approach and methodology, including:
• the Group’s capability to identify and manage new risk types
• the Group’s procedures for detecting fraud and for the
prevention of bribery
• the adequacy and security of the Group’s Speak-Up
arrangements and
• the principal risks and uncertainties disclosure and other
relevant risk management disclosures for inclusion in the
Annual Report
The Committee also advises the Board on the current risk
exposures of the Group, future risk mitigation strategies and the
overall risk appetite and tolerance.
Key activities
The Committee meets four times a year. The activities during the
year included:
Tim Bratton (General Counsel & Company Secretary)
• reviewing the Group’s risk management processes and the
Ros Irving (Divisional Director)
John Orchard (Divisional Director)
Andrew Pieri (Chief Information Officer)
Group risk register
• reviewing the Group’s principal risks
• assessment of the Group’s cyber risk and information
security governance
• reviewing the Group’s risk management framework for the
Andrew Rashbass (Chief Executive Officer)
events organised by the Company
Toby Smith (Head of Risk)
• monitoring the Group’s programme to enhance controls for the
management of trade sanctions risk and
• assessment of the management of operational risk by the
Group’s divisions
Looking ahead, the Risk Committee will continue to monitor key
risks affecting operating businesses and the Group. Areas of focus
will continue to include information security, data protection, trade
sanctions and business continuity.
55
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Remuneration Report
The phasing out of legacy remuneration arrangements is now
complete and our Remuneration Policy ensures that a significant
proportion of remuneration is focused on the long-term
In this section
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 and of the Listing Rules of the
Financial Conduct Authority.
Letter from the Remuneration Committee Chair
Summary
Remuneration Policy
Annual Remuneration Report
Executive Directors*
Non-Executive Directors*
Other performance measures and disclosures
* Information subject to audit
56
58
60
67
67
71
72
Imogen Joss
Remuneration Committee Chair
Letter to shareholders from the Remuneration
Committee Chair
Dear Shareholder,
I am pleased to present the Directors’ Remuneration Report for
2018 which has been prepared by the Remuneration Committee
(‘Committee’) on behalf of the Board.
The key remuneration outcomes for the year and plans for the
coming year are below. Further details are provided in the Annual
Remuneration Report, commencing on page 67.
Our Remuneration Policy and the link to long-term performance
Our Remuneration Policy contains various elements, with
each serving a particular purpose. Our basic salary, benefits
and pensions arrangements are provided as part of a market
competitive package, for our Executive Directors and for the wider
employee population.
56
Our Remuneration Policy also provides for variable elements of
remuneration, both an Annual Bonus plan and a Performance
Share Plan. The variable elements of remuneration are subject
to stretching performance measures. Any bonus award to an
Executive Director above 100% of salary will be deferred into
Euromoney shares for a period of two years, providing a longer-
term link to shareholders. Our Performance Share Plan takes
the form of awards over Euromoney shares, with vesting subject
to Group performance conditions measured over a three year
period. A further two year holding period applies to Executive
Directors, giving a total of five years (vesting plus holding period).
The Performance Share Plan therefore rewards the creation of
long-term shareholder value.
In addition, to further ensure alignment with shareholders,
Non-Executive Directors, Executive Directors and all members
of our Group Management Board have personal Euromoney
shareholding requirements. For Non-Executive Directors, the
required shareholding level is shares with a value of at least
100% of their annual fee. For Executive Directors and other Group
Management Board members the required level of holding is
200% of salary and 75% of salary respectively.
2018 performance and reward outcomes
The Group continues to perform well; our underlying revenues
grew by 3% compared to 2017. Our key performance measure for
annual bonus purposes is adjusted profit before tax. This measure
has a 75% weighting in the performance measures applied to
Executive Director bonuses and in 2018 our adjusted profit before
tax increased by 3% from 2017 to £109.2m. For bonus performance
measurement purposes, a negative adjustment of £1.4m was
applied to take account of M&A activity, resulting in adjusted profit
before tax for these purposes of £107.8m, which was equal to our
target for 2018.
The remaining 25% of the annual bonus performance measures
relate to individual objectives. Information on how our CEO and
CFO performed against their individual objectives is provided on
page 68.
The performance against these measures resulted in an annual
bonus payout of 60.1% of maximum for Andrew Rashbass and 50%
of maximum for Wendy Pallot. The actual amounts payable were
£676,350 for Andrew Rashbass and £27,734 for Wendy Pallot,
which is the pro-rated amount to reflect her period of service
during the year.
Our Performance Share Plan has not been in place for a full
three year performance period yet and so no outcomes for the
Performance Share Plan measures have been tested this year.
The performance measures that apply are adjusted diluted EPS
growth and, for more recent awards, adjusted operating profit
margin. Our adjusted diluted EPS has increased from 76.4p in 2017
to 81.3p in 2018. Adjusted operating profit margin has increased
from 25% in 2017 to 27% in 2018.
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Colin Jones, the Group’s former Finance Director, was incentivised
with a profit share scheme linked to adjusted diluted earnings per
share (before tax). Colin was entitled to a pro-rata entitlement
under the profit share scheme, reflecting the eight and a half
months he worked during 2018. The amount payable to him is
£520,423, (equivalent to £734,715 on a full-year basis), compared
to a 2017 full-year payment of £668,487. This increase reflects the
Group’s increase in adjusted earnings per share.
The Committee felt that although the proportion of fixed
remuneration increases at target, there remains a significant
incentive to achieve superior performance. At target performance
levels, there is an overall reduction in the package that will be
broadly equal to the incremental costs incurred by the Company
in relation to the US assignment. It is intended that at the point
that support in the US is no longer provided, these temporary
reductions would no longer apply.
As announced previously, Colin Jones retired during 2018. He
stepped down from the Board on 15 June 2018. His remuneration
arrangements on retirement are set out on page 70.
Chief Financial Officer
During the year, our new Chief Financial Officer, Wendy Pallot,
took up her role (from 16 August 2018). Wendy’s remuneration
arrangements are in line with our Remuneration Policy on
recruitment and are summarised below and set out in full on
page 70.
• Salary: £355,000
• Bonus: target: 62.5% of salary; maximum: 125% of salary
• PSP: usual award level 150% of salary
Other Board changes
As well as the retirement of Colin Jones and appointment of Wendy
Pallot as Chief Financial Officer during 2018, we had a number of
changes in our other Board members. These are explained in full
on page 45. Our Board diversity has changed significantly during
the year and we now have four women on our Board.
I took on the role of Chairman of the Remuneration Committee from
1 February 2018 when John Botts stepped down from the Board.
During the year, a further change in Remuneration Committee
membership took place when Paul Zwillenberg stepped down
from the Board and Remuneration Committee and was replaced
by Kevin Beatty from 21 November 2017.
Remuneration changes during 2018
The Chief Executive Officer’s salary was not increased at the time
of the annual salary review and therefore from 1 April 2018 his
annual salary remained at £750,000.
However, it was agreed during 2018 that the Chief Executive
Officer’s variable remuneration opportunities would be temporarily
reduced. This was at the Chief Executive Officer’s request to ensure
that the Company did not incur additional costs in relation to
the Chief Executive Officer’s short-term commuter assignment to
the US.
During 2018 (from 1 April 2018), the Chief Executive Officer
committed to spend up to half his time in the US on a short-
term commuter assignment to help focus the Group’s growth
and acquisition strategy on opportunities there. The Company
facilitated this by providing suitable accommodation for the short-
term assignment.
The Remuneration Committee and the Chief Executive Officer
agreed that the ongoing costs to the business should be minimised
and therefore agreed adjustments to his package to offset these
costs. These included a reduction in his target bonus level from
100% to 90% of salary and a reduction in the level of PSP award at
grant from 200% of salary to 170%.
All employee remuneration at Euromoney
In our 2017 Directors’ Remuneration Report, we referred to our
commitment to introducing an employee forum for consulting
on remuneration matters. During the course of 2018, we have
carried out extensive work on planning the details around how this
proposed employee forum will work. We have now completed the
planning and are due to launch the employee forum, with the first
meeting expected to take place shortly after our 2019 AGM.
During 2018 we have also continued work to bring further
alignment of reward structures across our senior employees
(‘Top 100’), and, in particular, the removal of profit share
arrangements for senior management that was referred to in our
2016 Directors’ Remuneration Report has now been completed.
Group Management Board remuneration structures are now
aligned with Executive Directors with a significant long-term
element and strong alignment to shareholders.
During 2019, we intend to consider all employee pay more closely
to ensure we are treating our employees fairly and keeping up
with developing market practice and governance requirements in
this area.
Remuneration for 2019
We do not intend to make any changes to our Remuneration Policy
or the implementation of our policy for 2019. We will also retain
the same performance measures for Executive Director bonuses,
with 75% based on adjusted profit before tax and 25% based on
individual objectives. The same performance measures as we
have applied previously will also continue to apply to performance
share plan awards granted to Executive Directors, with 75% based
on adjusted diluted EPS growth and 25% based on adjusted
operating margin.
The annual review of salaries takes place in April each year and
Executive Director salaries will also be reviewed at this time.
Remuneration Policy shareholder approval at the 2018 AGM
The Director’s Remuneration Policy was put forward to a binding
shareholder vote at our 2018 AGM. It was approved at that vote.
The Annual Remuneration Implementation Report together with
this letter is subject to an advisory shareholder vote at our 2019
AGM to be held on 1 February 2019. The sections of this report that
have been subject to audit are marked in the contents above.
The members of the Committee include a representative
of its major shareholder, DMGT. The Committee consults
with its shareholders prior to any major changes in its
remuneration arrangements.
Imogen Joss
Remuneration Committee Chair
21 November 2018
57
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Remuneration Report summary
This summary section provides shareholders with the key information
from our 2018 Directors’ Remuneration Report at a glance
2018 Key performance measures
for remuneration
Adjusted profit before tax (annual bonus financial
performance measure, 75% weighting)
116.2
107.8
102.5
106.5
109.2
Scenario charts for CEO and CFO
The charts below provide illustrative values of the
remuneration package for the Chief Executive Officer,
Andrew Rashbass, and Chief Financial Officer, Wendy Pallot,
under three assumed performance scenarios. For the CEO,
the scenario chart reflects the Remuneration Policy and
not the temporarily reduced target annual bonus and PSP
award level that apply for the period of his US assignment.
The assumptions used are detailed on page 66.
2014
2015
2016
2017
2018
Adjusted diluted earnings per share (PSP award performance
measure, 75% weighting)
70.6p
70.1p
66.5p
81.3p
76.4p
CEO (£000)
3,500
3,000
2,500
2,000
1,500
1,000
500
0
100%
43%
33%
24%
32%
32%
36%
Minimum
In line with expectations
Maximum
● Fixed pay
● Annual bonus
● PSP
2014
2015
2016
2017
2018
CFO (£000)
Adjusted operating profit margin (PSP award performance
measure, 25% weighting)
30%
26% 25% 25%
27%
1,500
1,250
1,000
750
500
250
0
34%
28%
38%
100%
38%
35%
28%
Minimum
In line with expectations
Maximum
● Fixed pay
● Annual bonus
● PSP
2014
2015
2016
2017
2018
58
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Single figure of remuneration summary table
A Rashbass
W Pallot
CR Jones
Total
Salary,
Benefits and
Pension
£
826,441
826,284
50,565
Profit share
£
Annual
bonus
£
Total before
buy-out
award
£
–
–
–
676,350 1,502,791
800,250 1,626,534
27,734
78,299
221,822
520,423
312,129
668,487
–
–
742,245
980,616
2018
2017
2018
2018
2017
2018 1,098,828
520,423
704,084 2,323,335
2017
1,138,413
668,487
800,250
2,607,150
2018 CEO bonus outcome
For 2018, the CEO bonus amount is 60.1% of maximum, £676,350.
This amount will be split as follows and was calculated based on performance against the 2018 annual bonus performance
measures, summarised below.
Bonus Plan
A Rashbass
Bonus payable in cash
Bonus deferred into shares
Total
Performance measures
Weighting
Minimum
On target Maximum
Actual
Financial: adjusted profit before tax1&2
Individual objectives
Total pay-out (% of maximum)
£97.0m
£107.8m
£118.5m
£107.8m
–
–
–
–
75%
25%
100%
1 A reconciliation of adjusted profit before tax is set out on page 28
2 The adjusted profit before tax result was amended to take account of M&A activity with a negative adjustment of £1.4m
The individual objectives for Andrew Rashbass in 2018 were:
£
676,350
–
676,350
Maximum
opportunity
(% of salary)
Pay-out
(% of
maximum)
112.5%
37.5%
150%
63.3%
50.5%
60.1%
Objective
Outcome
Pay-out (% of maximum)
Book of Business growth year-on-year
Between threshold and target 40.4%
Portfolio management targeting reducing drag from bottom
left quadrant businesses and improving upper right quadrant
businesses (see page 12)
Succession planning
Internal controls and cyber security
Between threshold and target
28.5%
Between target and maximum 81.7%
Between threshold and target 51.4%
59
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Remuneration Policy
Approved by shareholders at our 2018 AGM
Remuneration Policy
The Board believes in aligning the interests of management with
those of shareholders. It is the Group’s policy to construct executive
remuneration packages such that a significant 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. The policy was
approved by shareholder vote at the 1 February 2018 AGM and is
effective from that date and is available on our website in our 2017
Annual Report and Accounts (pages 59 to 65).
Information not subject to audit.
The implementation of the current Remuneration Policy for the
Executive Directors in 2018 is set out in the Annual Remuneration
Report, from page 67 to 74.
The following pages show our Remuneration Policy which was
effective from 1 February 2018.
Compliance statement
This report sets out the Group’s policy and structure for the
remuneration of Executive and Non-Executive Directors. This policy
report is intended to be in full compliance with the requirements of
the Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2013.
In formulating its Directors’ Remuneration Policy, the Committee
considered employee pay and benefits, and sought advice on
best practice from Deloitte. The Committee consulted with its top
shareholders by equity holding.
60
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Remuneration Report
continued
Benefits
Key Features of Policy
Maximum Opportunity
Basic salary
Purpose and link
to strategy
• Part of an overall market competitive pay package with
salary generally not the most significant part of a Director’s
overall package
• Reflect the individual’s experience, role and performance
within the Company
Operation
• Paid monthly in cash
Benchmarking
• Normally reviewed by the Remuneration Committee in March
each year
• The Remuneration Committee examines salary levels at FTSE
250 companies and other listed peer group companies to
help determine Executive Director pay increases
• The Remuneration Committee takes into account the general
level of salary increases awarded to employees
Relationship
to employee
salaries
• The approach to setting base salary increases across the
Group 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
Benefits
Purpose and link
to strategy
• Basic benefits are provided as part of a market competitive
pay package
Operation
Benefits may include:
• Private healthcare
• Life insurance
• Overseas relocation and housing costs
The Committee has discretion to add or remove benefits from
this list
Relationship
to employee
benefits
• Benefits are available to all Directors and employees
subject to a minimum length of service or passing a
probationary period
Benefit levels
• All Executive Directors participate in the healthcare scheme
offered in the country where they reside
• No absolute maximum has been
set for Executive Director salaries.
The Committee is guided by the
general increase for the broader
employee population although
larger increases may be considered
appropriate in circumstances
(including, but not limited to,
a change in an individual’s
responsibilities or in the scale of their
role or in the size and complexity of
the Group). Larger increases may
also be considered appropriate if a
Director has been initially appointed
to the Board at a lower than
typical salary
• There is no overall maximum as the
level of benefits depends on the
annual cost of providing individual
items in the relevant local market
and the individual’s specific role
Pensions
Purpose and link
to strategy
• Retirement benefits are provided as part of a market
• The maximum employer’s
competitive pay package
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
Relationship
to employee
salaries
• All Directors and employees are entitled to participate in
the same pension scheme arrangements applicable to the
country where they work
contribution to a pension scheme is
15% of pensionable salary
61
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Remuneration Report
continued
Benefits
Key Features of Policy
Maximum Opportunity
• 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
• The maximum level of bonus
payment at threshold achievement
is 0%
Annual Bonus Plan
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
• Annual bonus payments will be paid in cash following the
release of audited results and/or as a deferred award over
Company shares
• Any bonus earned in excess of 100% of salary will be awarded
as a deferred award
• 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 and may be based upon any of
appropriate financial, strategic and individual performance
measures. No more than half of the annual bonus will
generally be determined by strategic and/or individual
performance measures
• 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
Relationship to
all employee
incentive
schemes
• Incentive schemes, like the Annual Bonus Plan, are an
important part of the Group culture. The Directors believe
they directly reward good and exceptional performance.
Many employees across the Group have an incentive scheme
in place
62
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Benefits
Key Features of Policy
Maximum Opportunity
Long-term incentive plans
Purpose and link
to strategy
• Share schemes are an important part of overall compensation
• The maximum annual award
and align the interests of Directors and managers with
shareholders. They encourage Directors to deliver long-term,
sustainable profit and share price growth
permitted under the PSP is shares
with a market value of 200% of
annualised basic salary
Operation
2015 Performance Share Plan (PSP)
• Any Executive Director may participate in the PSP
• These awards will normally be subject to a performance
period of three years, with an additional holding period
of two years. If the Remuneration Committee determines
so, an alternative performance period may be applied
(with a minimum of at least three years). The aggregate
of the performance period and additional holding period
shall not be less than five 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
• The PSP rewards the creation of long-term shareholder value
and is potentially available to all senior employees across
the Group
Relationship to
all employee
long-term
incentive
schemes
Long-term incentive plans (all-employee schemes)
Purpose and link
to strategy
• All-employee share schemes align staff with the Group’s
financial performance and promote a sense of ownership
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 are able to buy shares in the
Company at a price set at a discount of up to 20% to the
market value at the start of the savings period
• 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
63
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Remuneration Report
continued
Notes to table:
• The Remuneration Committee may vary any performance condition(s) if an
event occurs which causes it to determine that a varied condition would be
more appropriate, provided that any such varied condition is not materially
less difficult to satisfy. In the event that the Remuneration Committee was to
make an adjustment of this sort, a full explanation would be provided in the
next Remuneration Report.
• Performance measures – The performance measures used in the variable
incentive plans are reviewed annually and chosen to focus executive rewards
on delivery of key financial targets for the relevant performance period in
addition, where appropriate, to key strategic or operational goals relevant to
an individual. Precise targets are set at the start of each performance period
by the Remuneration Committee based on relevant reference points, including,
for Group financial targets, the Group’s business plan, and are designed to be
appropriately stretching.
• The Remuneration Committee intends to honour any commitments entered into
with current or former Directors on their original terms, including outstanding
incentive awards, which have been disclosed in previous remuneration
reports and, where relevant, are consistent with a previous policy approved
by shareholders. Any such payments to former Directors will be set out in the
Remuneration Report as and when they occur.
• The Remuneration Committee reserves the right to make any remuneration
payments and payments for loss of office (including exercising any discretions
available to it in connection with such payments) notwithstanding that they are
not in line with the Policy set out above where the terms of the payment were
agreed; (i) before the date the Company’s first Remuneration Policy approved
by shareholders in accordance with section 439A of the Companies Act came
into effect; and (ii) before the Policy set out above came into effect, provided
that the terms of the payment were consistent with the shareholder-approved
Remuneration Policy in force at the time they were agreed; or (iii) at a time
when the relevant individual was not a Director of the Company and, in the
opinion of the Remuneration Committee, the payment was not in consideration
for the individual becoming a Director of the Company. For these purposes
‘payments’ includes the Remuneration Committee satisfying awards of variable
remuneration and, in relation to an award over shares, the terms of the
payment are ‘agreed’ at the time the award is granted.
• The Remuneration Committee may make minor amendments to the Policy
(for regulatory, exchange control, tax or administrative purposes, or to take
account of a change in legislation) without obtaining shareholder approval for
that amendment.
• The Remuneration Committee will operate the variable incentive plans
according to their respective rules which provide flexibility in a number of
regards.
• Under the PSP and the deferred share bonus plan, outstanding awards will
vest early in the event of a change of control /takeover unless the change
of control is an internal reorganisation or the Remuneration Committee
determines otherwise in which case awards will be exchanged for equivalent
awards over shares in the acquiring company. In the case of PSP awards,
the extent to which awards vest will take into account the satisfaction of the
performance conditions 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. If the Company is wound up or is or may
be affected by a demerger, delisting, special dividend or other event which
would, in the Remuneration Committee’s opinion affect the Company’s share
price, the Remuneration Committee may allow PSP and deferred share bonus
plan awards to vest on the same basis as for a takeover.
• Any buy-out award granted as part of the recruitment of an Executive Director
will be treated on a change of control in line with the agreed commercial
terms of that award.
• If there is a variation of the Company’s share capital or a demerger, delisting,
special dividend, rights issue or other event which, in the Remuneration
Committee’s opinion would affect the Company’s share price, the
Remuneration Committee may adjust the terms of the awards.
Non-Executive Directors
The Remuneration of Non-Executive Directors is determined by
the Board based on the time commitment required by the Non-
Executive Directors, their role and market conditions. Each Non-
Executive Director receives a base fee for services to the Board
with an additional fee payable for Non-Executive Directors with
selected, additional responsibilities (for example, the Chairs of the
Remuneration and Audit Committees and the Senior Independent
Director). The Non-Executive Directors do not participate in any
of the Company’s incentive schemes. The Non-Executive Directors
receive reimbursement for reasonable expenses (including, where
relevant, tax payable on those expenses) incurred as part of their
role as Non-Executive Directors.
Policy on external appointments
The Company allows its Executive Directors to take a limited
number of outside directorships provided they are not expected to
impinge on their principal employment.
Subject to the approval of the Company Chairman, Executive
Directors may retain the remuneration received from the first
such appointment.
Recruitment policy
Compensation packages for new Board Directors are set in
accordance with the prevailing Remuneration Policy at their time
of 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 private healthcare and life assurance.
Other benefits may include a pension allowance, relocation or
housing allowance.
New Executive Directors will participate in one or more of the
incentive plans outlined in the section Detailed remuneration
arrangements of Executive Directors earlier in this Policy. The initial
annual bonus and/or long-term incentive plan award to a new
recruit may be granted with different measures and or targets to
other Directors in the year of joining if deemed appropriate.
Where appropriate, a new Executive Director may be granted
a one-off buy-out award for loss of earnings from previous
employment which have been forfeited in order to join the
Company. When structuring a buy-out award, the Remuneration
Committee will take account of all relevant factors, including any
performance conditions attached to forfeited incentive awards,
the likelihood of those conditions being met, the proportion of
the vesting/performance period remaining and the form of the
award (e.g. cash or shares). The overriding principle will be that
any replacement buy-out award should, in aggregate, not exceed
the commercial value of the earnings which have been forfeited.
The Remuneration Committee may, in a recruitment scenario,
rely upon the Listing Rules exemption from shareholder approval
to grant a one-off buy-out award to facilitate the recruitment of
a Director.
New Executive Directors are entitled to participate in the
Euromoney SAYE scheme.
64
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 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
be honoured.
Where an appointment is made to fill an Executive Director role on
a short-term basis, the Remuneration Committee retains discretion
to make appropriate remuneration decisions outside the standard
Policy to meet the individual circumstances of recruitment on an
interim basis.
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 Directors.
Directors’ service contracts
The Company’s policy is to employ Executive Directors on
service agreements which are terminable on 12 months’ notice.
The Remuneration Committee seeks to minimise termination
payments and believes these should be restricted to the value of
remuneration for the notice period.
The Company’s Executive Directors are employed for an indefinite
term and the service agreements provide for a notice period of
12 months from the Company and the Executive. Each Executive
Director participates in bonus or incentive arrangements
(and, in the case of Andrew Rashbass, a recruitment award
as compensation for forfeiting remuneration in order to join
the Company).
The service agreements for the Executive Directors include the
following provisions on termination: 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 Remuneration Committee, bonus and long-term
incentive awards that accrue 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
the Executive’s base salary for the notice period. At the absolute
discretion of the Remuneration Committee, the Executive will
also be considered for any bonuses to which they would or may
become entitled during the notice period.
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.
Each of the Non-Executive Directors serve under a letter of
appointment, rather than a service agreement.
The Directors’ service contracts and Non-Executive Directors’ letters
of appointment 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 bonus 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 and pension 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.
The treatment of outstanding share awards in the event of
termination is governed by the relevant share plan rules as
summarised below.
If an Executive Director participates in the PSP and ceases to be an
officer or employee of the Group during the performance period
in any circumstances other than those set out below, an unvested
award will lapse on the date on which their employment ceases.
If a participant dies, an unvested PSP award will vest at the time of
the participant’s death, taking into account the satisfaction of the
performance condition 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.
If a participant is treated as a good leaver because cessation of
employment is as a result of ill-health, injury, disability, the sale
of the individual’s employing business or entity out of 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 Committee determines it should vest as soon
as reasonably practicable following the participant’s cessation.
The extent to which the 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.
If a PSP award is subject to a holding period and a participant
ceases to be an officer or employee of the Group during that
holding period, his/her award will normally be released at the end
of the holding period except where the Remuneration Committee
determines it should be released following the participant’s
cessation. However, if a participant is summarily dismissed during
a holding period, his/her award will lapse immediately. Nil-cost
options will normally be exercisable for six months after release.
65
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Remuneration Report
continued
Where an Executive Director participates in the deferred share
bonus plan and ceases employment, their outstanding awards will
normally lapse unless cessation is due to the participant’s death
or a Good Leaver Reason, in which case outstanding awards will
vest at the normal vesting date or, if the Remuneration Committee
so determines, as soon as is reasonably practicable following the
individual’s cessation.
Any buy-out award granted as part of the recruitment of an
Executive Director will be treated on cessation of employment in
line with the agreed commercial terms of that award.
The Remuneration Committee reserves the right to make any
other payments in connection with a Director’s cessation of office
or employment where the payments are made in good faith in
discharge of an existing legal obligation (or by way of damages
for breach of such an obligation) or by way of a compromise or
settlement of any claim arising in connection with the cessation of
a Director’s office or employment. Any such payments may include
but are not limited to paying any fees for outplacement assistance
and/or the Director’s legal and/or professional advice fees in
connection with his cessation of office or employment.
No other termination payments are provided unless otherwise
required by law.
Policy for Directors holding equity in the Company
There is a minimum shareholding requirement of 200% of
base salary for 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.
There is a minimum shareholding requirement of 100% of
annual fees for Non-Executive Directors on a continuous basis.
This excludes Non-Executive Directors who are also Executive
Directors of DMGT as they have a similar requirement at DMGT.
Scenario charts for Directors’ remuneration
The charts below provide illustrative values of the remuneration
package for the Chief Executive Officer, Andrew Rashbass, and
Chief Financial Officer, Wendy Pallot, under three assumed
performance scenarios. For the CEO, the scenario chart reflects
the Remuneration Policy and not the temporarily reduced target
annual bonus and PSP award level that apply for the period of his
US assignment.
These charts are for illustrative purposes only and actual outcomes
may differ from those shown.
Assumed performance
Assumptions used
All performance scenarios
(Fixed pay)
Minimum (less than threshold)
performance
(Variable pay)
Performance in line
with expectations
(Variable pay)*
Maximum performance
(Variable pay)*
• Consists of total fixed pay,
including base salary, benefits
and pension
• Base salary – salary effective as
at 1 October 2018
• Benefits – estimated value of
£2,000
• Pension allowance –10%
of salary
• No pay-out under the annual
bonus
• 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
CEO (£000)
CFO (£000)
32%
32%
36%
100%
43%
33%
24%
1,500
1,250
1,000
750
500
250
0
34%
28%
38%
100%
38%
35%
28%
Minimum
In line with expectations
Maximum
Minimum
In line with expectations
Maximum
● Fixed pay
● Annual bonus
● PSP
● Fixed pay
● Annual bonus
● PSP
3,500
3,000
2,500
2,000
1,500
1,000
500
0
66
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Annual Remuneration Report
Executive Directors (audited)
In 2018, the key elements of remuneration for the CEO, Finance Director (who retired during the year) and CFO (who joined during the
year), in line with the Directors’ Remuneration Policy in force, were as follows:
Salary
Annual incentive
Bonus deferral
LTIP
Pension
Benefits
A Rashbass (CEO) £750,000
Annual Bonus Plan
WM Pallot
(from 16
August 2018)
• 150% of salary maximum
• 100%/90%1 of salary target
The performance measures were:
• 75% adjusted profit before tax
• 25% individual objectives
£355,000
Annual Bonus Plan
• 125% of salary maximum
• 62.5% of salary target
The performance measures were:
• 75% adjusted profit before tax
• 25% individual objectives
Any amount
above 100% of
salary deferred
into nil-cost
options for two
years
Any amount
above 100% of
salary deferred
into nil-cost
options for
two years
CR Jones
(Finance Director
to 15 June 2018)
£270,300
–
Profit share scheme 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
PSP Annual
award of 170%1
of salary vesting
after 5 years (3
year performance
period plus 2 year
holding period)
PSP Annual
award of 150%
of salary vesting
after 5 years (3
year performance
period plus 2 year
holding period)
N/A given
retirement on 15
June 2018
10% of
salary per
annum,
payable
in cash
Private
healthcare
Life
insurance
10% of
salary per
annum,
payable
in cash
Private
healthcare
Life
insurance
15% of
salary per
annum,
payable
in cash
Private
healthcare
Life
insurance
1
As explained in the Chairman’s letter, the Chief Executive Officer’s target bonus level was reduced from 100% to 90% of salary and the level of PSP award grant was reduced from 200% of salary to
170%. These adjustments are intended to leave the Company broadly cost neutral in relation to its increased costs arising from the Chief Executive Officer’s short-term commuter assignment to the US
to develop our strategy and business there. The US assignment began on 1 April 2018 and so the target bonus for 2018 is 100% of salary to 1 April 2018 and 90% of salary thereafter
The table below sets out the break down of the single figure of remuneration for each Executive Director in 2018 and 2017.
Salary
£
Benefits1
£
Profit share2
£
Annual
bonus3
£
Total before
buy-out
award
£
Pension
£
Buy-out
award4
£
Total
£
A Rashbass
WM Pallot
CR Jones
Total
2018
2017
2018
2018
2017
2018
750,000
750,000
45,968
191,636
270,300
987,604
2017
1,020,300
1,441
1,284
–
–
–
–
676,350
800,250
27,734
75,000 1,502,791
590,981 2,093,772
75,000 1,626,534
518,931
2,145,465
4,597
78,299
1,441
520,423
1,284
668,487
–
–
28,745
742,245
40,545
980,616
–
–
–
78,299
742,245
980,616
2,882
2,568
520,423
704,084
108,342 2,323,335
590,981 2,914,316
668,487
800,250
115,545
2,607,150
518,931 3,126,081
1
In line with the practice in previous years, the value of benefits provided is the most recent P11D (tax year) value. As noted above, the Company has provided accommodation for the period of
Andrew Rashbass’ short-term assignment to the US. The cost of this accommodation is exempt from tax and so it has not been included in the benefits figure
2 Adjusted pre-tax EPS was 101.19p. This equates to 819.91 percentage points above 11 pence and 405.95 percentage points above 20 pence. The full-year profit share amount equates to
£734,715; this is pro-rated for eight and a half months until retirement in June 2018, resulting in a payment of £520,423
3 Includes any amount deferred into nil-cost options for two years, with vesting subject to continued employment (other than in limited good leaver circumstances)
4 For 2017, the value of Andrew Rashbass’ buy-out award vesting was calculated using the average mid-market price of the five days preceding vesting on 30 September 2017 of £11.74. Due to
being in a close period, no vesting of the buy-out award occurred in 2017. For 2018, the value of Andrew Rashbass’ buy-out award vesting was calculated using the average mid-market price
of the five days preceding vesting on 30 September 2018 of £13.37
Annual Bonus Plan
A Rashbass
Bonus payable in cash
Bonus deferred into shares
Total
Performance measures
Financial: adjusted profit before tax1&2
Individual objectives
Total pay-out (% of maximum)
Weighting
Minimum
On target Maximum
Actual
£97.0m
£107.8m
£118.5m
£107.8m
–
–
–
–
75%
25%
100%
1 A reconciliation of adjusted profit before tax is set out on page 28
2 The adjusted profit before tax result was amended to take account of M&A activity with a negative adjustment of £1.4m
£
676,350
–
676,350
Maximum
opportunity
(% of salary)
Pay-out
(% of
maximum)
112.5%
37.5%
150%
63.3%
50.5%
60.1%
67
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Remuneration Report
continued
The individual objectives for Andrew Rashbass in 2018 were:
Objective
Book of Business growth year-on-year
Outcome
Between threshold and target
Portfolio management targeting reducing drag from bottom left
quadrant businesses and improving upper right quadrant businesses
(see page 12)
Succession planning
Internal controls and cyber security
Between threshold and target
Between target and maximum
Between threshold and target
Pay-out (% of maximum)
40.4%
28.5%
81.7%
51.4%
These objectives were weighted equally and the assessment of the outcome was determined by the Committee. In determining the final
level of bonus payable, the Committee also considered whether the overall bonus outcome was appropriate.
On the basis of the above, the annual bonus will pay out at 60.1% of maximum opportunity and an overall bonus of £676,350 (90.2%
of salary). Under our Remuneration Policy, any annual bonus earned in excess of 100% of salary will be paid as a nil-cost option, the
vesting of which will be deferred for two years. The bonus deferral level was not reached.
WM Pallot
Bonus payable in cash
Bonus deferred into shares
Total
Performance measures
Financial: adjusted profit before tax1&2
Individual objectives
Total pay-out (% of maximum)
£
27,734
–
27,734
Weighting
Minimum
On target Maximum
Actual
£97.0m
£107.8m
£118.5m
£107.8m
–
–
–
–
75%
25%
100%
Maximum
opportunity
(% of salary)
Pay-out
(% of
maximum)
93.75%
31.25%
125%
50%
50%
50%
1 A reconciliation of adjusted profit before tax is set out on page 28
2 The adjusted profit before tax result was amended to take account of M&A activity with a negative adjustment of £1.4m
The individual objectives for Wendy Pallot in 2018 were a number of personal objectives relating to her first one and a half months in the
CFO role. These were based around internal controls, risk management and the actions on the internal structure of the finance function.
The Committee assessed the CFO’s performance against these objectives and determined that performance against those individual
objectives was on target. In determining the final level of bonus payable, the Committee also considered whether the overall bonus
outcome was appropriate.
On the basis of the above, the annual bonus will pay out at 50% of maximum opportunity against the individual objectives and an
overall bonus of £27,734 (62.5% of salary) after pro-rating to reflect the proportion of 2018 that Wendy Pallot was on the Board.
Pensions
Pension amounts are those contributed by the Company to pension schemes or cash amounts paid in lieu of pension contributions.
Executive Directors can participate in the Euromoney PensionSaver Plan (a money purchase plan) or their own private pension scheme.
The Harmsworth Pension Scheme closed to future accrual of benefits on 31 December 2015. Under the Harmsworth Pension Scheme, the
following pension benefits were earned by the Directors:
Accrued annual benefit at 15 June 2018
based on normal retirement age
£
CR Jones
50,464
Normal retirement
age of 65
15 Aug 2025
Additional value of
benefits if early
retirement taken
Weighting of pension
benefit value as shown
in single figure table
none
Cash allowance: 100%
Buy-out award for Andrew Rashbass
A one-off award of shares in the Company with a value of £2,250,000 was made in 2016 in order to compensate Andrew 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 him from his previous employment. Based on the Company’s average share price for the month
of September 2015, 221,011 shares were awarded on 1 October 2015. 40% of this award vested on 30 September 2016, 20% vested on
30 September 2017 and a further 20% vested on 30 September 2018. The remaining 20% will vest on 30 September 2019 (subject to
continued employment).
Under the terms of this award, 44,202 options (2017: 44,202) vested on 30 September 2018.
Long-term incentives
No share plan awards under the PSP were due to vest in the year for the Executive Directors. Options were granted over 110,103 shares
to Executive Directors during the year under the PSP. Details of the Group’s share option schemes are set in the Remuneration Policy that
can be found on the website and note 24 to the Group’s Financial Statements.
68
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ interests
The following tables set out all interests in the equity of the Company held by Executive Directors and a comparison to the shareholding
guidelines for Executive Directors at 30 September 2018.
Share options subject to performance conditions
The table below sets out the details of the long-term incentive award granted under the PSP where vesting will be determined according
to the achievement of performance measures that will be tested in 2020. Awards under the PSP were granted to Andrew Rashbass
on 19 February 2018. In addition, Executive Directors have a further two-year holding period following the performance measurement
period. No other awards under the PSP have been granted to the Executive Directors during 2018. As explained above, the Chief
Executive Officer’s PSP award level was reduced to 170% of salary (at grant) for the award granted in February 2018 to contribute to
leaving the Company broadly cost neutral in relation to its increased costs arising from the Chief Executive Officer’s short-term commuter
assignment to the US to develop our strategy and business there.
A Rashbass
Type of
option awarded
Basis of award
Nil-cost option
170% of salary
Face value of
award made
£1,275,000
Number of
shares1
End of
performance period
110,103
Sep 2020
1
Calculated as maximum number of shares that would vest if all performance measures are met. The share price used to determine the number of shares awarded was £11.58, being the
average of the middle market quotations of an ordinary share as derived from the Daily Official List for the five dealing days preceding 19 February 2018
Details of performance measures for the February 2018 PSP awards are as follows:
Maximum opportunity
Performance measure
Weighting
Performance target
8% or more
Vesting level
Full vesting
Compounded annualised EPS1
growth between financial
years 2017 and 2020
A Rashbass
170% of salary
75%
Between 8% and 3% Between 100% and 25%
on a sliding scale
3%
Less than 3%
28% or more
25%
Nil
Full vesting
Between 28% and 25.5% Between 100% and 25%
on a sliding scale
25.5%
Less than 25.5%
25%
Nil
Operating margin2
25%
1 EPS will be the adjusted diluted earnings per share disclosed in note 10 to the Group’s Financial Statements
2 Operating margin will be adjusted operating margin as disclosed in the Group’s Financial Statements
The table below sets out the details of PSP awards held by Executive Directors as at 30 September 2018.
Year
A Rashbass
2015
2016
2018
Total
Relating to
Award type Exercisable from
Expiry date
Status
Award price
(pence)
Exercised
during
the year
Outstanding
awards
PSP
PSP
PSP
Nil-cost option
18 Dec 2020
18 Dec 2025 Outstanding
Nil-cost option
19 Dec 2021
19 Dec 2026 Outstanding
Nil-cost option
19 Feb 2023
19 Feb 2028 Outstanding
941.8
1,057.4
1,158.0
–
–
–
159,269
141,857
110,103
411,229
Wendy Pallot will be granted her first PSP award in the next PSP award cycle (December 2018).
69
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Remuneration Report
continued
Share awards not subject to performance conditions
The table below sets out the details of outstanding buy-out awards, deferred bonus awards and SAYE options held by Andrew Rashbass.
Year
2015
2015
2016
2017
2018
Relating to
Award type Exercisable from
Expiry date
Status
Award price
(pence)
Exercised
during
the year
Buy-out
award
Buy-out
award
Deferred
bonus
Deferred
bonus
SAYE
Nil-cost option
30 Sep 2018
1 Oct 2025 Outstanding
1,018.5
Nil-cost option
30 Sep 2019
1 Oct 2025 Outstanding
1,018.5
Nil-cost option
22 Dec 2018
22 Dec 2024 Outstanding
1,063.6
Nil-cost option
19 Feb 2020
19 Feb 2026 Outstanding
1,158.0
Discounted
option
1 Aug 2021
1 Feb 2022 Outstanding
1,420.0
–
–
–
–
–
Outstanding
awards
44,202
44,202
19,175
4,339
1,691
The proportion of the buy-out award (over 44,202 shares) which vested on 30 September 2017 was exercised on 23 February 2018 and
all shares were retained.
Share interests summary
The table below summarises all interests in shares.
Executive Director
A Rashbass
WM Pallot
Awards held
subject to
performance
conditions
Awards held
not subject to
performance
conditions
Shares required
to be held
% of salary
Number of
shares required
to be held1
Number of
beneficially
owned shares
Shareholding
requirement met
411,229
113,609
–
–
200%
200%
111,442
52,749
91,056
–
No2
No2
1
The number of shares is calculated using the closing mid-market price on 28 September 2018 of £13.46. The requirement is for the Executive Directors to hold 200% of salary within five years of
appointment
2 Andrew Rashbass was appointed Executive Director on 1 October 2015 and Wendy Pallot was appointed Executive Director on 16 August 2018 and therefore neither have yet built up shares
equal to their individual requirement
At the date of his retirement (15 June 2018), the former Finance Director, Colin Jones, held 192,000 shares and met his personal shareholding requirement of 100% of salary
There have been no changes in the shareholdings of the Executive Directors between 30 September 2018 and the date of this Annual
Report and Accounts.
Remuneration for new CFO
Wendy Pallot joined the Company on 16 August 2018 as Chief Financial Officer. All elements of her remuneration package are aligned
with our Remuneration Policy for Executive Directors.
Wendy Pallot’s annual salary was set at £355,000. She elected to receive a cash allowance of 10% of salary in lieu of pension
contributions and will receive the usual benefits for an Executive Director under our Remuneration Policy, including private healthcare
and life assurance.
In relation to variable remuneration, the applicable Annual Bonus Plan structure will be similar to the Chief Executive Officer, with the
target pay out level being at 62.5% of salary. The maximum annual bonus opportunity will be 125% of salary.
The performance measures will be structured in the same way as those for the Chief Executive Officer and will be adjusted profit before
tax (with a 75% weighting), plus individual objectives (with a 25% weighting). Any bonus amount awarded above 100% of salary will be
deferred into nil-cost options for two years.
No buy-out awards were awarded in respect of the package agreed with Wendy Pallot.
Arrangements on leaving office – Colin Jones
Colin Jones retired from his role as Finance Director of the Company and stepped down from the Board on 15 June 2018. The following
sets out the treatment of each element of remuneration as part of his leaving arrangements:
• Salary and pension cash allowance were paid up to leaving date
• Benefits (life assurance and cash-back medical plan) continued to his leaving date, with the exception of private medical cover which
continued until the end of the month of him leaving, i.e. to 30 June 2018
• Profit share arrangements will be paid on a pro-rata basis, reflecting service during the 2018 financial year
• Good leaver treatment will apply to his PSP award granted in December 2016 over 25,562 shares. Therefore, this award will be
exercisable on the normal release date in 2021, subject to performance conditions and pro-rating based on the proportion of the
performance period (1 October 2016 to 30 September 2019) in employment
Payments to past Directors
There were no payments to past Directors made in the year.
70
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Payments for loss of office
There were no payments for loss of office made in the year.
Non-Executive Directors (audited)
The fees for Non-Executive Directors were not reviewed during 2018, with the last increase having been effective from 1 February 2017.
The current fee levels are as follows:
• Chairman: £190,000
• Non-Executive base fee: £50,000
• Audit Committee Chair: additional £10,000
• Remuneration Committee Chair: additional £10,000
• Senior Independent Director: additional £10,000
Each of the Non-Executive Directors seeking re-election at our 2019 AGM currently have an unexpired term of at least two years on their
letters of appointment, with the exception of DP Pritchard who has five months.
Single figure of remuneration
The table below sets out the break down of the single total figure of remuneration for each Non-Executive Director in 2018 and 2017.
JC Botts (Chairman until 1 February 2018)
The Viscount Rothermere (until 21 November 2017)
Sir Patrick Sergeant (until 16 May 2018)2
DP Pritchard (Senior Independent Director until 1
February 2018, Acting Chairman from 1 February 2018)
ART Ballingal
TP Hillgarth
PA Zwillenberg (until 21 November 2017)
I Joss (appointed 10 November 2017, Remuneration
Committee Chair from 1 February 2018)
TG Collier (appointed 21 November 2017)
KJ Beatty (appointed 21 November 2017)
J Babiak (appointed 1 December 2017)
LM Tilbian (appointed 1 January 2018)
C Day (appointed 5 March 2018, Audit Committee
Chair from 16 May 2018)
Total
1 Fees include pro-rata fee increase from 1 February 2017
2018 fees
£
2018 benefits
£
2018 Total
£
64,064
7,008
31,250
150,000
50,000
50,000
7,008
41,667
43,182
43,182
41,667
37,500
32,614
599,142
–
–
22,719
–
–
–
–
–
–
–
–
–
–
22,719
64,064
7,008
53,969
150,000
50,000
50,000
7,008
41,667
43,182
43,182
41,667
37,500
32,614
621,861
2017 fees1
£
185,000
43,333
43,333
58,833
43,333
43,333
43,333
–
–
–
–
–
–
2017 benefits
£
–
–
35,747
–
–
–
–
–
–
–
–
–
–
2017 total
£
185,000
43,333
79,080
58,833
43,333
43,333
43,333
–
–
–
–
–
–
460,498
35,747
496,245
2 In addition to fees paid in line with other Non-Executive Directors, in recognition of his additional responsibilities as President, Sir Patrick Sergeant is provided with a chauffeur and personal
assistant and was also reimbursed for expenses incurred. In total, the personal element for these expenses in 2018 was £22,719. The equivalent figure for 2017 was £35,747 which, in error, was
not disclosed in our 2017 Directors’ Remuneration Report
Directors’ interests
Shareholding guidelines for the Non-Executive Directors were introduced last year. The interests of the Non-Executive Directors in the
ordinary shares of the Company as at 30 September 2018 (or date of stepping down from the Board, if earlier) were as follows:
Beneficial
JC Botts
The Viscount Rothermere
Sir Patrick Sergeant
DP Pritchard
ART Ballingal
TP Hillgarth
PA Zwillenberg
I Joss
TG Collier
KJ Beatty
J Babiak
LM Tilbian
C Day
There have been no changes in the shareholdings of the Non-Executive Directors between 30 September 2018 and the date of this
Annual Report and Accounts.
Number of
ordinary shares
15,503
–
101,476
16,644
–
4,000
–
–
–
–
5,404
–
–
71
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Remuneration Report
continued
Other performance measures and disclosures (unaudited)
Comparison of overall performance and remuneration of the CEO
The chart below compares the Company’s total shareholder return with the FTSE 250 index over the past 10 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 the most appropriate benchmark.
Total shareholders’ return: %
600
550
500
450
400
350
300
250
200
150
100
50
0
30 Sep 2008 30 Sep 2009 30 Sep 2010 30 Sep 2011 30 Sep 2012
30 Sep 2013 30 Sep 2014
30 Sep 2015
30 Sep 2016
30 Sep 2017
30 Sep 2018
● Company
● FTSE 250
The table below sets out the remuneration data for Directors undertaking the role of CEO during each of the last 10 years. The single
figure of remuneration for the CEO set out below includes salary, benefits, Company pension contributions and, where applicable, long-
term incentives.
CEO
2009
2010
2011
2012
Single figure of
remuneration
(£000)
Annual incentive
payment
(% of maximum)
Long-term incentive
vesting
(% of maximum)
A Rashbass
CHC Fordham
PR Ensor
A Rashbass1
CHC Fordham2
PR Ensor2
A Rashbass
CHC Fordham
–
–
–
–
–
–
–
–
2,917
3,977
4,397
4,857
–
–
–
–
–
–
–
–
81%
82%
82%
82%
–
–
–
–
–
–
–
–
PR Ensor
100%
100%
100%
2013
–
1.647
–
–
2014
–
895.
–
–
2015
–
576
–
–
2016
1,780
–
–
2017
1,627
–
–
2018
1,503
–
–
85%
71%
60%
58%
52%
17%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Andrew Rashbass was awarded an annual bonus under the Group’s Annual Bonus Plan
2 Christopher Fordham and Richard Ensor were paid under the Group’s profit share scheme. The profit share scheme had no ceiling; the maximum annual variable element of remuneration was
therefore calculated assuming that profits achieved had been 20% higher
72
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Percentage change in remuneration of the CEO
The table below illustrates the change in remuneration for the CEO 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 Committee at the same time as that of the CEO and under the same economic
circumstances. The Directors believe this demonstrates the best link between the changes in average remuneration compared to
the CEO.
CEO remuneration
Average employee
% change 2017 to 2018
Salary
0%
2%
Benefits
12.2%
8%
Incentives
(15.5%)
5%
Remuneration in the above table excludes long-term incentive payments and pension benefits. There is no change in salary from 2017 for
the CEO remuneration as Andrew Rashbass did not receive an increase in the April 2018 salary review.
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 pay1
Dividends paid
Adjusted profit before tax2
2018
£m
159.0
34.4
109.2
2017
£m
163.8
30.2
106.5
% increase
(2.9%)
13.9%
2.5%
1 Total employee pay is affected by foreign exchange translation as more than half of the Group’s employees are based outside of the UK
2 From continuing and discontinued operations
Remuneration Committee
The Committee meets four times a year and additionally as required. It is responsible for determining the contract terms, remuneration
and other benefits of Executive Directors, including performance-related incentives. The Committee reviews the remuneration and
incentive plans of the Executive Directors and other key employees as well as looking at the remuneration costs and policies of the Group
as a whole. The Committee’s terms of reference are available on the Company’s website.
During 2018, the Committee met five times and informal discussions were held at other times during the year. Information on meeting
attendance is provided on page 46.
Committee members
John Botts (Committee Chair until he resigned on 1 February 2018)
David Pritchard
Paul Zwillenberg (resigned from the Committee on 21 November 2017)
Imogen Joss (appointed to the Committee on 10 November 2017, became Committee Chair on 1 February 2018)
Kevin Beatty (appointed to the Committee on 21 November 2017)
All members of the Committee are Non-Executive Directors of the Company. For the year under review, the Committee also sought
advice and information from the Company’s Chief Executive Officer, Finance Director/Chief Financial Officer, the Global HR Director
and the Global Reward Director. The Committee’s terms of reference permit its members to obtain professional advice on any matter.
Guidance was sought from Deloitte on an ad hoc basis and fees of £500 were payable for this advice. Deloitte was appointed in
2013 by the Committee. Deloitte is a founding member of the Remuneration Consultants Group and voluntarily operates under the
code of conduct in relation to executive remuneration consulting in the UK. The Committee is satisfied as to the independent nature of
their advice.
The key activities of the Committee in the year included:
• Assessing performance against the bonus performance measures for 2017 bonus payment to the Chief Executive Officer
• Assessing performance measures for 2017 profit share payment to the Finance Director
• Approving 2017 bonus payments for the Group Management Board individuals
• Finalising the 2017 Directors’ Remuneration Report, including the new Remuneration Policy which was put to shareholders for approval
at our 2018 AGM
• Approving the performance measures and targets to apply to annual bonus payments for 2018
• Approving the performance measures and performance targets to apply to PSP awards granted during the year
• Determining the leaving arrangements for the Finance Director and the remuneration package for the new Chief Financial Officer
73
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Remuneration Report
continued
Implementation of the Remuneration Policy in 2019
Basic salary
Directors’ salaries from 1 October 2018 are:
Andrew Rashbass: £750,000
Wendy Pallot: £355,000
Salaries will be reviewed in April 2019
Pensions and benefits
No change to prior year for Andrew Rashbass or Wendy Pallot
Annual incentive
Annual Bonus Plan
Annual bonus deferral
Long-term incentive
The weightings for the individual and financial objectives for Andrew Rashbass and Wendy Pallot under
the Annual Bonus Plan in 2019 will remain the same as 2018 with 75% based on adjusted profit before tax
and 25% on individual objectives. The Committee considers that disclosing the precise targets, which are
commercially sensitive, of the Annual Bonus Plan would not be in shareholders’ interests and awards made
will be published at the end of the performance period where possible.
Any amount above 100% of salary for Andrew Rashbass and Wendy Pallot will be deferred into nil-cost
options for two years, as was the case for 2018.
The value of the PSP awards due to be granted to Executive Directors in December 2018 will be equivalent to
170% of salary for Andrew Rashbass and 150% of salary for Wendy Pallot.
The performance measures attached to these PSP awards will be adjusted diluted EPS (75% weighting) and
adjusted operating profit margin (25% weighting), as was the case for 2018 awards.
For the adjusted diluted EPS performance measure, the threshold target level will be compounded
annualised adjusted diluted EPS growth of 3% over the performance period and would result in 25%
vesting. Maximum vesting would occur at compounded annualised EPS growth of 8%. Vesting occurs on a
sliding scale between the threshold and maximum level.
For the adjusted operating profit margin performance measure, the threshold target level will be adjusted
operating profit margin of 25.5% over the performance period and would result in 25% vesting. Maximum
vesting would occur if adjusted operating profit margin is 28%, with vesting taking place on a sliding scale
between the threshold and maximum level.
Non-Executive Directors’ fees
Non-Executive Directors’ fees will not be reviewed.
Directors employed in the UK are eligible to participate in the SAYE.
Shareholding requirement
Guidelines recommended by the Committee and as indicated in the revised Remuneration Policy are:
• Non-Executive Directors: 100% of annual fee
• Executive Directors: 200% of salary
• Group Management Board: 75% of salary
General Meetings – shareholder vote outcome
The table below shows the voting outcomes on the two resolutions on the 2017 Directors’ Remuneration Report at the February
2018 AGM.
Directors’ Remuneration
Report
Remuneration Policy
On behalf of the Board
Votes for
85,283,119
Votes for
93,926,490
%
89%
%
92%
Votes against
%
Abstentions
10,413,138
Votes against
8,497,841
11%
%
8%
6,748,073
Abstentions
20,000
Imogen Joss
Remuneration Committee Chair
21 November 2018
74
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Report
Euromoney Institutional Investor PLC, incorporated in England and
Wales, company number 954730, with its registered office at 8
Bouverie Street, London, EC4Y 8AX, is listed on the London Stock
Exchange and is a constituent of the FTSE 250 share index.
The Directors’ Report comprises pages 75 to 78 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 2 to 39) as the Board
considers them to be of strategic importance, particularly future
business developments and principal risks.
It is expected that the Company will continue to operate as the
holding Company of the Group. Subsidiaries of the Company have
established branches in a number of different countries in which
they operate.
Forward-looking statements
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.
Group results and dividends
The Group profit for the year attributable to equity holders of
the parent amounted to £201.1m (2017: £42.7m). In 2017, the
Board approved a new, progressive dividend policy with an
increase in the dividend pay-out ratio from approximately 33%
to approximately 40% of adjusted diluted earnings per share.
The Board is able to recommend an increased final dividend of
22.30p per ordinary share (2017: 21.80p), payable on Thursday
14 February 2019 to shareholders on the register on Friday
30 November 2018. This, together with the interim dividend of
10.20p per ordinary share (2017: 8.80p), which was declared on
17 May 2018, brings the total dividend for the year to 32.50p per
ordinary share (2017: 30.60p).
Share capital
The Company’s share capital is divided into ordinary shares
of 0.25p each. At 30 September 2018 there were 109,180,729
ordinary shares in issue and fully paid. During the year, 79,121
ordinary shares of 0.25p each (2017: 35,425 ordinary shares)
with an aggregate nominal value of £198 (2017: £88) were
issued following the exercise of share options granted under the
Company’s share incentive schemes for a cash consideration of
£0.64m (2017: £0.3m). Details of the Company’s share capital are
given in note 23 to the Group’s Financial Statements.
Employee Share Trust
The Executive Directors of the Company together with other
employees of the Group are potential beneficiaries of the
Euromoney Employee Share Trust and Euromoney ESOP Trust and,
as such, are deemed to be interested in any ordinary shares held
by the trust.
At 30 September 2018, the trust’s shareholding totalled
1,715,551 shares representing 1.52% of the Company’s called-up
ordinary share capital. There have been no awards transferred
between 30 September 2018 and the date of this Annual Report
and Accounts.
Voting rights and restrictions on transfer of shares
Each share entitles its holder to one vote at shareholders’
meetings and the right to receive dividends and other distributions
according to the respective rights and interests attached to the
shares. There are no special control rights attached 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 effect, alter or
terminate upon a change of control of the Company following a
takeover bid. These include the Group’s debt facility agreement
with HSBC under which the bank can demand immediate
repayment of outstanding debt upon a change of control.
Other than this agreement, none of these agreements are deemed
to be significant in terms of their potential impact on the business
of the Group as a whole. The Company’s share plans contain
provisions that take effect in such an event but do not entitle
participants to a greater interest in the shares of the Company
than created by the initial grant or award under the relevant plan.
Details of the Directors’ entitlement to compensation for loss of
office following a takeover or contract termination are given in the
Directors’ Remuneration Report.
Authority to purchase and allot own shares
At the 2018 AGM, the Company was authorised by shareholders
to purchase up to 10% of its own shares and to allot shares up to
an aggregate nominal amount of £27,275. The Company did not
purchase any of its own shares under this authority during the year.
Significant shareholdings
At 30 September 2018, the Company had received notifications
from the following shareholders of their direct or indirect
shareholding of 3% or more in the Company’s issued share capital.
This information is disclosed pursuant to the Disclosure Guidance
and Transparency Rules and in response to disclosures requested
by the Company. No notifications have been disclosed to the
Company in accordance with DTR 5 during the period 1 October
2018 to 21 November 2018.
Name of holder
DMGZ Limited
Nature of
holding
Number of
shares
% of voting
rights
Direct 53,546,470
49.04
5.47
Standard Life Aberdeen plc
Indirect
5,974,019
Woodford Investment
Management
Heronbridge Investment
Management LLP
Direct 5,897,334
5.40
Indirect 5,283,820
4.84
Relationship deed
The Company and DMGT, the parent company of DMGZ Limited,
entered into a revised relationship deed on 8 December 2016
(which supersedes the agreement entered into on 16 July 2014) in
accordance with the Listing Rules and have acted in accordance
with its terms since execution.
75
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Report
continued
Employees
The competence of employees is strengthened through a robust
recruitment process along with training and development
programmes. The conduct of employees is an essential part of
the Company’s control environment. The high ethical standards
expected are communicated by management and through
the employee handbook which is provided to all employees.
The employee handbook includes specific policies on matters
such as 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
page which is used to communicate with employees and
provide guidance and assistance on day-to-day matters facing
employees. The Group has a Speak-Up policy that is supported
by an externally managed Speak-Up hotline and web platform.
The speak-up policy is updated when necessary and is reviewed
by the Audit and Risk Committees.
The Company actively encourages employees to become involved
in the financial performance of our business through a variety of
share and bonus schemes.
Human rights and health and safety requirements
The Group is committed to the health and safety and the human
rights of its employees and communities in which it operates.
Health and safety issues are monitored to ensure compliance with
all local health and safety regulations. External health and safety
advisors are available where appropriate.
Disabled employees
It is the Group’s policy: to give full and fair consideration to
applications for employment from people who are disabled; to
continue, wherever possible, the employment of, and to arrange
appropriate training for, employees who become disabled; and
to provide opportunities for the career development, training and
promotion of disabled employees.
Political donations
No political donations were made during the year (2017: £nil).
Post balance sheet events
Events arising after 30 September 2018 are set out in note 30 to the
Group’s Financial Statements.
Going concern
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 and Accounts.
Additional disclosures
Additional information that is relevant to this report, and which is
incorporated by reference into this report, including information
required in accordance with the UK Companies Act 2006 and
Listing Rule 9.8.4R, can be located as follows:
• Corporate Governance Report (pages 42 to 48)
• Related party transactions (note 29)
• Waivers of dividends (page 92)
Greenhouse Gas (GHG) reporting
The Group participates in a 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.
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 2018. 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
2016
Consolidation approach
Operational control
Boundary summary
Consistency with the
Financial Statements
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
Assessment methodology Greenhouse Gas Protocol environmental
reporting guidelines
Intensity ratio
Emissions per £m of revenue
Greenhouse gas emission source
Scope 1: Combustion
of fuel and operation
of facilities
Scope 2: Electricity,
heat, steam and cooling
purchased for own use
2018
2017
(tCO2e)/
(tCO2e)
£m (tCO2e)
(tCO2e)/
£m
700
1.8
700
1.8
1,300
3.3
1,800
4.7
Total scope 1 and 2*
2,000
5.1
2,500
6.5
Scope 3: Business travel
and outsourced activities
5,700
14.6
5,300
13.7
Total emissions
7,700
19.7
7,800
20.2
* Statutory carbon reporting disclosures required by Companies Act 2006
Auditor
Each Director confirms that, so far as he/she is aware, there is
no relevant audit information of which the Company’s auditor is
unaware, and that each of the Directors has taken all the steps
that he/she ought to have taken as a 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 PricewaterhouseCoopers LLP as the
Company’s statutory auditor and to authorise the Audit Committee
to determine their remuneration will be proposed at the 2019 AGM.
76
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 In accordance with the Company’s Articles of Association and the
requirements of the Code, all serving Directors, with the exception
of Andrew Ballingal, offer themselves for election or re-election
at the forthcoming AGM. In addition, in accordance with the
Code, before the election or re-election of a Non-Executive
Director, the Chairman is required to confirm to shareholders that,
following formal performance evaluation, the Non-Executive
Directors’ performance continues to be effective and demonstrates
commitment to the role.
Directors’ indemnities
A qualifying third-party indemnity (QTPI), as permitted by the
Company’s Articles of Association and section 232 and 234 of
the Companies Act 2006, has been granted by the Company to
each of its Directors. 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, judgment is given against the Director.
On behalf of the Board
Tim Bratton
General Counsel & Company Secretary
21 November 2018
Annual General Meeting
The Company’s AGM will be held at the Company’s registered
office at 8 Bouverie Street, London, EC4Y 8AX on 1 February 2019
at 9.30 a.m. A separate circular comprising the Notice of Meeting,
together with explanatory notes, accompanies this Annual Report
and Accounts.
Directors
Directors and Directors’ interests
The membership of the Board and biographical details of
the Directors are given on pages 40 and 41 of the Corporate
Governance Report. The Directors serving on the Board of the
Company during the year were as follows:
Director
Jan Babiak
Andrew Ballingal
Date appointed in the
year (if applicable)
Date resigned in the year
(if applicable)
1 December 2017
Kevin Beatty
21 November 2017
John Botts
Tim Collier
Colin Day
Tristan Hillgarth
Colin Jones
Imogen Joss
Wendy Pallot
David Pritchard
Andrew Rashbass
The Viscount
Rothermere
Sir Patrick Sergeant
1 February 2018
15 June 2018
21 November 2017
5 March 2018
10 November 2017
16 August 2018
21 November 2017
16 May 2018
Lorna Tilbian
1 January 2018
Paul Zwillenberg
21 November 2017
Details of the interests of the Directors in the ordinary shares of
the Company and of options held by the Directors to subscribe
for ordinary shares in the Company are set out in the Directors’
Remuneration Report on pages 56 to 74.
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 written notice to such a Director. The Articles of
Association themselves may be amended by a special resolution of
the shareholders.
77
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Directors’ Report
continued
Directors’ confirmations
Each of the Directors, whose names and functions are listed on
pages 40 and 41 in the Annual Report and Accounts confirm that,
to the best of their knowledge:
• the Company’s Financial Statements, which have been
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 102 ‘The Financial Reporting
Standard applicable in the UK and Republic of Ireland’,
and applicable law), give a true and fair view of the assets,
liabilities, financial position and profit of the Company
• the Group Financial Statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give
a true and fair view of the assets, liabilities, financial position,
profit and cash flows of the Group and
• the Strategic Report and the Directors’ Report includes a fair
review of the development and performance of the business
and the position of the Group and Company, together with a
description of the principal risks and uncertainties that it faces
On behalf of the Board
Wendy Pallot
Chief Financial Officer
21 November 2018
Statement of Directors’ responsibilities in respect of the Financial
Statements
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law
and regulation.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the Directors
have prepared the Group Financial Statements in accordance
with International Financial Reporting Standards (IFRSs) as
adopted by the European Union and Company Financial
Statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 102 ‘The Financial Reporting Standard
applicable in the UK and Republic of Ireland’, and applicable
law). Under Company law the Directors must not approve the
Financial Statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and Company
and of the profit or loss of the Group and Company for that
period. In preparing the Financial Statements, the Directors are
required to:
• select suitable accounting policies and then apply
them consistently
• state whether applicable IFRSs as adopted by the European
Union have been followed for the Group Financial Statements
and United Kingdom Accounting Standards, comprising FRS
102, have been followed for the Company Financial Statements,
subject to any material departures disclosed and explained in
the Financial Statements
• make judgements and accounting estimates that are
reasonable and prudent 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 also responsible for safeguarding the assets of
the Group and Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Group and Company
and enable them to ensure that the Financial Statements and the
Directors’ Remuneration Report comply with the Companies Act
2006 and, as regards the Group Financial Statements, Article 4 of
the IAS Regulation.
The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of Financial
Statements may differ from legislation in other jurisdictions.
78
GovernanceEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Financial Statements
Independent Auditors’ Report to the members
of Euromoney Institutional Investor PLC
Report on the audit of the Financial Statements
Opinion
In our opinion:
• Euromoney Institutional Investor PLC’s Group Financial Statements and Company Financial Statements (the 'Financial Statements') give
a true and fair view of the state of the Group’s and of the Company’s affairs at 30 September 2018 and of the Group’s profit and cash
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 (United Kingdom Accounting Standards, comprising FRS 102 'The Financial Reporting Standard applicable in the
UK and Republic of Ireland', and applicable law); 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.
We have audited the Financial Statements, included within the Annual Report and Accounts (the 'Annual Report'), which comprise:
the Consolidated Statement of Financial Position and the Company Balance Sheet at 30 September 2018; the Consolidated Income
Statement; the Consolidated Statement of Comprehensive Income; the Consolidated Statement of Cash Flows; and the Consolidated
and Company Statements of Changes in Equity for the year then ended; and the notes to the Financial Statements, which include a
description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) ('ISAs (UK)') and applicable law.
Our responsibilities under ISAs (UK) are further described in the auditors’ responsibilities for the audit of the Financial Statements section
of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the Financial
Statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided
to the Group or the Company.
Other than those disclosed in note 4 to the Financial Statements, we have provided no non-audit services to the Group or the Company
in the period from 1 October 2017 to 30 September 2018.
Our audit approach
Overview
Materiality
Audit scope
• Overall Group materiality: £4.0m (2017: £4.2m) based on 5% of statutory profit before tax from
continuing operations, adjusted for exceptional items.
• Overall Company materiality: £14.5m (2017: £13.5m) based on 1% of total assets.
• We conducted work in three key territories, being the UK, US and Canada. This included full
scope audits at four components and specific Financial Statements line item audit procedures at
a further two components.
• Taken together, the components at which audit work has been performed accounted for
approximately 77% of the Group’s revenue, 96% of the Group’s statutory profit before tax
from continuing operations and 91% of the Group’s statutory profit before tax from continuing
operations, adjusted for exceptional items.
• Carrying values of goodwill and acquired intangible assets (Group) and investments in
Key audit
matters
subsidiaries (Company)
• Uncertain tax positions (Group)
• Presentation of exceptional items (Group)
• US tax reform (Group)
• Disposals and discontinued operations (Group)
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Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Independent Auditors’ Report to the members
of Euromoney Institutional Investor PLC continued
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the 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 are inherently uncertain. We gained an understanding of the legal
and regulatory framework applicable to the Group and Company and the industry in which they operate and considered the risk of acts
by the Group and Company which were contrary to applicable laws and regulations, including fraud. We designed audit procedures at
Group and significant component levels and for the Company to respond to this risk, recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment
by, for example, forgery or intentional misrepresentations or through collusion. We focused on laws and regulations that could give rise to
a material misstatement in the Group and Company Financial Statements, including, but not limited to, the Companies Act 2006 (CA06),
ISAs (UK), the Listing Rules of the Financial Conduct Authority (FCA) and taxation legislation. Our tests included, but were not limited to,
checking the Financial Statement disclosures to underlying supporting documentation, review of correspondence with legal advisors,
enquiries of management, review of significant component auditors’ work and review of relevant Internal Audit reports insofar as they
related to the Financial Statements. There are inherent limitations in the audit procedures described above and the further removed non-
compliance with laws and regulations is from the events and transactions reflected in the Financial Statements, the less likely we would
become aware of it.
As in all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether there
was evidence of bias by the Directors that represented a risk of material misstatement due to fraud, and the risk of fraud in revenue
recognition. Procedures designed to address these risks included testing of material journal entries and post-close adjustments, testing
and evaluating management’s key accounting estimates for reasonableness and consistency, understanding and testing management
incentive plans, undertaking cut-off procedures to test proper cut-off of revenue and expenses and testing the existence and accuracy of
revenue transactions. In addition, we incorporate an element of unpredictability into our audit work each year.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the Financial
Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
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Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Key audit matter
How our audit addressed the key audit matter
Carrying values of goodwill and acquired intangible assets
(Group)
Refer to the Audit Committee Report on page 52 and to note 12
to the Consolidated Financial Statements.
At 30 September 2018, the Group had £588m of intangible
assets, which includes £168m of acquired intangible assets
and £415m of goodwill. Goodwill is tested for impairment
annually or more frequently if impairment indicators exist.
Acquired intangible assets that are amortised are tested for
impairment if impairment indicators exist.
During the year, the Group recognised a £3.0m impairment
charge for Layer123. In addition, there have been headwinds
affecting a number of businesses operating within the
asset management segment following structural and
regulatory changes in the market, which were considered an
impairment indicator.
Recoverability of goodwill and acquired intangible assets
is contingent on future cash flows of the underlying cash
generating units (CGUs) and there is a risk that if these cash
flows do not meet management’s expectations the assets will
be impaired. The cash flow forecasts and related recoverable
value calculations include a number of significant judgements
and estimates including revenue, profit and cash flow growth
rates, terminal growth rates and discount rates. For certain
CGUs, including where businesses are held for sale, fair value
less cost of disposal (rather than value in use) has been used as
the methodology to value CGUs. Changes in the key assumptions
underpinning these calculations have a significant impact on the
headroom available in the impairment calculations.
We obtained management’s goodwill impairment model
and tested the reasonableness of key assumptions, including
revenue, profit and cash flow growth rates, terminal growth rates
and the selection of discount rates. We agreed the underlying
cash flow projections to management approved budgets and
forecasts and assessed how these projections are compiled.
Where cost savings were forecast, in particular for businesses in
the Asset Management segment, we verified that the associated
restructuring had been committed and compared the planned
savings to the costs previously incurred to deliver these savings.
Deploying our valuations experts, we assessed the terminal
growth rate and discount rate applied to each CGU compared
with third party information, past performance, the Group’s cost
of capital and relevant risk factors. We evaluated the agreed
sales price from third parties where CGUs are held for sale and
therefore have been valued on a fair value less cost of disposal
basis. We performed our own risk assessment by considering
historical performance and management’s forecasting accuracy
by applying any current year budget shortfalls to future forecasts
to highlight the CGUs with either lower headroom or which are
more sensitive to changes in key assumptions.
We performed our own independent sensitivity analysis to
understand the impact of reasonably possible changes in
management’s assumptions on the available headroom.
We challenged the significant assumptions, specifically relating
to revenue and profit growth in light of the individual CGU’s past
performance to assess whether the forecasts are achievable.
We focused in particular on the goodwill relating to Layer123
in order to determine whether we agreed with management’s
decision to impair and whether in our view the impairment
charge is sufficient. We separately evaluated whether additional
sensitivity disclosures were required for more CGUs than RISI and
BCA where management identified that reasonably possible
changes in key assumptions could give rise to impairment
charges in future periods.
We checked for any additional impairment triggers in 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 2018 was appropriate. We have assessed
management’s disclosures in light of the impairment testing
performed and we considered the disclosures made to be
reasonable. For those intangible assets, including goodwill,
where management determined that no impairment was
required and that no additional sensitivity disclosures should
be provided, 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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Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Independent Auditors’ Report to the members
of Euromoney Institutional Investor PLC continued
Key audit matter
How our audit addressed the key audit matter
Carrying value of investments in subsidiaries (Company)
Refer to note 6 to the Company Financial Statements.
Investments in subsidiaries of £1,231m are accounted for
at cost less impairment in the Company balance sheet at
30 September 2018.
Investments are tested for impairment if impairment indicators
exist. If such indicators exist, the recoverable amounts of the
investments in subsidiaries are estimated in order to determine
the extent of the impairment loss, if any. Any such impairment loss
is recognised in the income statement.
Management judgement is required in the area of impairment
testing, particularly in assessing: (1) whether an event has
occurred that may indicate that the related asset values may
not be recoverable; (2) whether the carrying value of an asset
can be supported by the recoverable value, being the higher of
fair value less cost of disposal or the net present value of future
cash flows which are estimated based on the continued use of
the asset in the business; (3) appropriate valuation multiples
used to estimate the fair value less cost of disposal; and (4) key
assumptions to be applied in preparing cash flow projections
including whether these cash flow projections are discounted
using an appropriate rate. Changing the assumptions selected
by management to determine the level, if any, of impairment,
including the discount rates or the growth rate assumptions in
the cash flow projections, could materially affect the recoverable
value determined by the impairment test and as a result affect
the Company’s financial condition and results of operations.
During the year, an impairment of £48.6m was recorded,
triggered by the payment of a material intercompany dividend
and lower forecasted profits in certain subsidiaries.
Uncertain tax positions (Group)
Refer to the Audit Committee report on page 53 and to note 8
to the Consolidated Financial Statements.
The Group operates in a complex multinational tax environment
in relation to direct and indirect taxes and there are a number
of open tax matters with tax authorities, especially in the UK,
US and Canada. From time to time, the Group enters into
transactions with complicated accounting and tax consequences
and judgement is required in assessing the level of provisions
needed in respect of uncertain tax positions.
During the year, the Group increased its provision for a potential
exposure in the UK relating to a HMRC enquiry following receipt
of a closure notice from HMRC in September 2018.
In addition, the Group is subject to sales taxes in the US.
The evolving nature both of US sales tax legislation and of
the Group’s product base as the business goes increasingly
digital means that management periodically needs to exercise
judgement (supported by external expert advice) in assessing
appropriate levels of provisioning.
82
We evaluated management’s assessment whether any
indicators of impairment existed by comparing the net assets
of the Company’s subsidiaries at 30 September 2018 with the
Company’s investment carrying values.
For those investments where the net assets were lower than
the carrying values, management prepared a discounted
cash flow model on a value in use basis. We have tested the
reasonableness of key assumptions, including revenue, profit and
cash flow growth rates, terminal growth rates and the selection
of discount rates management has applied. Deploying our
valuations experts, we assessed the terminal growth rate and
discount rate applied to each investment compared with third
party information, past performance, the Group’s cost of capital
and relevant risk factors.
In order to ensure that the recoverable values of investments
appropriately reflected the higher of fair value less cost of
disposal and the net present value of future cash flows calculated
on a value in use basis, management performed an assessment
applying the fair value less cost of disposal methodology for
certain investments where impairment indicators existed that
was based on an estimated multiple of the investment’s profits.
We compared the multiples used to third party sources and to
multiples paid by the Group in previous acquisitions. We also
considered the recoverable values by reference to the Group’s
market capitalisation at 30 September 2018.
We performed our own independent sensitivity analysis to
understand the impact of reasonably possible changes in
management’s assumptions on the available headroom.
When applicable, we verified that the recoverable values of
investments were consistent with the recoverable values of the
related CGUs tested for goodwill impairment purposes as part of
the Group audit of the Consolidated Financial Statements.
As a result of our work, we considered the £48.6m impairment
charge to be appropriate. The remaining carrying values of the
investments held by the Company are supportable in the context
of the Company Financial Statements taken as a whole.
We evaluated management’s judgements in respect of estimates
of tax exposures and contingencies in order to assess the
adequacy of the Group’s tax provisions.
In understanding and evaluating management’s judgements,
we deployed our tax specialists and considered third party tax
advice received by the Group, the status of recent and current
tax authority audits and enquiries, the outturn of previous claims,
judgemental positions taken in tax returns, and current year
estimates and developments in the tax environment.
We refreshed our independent assessment of tax risks in the
Group’s most material markets (UK, US and Canada) and we
evaluated the appropriateness and completeness of related tax
provisions. The most significant uncertain tax positions comprise
the Canadian Revenue Agency’s assessment of a foreign
currency trade in 2009 and a potential exposure relating to a
HMRC enquiry from 2015.
Deploying our tax specialists, we reviewed external expert
advice received by the Group in relation to the challenges by the
Canadian Revenue Agency and HMRC.
Based on the audit evidence obtained, we considered the level
of provisioning for direct and indirect taxes and the related
disclosures to be complete and acceptable in the context of the
Consolidated Financial Statements taken as a whole.
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Key audit matter
How our audit addressed the key audit matter
Presentation of exceptional items (Group)
Refer to the Audit Committee report on page 52 and to note 5
to the Consolidated Financial Statements.
The Group continues to present adjusted earnings by making
adjustments for costs and profits which management believes to
be exceptional by virtue of their size and incidence.
We considered the appropriateness of the adjustments made
to statutory profit measures to derive adjusted profit measures.
We understood management’s rationale for classifying items
as exceptional and considered whether this is reasonable and
appropriate in arriving at an adjusted profit measure for 2018.
Overall, we found that management was even handed and
consistent in its treatment of exceptional credits and debits.
During the year, the Group presented £81.4m of net income
as exceptional items from continuing operations, primarily
comprising: profit on disposal of businesses and associates
(£86.8m) and the favourable settlement of the legal dispute
with the previous owners of Centre for Investor Education (CIE)
offset by restructuring charges, goodwill impairments and other
exceptional costs. In addition, a £91.3m exceptional gain on the
disposal of discontinued operations was recorded.
Given that the Group presents adjusted earnings measures in
addition to its statutory results, the classification of these items
as exceptional in the Consolidated Financial Statements was
considered important, particularly considering the nature of
such items, whether they are non-recurring and whether they are
significant in size.
US tax reform (Group)
Refer to the Audit Committee report on page 53 and to notes 2
and 8 to the Consolidated Financial Statements.
The US Tax Cuts and Jobs Act ('US tax reform') was substantively
enacted in December 2017. The main changes include a
reduction in the corporate tax rate that should be applied to
deferred taxation balances and the introduction of a toll tax for
the deemed repatriation of certain deferred foreign earnings.
In addition, as a result of the change in attribution rules that
dictate which entities are treated as a controlled foreign
corporation (CFC) for US income tax purposes, the disposal of
shares in Diamond Topco Limited (Dealogic) crystallised a gain
that is subject to US tax.
Some of the changes are complex and there are a number of
areas of uncertainty relating both to the manner in which the law
will apply and to the accounting in certain areas.
Disposals and discontinued operations (Group)
Refer to the Audit Committee report on page 53 and to note 11
to the Consolidated Financial Statements.
On 30 April 2018, the Group disposed of its Global Markets
Intelligence Division, consisting of CEIC and EMIS (the 'disposal
group'), generating a gain on disposal of £91.3m.
In 2017, management concluded that the disposal group
constituted a discontinued operation that was held for sale,
meaning that additional disclosure of the profit, cash flows and
net assets of the disposal group is required under IFRS 5.
We were satisfied that excluding the one-off net profit on
disposal of businesses from adjusted profit measures was
consistent with the Group’s historical practice. Where costs were
treated as exceptional, we considered whether the Group had
complied with its accounting policy and with the financial hurdle
set by the Directors below which items of cost and income should
not be treated as exceptional.
We considered the appropriateness and transparency of the
disclosures in the Consolidated Financial Statements regarding
the nature of the reconciling items between statutory and
adjusted profit measures, especially in the context of the principle
that financial reporting as a whole should be fair, balanced
and understandable.
As a result of our work, we determined that the classification of
exceptional items was reasonable, that the Group’s policy in
this area has been consistently applied and that the rationale
for including or excluding items from adjusted profit has been
consistently applied across gains and losses.
Deploying our US tax specialists, we evaluated the key
judgements, assumptions and interpretations used by
management to assess the impact of US tax reform. We have
undertaken procedures to validate the corporate tax rate change
adjustments to deferred tax balances, giving rise to a one-off
deferred tax credit of £4.7m, and the crystallisation of the £10.1m
tax charge on the Dealogic gain. With respect to the £3.2m
toll tax charge for the deemed repatriation of foreign earnings
of subsidiaries of the Group’s US entities, we have evaluated
the documentation prepared by management and assessed
the underlying calculations together with advice from third
party advisors, undertaken procedures to validate key inputs
underpinning the estimated charge and confirmed that the
liability is appropriately presented.
Given the complexity and uncertainty relating to US tax reform,
we expect that there will be true-ups and updates to the
estimates made by management as further guidance is issued.
However, we are satisfied that the accounting positions taken by
the Group at 30 September 2018 represent management’s best
estimate of the impact of US tax reform at this time.
We obtained and reviewed the sale and purchase agreement
(SPA) to gain an understanding of the terms of the transaction
and recalculated the gain on disposal based on the net assets
attributable to the disposal group.
We vouched the disposal costs to invoice and other supporting
evidence, confirming that they were directly attributable to the
disposal, and recalculated the cumulative translation adjustment
recycled from reserves to the consolidated income statement
on disposal.
We assessed the adequacy of the disclosures in the notes to
the Consolidated Financial Statements and considered the
disclosures to be appropriate.
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Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Independent Auditors’ 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 structure of the Group and the Company, the industry in which they operate and the accounting
processes and controls.
The Consolidated Financial Statements are a consolidation of 84 reporting units, each of which is considered to be a component.
We identified four components in the UK, US and Canada that required a full scope audit due to their size. Audit procedures over
specific Financial Statement line items were performed at a further two components in the UK and US to give sufficient audit coverage.
In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed at the
components by us, as the Group audit team, or by 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 (UK), Euromoney Global Limited (UK), Institutional Investor, Inc.
(US) and BCA Research, Inc. (Canada) which, in our view, required a full scope audit due to their size.
We performed audit procedures over specific Financial Statement line items at Tipall Limited over property, plant and equipment and
related dilapidation provisions and at Ned Davis Research, Inc. over revenue, accounts receivable and deferred revenue. This ensured
that sufficient and appropriate audit procedures were performed to achieve sufficient coverage over these Financial Statement
line items.
In addition to instructing and reviewing the reporting from our component audit teams, we conducted visits to our in-scope components
in the US and Canada, which included file reviews and attendance at key meetings with local management. We also had regular
dialogue with component teams 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 and tax.
Taken together, the components and corporate functions where we conducted audit procedures accounted for approximately 77% of
the Group’s revenue, 96% of the Group’s statutory profit before tax from continuing operations and 91% of the Group’s statutory profit
before tax from continuing operations, adjusted for certain exceptional 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 in aggregate, on the Financial Statements as a whole.
Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:
Group Financial Statements
Company Financial Statements
Overall materiality
£4.0m (2017: £4.2m).
£14.5m (2017: £13.5m).
How we
determined it
5% of statutory profit before tax from continuing operations, after
adjusting for exceptional items.
1% of total assets.
Based on our professional
judgement, total assets is an
appropriate measure to assess the
performance of the Company and
is a generally accepted auditing
benchmark for holding companies.
The Group’s principal measure of earnings comprises adjusted
operating profit, which adjusts statutory operating profit for a
number of income and expenditure items and which includes the
results of discontinued operations. Management uses this measure
as it believes that it eliminates the volatility inherent in exceptional
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, share of results
in associates and joint ventures or net finance costs as in our view
these are recurring items which do not introduce volatility to the
Group’s earnings.
In addition, we have not taken profit from discontinued operations
into account when determining our materiality given that GMID was
sold during the year and does not therefore form part of the Group’s
ongoing operations at 30 September 2018.
Rationale for
benchmark
applied
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Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range
of materiality allocated across components was between £0.5m and £3.4m. Certain components were audited to local statutory audit
materiality levels that were also less than our overall Group materiality.
We agreed with the Audit Committee that we would report misstatements identified during our audit above £0.2m for the Group
and Company audits (2017: £0.2m) as well as misstatements below those amounts that, in our view, warranted reporting for
qualitative reasons.
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
Outcome
We are required to report if we have anything material to add or draw attention
to in respect of the Directors’ statement in the Financial Statements whether
the Directors considered it appropriate to adopt the going concern basis of
accounting in preparing the Financial Statements and the Directors’ identification
of any material uncertainties to the Group’s and the Company’s ability to continue
as a going concern over a period of at least 12 months from the date of approval
of the Financial Statements.
We have nothing material to add or to draw
attention to. However, because not all future
events or conditions can be predicted, this
statement is not a guarantee as to the Group’s
and Company’s ability to continue as a
going concern.
We are required to report if the Directors’ statement relating to going concern
in accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our
knowledge obtained in the audit.
We have nothing to report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the Financial Statements and our auditors’ report
thereon. The Directors are responsible for the other information. Our opinion on the Financial Statements does not cover the other
information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any
form of assurance thereon.
In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, to consider
whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to
perform procedures to conclude whether there is a material misstatement of the Financial Statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 (CA06), ISAs
(UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions and matters as described
below (required by ISAs (UK) unless otherwise stated).
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’
Report for the year ended 30 September 2018 is consistent with the Financial Statements and has been prepared in accordance with
applicable legal requirements. (CA06)
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we
did not identify any material misstatements in the Strategic Report and Directors’ Report. (CA06)
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Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Independent Auditors’ Report to the members
of Euromoney Institutional Investor PLC continued
The Directors’ assessment of the prospects of the Group and of the principal risks that would threaten the solvency or liquidity of
the Group
We have nothing material to add or draw attention to regarding:
• The Directors’ confirmation on page 78 of the Annual Report that they have carried out a robust assessment of the principal risks
facing the Group, including those that 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 or mitigated; and
• The Directors’ explanation on page 39 of the Annual Report how they have assessed the prospects of the Group, over what period
they have done so and why they consider that period to be appropriate and their statement 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.
We have nothing to report having performed a review of the Directors’ statement that they have carried out a robust assessment of
the principal risks facing the Group and statement in relation to the longer-term viability of the Group. 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 UK Corporate Governance Code (the 'Code'); and
considering whether the statements are consistent with the knowledge and understanding of the Group and Company and their
environment obtained in the course of the audit. (Listing Rules)
Other Code provisions
We have nothing to report in respect of our responsibility to report when:
• The statement given by the Directors, on page 47, that they consider the Annual Report taken as a whole to be fair, balanced
and understandable and provides the information necessary for the members to assess the Group’s and Company’s position and
performance, business model and strategy is materially inconsistent with our knowledge of the Group and Company obtained in
the course of performing our audit;
• The section of the Annual Report on pages 52 and 53 describing the work of the Audit Committee does not appropriately address
matters communicated by us to the Audit Committee; and
• The Directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a
relevant provision of the Code specified, under the Listing Rules, for review by the auditors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006. (CA06)
Responsibilities for the Financial Statements and the audit
Responsibilities of the Directors for the Financial Statements
As explained more fully in the Directors’ Responsibilities Statement set out on page 78, the Directors are responsible for the preparation
of the Financial Statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of Financial
Statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a
going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Company or to cease operations or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance whether the Financial Statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.
A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
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 it may come save where expressly agreed by
our prior consent in writing.
86
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006, we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require 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 not visited by us; or
• certain disclosures of Directors’ remuneration specified by law are not made; 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.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 29 January 2015 to audit the Financial
Statements for the year ended 30 September 2015. The period of total uninterrupted engagement is four years, covering the years ended
30 September 2015 to 30 September 2018.
Giles Hannam (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
21 November 2018
87
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Consolidated Income Statement
for the year ended 30 September 2018
CONTINUING OPERATIONS
Revenue
Operating profit before acquired intangible amortisation and exceptional items
Acquired intangible amortisation
Exceptional items
Operating profit
Share of results in associates and joint ventures
Finance income
Finance expense
Net finance costs
Profit before tax
Tax expense on profit
Profit for the year from continuing operations
DISCONTINUED OPERATIONS
Profit for the year from discontinued operations
PROFIT FOR THE YEAR
Attributable to:
Equity holders of the parent
Equity non-controlling interests
Earnings per share
From continuing operations
Basic
Diluted
From continuing and discontinued operations
Basic
Diluted
Dividend per share (including proposed dividends)
Notes
2018
£000
2017
£000
3
3
12
5
3, 4
14
7
7
7
3
8
3
11
10
10
10
10
9
390,279
386,923
103,198
(22,739)
81,396
161,855
157
5,248
(6,034)
(786)
161,226
(51,360)
109,866
95,253
(20,566)
(31,253)
43,434
(1,890)
3,290
(4,146)
(856)
40,688
(3,390)
37,298
91,342
5,889
201,208
43,187
201,069
139
201,208
102.15p
102.03p
187.18p
186.96p
32.50p
42,718
469
43,187
32.74p
32.68p
37.98p
37.91p
30.60p
A detailed reconciliation of the Group’s statutory results to the adjusted and underlying results is set out on pages 27 to 29.
During the year the Group disposed of Global Markets Intelligence Division. This division has met the recognition criteria of a
discontinued operation under IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ and is therefore presented as such
throughout this report (note 11).
88
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Consolidated Statement of Comprehensive Income
for the year ended 30 September 2018
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)/losses on cash flow hedges from fair value reserves to Income Statement:
Foreign exchange (gains)/losses in revenue
Foreign exchange gains in operating profit
Gains on interest rate swaps to hedge interest on committed borrowings
Net exchange differences on translation of net investments in overseas subsidiary undertakings
Net exchange differences on foreign currency loans
Translation reserves recycled to Income Statement
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 losses on defined benefit pension schemes
Other comprehensive income for the year
Total comprehensive income for the year
Continuing operations
Discontinued operations
Total comprehensive income for the year
Attributable to:
Equity holders of the parent
Equity non-controlling interests
2018
£000
201,208
2017
£000
43,187
(711)
2,408
(1,037)
(409)
(2,121)
24,311
(5,642)
8,250
630
9,334
(72)
–
(4,875)
(799)
(285)
(1,955)
6,495
(1,104)
(320)
54
28,662
3,490
229,870
46,677
136,649
93,221
229,870
229,895
(25)
229,870
41,364
5,313
46,677
46,399
278
46,677
89
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Consolidated Statement of Financial Position
as at 30 September 2018
Notes
2018
£000
2017
£000
12
12
13
14
14
25
22
27
19
16
25
19
19
11
25
25
17
18
19
21
11
25
25
20
18
22
27
19
21
414,722
173,503
16,112
715
3,546
2,677
470
1,299
1,937
583
55
399,971
193,991
17,235
26,820
3,546
2,503
1,570
1,549
–
929
662
615,619
648,776
68,285
650
4,605
78,273
131
13,719
64,483
419
5,112
4,426
2,686
50,671
165,663
127,797
(97)
(209)
(27,284)
(31,816)
–
(64,143)
(117,088)
(2,424)
(248)
(1,994)
(245,303)
(79,640)
535,979
(175)
(125)
–
(1,348)
(3,316)
(28,490)
(4,870)
(166)
(3,872)
(42,362)
493,617
(9,904)
(350)
(28,070)
(16,117)
(387)
(67,819)
(113,487)
(1,001)
(337)
(29,998)
(267,470)
(139,673)
509,103
(3,221)
–
(168,893)
(486)
(3,491)
(23,431)
(9,954)
(230)
(2,600)
(212,306)
296,797
Non-current assets
Intangible assets
Goodwill
Other intangible assets
Property, plant and equipment
Investment in associates and joint ventures
Available-for-sale investments
Convertible loan note
Deferred consideration
Deferred tax assets
Retirement benefit asset
Other non-current assets
Derivative financial instruments
Current assets
Trade and other receivables
Deferred consideration
Current income tax assets
Cash and cash equivalents (excluding bank overdrafts)
Derivative financial instruments
Total assets of businesses held for sale
Current liabilities
Acquisition commitments
Deferred consideration
Trade and other payables
Current income tax liabilities
Group relief payable
Accruals
Deferred income
Derivative financial instruments
Provisions
Total liabilities of businesses held for sale
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Acquisition commitments
Deferred consideration
Borrowings
Other non-current liabilities
Deferred income
Deferred tax liabilities
Retirement benefit obligation
Derivative financial instruments
Provisions
Net assets
90
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Consolidated Statement of Financial Position
as at 30 September 2018 continued
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 attributable to non-controlling interests
Total equity
Notes
23
2018
£000
2017
£000
273
103,790
64,981
56
(20,462)
39,687
(27,616)
119,075
213,833
493,617
–
493,617
273
103,147
64,981
56
(21,005)
38,395
(23,071)
89,269
35,594
287,639
9,158
296,797
The Financial Statements on pages 88 to 147 were approved by the Board of Directors on 21 November 2018 and signed on its behalf by:
Andrew Rashbass
Wendy Pallot
Directors
91
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Consolidated Statement of Changes in Equity
for the year ended 30 September 2018
Share
capital
£000
Share
premium
account
£000
Other
reserve
£000
Capital
redemption
reserve
£000
Own
shares
£000
Reserve
for
share-
based
payments
£000
321 102,835 64,981
–
–
–
8 (21,005)
–
–
37,334
–
Fair
value
reserve
£000
(34,741)
–
Translation
reserve
£000
Retained
earnings
£000
Non-
controlling
interests
£000
Total
£000
Total
equity
£000
95,037
–
224,218 468,988
42,718
42,718
8,513
469
477,501
43,187
–
–
–
–
–
–
–
–
–
–
–
–
–
(48)
–
–
312
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
48
–
–
–
–
–
–
–
–
–
–
11,670
(5,768)
(2,221)
3,681
(191)
3,490
–
–
–
–
1,061
–
–
–
11,670
(5,768)
40,497
46,399
278
46,677
–
–
–
–
–
–
–
–
–
–
(4,997)
(4,997)
–
(4,997)
–
–
1,525
1,525
(234)
(234)
(560)
(794)
1,061
–
–
(30,200)
– (30,200)
–
312
–
– (193,465) (193,465)
1,061
–
(30,798)
(598)
–
312
– (193,465)
–
–
–
273 103,147 64,981
–
–
–
–
–
56 (21,005)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
643
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
38,395
–
–
(23,071)
–
–
89,269
(225)
(225)
35,594 287,639
– 201,069 201,069
–
(225)
9,158 296,797
139 201,208
– (4,545)
27,349
6,022
28,826
(164)
28,662
– (4,545)
27,349
207,091 229,895
(25) 229,870
–
–
–
–
543
1,741
–
(449)
–
–
–
–
–
–
317
317
(170)
147
2,457
6,082
8,539
(8,539)
–
–
–
– (34,361)
(94)
–
1,741
(34,361)
643
–
1,741
(424) (34,785)
643
–
At 1 October 2016
Profit for the year
Other comprehensive
income/(expense) for
the year
Total comprehensive
income/(expense) for
the year
Recognition of
acquisition commitments
Non-controlling
interest recognised on
acquisition
Adjustment arising
from change in non-
controlling interest
Credit for share-based
payments
Cash dividend paid
Exercise of share options
Share buyback
Tax relating to items
taken directly to equity
At 30 September 2017
Profit for the year
Other comprehensive
(expense)/income for
the year
Total comprehensive
(expense)/income for
the year
De-recognition of
non-controlling interest
and related liabilities
on disposal
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 30 September 2018
–
–
273 103,790 64,981
–
–
–
56 (20,462) 39,687 (27,616)
–
–
–
(796)
119,075 213,833 493,617
(796)
–
(796)
– 493,617
The other reserve represents the share premium arising on the shares issued for the purchase of Metal Bulletin plc in October 2006.
The investment in own shares is held by the Euromoney Employees’ Share Ownership Trust and Euromoney Employee Share Trust.
The trusts waived the rights to receive dividends. Interest and administrative costs are charged to the profit and loss account of the trusts
as incurred and included in the Consolidated Financial Statements.
Euromoney Employees' Share Ownership Trust
Euromoney Employee Share Trust
Total
Nominal cost per share (p)
Historical cost per share (£)
Market value (£000)
92
2018
Number
58,976
1,656,575
1,715,551
0.25
11.93
23,091
2017
Number
58,976
1,700,777
1,759,753
0.25
11.94
20,607
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Consolidated Statement of Cash Flows
for the year ended 30 September 2018
Notes
2018
£000
2017
£000
Cash flow from operating activities
Operating profit from continuing operations
Operating profit from discontinued operations
Operating profit
Long-term incentive expense
Acquired intangible amortisation
Licences and software amortisation
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Loss on disposal of intangible assets
Impairment charge
Profit on disposal of businesses/joint ventures/associates
Increase/(decrease) in provisions
Operating cash flows before movements in working capital
(Increase)/decrease in receivables
(Decrease)/increase in payables
Cash generated from operations
Income taxes paid
Group relief tax paid
Net cash generated from operating activities
Investing activities
Interest received
Purchase of intangible assets
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Purchase of businesses/subsidiary undertakings, net of cash acquired
Proceeds from disposal of businesses
Purchase of associates and joint venture
Proceeds from disposal of associate
Receipt of deferred consideration
Payment of deferred consideration
Purchase of convertible loan note
Net cash generated from/(used in) investing activities
Financing activities
Dividends paid
Dividends paid to non-controlling interests
Interest paid
Cash settlement on interest rate swaps
Issue of new share capital
Share buyback
(Decrease)/increase in borrowings
Purchase of additional interest in subsidiary undertakings
Redemption of loan notes
DMGT financing facility receipts
Net cash (used in)/generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year (including held for sale)
Effect of foreign exchange rate movements
Cash and cash equivalents at end of year (including held for sale)
Cash and cash equivalents classified as held for sale
Cash and cash equivalents at end of year
3
11
24
12
12
13
5
5
12
15
15
14
14
25
25
14
9
23
15
20
11
161,855
6,541
168,396
1,487
22,739
2,908
3,356
6
432
3,048
(86,817)
734
116,289
(7,498)
(231)
108,560
(38,692)
(229)
69,639
950
(3,262)
(1,703)
74
(19,200)
124,805
–
100,142
1,607
(1,470)
–
201,943
(34,361)
(424)
(3,786)
2,091
643
–
(167,740)
(10,130)
–
–
(213,707)
57,875
14,272
6,126
78,273
–
78,273
Cash and cash equivalents include bank overdrafts. This statement includes discontinued operations (note 11).
43,434
9,200
52,634
985
20,815
3,965
3,202
15
–
29,649
(2,931)
(528)
107,806
3,483
6,912
118,201
(21,791)
–
96,410
254
(1,987)
(10,928)
3
(102,700)
4,217
(553)
–
1,386
(833)
(2,503)
(113,644)
(30,200)
(598)
(5,027)
–
312
(193,465)
178,504
(1,266)
(185)
73,618
21,693
4,459
10,328
(515)
14,272
(9,846)
4,426
93
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
1 Accounting policies
General information
Euromoney Institutional Investor PLC (the ‘Company’) is a public
company limited by shares and incorporated in England and
Wales, United Kingdom (UK). The address of the registered office
is 8 Bouverie Street, London, EC4Y 8AX, 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 interpretations issued by the IFRS
Interpretations Committee (IFRS IC) and therefore comply with
Article 4 of the EU IAS Regulation, and with those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS. The Company has elected to prepare its parent Company
Financial Statements in accordance with Financial Reporting
Standard 102.
The following amendments and interpretations were adopted in
2018. The adoption of these new pronouncements from 1 October
2018 does not have a material impact on the Consolidated
Financial Statements. Additional disclosure has been given
where relevant:
• Amendments to IAS 12 ‘Income Taxes’ – the mandatory effective
date of implementation is 1 January 2017
• Amendments to IAS 7 ‘Statement of Cash Flows’ – the mandatory
effective date of implementation is 1 January 2017
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.
Certain changes to IFRS will be applicable to the Group Financial
Statements in future years. Set out below are those which are
considered to be most relevant to the Group.
Relevant new standards, amendments and interpretations issued
but effective subsequent to the year end:
• IFRS 9 ‘Financial Instruments’ – the mandatory effective date of
implementation is 1 January 2018
• IFRS 15 ‘Revenue from Contracts with Customers’ – the mandatory
effective date of implementation is 1 January 2018
• IFRS 16 ‘Leases’ – the mandatory effective date of implementation
is 1 January 2019
• Amendment to IFRS 2 ‘Share Based Payments’ – the mandatory
effective date of implementation is 1 January 2019
• IFRIC 22 ‘Foreign Currency Transactions and Advance
Consideration’ – the mandatory effective date of implementation
is 1 January 2019
• IFRIC 23 ‘Uncertainty over Income Tax Treatments’ – the
mandatory effective date of implementation is 1 January 2019
• Amendments to IAS 28 ‘Investments in Associates’ – the
mandatory effective date of implementation is 1 January 2019
• Amendments to IAS 19 ‘Employee Benefits’ – the mandatory
effective date of implementation is 1 January 2019
• Amendment to definition of a business in IFRS 3 ‘Business
Combinations’ – the mandatory effective date of implementation
is 1 January 2020
Other than IFRS 16, the adoption of these standards, amendments
and interpretations is not expected to have a material impact on
the Group’s Financial Statements. The Group adopted IFRS 9 and
IFRS 15 on 1 October 2018 and will adopt IFRS 16 on 1 October 2019.
IFRS 9 ‘Financial Instruments’
IFRS 9 replaces the majority of IAS 39 and covers the classification,
measurement and de-recognition of financial assets and financial
liabilities, introduces a new impairment model for financial assets
based on expected losses rather than incurred losses and provides
a new hedge accounting model.
In the 2019 Annual Report and Accounts, the Group will adopt IFRS
9 retrospectively. The comparative periods will not be adjusted
but there will be a cumulative adjustment to equity at 1 October
2018. The Group’s assessment of the impact of adopting IFRS 9 is
as follows:
Classification and measurement
The Group’s available-for-sale financial investments which
are currently being held at cost less any impairment will be
recognised at fair value. For available-for-sale assets existing at
1 October 2018, the Group has elected the option to recognise all
movements in fair value in other comprehensive income. Gains or
losses realised on the subsequent sale of these financial assets
will no longer be recycled through the profit and loss account.
Based on the Group’s assessment of its available-for-sale financial
investments, the impact of the recognition of these assets at fair
value at 1 October 2018 is not material. Trade receivables will
continue to be measured at amortised cost. Derivative assets
and liabilities will continue to be recognised at fair value with
movements recognised in the Income Statement, unless the
hedging strategy determines otherwise. In addition, money market
funds and deferred consideration received will be measured at fair
value through the Income Statement and not as amortised cost.
This is not expected to lead to a material change.
Trade debt provisions
IFRS 9 introduces a new impairment model which requires the
recognition of impairment provisions based on expected credit
losses rather than only incurred credit losses, as is the case under
IAS 39. The Group expects this new impairment model will not
lead to a material change in its provision for losses against trade
debtors. The IFRS 9 impairment model recognises anticipated
losses evidenced by both historical recovery rates and forward-
looking indicators.
Hedge accounting
IFRS 9 introduces a new hedge accounting model with a
principles-based approach designed to align the accounting
result with the economic hedging strategy. The Group uses cash
flow hedge relationships to hedge its exposure to US dollar and
euro revenues in its UK businesses and the operation’s Canadian
dollar cost base in Canada. The Group has confirmed that its
current hedge relationships will continue to qualify as hedges
upon the adoption of IFRS 9.
94
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 1 Accounting policies continued
IFRS 15 ‘Revenue from Contracts with Customers’
Management has evaluated the impact of IFRS 15 ‘Revenue from
Contracts with Customers’ across the Group to confirm the full
impact of adopting the standard. The implementation analysis of
the potential impact of IFRS 15 was complex due to the Group’s
large number and type of revenue streams, in particular bundled
contracts, customised research, vote revenue, milestone revenue
and membership groups.
Where multiple services are bundled within one contract, the
new standard requires revenue to be allocated to the different
performance obligations and recognised separately, which could
drive differences in the timing of revenue recognition. Where this
occurs, the Group’s treatment under IAS 18 is consistent with IFRS 15
and allocates the revenue to the distinct services and recognises
the related revenue separately.
IFRS 15 requires revenue to be recognised over time where
research is unique to a specific customer and where the customer
is obligated to pay for the work performed should it terminate the
contract. Limited cases of customised research are performed
across the Group whereby revenue is recognised according to
milestones. An assessment of large customised research projects
ongoing over the interim and year-end closes will be performed to
ensure that revenue is recognised in the correct period.
Vote revenue is treated as variable consideration under IFRS
15. This would require the Group to recognise revenue when
the service is performed to the extent that it is highly probable
that the related revenue, if recognised, would not be reversed.
Any incremental amounts would be recognised once the
confirmation of the vote is given. The Group performed analysis
of vote revenue confirming that the amount of revenue received
from each customer was sufficiently volatile that it would not be
appropriate to recognise any material amount of revenue over
time as the service is delivered.
Based on the Group’s analysis, there is no material impact on the
timing of revenue recognition arising from the implementation of
IFRS 15. The Group's revenue recognition policy has been updated
to reflect IFRS 15 and to ensure consistent application across the
Group. The Group will adopt the modified retrospective transition
method. This method recognises the cumulative effect of initially
applying IFRS 15 as an adjustment to the opening balance sheet in
the period of initial application and comparative periods will not
be adjusted. IFRS 15 also requires increased disclosure, which will
be incorporated in the 2019 Annual Report and Accounts.
IFRS 16 ‘Leases’
The new standard replaces IAS 17 ‘Leases’ and related
interpretations and details the requirements for the classification,
measurement and recognition of lease arrangements. The key
changes brought in by IFRS 16 are that it no longer distinguishes
between operating and finance leases; all leases over a year in
length will be recorded on the Statement of Financial Position.
As these leases will be treated as fixed assets, their cost will
be charged through the Income Statement as depreciation.
In addition, there will be a finance charge in respect of the
unwinding of discounts for future lease payments. The cost of short-
term leases will continue to be recognised through the Income
Statement as rental expense. The Group plans to apply IFRS 16
using the modified retrospective approach. Under this approach,
the cumulative effect of adopting IFRS 16 will be recognised as
an adjustment to the opening balance of retained earnings on
1 October 2019, with no restatement of comparative information.
Basis of preparation
The accounts have been prepared under the historical cost
convention, except for certain financial instruments which have
been measured at fair value. Apart from the aforementioned
amendments and interpretations adopted in 2018, 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.
(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.
The Group uses the acquisition method of accounting to
account for business combinations. The amount recognised
as consideration by the Group equates to the fair value
of the assets, liabilities and equity acquired by the Group
plus contingent consideration (should there be any such
arrangement). Acquisition related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their
fair values at acquisition. Non-controlling interests are measured
initially at their proportionate share of the acquiree’s identifiable
net assets at the date of acquisition.
To the extent the consideration (including the assumed contingent
consideration) provided by the acquirer is greater than the fair
value of the assets and liabilities, this amount is recognised as
goodwill. Goodwill is recognised using the proportionate method
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 to reflect new information obtained about facts
and circumstances that existed as of the date of the acquisition
that, if known, would have affected the amounts recognised as of
that date.
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 of one year.
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Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
1 Accounting policies continued
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.
(b) Transactions with non-controlling interests
Transactions with non-controlling interests in the net assets of
consolidated subsidiaries are identified separately and included
in the Group’s equity. Non-controlling interests consist of the
amount of those interests at the date of the original business
combination and its share of changes in equity since the date
of the combination. Total comprehensive income is attributed to
non-controlling interests even if this results in the non-controlling
interests having a deficit balance.
(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 is, when the strategic financial and operating
policy decisions relating to the activities require the unanimous
consent of the parties sharing control.
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.
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 fair value of the identifiable assets, liabilities and contingent
liabilities of the joint venture or associate recognised at the date
of acquisition is recognised as goodwill. The goodwill is included
within the carrying amount of the investment.
Non-current assets classified as held for sale
Where the carrying value of a non-current asset is expected to be
principally recovered through its sale, the asset is classified as held
for sale if it also meets the following:
• the asset is available for sale in its current condition
• the sale is highly probable and
• the sale is expected to occur within one year
Once classified as held for sale, the asset is held at the lower
of its carrying value and the fair value less cost to sell and is no
longer depreciated.
Discontinued operations
A discontinued operation is a component of the Group’s
business, the operations and cash flows of which can be clearly
distinguished from the rest of the Group and which:
• represents a separate major line of business or geographic area
of operations
• is part of a single co-ordinated plan to dispose of a separate
major line of business or geographic area of operations or
• is a subsidiary acquired exclusively with a view to re-sale
Classification as a discontinued operation occurs at the earlier of
disposal or when the operation meets the criteria to be classified
as held for sale.
When an operation is classified as a discontinued operation, the
comparative Income Statement and other comprehensive income
is re-presented as if the operation had been discontinued from the
start of the comparative year.
Foreign currencies
Functional and presentation currency
The functional and presentation currency of Euromoney
Institutional Investor PLC and its UK subsidiaries, other than
Fantfoot Limited, Centre for Investor Education (UK) Limited and
Redquince Limited, is sterling. The functional currency of other
subsidiaries, associates and joint ventures is the currency of the
primary economic 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 are used to provide
a hedge against the Group’s equity investments in overseas
undertakings, are taken to other comprehensive income together
with the exchange difference arising on the net investment in those
undertakings. All other exchange differences are taken to the
Income Statement.
On consolidation, exchange differences arising from the
translations of the net investment in foreign entities and borrowings
and other currency instruments designated as hedges of such
investments are taken to other comprehensive income. The Group
treats specific inter-company loan balances, which are not
intended to be repaid in the foreseeable future, as part of its
net investment.
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Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 1 Accounting policies continued
Group companies
The Income Statements of overseas operations are translated into
sterling at the weighted average exchange rates for the year and
their balance sheets are translated into sterling at the exchange
rates ruling at the balance sheet date. All exchange differences
arising on consolidation are taken to other comprehensive income.
In the event of the disposal of an operation, the related cumulative
translation differences are recognised in the Income Statement in
the period of disposal.
Internally generated intangible assets
An internally generated intangible asset arising from the Group’s
software and systems development is recognised only if all of the
following conditions are met:
• An asset is created that can be identified (such as software or
a website);
• It is probable that the asset created will generate future
economic 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.
Depreciation of property, plant and equipment is provided on a
straight-line basis over their expected useful lives as follows:
Internally generated intangible assets are recognised at cost and
amortised on a straight-line basis over the useful lives from the
date the asset becomes usable. Where no internally generated
intangible asset can be recognised, development expenditure
is charged to the Income Statement in the period in which it
is incurred.
Leasehold improvements
Office equipment
over term of lease
3 – 25 years
Intangible assets
Goodwill
Goodwill represents the excess of the fair value of purchase
consideration over the net fair value of identifiable assets and
liabilities acquired.
Goodwill is recognised as an asset at cost and subsequently
measured at cost less accumulated impairment. For the
purposes of impairment testing, goodwill is allocated to those
cash generating units that have benefited from the acquisition.
Assets are grouped at the lowest level for which there are
separately identifiable cash flows. The carrying value of goodwill
is reviewed for impairment at least annually or where there is
an indication that goodwill may be impaired. If the recoverable
amount 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.
Goodwill arising on foreign subsidiary investments held in the
Statement of Financial Position are retranslated into sterling at the
applicable period end exchange rates. Any exchange differences
arising are taken directly to other comprehensive income as part of
the retranslation of the net assets of the subsidiary.
Goodwill arising on acquisitions before the date of transition to
IFRS has been retained at the previous UK GAAP amounts having
been tested for impairment at that date. Goodwill written off to
reserves under UK GAAP before 1 October 1998 has not been
reinstated and is not included in determining any subsequent profit
or loss on disposal.
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.
Subsequent to acquisition, amortisation is charged so as to
write off the costs of other intangible assets over their estimated
useful lives, using a straight-line or reducing balance method.
These intangible assets are reviewed for impairment as
described below.
These intangibles are stated at cost less accumulated amortisation
and 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 as follows:
Trademarks and brands
Customer relationships
Databases
Licences and software
5 – 30 years
1 – 16 years
1 – 22 years
3 – 7 years
Impairment of non-financial assets
Assets that have an indefinite useful life – for example, goodwill or
intangible assets not ready to use – are not subject to amortisation
and are tested annually for impairment. Assets that are subject
to amortisation are reviewed for impairment whenever events
or changes in circumstances 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.
97
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
Available-for-sale (AFS) financial assets
AFS financial assets are non-derivatives that are either designated
in this category or not classified in any of the other categories.
AFS financial assets are subsequently measured at fair value
where it can be measured reliably. AFS equity investments that do
not have a quoted market price in an active market and whose fair
value cannot be reliably measured are measured at cost less any
identified impairment losses.
For AFS investments, gains and losses arising from changes in fair
value are recognised directly in equity, until the security is disposed
of or is determined to be impaired, at which time the cumulative
gain or loss previously recognised in equity is included in the net
profit or loss for the period.
Financial liabilities
Financial liabilities are recognised when the Group becomes
a party to the contractual provisions of the relevant instrument.
The Group derecognises financial liabilities when it ceases to be
a party to such provisions.
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 premiums payable on settlement or
redemption are charged to the Income 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.
Trade payables and accruals
Trade payables and accruals are not interest-bearing and are
held at amortised cost.
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.
The Group does not hold or issue derivative financial instruments
for trading or speculative purposes.
All derivative instruments are recorded in the Statement of
Financial Position at fair value. Changes in the fair value of
derivative instruments which do not qualify for hedge accounting
are recognised immediately in the Income Statement.
Where the derivative instruments do qualify for hedge accounting,
the following treatments are applied:
1 Accounting policies continued
Cash and cash equivalents
Cash and cash equivalents include cash, short-term deposits and
other short-term highly liquid investments with an original maturity
of three months or less. 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 the classification of its
assets on initial recognition and re-evaluates this designation at
every reporting date. Financial assets are classified as current
assets if expected to be settled within 12 months; otherwise, they
are classified as non-current.
Regular purchases and sales of financial assets are recognised on
the date on which the Group commits to purchase or sell the asset.
The Group derecognises financial assets when it ceases to be a
party to such arrangements. 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 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.
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.
Loans and 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.
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 Statement
of Financial Position.
Loans and receivables are carried at amortised cost using the
effective interest method.
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Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 1 Accounting policies continued
Fair value hedges
Changes in the fair value of the hedging instrument are recognised
in the Income Statement for the year together with the changes
in the fair value of the hedged item due to the hedged risk, to the
extent the hedge is effective. When the hedging instrument expires
or is sold, terminated, or exercised, or no longer qualifies for hedge
accounting, hedge accounting is discontinued.
Cash flow hedges
Changes in the fair value of derivative financial instruments
that are designated and effective as hedges of future cash
flows are recognised directly in other comprehensive income
and the ineffective portion is recognised immediately in the
Income Statement.
If a hedged firm commitment or forecast transaction results in
the recognition of a non-financial asset or liability, then, at the
time that the asset or liability is recognised, the associated gains
and losses on the derivative that had previously been recognised
in equity are included in the initial measurement of the asset
or liability.
For hedges that do not result in the recognition of an asset or a
liability, amounts deferred in equity are recognised in the Income
Statement in the same period in which the hedged item affects the
Income Statement.
Hedge accounting is discontinued when the hedging instrument
expires or is sold, terminated, exercised, revoked, or no longer
qualifies for hedge accounting. At that time, any cumulative
gain or loss on the hedging instrument recognised in equity is
retained in equity until the forecast transaction occurs. If a hedged
transaction is no longer expected to occur, the net cumulative gain
or loss previously recognised in equity is included in the Income
Statement for the period.
Net investment hedges
Exchange differences arising from the translation of the net
investment in foreign operations are recognised directly in other
comprehensive income in the translation reserve. Gains and losses
arising from changes in the fair value of the hedging instruments
are recognised in other comprehensive income to the extent
that the hedging relationship is effective. Any ineffectiveness is
recognised immediately in the Income Statement for the period.
Hedge accounting is discontinued when the hedging instrument
expires or is sold, terminated or exercised, or no longer qualifies
for hedge accounting. Gains and losses accumulated in the
translation reserve are included in the Income Statement on
disposal of the foreign operation.
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.
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 IAS 12
‘Income Tax’ and is recognised on differences between the
carrying amounts of assets and liabilities in the accounts and
the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are recognised for taxable
temporary differences and deferred tax assets are recognised to
the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
No provision 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.
The carrying amount of deferred tax assets is reviewed at each
balance 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 Statement of Comprehensive Income
and equity, in which case the deferred tax is also dealt with in
Statement of Comprehensive Income and equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities 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.
Actual tax liabilities or refunds may differ from those anticipated
due to changes in tax legislation, differing interpretations of tax
legislation and uncertainties surrounding the application of tax
legislation. In situations where uncertainties exist, provision is made
for contingent tax liabilities and assets when it is more likely than
not that there will be a cash impact. These provisions are made
for each uncertainty individually on the basis of management
judgement following consideration of the available relevant
information. The measurement basis adopted represents the
best predictor of the resolution of the uncertainty which is usually
based on the most likely cash outflow. The Company reviews the
adequacy of these provisions at the end of each reporting period
and adjusts them based on changing facts and circumstances.
The Group does not consider detection risk when making
its estimates.
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 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.
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Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
• 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
Employee Share Trust
Transactions of the Group-sponsored trusts are included in the
Group Financial Statements. In particular, the trusts’ holdings of
shares in the Company are debited direct to equity. The Group
provides finance to the trusts to purchase Company shares to meet
the obligation to provide shares when employees exercise their
options or awards. Costs of running the trusts are charged to the
Income Statement. Shares held by the trusts are deducted from
other reserves.
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,
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 as being significant and which require additional
disclosure in order to provide an indication of the adjusted trading
performance of the Group. Such items could include, but may
not be limited to, costs associated with business combinations,
gains and losses on the disposal of businesses and properties,
significant reorganisation or restructuring costs and impairment
of goodwill and acquired intangible assets. Any item classified as
an exceptional item will be large and unusual, not attributable to
underlying operations and will be subject to specific quantitative
and qualitative thresholds set by and approved by the Directors
prior to being classified as exceptional.
Segment reporting
Operating segments are reported in a manner consistent with
the internal reporting provided to the Board and CEO who are
responsible for strategic decisions, allocating resources and
assessing performance of the operating segments.
1 Accounting policies continued
Defined contribution plans
Payments to the defined contribution pension plan are charged to
the Income Statement as they fall due.
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 factors such as age, years of service and compensation.
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 the terms of the
related pension obligation. The actuarial valuations are obtained
at least triennially and are updated at each balance sheet date.
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.
Other movements in the net deficit are recognised in the Income
Statement, including the current service cost and past service cost
and the effect of any curtailment or settlements. The interest cost
less the expected return of assets is also charged to the Income
Statement within net finance costs.
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. On exercise of equity settled options, the Group either issues
additional shares, leading to an increase in share capital and
share premium or reduces the amount of own shares held.
Revenue
Revenue represents income from advertising, subscriptions,
sponsorship and delegate fees, net of value added tax.
• Subscription revenues are recognised in the Income Statement
on a straight-line basis over the period of the subscription.
Subscription revenues contain 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.
• Advertising revenues are recognised in the Income Statement
on the date of publication for print advertising and over time for
online advertising. In the case of an ad hoc project, it is when the
deliverable has been sent to the customer. 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, to commission ad hoc consulting and thought leadership
projects, and to purchase survey reports.
100
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 2 Key judgemental areas adopted in preparing
these Financial Statements
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 significant accounting judgements and estimates
with the Group’s Audit Committee. The discussion below should
be read in conjunction with the Group’s disclosure of accounting
policies in note 1.
Judgements
Discontinued operations and disposal groups classified
as held for sale
On 30 April 2018, the Group completed the disposal of the
Global Markets Intelligence Division (GMID). This division meets
the recognition criteria of a discontinued operation under IFRS 5
‘Non-current Assets Held for Sale and Discontinued Operations’
and is therefore presented as such throughout this report (note 11).
On 23 October 2018, the Group disposed of Mining Indaba
to ITE Group plc for a consideration of £30.1m. Mining Indaba
meets the IFRS 5 criteria to be classified as held for sale at
30 September 2018 (note 11).
Presentation of adjusted performance
The Directors believe that the adjusted profit and earnings
per share measures provide additional useful information for
shareholders to evaluate the performance of the business.
These measures are consistent with how business performance
is measured internally and are the basis on which executive
management is incentivised. The adjusted earnings measure
is not a recognised profit measure under IFRS and may not be
directly comparable with adjusted profit measures used by other
companies. Adjusted figures are presented before the impact of
amortisation of acquired intangible assets (comprising trademarks
and brands, databases and customer relationships); exceptional
items; share of associates' and joint ventures’ acquired intangibles
amortisation, exceptional items and tax; net movements in
deferred consideration and acquisition commitments; net close-out
of the interest rate swaps; and interest on uncertain tax provisions.
In respect of earnings, adjusted amounts reflect a tax rate that
includes the current tax effect of the goodwill and intangible
assets. Many of the Group’s acquisitions, particularly in the US,
give rise to significant tax savings as the amortisation of goodwill
and intangible assets on acquisition is deductible for tax purposes.
The Group considers that the resulting adjusted effective tax rate is
therefore more representative of its tax payable position.
The Group has consistently applied these principles in calculating
adjusted measures, as it has reported on its financial performance
in the past and it is the Group’s intention to continue to consistently
apply these principles in the future.
A detailed explanation and reconciliation of the Group’s statutory
results to the adjusted and underlying results is set out on pages 27
to 29.
Taxation
EU Commission investigation into state aid
In October 2017, the European Commission opened a state
aid investigation into the Group Financing Exemption in the
UK controlled foreign company rules. The Group Financing
Exemption was introduced in legislation by the UK government in
2013. In common with other UK-based international companies
whose arrangements are in line with current UK CFC legislation,
the Group may be affected by the outcome of this investigation
and is monitoring developments. If the preliminary findings of the
European Commission’s investigation are upheld, the estimated
maximum potential liability is approximately £8m. Based on the
current assessment, no provision is being made in respect of this
issue as it is not probable that the Group will suffer an outflow
of funds.
Estimates
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. The sensitivity analysis is
disclosed in note 12. Goodwill held on the Statement of Financial
Position at 30 September 2018 was £414.7m (2017: £400.0m).
Taxation
The Group’s tax expense on profit is the sum of the total current
and deferred tax expense. The calculation of the 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 complexity in the Group’s tax
structure and makes the degree of estimation and judgement
challenging especially where tax law has changed in the
year, for example, the Tax Cuts and Jobs Act enacted in the
US. 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.
The Group has 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 and judgement. However, the inherent uncertainty
regarding the outcome of these items means eventual resolution
could differ from the accounting estimates and therefore affect the
Group’s results and cash flows.
The Group considers each uncertain tax matter on the technical
merits of the case in law, taking into account all relevant evidence,
including the known attitude of tax authorities in making an
assessment of the likelihood a matter will crystallise. The uncertain
tax provisions are calculated by determining the single most likely
cash flow for each issue rather than by applying a probability
threshold and this methodology has been applied consistently
year-on-year.
101
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
On 23 October 2017, the CRA issued a Notice of Reassessment
to BCA Research Inc (‘BCA’) based on the CRA view that the loss
sustained by BCA on an intra-group derivative transaction cannot
be deducted in computing income. Based on external legal
advice, management is confident that BCA will be able to overturn
these reassessments through the normal litigation process, which
has already begun. The Company filed a notice of objection with
the CRA in November 2017 and a notice of appeal with the Tax
Court of Canada in March 2018 to which the Tax Court of Canada
replied in June 2018. BCA has provided satisfactory security for
payment to the CRA for 50% of the tax being contested of £3.5m.
Revenu Quebec issued a Notice of Reassessment to BCA in
December 2017 based on the CRA view that the loss sustained by
BCA cannot be deducted in computing income. In July 2018, BCA
provided security to Revenu Quebec for 50% of the tax owing
amounting to £3.2m.
Indirect tax
The Group reviews and assesses other indirect tax exposures
across the Group and a £4.6m provision is the Group’s best
estimate of the most probable outflow relating to these exposures.
Retirement benefit schemes
The surplus or deficit in the defined benefit pension scheme
that is recognised through the Statement of Comprehensive
Income is subject to a number of assumptions and uncertainties.
The calculated assets and liabilities of 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 and related
sensitivities used are shown in note 27. Such assumptions are
based on actuarial advice and are benchmarked against similar
pension schemes.
2 Key judgemental areas adopted in preparing
these Financial Statements continued
Direct tax
There are two main areas of direct tax risk within the Group
as follows:
• Permanent establishment risk: the Group operates in multiple
jurisdictions and has internationally mobile employees. There is
a risk that operating activities could inadvertently create a
taxable presence in countries where the Group does not have
an entity. The Group proactively manages this risk and has a
transfer pricing policy in place for intercompany transactions.
It held an uncertain tax provision at 30 September 2018 of £1.9m
(2017: £1.9m) in respect of this risk.
• Challenges by tax authorities: where arrangements that
have been adopted on the basis of professional advice are
challenged by tax authorities and there is an expectation
that there is more likely than not to be a cash outflow, this risk
is provided for. The Group held a provision in respect of this
risk at 30 September 2018 of £11.0m (2017: £8.3m). The Group
had been challenged on: whether certain business disposals
should give rise to capital gains; a number of internal financing
arrangements between different jurisdictions that give rise to
different tax outcomes; and whether tax deductions taken for
costs arising within the Group’s treasury function are permissible.
The Group has previously disclosed a potential exposure relating
to an HMRC enquiry, which has a maximum exposure of £10.7m of
which £2.8m had been provided in prior periods. Following receipt
of a closure notice from HMRC on 21 September 2018 confirming
that the tax being pursued is £10.7m, the associated provision
has been increased for accounting purposes to £10.7m at
30 September 2018. A notice of appeal was filed with HMRC on
16 October 2018. The charge for this additional provision relating to
prior periods has been excluded from adjusted tax.
The maximum potential additional exposure for the Group
in relation to challenges by tax authorities not provided for is
approximately £20m which is for the challenge by the Canadian
Revenue Agency (CRA) and the Quebec Tax Authorities (Revenu
Quebec) on a foreign currency trade in 2009.
102
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 3 Segmental analysis
Segmental information is presented in respect of the Group’s segments and reflects the Group’s management and internal reporting
structure. The Group is organised into four segments: Asset Management; Pricing, Data & Market Intelligence; Banking & Finance; and
Commodity Events.
Revenues generated in the Asset Management and Pricing, Data & Market Intelligence segments are primarily from subscriptions.
Banking & Finance revenues consist mainly of sponsorship income and delegates revenue. Commodity Events revenue is mainly
delegates revenue. A breakdown of the Group’s revenue by type is set out below.
During the year, the Group sold Global Markets Intelligence Division (GMID), Adhesion, World Bulk Wine and Institutional Investor
Journals (note 15). As a result, segment information for these businesses has been reclassified as sold businesses and the comparative
split of segmental revenues, revenue by type, operating profits, acquired intangible amortisation, exceptional items and depreciation
and amortisation has been restated. GMID has been classified as discontinued operations (note 11) and therefore presented as such
throughout this report.
In addition, the operating profit segments have been restated to reflect a change in the way unallocated corporate costs are recharged.
From 1 October 2017, central costs over which a segment had no influence were not recharged to that segment. This restatement has
no effect on the total Group's results but reflects the operating profit of each segment as if the new recharge methodology had been
applied from 1 October 2016. Central costs of £17.6m for 2017 were reallocated to unallocated corporate costs.
Analysis of the Group’s three main geographical areas is also set out to provide additional information on the trading performance of
the businesses.
Inter-segment sales are charged at prevailing market rates and shown in the eliminations columns.
2018
Revenue by segment and type:
Asset Management
Pricing, Data & Market Intelligence
Banking & Finance
Commodity Events
Sold/closed businesses
Foreign exchange gains on forward contracts
Total revenue
Continuing operations
Discontinued operations
Total revenue
2017
Revenue by segment and type:
Asset Management
Pricing, Data & Market Intelligence
Banking & Finance
Commodity Events
Sold/closed businesses
Foreign exchange losses on forward contracts
Total revenue
Continuing operations
Discontinued operations
Total revenue
Subscriptions
and content
£000
Advertising
£000
Sponsorship
£000
Delegates
£000
Other
£000
119,642
90,601
8,617
–
11,923
16,904
8,633
–
218,860
37,460
–
–
218,860
218,860
–
–
–
37,460
37,460
–
16,980
16,937
29,814
5,335
69,066
–
–
69,066
69,066
–
2,408
19,790
22,490
15,281
59,969
–
–
59,969
59,969
–
218,860
37,460
69,066
59,969
18
496
1,111
206
1,831
25,650
1,258
28,739
4,924
23,815
28,739
Subscriptions
and content
£000
Advertising
£000
Sponsorship
£000
Delegates
£000
Other
£000
135,008
72,446
8,852
1
216,307
–
–
216,307
216,307
–
216,307
13,585
16,693
9,825
4
40,107
–
–
40,107
40,107
–
40,107
16,071
14,442
28,061
5,487
64,061
–
–
64,061
64,061
–
64,061
3,210
18,996
21,665
13,662
57,533
–
–
57,533
57,533
–
57,533
Total
revenue
£000
150,971
144,728
70,665
20,822
387,186
25,650
1,258
414,094
390,279
23,815
414,094
Total
revenue
£000
167,941
123,988
69,728
19,690
381,347
57,874
67
1,411
1,325
536
3,339
57,874
(10,808)
(10,808)
50,405
8,915
41,490
50,405
428,413
386,923
41,490
428,413
103
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
3 Segmental analysis continued
United Kingdom
North America
Rest of World
Eliminations
2018
£000
2017
£000
2018
£000
2017
£000
2018
£000
2017
£000
2018
£000
2017
£000
Total
2018
£000
2017
£000
3,776
2,934
144,660
161,911
2,722
3,099
(187)
(3)
150,971
167,941
Revenue by segment and
source:
Asset Management
Pricing, Data & Market
Intelligence
Banking & Finance
Commodity Events
Sold/closed businesses
Foreign exchange gains/
(losses) on forward contracts
103,350
40,355
19,585
2,625
99,951
41,036
18,489
6,867
36,772
26,087
23,985
25,938
–
–
5,326
4,766
1,241
4,555
3,360
1,201
5,796
14,967
17,229
36,416
1,258
(10,808)
–
–
–
–
Total revenue
170,949
158,469
213,315
226,801
Continuing operations
168,324
154,031
208,592
218,358
Discontinued operations
2,625
4,438
4,723
8,443
Total revenue
170,949
158,469
213,315
226,801
31,284
14,817
16,467
31,284
48,631
20,022
28,609
48,631
(720)
(543)
(4)
–
–
(1,454)
(1,454)
–
(4,503)
144,728
123,988
(606)
70,665
–
20,822
(376)
25,650
69,728
19,690
57,874
–
1,258
(10,808)
(5,488) 414,094
428,413
(5,488) 390,279
386,923
–
23,815
41,490
(1,454)
(5,488) 414,094
428,413
Total revenue by destination
52,770
44,620
194,146
199,319
167,178
184,474
–
–
414,094
428,413
United Kingdom
North America
Rest of World
2018
£000
2017
£000
2018
£000
2017
£000
2018
£000
2017
£000
Total
2018
£000
2017
£000
Adjusted operating profit1 by segment and source:
Asset Management
Pricing, Data & Market Intelligence
Banking & Finance
Commodity Events
Sold/closed businesses
Unallocated corporate costs
Adjusted operating profit1
Discontinued operations
Continuing operations
Acquired intangible amortisation2 (note 12)
Exceptional items (note 5)
Operating profit/(loss)
Share of results in associates and joint ventures (note
14)
Finance income (note 7)
Finance expense (note 7)
Profit before tax
Tax expense on profit (note 8)
Profit for the year from continuing operations
971
766
59,045
40,242
36,712
6,934
8,425
(248)
7,510
7,060
304
16,097
10,046
–
66,441
10,844
9,236
–
1,082
(3,146)
692
658
1,318
5,710
7,521
1,025
(1,754)
262
671
9,217
61,098
53,193
17,672
9,083
8,591
68,232
45,802
17,008
7,731
15,231
(33,531)
(43,208)
(3,475)
(2,150)
(1,923)
(1,507)
(38,929)
(46,865)
22,793
9,144
83,031
90,081
4,884
7,914
110,708
107,139
278
23,071
(7,637)
(4,148)
762
9,906
1,730
84,761
(7,338)
(15,064)
(7,164)
71,584
11,286
(4,596)
141,281
(4,160)
(9,518)
(8,488)
(7,510)
(11,886)
85,921
(4,634)
(574)
103,198
95,253
(13,126)
(21,414)
51,381
(38)
(102)
(22,739)
(20,566)
13,960
9,288
(2,675)
81,396
(31,253)
(3,351)
161,855
43,434
157
5,248
(6,034)
(1,890)
3,290
(4,146)
161,226
40,688
(51,360)
(3,390)
109,866
37,298
1
Operating profit including discontinued operations before acquired intangible amortisation and exceptional items. A detailed reconciliation of the Group’s statutory results to the adjusted
and underlying results is set out on pages 27 to 29.
2 Acquired intangible amortisation represents amortisation of acquisition-related non-goodwill assets such as trademarks and brands, customer relationships and databases (note 12).
104
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 3 Segmental analysis continued
Other segmental information by segment:
Asset Management
Pricing, Data & Market Intelligence
Banking & Finance
Commodity Events
Sold/closed businesses
Unallocated corporate costs
Continuing operations
Discontinued operations
Total
Acquired intangible
amortisation
Exceptional items
Depreciation and
amortisation
2018
£000
2017
£000
2018
£000
2017
£000
2018
£000
2017
£000
(10,893)
(10,725)
(617)
(29,992)
(8,781)
(6,661)
(5,277)
(1,582)
(222)
(235)
(2,570)
(2,665)
–
–
–
–
87,290
(273)
(280)
–
(22,739)
(20,566)
–
(249)
81,396
90,294
–
(89)
2,930
(2,520)
(31,253)
(2,437)
(1,136)
(1,262)
–
(112)
(2)
(3,752)
(6,264)
–
(22,739)
(20,815)
171,690
(33,690)
(6,264)
(1,806)
(292)
–
(139)
(1)
(4,444)
(6,682)
(485)
(7,167)
The closing net book value of goodwill, other intangible assets, property, plant and equipment and investments is analysed by
geographic area as follows:
Goodwill
Other intangible assets
Property, plant and equipment
Investments
Non-current assets
United Kingdom
North America
Rest of World
2018
£000
2017
£000
2018
£000
2017
£000
2018
£000
103,715
303,399
289,079
7,096
104,227
45,656
5,325
4,261
61,024
127,326
5,913
30,366
10,165
–
132,416
10,724
–
159,469
201,018
440,890
432,219
521
622
–
8,239
(370)
Total
2018
£000
414,722
173,503
16,112
4,261
2017
£000
399,971
193,991
17,235
30,366
2017
£000
7,177
551
598
–
8,326
608,598
641,563
(757)
(1,978)
(10,928)
Additions to property, plant and equipment
(602)
(337)
(1,006)
(9,834)
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 profit
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Operating profit
Continuing
operations
2018
£000
Discontinued
operations
2018
£000
390,279
(88,787)
301,492
(1,956)
(137,681)
161,855
23,815
(4,223)
19,592
(28)
(13,023)
6,541
Total
2018
£000
414,094
(93,010)
321,084
(1,984)
(150,704)
168,396
Continuing
operations
2017
£000
386,923
(96,900)
290,023
(2,261)
(244,328)
43,434
Discontinued
operations
2017
£000
41,490
(7,678)
33,812
(51)
(24,561)
9,200
Total
2017
£000
428,413
(104,578)
323,835
(2,312)
(268,889)
52,634
Administrative expenses include items separately disclosed in exceptional items from continuing operations of £81.4m (2017: £31.3m)
and discontinued operations of £1.0m (2017: £2.4m) (note 5).
105
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
4 Operating profit continued
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 businesses/joint ventures/associates
Impairment charges
Release for overseas sales tax
Restructuring and other exceptional costs
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 assurance services
Other services
Total Group auditors' remuneration
5 Exceptional items
Continuing
operations
2018
£000
Discontinued
operations
2018
£000
Total
2018
£000
Continuing
operations
2017
£000
Discontinued
operations
2017
£000
Total
2017
£000
166,219
9,799
176,018
163,227
16,974
180,201
22,739
2,908
3,356
8,985
5
(86,817)
3,048
–
2,373
1,187
–
–
–
467
1
–
–
–
969
287
22,739
20,566
2,908
3,356
9,452
6
(86,817)
3,048
–
3,342
1,474
3,709
2,973
9,682
16
(2,931)
29,649
(3,868)
8,403
69
249
256
229
773
(1)
–
–
–
2,437
324
20,815
3,965
3,202
10,455
15
(2,931)
29,649
(3,868)
10,840
393
2018
£000
2017
£000
900
726
247
1,147
123
6
76
2
84
305
1,031
117
6
195
44
245
1,354
1,393
Exceptional items are items of income or expense considered by the Directors as being significant, non-recurring and which require
additional disclosure in order to provide an indication of the underlying trading performance of the Group.
Profit on disposal of businesses/joint ventures/associates
Impairment charges
Release of overseas sales tax provision
Restructuring and other exceptional costs
Continuing operations
Exceptional items from discontinued operations
Profit on disposal of discontinued operations
Discontinued operations
Total
2018
£000
86,817
2017
£000
2,931
(3,048)
(29,649)
–
(2,373)
81,396
(969)
91,263
90,294
171,690
3,868
(8,403)
(31,253)
(2,437)
–
(2,437)
(33,690)
For the year ended 30 September 2018, the Group recognised a continuing operations exceptional credit of £81.4m.
The Group sold Adhesion (profit £9.8m), World Bulk Wine (profit £0.9m) and Institutional Investor Journals (profit £4.4m) resulting in a net
profit of £15.1m (note 15). The disposal of the associate investment in Dealogic resulted in a profit of £71.7m (note 14).
The impairment charge relates to a goodwill impairment of £3.0m for Layer123 Events and Training Limited (Layer123). The impairment
of Layer123 is the result of its disappointing financial performance post acquisition.
106
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018
5 Exceptional items continued
Restructuring and other exceptional costs consist of restructuring costs, earn-out payments treated as compensation costs and
acquisition-related costs offset by the favourable settlement of the legal dispute with the previous owners of Centre for Investor
Education (CIE). Costs as a result of a strategic review undertaken for the major restructuring of certain businesses have been treated
as exceptional items. Normal restructuring costs are not treated as exceptional items. The recognition of the earn-out payments for the
acquisition of Layer123, Site Seven Media Ltd (TowerXchange) and Random Lengths are treated as compensation costs. It is Group
policy to treat, as exceptional, significant earn-out payments required by IFRS to be recognised as a compensation cost. The acquisition-
related costs of Random Lengths (note 15) are treated as exceptional due to the magnitude of the costs associated with the acquisition.
Acquisition costs for smaller acquisitions have not been treated as exceptional.
The Group’s tax charge includes a related tax charge on the continuing operations exceptional items of £12.1m (note 8).
The discontinued operations have incurred exceptional costs as a result of the GMID disposal of £1.0m. The sale of GMID resulted
in a profit on disposal of discontinued operations, after deducting disposal costs, of £91.3m (note 15). The Group’s tax charge includes
a related tax charge on the profit on disposal of discontinued operations exceptional items of £6.7m (note 8).
For the year ended 30 September 2017 the Group recognised a continuing operations exceptional charge of £31.3m.
The Group sold HedgeFund Intelligence (loss £4k), II Intelligence (profit £2.2m), Euromoney Indices (loss £1.8m) and LatinFinance
(profit £3.4m), resulting in a net profit of £3.8m. The disposal of the joint ventures Institutional Investor Zanbato Limited and EIIZ Discovery
LLC resulted in a loss of £0.8m.
The goodwill impairment charge of £27.4m related to Ned Davis Research (NDR). An available-for-sale investment impairment of £2.3m
related to Estimize, Inc.
An element of the provision for overseas sales tax was released following settlement of the sales tax exposure (including interest) resulting
in a credit of £3.9m.
Restructuring and other exceptional costs consisted of professional fees associated with the placement element of the share buyback
transaction with Daily Mail and General Trust plc (DMGT); professional fees from the CIE legal dispute; incremental costs relating to the
relocation of the New York office; and the acquisition-related costs of RISI US (Holdco) Inc, (RISI). These costs for RISI were treated as
exceptional due to the significance of the acquisition. No severance costs were treated as exceptional items in 2017.
The Group’s tax charge included a related tax credit on the continuing operations exceptional items of £10.1m (note 8).
The discontinued operations incurred exceptional costs to engage with advisors to assist with the strategic review of GMID.
These exceptional costs of £2.4m have been disclosed separately (note 11). The Group’s tax charge included a related tax charge
on the discontinued operations exceptional items of £1.1m (note 8).
6 Staff costs
(i) Number of staff (including Directors and temporary staff)
By business segment:
Asset Management
Pricing, Data & Market Intelligence
Banking & Finance
Commodity Events
Central
Continuing operations
Discontinued operations
Total
By geographical location:
United Kingdom
North America
Rest of World
Continuing operations
Discontinued operations
Total
2018
Monthly
average
2017
Monthly
average
475
635
226
52
299
1,687
305
1,992
540
539
210
76
334
1,699
488
2,187
2018
Monthly
average
2017
Monthly
average
827
635
225
1,687
305
1,992
800
671
228
1,699
488
2,187
107
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
6 Staff costs continued
(ii) Staff costs (including Directors and temporary staff)
Wages and salaries
Social security costs
Other pension costs (note 27)
Long-term incentive expense (note 24)
Continuing
operations
2018
£000
150,300
11,170
3,262
1,487
Discontinued
operations
2018
£000
8,732
857
210
–
166,219
9,799
Total
2018
£000
159,032
12,027
3,472
1,487
176,018
Continuing
operations
2017
£000
Discontinued
operations
2017
£000
148,528
10,609
3,105
985
163,227
15,314
1,344
316
–
16,974
Total
2017
£000
163,842
11,953
3,421
985
180,201
Details of Directors’ remuneration have been disclosed in the Directors’ Remuneration Report on pages 56 to 74.
7 Finance income and expense
Finance income
Interest on cash deposit with DMGT group company
Interest receivable from short-term investments
Movements in acquisition commitments (note 25)
Movements in deferred consideration (note 25)
Finance expense
Interest payable on committed borrowings with DMGT group company
Interest payable on borrowings
Net interest expense on defined benefit liability (note 27)
Movements in deferred consideration (note 25)
Interest on tax
Continuing operations net finance costs
Discontinued operations net finance income
Total net finance costs
Reconciliation of net finance costs in Income Statement to adjusted net finance costs
Continuing operations net finance costs in Income Statement
Add back:
Movements in acquisition commitments
Movements in deferred consideration
Other
Continuing operations adjusted net finance costs
Discontinued operations adjusted net finance income
Total adjusted net finance costs
2018
£000
2017
£000
–
2,870
2,378
–
5,248
–
(4,201)
(248)
(1,122)
(463)
(6,034)
(786)
32
(754)
137
6
2,970
177
3,290
(152)
(3,656)
(202)
–
(136)
(4,146)
(856)
33
(823)
2018
£000
2017
£000
(786)
(856)
(2,378)
1,122
(629)
(1,885)
(2,671)
32
(2,639)
(2,970)
(177)
–
(3,147)
(4,003)
33
(3,970)
The reconciliation of net finance 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 (page 28).
Charges and credits relating to the movements in acquisition commitments and deferred consideration reflect future payments and
receipts expected on historical transactions that do not directly relate to the current year results.
Other items in the adjusted net finance costs consist of a gain realised on the close-out of the interest rate swaps of £2.1m offset by the
write-off of capitalised borrowing costs of £0.9m following the repayment of the Group’s term loan. The net gain has been excluded
from adjusted finance costs as it would not have crystallised had the disposal of GMID not completed. In addition, interest of £0.6m on
uncertain tax provisions has been excluded as this provision is not in the ordinary course of business and relates to a tax adjusting item
(note 8).
108
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018
8 Tax expense on profit
Current tax expense
UK corporation tax expense
Foreign tax expense
Adjustments in respect of prior years
Deferred tax expense/(credit)
Current year
Adjustments in respect of prior years
Tax expense in Income Statement
Continuing
operations
2018
£000
Discontinued
operations
2018
£000
Total
2018
£000
Continuing
operations
2017
£000
Discontinued
operations
2017
£000
2,735
37,764
8,002
48,501
3,515
(656)
2,859
51,360
1,425
6,694
–
8,119
(1,625)
–
(1,625)
6,494
4,160
44,458
8,002
56,620
1,890
(656)
1,234
57,854
478
13,899
(2,193)
12,184
(8,543)
(251)
(8,794)
3,390
44
2,193
105
2,342
1,003
(1)
1,002
3,344
Total
2017
£000
522
16,092
(2,088)
14,526
(7,540)
(252)
(7,792)
6,734
Effective tax rate
32%
7%
22%
8%
36%
13%
The adjusted effective tax rate for the year is set out below:
Reconciliation of tax expense in Income Statement to adjusted
tax expense/(credit)
Total tax expense in Income Statement
51,360
6,494
57,854
3,390
3,344
6,734
Continuing
operations
2018
£000
Discontinued
operations
2018
£000
Total
2018
£000
Continuing
operations
2017
£000
Discontinued
operations
2017
£000
Total
2017
£000
Add back:
Tax on acquired intangible amortisation
Tax on exceptional items
Other tax adjusting items
Tax on goodwill and intangible amortisation
Share of tax on profits of associates and joint ventures
Adjustments in respect of prior years
Adjusted tax expense/(credit)
Adjusted profit before tax
Adjusted effective tax rate
5,032
(12,116)
(12,411)
(19,495)
(3,042)
333
(7,346)
–
(6,694)
–
5,032
(18,810)
(12,411)
(6,694)
(26,189)
–
–
–
(3,042)
333
(7,346)
(29,550)
(6,694)
(36,244)
21,810
(200)
21,610
5,327
10,088
–
15,415
(4,611)
988
2,444
14,236
17,626
44
(1,065)
–
(1,021)
–
–
(104)
(1,125)
2,219
109,179
20%
5,371
9,023
–
14,394
(4,611)
988
2,340
13,111
19,845
106,462
19%
The Group presents the above adjusted effective tax rate reconciliation to help users of this report better understand its tax charge.
In arriving at this rate, the Group removes the tax effect of exceptional and adjusting items that reconcile statutory to adjusted profit.
A detailed reconciliation of the Group’s statutory results to the adjusted and underlying results is set out on pages 27 to 29. However, the
current tax effect of goodwill and intangible items is not removed. The current tax benefit of tax deductible goodwill and intangible items
amounting to £3.0m is recognised in the adjusted effective tax rate as the Group considers that this more accurately reflects its expected
cash tax payable position as the deferred tax effect on the goodwill and intangible items is not expected to crystallise. The deferred tax
effect on goodwill and intangible items would only crystallise in the event of a disposal and that is not the current intention.
Other tax adjusting items include non-recoverable withholding tax of £14.6m, a one-time deemed repatriation tax charge relating to
unremitted foreign earnings of £3.2m arising from US tax reform and a tax credit of £4.7m arising as a result of revaluation of net US
deferred tax liabilities following a reduction in the US federal tax rate from 35% to 21%. These items are excluded from adjusted tax as
they are significant and not in the ordinary course of business. The non-recoverable withholding tax arises as a direct consequence of a
$380m intercompany dividend which was triggered by the disposal of GMID and other restructuring that took place.
Adjustments in respect of prior years are excluded on the basis that the adjusted tax expense should reflect the tax rate of the Group
for the current year. Share of tax on profits of associates and joint ventures is calculated on the adjusted profits of associates and joint
ventures and excludes tax on exceptional items consistent with the Group’s historical approach and policy.
109
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
8 Tax expense on profit continued
The actual tax expense for the year is different from the UK blended rate of 19% of profit before tax for the reasons set out in the
following reconciliation:
Profit before tax
Profit on disposal of discontinued operation
Tax at 19.0% (2017: 19.5%)
Factors affecting tax charge:
Continuing
operations
2018
£000
Discontinued
operations
2018
£000
Total
2018
£000
Continuing
operations
2017
£000
Discontinued
operations
2017
£000
Total
2017
£000
161,226
–
6,573
91,263
167,799
91,263
40,688
9,233
49,921
–
–
–
161,226
97,836
259,062
40,688
9,233
49,921
30,633
18,589
49,222
7,935
1,800
9,735
Different tax rates of subsidiaries operating in overseas jurisdictions
5,494
1,780
Share of tax on associates and joint ventures
Non-taxable income
Goodwill and intangibles
Disallowable expenditure
Disposal of businesses
Other items deductible for tax purposes
Tax impact of consortium relief
US tax reform
Non-recoverable withholding tax
Impact of change in rate
Adjustments in respect of prior years
Total tax expense for the year
(67)
(2,243)
1,220
2,210
(3,227)
(3,948)
–
3,169
15,458
(4,685)
7,346
51,360
7,274
(67)
2,814
369
–
(156)
(2,399)
(1,588)
–
–
1,220
2,210
(13,719)
(16,946)
–
–
–
–
–
–
6,494
(3,948)
–
3,169
15,458
(4,685)
7,346
57,854
152
1,381
–
(5,100)
(129)
–
–
–
972
–
–
–
468
–
–
–
–
–
–
3,786
369
(1,588)
152
1,849
–
(5,100)
(129)
–
–
–
(2,444)
3,390
104
3,344
(2,340)
6,734
The Group’s effective tax rate depends mainly on the geographic mix of profits and applicable tax rates. Different tax rates of subsidiaries
operating in overseas jurisdictions of £7.3m (2017: £3.8m) reflects higher profits earned in jurisdictions which have a higher tax rate than
the UK.
Disposal of businesses relates to the disposals of GMID and Dealogic during the year which crystallised a US tax charge of £16.8m
(£6.7m from GMID and £10.1m from Dealogic) but is non-taxable in the UK.
Goodwill and intangibles for the year ended 30 September 2018 are £1.2m which relate primarily to non-deductible goodwill impairment
for Layer123.
The other items deductible for tax purposes of £3.9m (2017: £5.1m) arise as a result of financing arrangements that result in different tax
treatment in the territories involved, primarily from debt financing provided to US affiliates. Following the anti-hybrid legislation and new
interest restriction rules enacted as part of US Tax Reform, these financing arrangements have been partially unwound during the year
and will be fully unwound by the end of next financial year.
A one-time deemed repatriation tax charge of £3.2m related to unremitted foreign earnings arises as a result of the US Tax Reform.
As a result of the disposal of GMID and other restructuring that took place during the year, a dividend payment of $380m was made in
September 2018 from BCA Research Inc. to Euromoney Canada Limited, a UK group entity. Canadian withholding tax of £14.6m arose
from the dividend payment and was paid in full to the Canadian Revenue Agency in October 2018.
The impact of change in rate relates to a one-off deferred tax credit of £4.7m arising from the revaluation of the Group’s net US deferred
tax liabilities following the change in the US federal tax rate from 35% to 21%.
Adjustments in respect of prior years of £7.3m (2017: £2.3m) reflect a further provision made in respect of a potential exposure in relation
to an HMRC enquiry and several small items across numerous jurisdictions that relate to changes in estimates.
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:
Other comprehensive income
2018
£000
474
2017
£000
1,901
Equity
2018
£000
796
2017
£000
225
Deferred tax (note 22)
110
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 9 Dividends
Amounts recognisable as distributable to equity holders in the year
Final dividend for the year ended 30 September 2017 of 21.80p (2016: 16.40p)
Interim dividend for the year ended 30 September 2018 of 10.20p (2017: 8.80p)
Employee share trusts dividend
Proposed final dividend for the year ended 30 September
Employee share trusts dividend
2018
£000
2017
£000
23,784
11,136
34,920
(559)
34,361
24,347
(383)
23,964
21,043
9,600
30,643
(443)
30,200
23,784
(384)
23,400
The proposed final dividend of 22.30p (2017: 21.80p) is subject to approval at the AGM on 1 February 2019 and has not been included as
a liability in these Financial Statements in accordance with IAS 10 ‘Events after the Reporting Period’.
10 Earnings per share
Profit for the year from continuing operations
Non-controlling interests
Earnings from continuing operations
Profit for the year from discontinued operations
Total earnings
Adjustments
Total 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
Earnings per share from continuing operations
Basic
Diluted
Earnings per share from discontinued operations
Basic
Diluted
Total earnings per share
Basic
Diluted
Total adjusted earnings per share
Basic
Diluted
2018
£000
109,866
(139)
109,727
91,342
201,069
(113,639)
87,430
2018
Number
000
109,148
(1,733)
107,415
131
107,546
2017
£000
37,298
(469)
36,829
5,889
42,718
43,430
86,148
2017
Number
000
114,252
(1,760)
112,492
213
112,705
Pence
Pence
102.15
102.03
85.03
84.93
187.18
186.96
81.39
81.30
32.74
32.68
5.24
5.23
37.98
37.91
76.58
76.44
The adjusted earnings per share figures have been disclosed since the Directors consider it necessary in order to give an indication of
the adjusted trading performance reflecting the performance both of the Group’s continuing and discontinued operations. A detailed
reconciliation of the Group’s statutory results to the adjusted and underlying results is set out on pages 27 to 29.
111
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
11 Discontinued operations and disposal groups classified as held for sale
On 30 April 2018, the Group completed the disposal of GMID (note 15). This division meets the IFRS 5 ‘Non-current Assets Held for Sale
and Discontinued Operations’ criteria to be treated as discontinued operations at 30 September 2018 due to its size and the fact that the
businesses constitute a major line of the Group’s business. GMID is therefore presented as discontinued operations throughout this report.
The results of the discontinued operations are as follows:
Total revenue
Operating profit before acquired intangible amortisation and exceptional items
Acquired intangible amortisation
Exceptional items
Operating profit
Finance income
Finance expense
Net finance income
Profit before tax
Tax credit/(expense) on profit
Profit after tax from discontinued operations
Profit on disposal of discontinued operation – exceptional items
Tax expense on profit on disposal
Profit after tax on disposal of discontinued operations
2018
£000
23,815
7,510
–
(969)
2017
£000
41,490
11,886
(249)
(2,437)
6,541
9,200
43
(11)
32
6,573
200
6,773
91,263
(6,694)
84,569
107
(74)
33
9,233
(3,344)
5,889
–
–
–
Profit for the year from discontinued operations
91,342
5,889
Reconciliation of profit before tax from discontinued operations in Income Statement to adjusted discontinued
operations:
Profit before tax for the year from discontinued operations
Add back:
Acquired intangible amortisation
Exceptional items
Adjusted discontinued operations profit before tax for the year
2018
£000
6,573
–
969
7,542
2017
£000
9,233
249
2,437
11,919
112
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 11 Discontinued operations and disposal groups classified as held for sale continued
The impact of the discontinued operations on the cash flows is as follows:
Operating cash flows
Investing cash flows
Financing cash flows
Total cash flows
2018
£000
(2,520)
112,639
(14)
110,105
2017
£000
10,935
(158)
(161)
10,616
On 23 October 2018, the Group disposed of Mining Indaba to ITE Group plc for a consideration of £30.1m. Mining Indaba meets the
IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ criteria to be classified as held for sale at 30 September 2018.
Mining Indaba does not meet the IFRS 5 criteria to be treated as discontinued operations. The assets and liabilities of this business have
been disclosed separately on the face of the Consolidated Statement of Financial Position. The assets and liabilities held for sale are
recorded at the lower of their carrying value and fair value less costs to sell. No impairment of these net assets has been identified at
30 September 2018. The disposal has been disclosed as an event after the balance sheet date (note 30).
The main classes of assets and liabilities comprising the business classified as held for sale are set out in the table below.
Acquired intangible assets
Trade and other receivables
Total assets of the business held for sale
Accruals
Deferred income
Total liabilities of the business held for sale
Net assets
Mining Indaba
2018
£000
12,783
936
13,719
(302)
(1,692)
(1,994)
11,725
113
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
12 Goodwill and other intangible assets
Acquired intangible assets
Trademarks
& brands
£000
Customer
relationships
£000
Databases
£000
Total
acquired
intangible
assets
£000
Licences &
software
£000
Intangible
assets in
development
£000
Goodwill
£000
Total
£000
210,273
150,418
13,701
374,392
15,960
–
–
5,317
618
4,022
–
–
5,941
–
2,973
–
–
–
–
230
–
–
11,258
618
7,225
(14,513)
(7,636)
–
(22,149)
704
(1,943)
–
2,679
390
–
2,024
2,558
–
–
(2,679)
25
–
467,215
859,591
–
–
10,205
(618)
9,351
3,262
(1,943)
21,463
–
16,991
(23,619)
(45,768)
205,717
151,696
13,931
371,344
17,790
1,928
462,534
853,596
95,964
10,182
80,474
11,681
9,602
186,040
876
22,739
–
–
2,192
(3,085)
105,253
–
–
1,687
(6,281)
87,561
–
–
208
–
–
–
4,087
(9,366)
12,345
2,908
–
(1,511)
317
–
10,686
203,500
14,059
–
–
–
–
–
–
–
67,244
265,629
–
3,048
–
1,139
25,647
3,048
(1,511)
5,543
(23,619)
(32,985)
47,812
265,371
100,464
64,135
3,245
167,844
3,731
1,928
414,722
588,225
Acquired intangible assets
Trademarks
& brands
£000
Customer
relationships
£000
Databases
£000
Total
acquired
intangible
assets
£000
Licences &
software
£000
Intangible
assets in
development
£000
Goodwill
£000
Total
£000
193,879
116,759
14,773
325,411
17,715
–
–
–
–
–
–
–
–
–
(5,460)
(4,656)
–
(4,864)
(3,638)
210,273
150,418
–
(359)
(2,121)
13,701
–
(10,683)
(10,415)
374,392
474
(542)
1,267
726
(372)
(3,308)
15,960
90,934
75,185
11,030
177,149
11,923
9,545
249
–
–
(2,323)
(2,441)
95,964
10,294
727
20,566
–
–
–
–
–
–
249
–
–
(1,726)
(3,279)
80,474
(271)
(1,884)
9,602
(4,320)
(7,604)
186,040
3,709
256
–
(542)
(250)
(2,751)
12,345
980
1,513
–
313
(726)
(56)
–
464,313
808,419
–
–
1,987
(542)
68,992
140,651
–
(13,456)
(52,634)
–
(24,567)
(66,357)
2,024
467,215
859,591
–
–
–
–
–
–
–
–
68,208
257,280
–
–
27,360
–
(2,533)
(25,791)
24,275
505
27,360
(542)
(7,103)
(36,146)
67,244
265,629
114,309
69,944
4,099
188,352
3,615
2,024
399,971
593,962
2018
Cost/carrying amount
At 1 October 2017
Additions
Disposals
Balance at acquisition of company
Transfer
Exchange differences
Classified as held for sale
At 30 September 2018
Amortisation and impairment
At 1 October 2017
Amortisation charge
Impairment
Disposals
Exchange differences
Classified as held for sale
At 30 September 2018
Net book value/carrying amount
at 30 September 2018
2017
Cost/carrying amount
At 1 October 2016
Additions
Disposals
Transfer
Exchange differences
Classified as held for sale
At 30 September 2017
Amortisation and impairment
At 1 October 2016
Amortisation charge
Continuing operations
Discontinued operations
Impairment
Disposals
Exchange differences
Classified as held for sale
At 30 September 2017
Net book value/carrying amount
at 30 September 2017
114
Balance at acquisition of company
26,510
42,161
1,408
70,079
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 12 Goodwill and other intangible assets continued
The individually material acquired intangible assets by CGU are as follows:
2018
CGU
BCA
RISI
2017
CGU
BCA
RISI
Trademarks & brands
Customer relationships
Databases
£000
years1
37,380
20,791
58,171
18
14
£000
2,214
36,145
38,359
years1
4
19
£000
–
844
844
Trademarks & brands
Customer relationships
Databases
£000
40,388
21,714
62,102
years1
19
15
£000
3,229
37,047
40,276
years1
5
20
£000
–
1,148
1,148
Total
acquired
intangible
assets
£000
39,594
57,780
97,374
Total
acquired
intangible
assets
£000
43,617
59,909
103,526
years1
–
3
years1
–
4
1 The remaining useful economic life.
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.
During the year, the goodwill in respect of each of the businesses was tested for impairment in accordance with IAS 36 ‘Impairment
of Assets’. 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 value in use or fair value less costs of disposal.
The following methodologies applied and key assumptions, reflecting past experience and external sources of information, included:
Value in use:
• budgets by business based on pre-tax cash flows with a CAGR of 3% to 18% for the next three years derived from approved 2018
budgets. Management believes these budgets to be reasonably achievable
• pre-tax discount rates between 11% and 19%, derived from the Group’s benchmarked weighted average cost of capital (WACC) of 9%
adjusted for risks specific to the nature of CGUs and risks included within the cash flows themselves
• long-term nominal growth rate of between 1% and 2%
Fair value less costs of disposal:
• fair value less costs of disposal is calculated using a discounted cash flow approach, with a post-tax discount rate applied to the
projected risk-adjusted post-tax cash flows and terminal value
• post-tax cash flows are derived from approved 2018 budgets. Management believes these budgets to be reasonably achievable
• the period of specific projected cash flows is five years
• post-tax discount rates between 8% and 10%, derived from the Group’s benchmarked WACC of 9% adjusted for risks specific to the
nature of CGUs and risks included within the cash flows themselves
• long-term nominal growth rate of between 1% and 2%
• uses significant inputs which are not based on observable market data. Therefore, this valuation technique is classified as level 3
in the fair value hierarchy
The recoverable amount of RISI is calculated on the fair value less costs of disposal methodology and the rest of the Group’s CGUs on
the value in use basis.
115
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
12 Goodwill and other intangible assets continued
Following the impairment review, the impairment losses recognised in exceptional items (note 5) in respect of goodwill and intangibles
are as follows:
2018
CGU
Layer123
2017
CGU
NDR
Reportable segment
Pricing, Data & Market Intelligence
Reportable segment
Asset Management
Goodwill
impairment
£000
Recoverable
amount
£000
3,048
6,167
Goodwill
impairment
£000
27,360
Recoverable
amount
£000
46,114
Discount
rate
%
11.0
Discount
rate
%
14.2
For the year ended 30 September 2018, no impairments were required to the Indaba CGU on a value in use basis before being
transferred to held for sale. Upon classification as held for sale, the CGU was assessed by reference to expected sale proceeds and no
impairment was required.
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% or more of the Group’s total carrying value of goodwill. Significant items of goodwill
relate to BCA of £177.5m (2017: £172.6m).
The remaining carrying value of goodwill and acquired intangible assets consists of a number of CGUs, none of which are individually
significant to the Group. The aggregate value of goodwill for these CGUs is £237.2m (2017: £227.4m).
For BCA, using the value in use methodology, a pre-tax discount rate of 12.8% (2017: 13.6%) and long-term nominal growth rate of 1.4%
(2017: 1.7%), the recoverable amount exceeded the total carrying value by £43.0m (2017: £130.0m). 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 two percentage points (2017: seven percentage points) or the long-term growth rate reduced by three percentage
points (2017: 10 percentage points).
For RISI, using the fair value less costs to disposal methodology, a post-tax discount rate of 9.9%, cash flows for the initial five-year
period growing between 3% and 24% projected into perpetuity using a long-term nominal growth rate of 1.4%, the recoverable amount
exceeded the total carrying value by £23.8m. Sensitivity analysis performed around the base case assumptions has indicated that for
RISI, the following changes in assumptions (in isolation), would cause the fair value less costs of disposal to fall below the carrying value:
• the discount rate increased by two percentage points
• operating profit growth rate decreasing to 9% for the initial five-year period
Impairment for Layer123 of £3.0m is the result of its disappointing financial performance post acquisition.
116
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 13 Property, plant and equipment
2018
Cost
At 1 October 2017
Additions
Disposals
Balance at acquisition of new company
Exchange differences
At 30 September 2018
Depreciation
At 1 October 2017
Charge for the year
Disposals
Exchange differences
At 30 September 2018
Net book value at 30 September 2018
2017
Cost
At 1 October 2016
Additions
Disposals
Balance at acquisition of new company
Balance at disposal of company
Exchange differences
Classified as held for sale
At 30 September 2017
Depreciation
At 1 October 2016
Charge for the year
Continuing operations
Discontinued operations
Disposals
Balance at disposal of company
Exchange differences
Classified as held for sale
At 30 September 2017
Net book value at 30 September 2017
Net book value at 30 September 2016
Leasehold
improvements
£000
Office
equipment
£000
14,995
801
(295)
–
289
12,177
1,177
(786)
4
278
Total
£000
27,172
1,978
(1,081)
4
567
15,790
12,850
28,640
2,558
1,512
(280)
69
3,859
11,931
7,379
1,844
(749)
195
8,669
4,181
Leasehold
improvements
£000
Office
equipment
£000
15,761
7,530
(7,883)
66
–
(263)
(216)
14,995
23,153
3,398
(6,258)
224
(86)
(394)
(7,860)
12,177
9,937
3,356
(1,029)
264
12,528
16,112
Total
£000
38,914
10,928
(14,141)
290
(86)
(657)
(8,076)
27,172
9,280
19,162
28,442
1,100
10
1,873
219
(7,883)
(6,240)
–
253
(202)
2,558
12,437
6,481
(84)
(197)
(7,354)
7,379
4,798
3,991
2,973
229
(14,123)
(84)
56
(7,556)
9,937
17,235
10,472
There is no material difference between the property, plant and equipment’s historical cost values as stated above and their fair
value equivalents.
117
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
14 Investments
At 1 October 2016
Additions
Impairment (note 5)
Exchange difference
Provision against investment losses
Share of losses after tax
At 30 September 2017
Disposals
Exchange difference
Provision against investment losses
Share of profits/(losses) after tax
At 30 September 2018
Investment in
associates
£000
Investment in
joint ventures
£000
Available-for-
sale investments
£000
29,810
552
–
(2,151)
–
(1,391)
26,820
(26,194)
(81)
–
170
715
215
1
–
(2)
285
(499)
–
–
–
13
(13)
–
Total
£000
35,860
553
(2,289)
(2,153)
285
(1,890)
30,366
(26,194)
(81)
13
157
5,835
–
(2,289)
–
–
–
3,546
–
–
–
–
3,546
4,261
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 the Group’s accounting policies in note 1.
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
157
(1,890)
2018
£000
2017
£000
Add back:
Share of tax on profits
Share of tax on acquired intangible amortisation and exceptional items
Share of acquired intangible amortisation
Share of exceptional items1
Adjusted share of results in associates and joint ventures
1 The share of exceptional items related to restructuring and earn-out costs in Dealogic.
333
(266)
761
125
953
1,110
988
(1,798)
4,790
1,203
5,183
3,293
The reconciliation of share of results in associates and joint ventures in the Income Statement has been provided since the Directors
consider it necessary in order to provide an indication of the adjusted share of results in associates and joint ventures. A detailed
reconciliation of the Group’s statutory results to the adjusted and underlying results is set out on pages 27 to 29. The share of profit/
(losses) after tax retained includes a finance expense of £0.3m (2017: £2.5m).
On 27 December 2017, the Group disposed of its minority equity stake of 15.5% in Diamond TopCo Limited (Dealogic) for $135.0m
(£100.1m). The disposal of the associate with a net book value of £26.2m, gave rise to a profit on disposal of £71.7m, after deducting
disposal costs, which was recognised as an exceptional item (note 5) in the Income Statement. The Group’s share of the profit of
Dealogic is £83k.
118
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 14 Investments continued
Information on investment in associates, investment in joint ventures and available-for-sale investments:
Investment in associates
Broadmedia Communications
Limited (BroadGroup)
Investment in joint ventures
Principal activity
Year
ended
Date of
acquisition
Type of
holding
Group
interest Registered Office
Events and publishing business
30 Sept Mar 2017 Ordinary
49.0% 8 Bouverie Street, London,
EC4Y 8AX, United Kingdom
Sanostro Institutional
AG (Sanostro)
Hedge fund manager
trading signals
Available-for-sale investments
31 Dec Dec 2014 Ordinary
50.0% Allmendstrasse 140,
8041 Zurich, Switzerland
Estimize, Inc (Estimize)
Financial estimates platform
31 Dec
July 2015 Ordinary
Zanbato, Inc (Zanbato)
Private capital placement
and workflow
31 Dec
Sept 2015 Ordinary
10.0% 43 West 24th Street, New York,
NY 10010, United States
9.9% 715 N Shoreline Boulevard,
Mountain View CA, 94043,
United States
The Group interests in the above investments remained unchanged since their respective dates of acquisition.
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
2018
£000
87
715
2017
£000
77
629
119
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
15 Acquisitions and disposals
Purchase of businesses
Site Seven Media Ltd (TowerXchange)
On 1 December 2017, the Group acquired 100% of the equity share capital of TowerXchange for £6.5m. TowerXchange is a fast-growing
information and events business which has become the leading source of information on the tower market, the infrastructure supporting
the growth of the mobile telecoms market. Acquiring TowerXchange is part of the Group’s telecoms strategy to facilitate industry
collaboration and trading in areas ranging from pricing to standards across the telecoms ecosystem. TowerXchange is included in the
Pricing, Data & Market Intelligence segment.
For the TowerXchange acquisition, an earn-out payment of £2.1m will be treated as compensation costs in accordance with IFRS 3 and
deferred consideration of £0.1m has been recognised (note 25).
The acquisition accounting is set out below and is provisional pending final determination of the fair value of the assets and
liabilities acquired:
Book
value
£000
Fair value
adjustments
£000
Provisional
fair value
£000
Net assets:
Intangible assets
Property, plant and equipment
Trade and other receivables
Trade and other payables
Deferred tax liability
Cash and cash equivalents
Net assets acquired (100%)
Goodwill
Total consideration
Consideration satisfied by:
Cash
Deferred consideration
Net cash outflow arising on acquisition:
Cash consideration
Less: cash and cash equivalent balances acquired
–
4
994
(1,320)
–
2,123
1,801
3,036
–
–
–
(516)
–
2,520
3,036
4
994
(1,320)
(516)
2,123
4,321
4,321
2,307
6,628
6,517
111
6,628
6,517
(2,123)
4,394
Intangible assets represent customer relationships of £2.1m and the brand of £0.9m, for which amortisation of £0.1m has been charged
for the year. The customer relationships will be amortised over their expected useful economic lives of 10 years. The brand will be
amortised over its expected useful life of 20 years.
Goodwill arises from the anticipated profitability and future operating synergies from integrating the acquired operations within
the Group.
The fair value of the assets acquired includes net trade receivables of £0.4m, all of which are contracted and are expected
to be collectable.
TowerXchange contributed £1.8m to the Group’s revenue, £0.4m to the Group’s operating profit and £0.3m to the Group’s profit after
tax for the period between the date of acquisition and 30 September 2018. If the acquisition had been completed on the first day of the
financial year, TowerXchange would have contributed £2.6m to the Group’s revenue and £0.9m to the Group’s operating profit.
120
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 15 Acquisitions and disposals continued
Extel
On 8 March 2018, the Group acquired 100% of the business of Extel for cash consideration of £2.7m and deferred consideration of £0.1m.
Extel runs the annual independent survey of quality across the European equities investment community. The acquisition of Extel fits within
the Group’s strategy of investing in its main themes, specifically asset management.
The acquisition accounting is set out below and is provisional pending final determination of the fair value of the assets and
liabilities acquired:
Net assets:
Intangible assets
Deferred tax liability
Net assets acquired (100%)
Goodwill
Total consideration
Consideration satisfied by:
Cash
Deferred consideration
Net cash outflow arising on acquisition:
Cash consideration
Fair value
adjustments
£000
Provisional
fair value
£000
1,120
(190)
930
1,120
(190)
930
930
1,870
2,800
2,702
98
2,800
2,702
Intangible assets represent the brand of £1.1m. The brand will be amortised over its expected useful life of 20 years. Goodwill arises from
the anticipated profitability and future operating synergies from integrating the acquired operations within the Group.
Extel contributed £0.9m to the Group’s revenue, £0.2m to the Group’s operating profit and £0.2m to the Group’s profit after tax for the
period between the date of acquisition and 30 September 2018. If the acquisition had been completed on the first day of the financial
year, Extel would have contributed £1.0m to the Group’s revenue and £0.1m to the Group’s operating profit.
121
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
15 Acquisitions and disposals continued
Random Lengths Publications, Inc (Random Lengths)
On 2 August 2018, the Group acquired 100% of the equity share capital of Random Lengths, a leading price reporting agency
for the global wood products industry for $16.8m (£12.8m) and paid a working capital adjustment on 7 November 2018 of $0.3m
(£0.2m). The acquisition strengthens the Group’s position in price reporting for the global forest products industry and fits within the
Group’s strategy of investing in its main themes, specifically price discovery. Random Lengths is included in the Pricing, Data & Market
Intelligence segment.
For the Random Lengths acquisition, an earn-out payment of $2.0m (£1.5m) will be treated as compensation costs in accordance with
IFRS 3.
The acquisition accounting is set out below and is provisional pending final determination of the fair value of the assets and
liabilities acquired:
Book
value
£000
Fair value
adjustments
£000
Provisional
fair value
£000
Net assets:
Intangible assets
Trade and other receivables
Trade and other payables
Cash and cash equivalents
Net assets acquired (100%)
Goodwill
Total consideration
Consideration satisfied by:
Cash
Working capital adjustments
Net cash outflow arising on acquisition:
Cash consideration
Less: cash and cash equivalent balances acquired
–
713
(1,489)
682
(94)
7,102
–
–
–
7,102
7,102
713
(1,489)
682
7,008
7,008
6,028
13,036
12,786
250
13,036
12,786
(682)
12,104
Intangible assets represent customer relationships of $5.0m (£3.8m) and the brand of $4.3m (£3.3m), for which amortisation of $0.1m
(£0.1m) has been charged for the year. The customer relationships will be amortised over their expected useful economic lives of 15 years.
The brand will be amortised over its expected useful life of 15 years.
Goodwill arises from the anticipated profitability and future operating synergies from integrating the acquired operations within the
Group. All of the goodwill recognised is expected to be deductible for income tax purposes.
The fair value of the assets acquired includes net trade receivables of $0.3m (£0.3m), all of which are contracted and are expected to
be collectable.
Random Lengths contributed $0.6m (£0.4m) to the Group’s revenue, $0.2m (£0.2m) to the Group’s operating profit and $0.2m (£0.2m) to
the Group’s profit after tax for the period between the date of acquisition and 30 September 2018. If the acquisition had been completed
on the first day of the financial year, Random Lengths would have contributed $3.5m (£2.7m) to the Group’s revenue and $0.8m (£0.6m)
to the Group’s operating profit (excluding exceptional costs).
Increase in equity holdings
Ned Davis Research, Inc. (NDR)
The non-controlling interest of NDR exercised their put options over the remaining 15% stake in NDR. The Group paid a cash
consideration of £7.8m on 22 December 2017 and a further £1.0m on 12 January 2018 (note 25). The Group’s equity shareholding in NDR
increased to 100%.
Centre for Investor Education (UK) Limited (CIE)
On 9 January 2018, there was a favourable settlement of the legal dispute with the previous owners of CIE and the Group acquired the
remaining 25% equity interest for no consideration. At 30 September 2017, the Group held no liability for the acquisition commitment
relating to the minority 25% stake in CIE and consolidated 100% of CIE with no non-controlling interest recorded in relation to the
minority stake.
Layer123 Events & Training Limited (Layer123)
On 3 May 2018, the Group acquired the remaining 39% of Layer123 for £1.3m in cash and deferred compensation costs of £0.7m.
The Group acquired 61% of the share capital of Layer123 in April 2017 for £6.3m and the remaining 39% was due to be acquired in three
equal instalments based on the profits for the financial years 2018, 2019 and 2020.
122
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 15 Acquisitions and disposals continued
Sale of businesses
Adhesion Group S.A. and World Bulk Wine Exhibition, S.L. (Adhesion and World Bulk Wine)
On 30 October 2017, the Group sold its equity share capital of Adhesion (100%) and World Bulk Wine (74%), part of the Commodity
Events segment, for €13.6m (£12.0m). The disposal of Adhesion and World Bulk Wine gave rise to a profit on disposal of €12.2m (£10.7m),
after deducting disposal costs incurred, which was classified as an exceptional item (note 5) in the Income Statement. In addition to the
profit on disposal, the Group released the acquisition commitment liability of £0.3m relating to World Bulk Wine to equity (note 25).
Institutional Investor Journals (II Journals)
On 10 January 2018, the Group sold the trading assets and liabilities of II Journals, part of the Asset Management segment, for a
consideration of $3.8m (£2.8m). Deferred consideration receivable of $0.8m (£0.6m) was recognised (note 25). The transaction gave
rise to a profit on disposal of $5.9m (£4.4m) after the release of deferred revenue of $2.3m (£1.7m) and the deduction of disposal costs
incurred, which was classified as an exceptional item (note 5) in the Income Statement.
Global Markets Intelligence Division (GMID)
On 30 April 2018, the Group completed the disposal of GMID, consisting of CEIC and EMIS, to a consortium led by the private equity
arm of CITIC Capital Holdings Limited and Caixin Global, for an equity value of $180.5m (£128.8m). The disposal gave rise to a profit on
disposal of $127.9m (£91.3m) after the deduction of disposal costs incurred, which was classified as an exceptional item (note 5) in the
Income Statement.
The Statement of Financial Position at 30 September 2017 classified GMID, Adhesion, World Bulk Wine and II Journals as held for sale.
The net assets of the businesses at the date of disposal were as follows:
Adhesion
£000
World Bulk Wine
£000
II Journals
£000
GMID
£000
Total
£000
Net assets/(liabilities):
Goodwill
Intangible assets
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Deferred income
Net assets/(liabilities) disposed
De-recognition of non-controlling interest
Directly attributable costs
Recycled cumulative translation differences
Profit on disposal (note 5)
Total consideration
Consideration satisfied by:
Cash
Deferred consideration
Working capital adjustments
Net cash inflow arising on disposal:
Cash consideration (net of directly attributable costs paid and
working capital adjustments)
Cash and cash equivalent balances disposed
–
–
30
2,473
1,095
(1,626)
(1,667)
305
305
–
244
(500)
9,773
9,822
(170)
66
(30)
954
2,193
9,822
2,193
–
–
–
–
9,822
2,193
9,578
(1,095)
8,483
2,127
(540)
1,587
463
730
6
971
540
(157)
(1,180)
1,373
–
–
–
–
–
–
(1,687)
(1,687)
25,227
2,447
585
8,771
10,152
(8,739)
(13,460)
24,983
25,690
3,177
621
12,215
11,787
(10,522)
(17,994)
24,974
1,373
(1,687)
24,983
24,974
–
129
–
4,374
2,816
2,223
593
–
2,816
2,094
–
2,094
–
6,034
6,547
91,263
128,827
(170)
6,473
6,017
106,364
143,658
128,148
142,386
–
679
593
679
128,827
143,658
122,793
(10,152)
112,641
136,592
(11,787)
124,805
123
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
16 Trade and other receivables
Amounts falling due within one year
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables - net of provision
Other debtors
Prepayments
Accrued income
2018
£000
2017
£000
53,534
(3,153)
50,381
4,847
10,395
2,662
68,285
50,863
(3,688)
47,175
5,977
9,610
1,721
64,483
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.
At 30 September 2018, trade receivables of £24.7m (2017: £25.2m) were not yet due.
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
2018
£000
11,326
3,901
3,280
4,946
23,453
2017
£000
10,093
2,956
1,846
1,665
16,560
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 77 days (2017: 66 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
2018
£000
942
316
691
3,439
5,388
2017
£000
1,557
1,929
1,472
4,107
9,065
The amount of the provision for impaired trade receivables was £3.2m (2017: £3.7m). It was assessed that a portion of the receivables is
expected to be recovered.
124
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 16 Trade and other receivables continued
Movements on the Group provision for impairment of trade receivables are as follows:
At 1 October
Impairment losses recognised
Impairment losses reversed
Amounts written off as uncollectible
Exchange differences
Classified as held for sale
At 30 September
2018
£000
(3,688)
(2,111)
1,785
804
(18)
75
2017
£000
(5,270)
(5,074)
3,941
1,220
62
1,433
(3,153)
(3,688)
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.
17 Trade and other payables
Trade creditors
Other creditors
The Directors consider the carrying amounts of trade and other payables approximate their fair values.
18 Deferred income
Deferred subscription income
Other deferred income
Within one year
In more than one year
2018
£000
2,687
24,597
27,284
2018
£000
97,589
22,815
120,404
117,088
3,316
120,404
2017
£000
3,073
24,997
28,070
2017
£000
92,605
24,373
116,978
113,487
3,491
116,978
125
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
19 Financial instruments and risk management
Derivative financial instruments
The derivative financial assets/(liabilities) at 30 September comprised:
Current
Forward foreign exchange contracts – cash flow hedge
Forward foreign exchange contracts – fair value through profit and loss
Non-current
Forward foreign exchange contracts – cash flow hedge
Interest rate swaps – cash flow hedge
2018
2017
Assets
£000
Liabilities
£000
Assets
£000
Liabilities
£000
131
–
131
55
–
55
186
(2,424)
–
(2,424)
(166)
–
(166)
2,448
238
2,686
381
281
662
(2,590)
3,348
(1,001)
–
(1,001)
(41)
(189)
(230)
(1,231)
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, 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 98 and 99 of the accounting policies. The Group’s Tax and Treasury Committee 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 (page 129).
Forward contracts are used to manage the Group’s exposure to fluctuations in exchange rate movements on foreign currency
transactions. Further details are set out in the foreign exchange rate risk section (pages 127 and 128).
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 2017.
The capital structure of the Group comprises equity attributable to equity holders, comprising share capital, reserves and retained
earnings as disclosed in the Statement of Changes in Equity.
Net (cash)/debt to adjusted EBITDA ratio
The Group’s Tax and Treasury Committee reviews the Group’s capital structure at least twice a year. Committed bank facilities available
to the Group until December 2021 contain covenants based on a maximum 3.0 times net debt to adjusted EBITDA and a minimum
interest cover ratio of 3.0 times. The amounts and foreign exchange rates used in the covenant calculations are subject to adjustments as
defined under the terms of the arrangement. Management regularly monitors the covenants and prepares detailed cash flow forecasts
to ensure that sufficient headroom is available and that the covenants are not at risk of a breach. Additionally, the Group arranges its
currency borrowings in order that they are in proportion to the ratio of earnings in that particular currency to total Group earnings.
The bank covenant ratio uses an average exchange rate in the calculation of net debt. The resultant net (cash)/debt to adjusted
EBITDA ratio is (0.69) times (2017: 1.24 times). Using a closing rate basis for the valuation of net (cash)/debt, the ratio was (0.71) times
(2017: 1.23 times).
126
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 19 Financial instruments and risk management continued
Categories of financial instruments
The Group’s financial assets and liabilities at 30 September are as follows:
Financial assets
Derivative instruments in designated hedge accounting relationships
Derivative instruments recognised at fair value through profit and loss
Available-for-sale investments (note 14)
Convertible loan note – held at cost
Deferred consideration (note 25) – loans and receivables
Loans and receivables (including cash at bank and short-term deposits)
Classified as held for sale loans and receivables (including cash at bank and short-term deposits)
Financial liabilities
Derivative instruments in designated hedge accounting relationships
Deferred consideration (note 25) – borrowings and payables
Deferred consideration (note 25) – fair value through profit and loss
Acquisition commitments (note 25) – borrowings and payables
Borrowings and payables (including bank overdrafts)
Classified as held for sale borrowings and payables (including bank overdrafts)
2018
£000
186
–
3,546
2,677
1,120
136,163
936
144,628
(2,590)
(98)
(236)
(272)
(91,427)
(302)
2017
£000
3,110
238
3,546
2,503
1,989
59,299
18,987
89,672
(1,231)
(350)
–
(13,125)
(264,782)
(10,002)
(94,925)
(289,490)
Derivative instruments are classified as level 2 in the fair value hierarchy on page 132 and deferred consideration held at fair value
through the profit and loss are classified as level 3. Available-for-sale investments are held at cost less any identified impairments as
they do not have a quoted market price in an active market and the fair value cannot be reliably measured. No other financial assets
or liabilities are held at fair value. The Directors consider that the carrying value amounts of financial assets and liabilities are equal to
their fair value. The Group has derivative assets of £0.2m (2017: £3.3m) and derivative liabilities of £2.6m (2017: £1.2m) with a number
of banks. These derivatives do not meet the offsetting criteria of IAS 32, but the Group would have the right to setoff same currency cash
flows with the same counterparties of which 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 convertible loan note is held at cost as it contains an embedded derivative of non-quoted equity for which the Group is unable to
accurately determine a fair value.
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. Cash and cash equivalents include no overdrafts (2017: £0.2m) offset under the
cash pooling arrangements. This agreement meets the offsetting criteria of IAS 32.
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 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 30 September 2018. 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 the US dollar. The Group generates approximately two-thirds of its revenues in US
dollars, including approximately 40% of the revenues in its UK-based businesses, and approximately two-thirds 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.
127
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
19 Financial instruments and risk management continued
ii) Foreign exchange rate risk continued
The Group does not hedge the translation of the results of foreign subsidiaries. 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.
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
2018
£000
Liabilities
2017
£000
2018
£000
2017
£000
130,459
62,742
(167,253)
(319,446)
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 underestimates 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. A series of forward
contracts are put in place up to 18 months forward to hedge the operation’s Canadian dollar 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 ($ net assets in UK companies)
Change in other comprehensive income (derivative financial instruments)
Change in other comprehensive income (loans to/from foreign operations)
2018
£000
(911)
7,167
12,122
2017
£000
(838)
6,545
17,751
The increase in the loss from the sensitivity analysis is due to an increase in the working capital assets. The increase in other
comprehensive income from £6.5m to £7.2m from the sensitivity analysis is due to the increase in the notional value of the derivative
financial instruments.
The change in other comprehensive income from a 10% change in sterling against US dollars in relation to the translation of loans to/
from 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 £12.1m (2017: £17.8m). 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.
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.
128
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 19 Financial instruments and risk management continued
ii) Foreign exchange rate risk 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% for the subsequent six months. In addition, at a Group
level a series of US dollar forward contracts are put in place up to 18 months forward to hedge the subsidiary’s Canadian cost base.
Fair value through profit and loss
Sell USD buy GBP
Less than a year
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
Average exchange rate
Foreign currency
Contract value
Fair value
2018
2017
2018
$000
2017
$000
2018
£000
2017
£000
2018
£000
2017
£000
–
1.290
–
8,230
–
6,380
–
238
1.372
1.346
1.302
1.329
69,400
18,300
64,450
17,100
50,587
13,595
49,502
12,868
(2,162)
(126)
1,659
260
1.271
1.292
1.309
1.270
11,148
3,863
11,221
3,700
8,427
2,969
8,759
2,804
(131)
16
410
53
€000
€000
£000
£000
£000
£000
1.115
1.104
1.165
1.114
20,000
5,230
22,400
6,550
17,930
4,738
19,230
5,880
–
(1)
(622)
27
(2,404)
2,025
† Rate used for conversion from CAD to GBP is 1.6809 (2017: 1.6767).
At 30 September 2018, the aggregate amount of unrealised losses under forward foreign exchange contracts deferred in the fair value
reserve relating to future revenue transactions is £2.4m (2017: £1.8m gain). 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. At 30 September 2018, there were
no ineffective cash flow hedges in place (2017: £nil).
iii) Interest rate risk
It is the Group’s policy to hedge approximately 80% of any term loan interest exposure, converting its floating rate debt into fixed debt
by means of interest rate swaps. The predictability of interest costs is deemed to be more important than the possible opportunity cost
foregone of achieving lower interest rates.
In May 2018, the Group repaid term loans of $100m and £40m and simultaneously terminated swaps converting $80m and £32m of
term debt from floating to fixed rates recognising a gain of £2.1m recycled from fair value reserves. At 30 September 2017, the aggregate
amount of unrealised gains on interest rate swaps deferred in the fair value reserve relating to future interest cash flows was £0.1m.
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk section on pages 130
and 131.
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 instruments, the analysis is prepared assuming the amount 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.
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 30 September 2018 would decrease or increase by £0.8m (2017: £0.8m). This is mainly attributable to the Group’s exposure
to interest rates on its variable rate cash deposits. For the year ended 30 September 2018, there is no impact on the fair value equity
reserves as a result of the changes in fair value of interest rate swaps, as the interest rate swaps were terminated (2017: decrease or
increase by £3.4m).
129
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
19 Financial instruments and risk management continued
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. 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 AAA rated money market fund investments, licensed commercial banks and investment banks with strong long-term credit
ratings. Treasury policies in place do not allow concentrations of risk with individual counterparties and do not allow significant treasury
exposures with counterparties which are rated below investment grade. Included in cash and cash equivalents of £78.3m (2017: £4.4m)
is £50.2m (2017: nil) directly deposited in AAA rated money market fund investments.
The Group also has credit risk with respect to trade and other receivables 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
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due. To manage this risk the
Group has readily accessible funding arrangements in place and seeks to optimise group liquidity through cash pooling arrangements.
The Group’s principal source of borrowings are provided through committed bank facilities available to the Group until December
2021. These syndicated facilities include a £240m (2017: £130m) multi-currency revolving credit facility which was undrawn at
30 September 2018 (2017: drawn down by £55.2m).
The Group’s strategy is to use excess operating cash to pay down its drawings under the revolving credit facility and where undrawn
invest in short-term bank deposits and money market funds. The Group generally has an annual cash conversion rate (the percentage by
which cash generated from operations covers adjusted operating profit before acquired intangible amortisation and exceptional items)
of 100% or more due to much of its subscription, sponsorship and delegate revenue being paid in advance. The Group’s underlying
operating cash conversion rate based on adjusted operating profit was 102%.
The Group’s forecasts and projections, looking out to September 2022 and taking account of reasonably possible changes in
trading performance, show that the Group should be able to operate within the level and covenants of its current and available
borrowing facilities.
130
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 19 Financial instruments and risk management continued
v) Liquidity risk continued
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
30 September 2018. The contractual maturity is based on the earliest date on which the Group may be required to settle.
2018
Deferred consideration
Acquisition commitments
Non-interest bearing liabilities (trade and other payables, and accruals)
2017
Variable rate borrowings
Deferred consideration
Acquisition commitments
Non-interest bearing liabilities (trade and other payables, and accruals)
Weighted
average
effective
interest rate
%
–
–
–
Weighted
average
effective
interest rate
%
2.28
–
9.50
–
Less than
1 year
£000
209
97
91,427
91,733
Less than
1 year
£000
5,125
350
9,904
95,889
111,268
1-3 years
£000
3-5 years
£000
125
175
–
300
–
–
–
–
Total
£000
334
272
91,427
92,033
1-3 years
£000
3-5 years
£000
Total
£000
11,915
177,191
194,231
–
3,221
–
–
–
–
350
13,125
95,889
15,136
177,191
303,595
The following table details the Group’s remaining contractual maturity for its non-derivative financial assets, mainly trade and other
receivables and short-term deposits. 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.
2018
Variable interest rate instruments (cash at bank and short-term deposits)
Deferred consideration
Non-interest bearing assets (trade and other receivables excluding prepayments)
2017
Variable interest rate instruments (cash at bank and short-term deposits)
(including cash from assets held for sale)
Deferred consideration
Non-interest bearing assets (trade and other receivables excluding prepayments)
Weighted
average
effective
interest rate
%
Less than
1 year
£000
1-3 years
£000
Total
£000
1.11
78,273
–
78,273
–
–
650
470
1,120
57,890
136,813
–
57,890
470
137,283
Weighted
average
effective
interest rate
%
0.59
5.50
–
Less than
1 year
£000
14,272
419
45,027
59,718
1-3 years
£000
Total
£000
–
1,570
–
1,570
14,272
1,989
45,027
61,288
131
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
19 Financial instruments and risk management continued
v) Liquidity risk 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 net cash inflows and outflows on those derivatives that settle on a net basis and 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 represented by the yield curves existing at the reporting date.
2018
Gross settled
Foreign exchange forward contracts inflows
Foreign exchange forward contracts outflows
2017
Net settled
Interest rate swaps
Gross settled
Foreign exchange forward contracts inflows
Foreign exchange forward contracts outflows
Less than
3 months
£000
3 months
to 1 year
£000
1-3 years
£000
3-5 years
£000
Total
£000
19,377
57,566
21,302
(19,837)
(59,807)
(21,671)
(460)
(2,241)
(369)
–
–
–
98,245
(101,315)
(3,070)
Less than
3 months
£000
3 months
to 1 year
£000
1-3 years
£000
3-5 years
£000
Total
£000
(139)
(122)
250
447
436
26,458
57,413
21,551
(26,505)
(55,862)
(21,299)
–
–
105,422
(103,666)
(186)
1,429
502
447
2,192
Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined in accordance with IFRS 13 ‘Fair Value Measurement’ as follows:
Level 1
• The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets is
determined with reference to quoted market prices.
Level 2
• The fair value of other financial assets and financial liabilities (excluding derivative instruments) is determined in accordance with
generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions
and dealer quotes for similar instruments.
• Foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest
rates matching maturities of the contracts.
Level 3
• If one or more significant inputs are not based on observable market data, the instrument is included in level 3.
At 30 September 2018 and the prior year, all the resulting fair value estimates have been included in level 2 other than the Group’s
deferred consideration payment which is classified as level 3.
132
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 19 Financial instruments and risk management continued
Other financial instruments not recorded at fair value
The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the Financial
Statements approximate their fair values. Such financial assets and financial liabilities include cash and cash equivalents, receivables,
payables and loans.
Movement in assets/(liabilities) arising from financing activities:
Analysis of changes in net cash/(debt)
Cash at bank and short-term deposits
Classified as held for sale
Total cash and cash equivalents
Borrowings
Net (debt)/cash
2017
£000
Cash flow
£000
Disposal of
subsidiaries
£000
Interest
and other
non-cash
movements
£000
Foreign
exchange
£000
2018
£000
4,426
9,846
14,272
66,737
–
66,737
(168,893)
167,740
–
(9,846)
(9,846)
–
(154,621)
234,477
(9,846)
984
–
984
(955)
29
6,126
78,273
–
6,126
2,108
8,234
–
78,273
–
78,273
Analysis of changes in liabilities from financing activities
Borrowings
Hedge of borrowings:
(168,893)
167,740
Derivative financial instruments – interest rate swaps
92
(2,091)
Other financing items – prepaid bank fees
Interest payable
Acquisition commitments
Other financing items
1,219
(1,619)
(13,125)
(13,433)
30
3,756
10,130
11,825
–
–
–
–
317
317
(955)
2,108
–
1,999
(401)
(3,525)
2,378
451
–
–
30
28
58
–
848
(1,358)
(272)
(782)
Total (liabilities)/assets from financing activities
(182,326)
179,565
317
(504)
2,166
(782)
133
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018
Notes to the Consolidated Financial Statements
continued
20 Borrowings
Borrowings – non-current liabilities
Undrawn committed facilities
2018
£000
–
240,000
2017
£000
168,893
74,768
Committed borrowing facilities
On 15 May 2018, the Group repaid its term loans of $100m and £40m, transferring the funding commitment into the existing £130m multi-
currency revolving credit facility, increasing the facility to £240m, which was entirely undrawn at 30 September 2018 (2017: £55.2m).
The committed facility is available until December 2021. There is a further accordion facility of £130m should the Group wish to request
it. Drawings under the revolving credit facility bear interest charged at LIBOR plus a margin, the applicable margin being based on
the Group’s ratio of adjusted net debt to EBITDA. The facility’s covenant requires the Group’s net debt to be no more than three times
adjusted EBITDA and requires minimum levels of interest cover of three times on a rolling 12-month basis. The amounts and foreign
exchange rates used in the covenant calculations are subject to adjustments as defined under the terms of the arrangement. On this
basis, at 30 September 2018, the Group’s adjusted net cash to EBITDA was (0.69) times. 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.
21 Provisions
At 1 October 2017
Provision in the year
Used in the year
Imputed interest
Exchange differences
At 30 September 2018
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
£000
274
970
(448)
–
49
845
Other
provisions
£000
2,663
555
(11)
61
7
3,275
2018
£000
248
1,301
2,571
4,120
Total
£000
2,937
1,525
(459)
61
56
4,120
2017
£000
337
92
2,508
2,937
Onerous lease provision
The onerous lease provision relates to an office in Hong Kong that was vacated following the disposal of GMID (note 15). The lease
expires in August 2020.
Other provisions
The provision consists of social security costs arising on share option liabilities and dilapidations on leasehold properties. A dilapidation
provision of £2.6m (2017: £2.4m) is held in respect of the Group’s main London offices. The leases, which expire in 2029, do not contain
any break clauses. As such, it is unlikely that the provisions will be utilised before the expiry date of the leases.
134
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 22 Deferred taxation
The net deferred tax liability at 30 September 2018 comprised:
Deferred tax asset
Deferred tax liability
At 30 September 2017
Credit/(charge) to Income Statement
Credit/(charge) to other comprehensive
income
(Charge)/credit to equity
Acquisitions and disposals
Exchange differences
At 30 September 2018
Deferred tax asset
Deferred tax liability
Capitalised
goodwill and
intangibles
£000
(6,122)
(41,629)
(47,751)
11,210
–
(924)
(352)
(870)
(38,687)
–
(38,687)
Tax losses
£000
3,388
2,248
5,636
–
5,515
5,515
(2,125)
(5,515)
–
–
–
18
3,529
1,294
2,235
–
–
–
–
–
–
–
Deferred
interest
£000
Financial
instruments
£000
Pension
deficit
£000
Accelerated
capital
allowances
£000
(241)
(11)
(252)
–
1,691
–
1,691
(89)
630
(1,104)
–
–
–
378
–
378
–
–
–
498
–
498
Other
£000
2,177
9,247
11,424
656
1,199
1,855
(68)
(6,272)
–
–
–
–
–
128
–
24
Total
£000
1,549
(23,431)
(21,882)
(2,859)
(474)
(796)
(352)
(828)
1,787
5,304
(27,191)
–
5
1,299
1,787
5,299
(28,490)
Other deferred tax assets include share based payments and general provisions.
At the balance sheet date the Group has unused tax losses available for offset against future profits. At 30 September, the deferred tax
asset recognised in relation to these losses is analysed as follows:
UK
US
Europe
2018
£000
1,215
1,020
1,294
3,529
2017
£000
1,899
2,248
1,489
5,636
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. The UK tax losses are expected to reverse in the short-term. The US losses can be carried
forward for a period of 20 years from the date they arose and have expiry dates between 2018 and 2038. There is no expiry date on the
other losses.
The increase in the net deferred tax liability relates to utilisation of tax losses and other tax attributes, partially offset by revaluation of
deferred tax assets and liabilities following the reduction in the US federal tax rate from 35% to 21%.
No deferred tax liability is recognised on temporary differences of £50.0m (2017: £300.0m) 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 30 September 2018 represent 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.
23 Called up share capital
Allotted, called up and fully paid
109,180,729 ordinary shares of 0.25p each (2017: 109,101,608 ordinary shares of 0.25p each)
2018
£000
273
2017
£000
273
During the year, 79,121 ordinary shares of 0.25p each (2017: 35,425 ordinary shares) with an aggregate nominal value of £198
(2017: £88) were issued following the exercise of share options granted under the Company’s share option schemes for a cash
consideration of £642,612 (2017: £311,658).
135
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
24 Share-based payments
The options set out below are outstanding at 30 September and are options to subscribe for new ordinary shares of 0.25p each in the
Company. All of the options outstanding are equity settled and the total charge recognised in the year was £1.5m (2017: £1.0m). There are
no share options exercisable at 30 September 2018 (2017: nil). Further details of the Group’s share plans are provided in the Directors’
Remuneration Report.
2018
Incentive scheme
SAYE/Sharesave
Buy-out award
PSP
Deferred bonus - equity settled
CAP
Total
2017
Incentive scheme
SAYE/Sharesave
Buy-out award
PSP
Deferred bonus - equity settled
CAP
CSOP
Total
Income
statement
charge in year
£000
Options
outstanding at
30 September
2017
Number
Granted in
year
Number
Exercised
during year
Number
Lapsed/
forfeited
during year
Number
Options
outstanding at
30 September
2018
Number
124
450
913
–
–
261,892
132,607
484,497
19,175
8,304
96,889
(79,121)
(34,989)
–
(44,202)
282,492
4,339
–
–
–
–
–
(90,129)
–
(3,180)
244,671
88,405
676,860
23,514
5,124
1,487
906,475
383,720
(123,323)
(128,298)
1,038,574
Income
statement
charge in year
£000
Options
outstanding at
30 September
2016
Number
Granted in
year
Number
Exercised
during year
Number
Lapsed/
forfeited
during year
Number
Options
outstanding at
30 September
2017
Number
139
450
537
–
241,430
132,607
159,269
–
(141)
2,112,889
–
517,031
107,181
(35,425)
(51,294)
–
325,228
19,175
–
–
–
–
–
–
–
–
–
–
(2,104,585)
(517,031)
261,892
132,607
484,497
19,175
8,304
–
985
3,163,226
451,584
(35,425)
(2,672,910)
906,475
The fair value of options awarded for the SAYE/Sharesave scheme are determined using the Black-Scholes option pricing model.
The remaining incentive plans are for nil cost options, where the fair value is determined by the share price applicable when the options
are granted. The fair value of options granted during the year was £3.6m (2017: £3.7m).
The weighted average exercise price of options exercised during the year was £5.21 (2017: £8.80).
The options outstanding at 30 September 2018 had a weighted average remaining contractual life of 6.78 years (2017: 6.70 years).
Save as You Earn (SAYE)/Sharesave options
The Group operates a SAYE/Sharesave scheme in which all employees, including Directors, employed in the UK are eligible to
participate. Participants save a fixed monthly amount of up 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.
The SAYE/Sharesave 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.
Buy-out award
A one-off award was made to A Rashbass on 1 October 2015.
Performance Share Plan (PSP)
Under the PSP schemes, participants are awarded nil-cost options to obtain ordinary shares in the Company. These options have a
maximum life of 10 years and would not normally vest until the respective three or five years after the date of the award, provided that the
performance conditions have been met.
The share price used to determine the number of shares awarded under the PSP grants is the average of the middle market quotations
of an ordinary share as derived from the Daily Official List for the five dealing days preceding the date of grant.
Deferred bonus – equity settled
Any bonus earned in excess of 100% of salary for A Rashbass is awarded as a deferred award.
136
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 24 Share-based payments continued
Capital Appreciation Plan (CAP) and Company Share Option Plan (CSOP)
The CAP 2010 executive share option scheme was approved by shareholders on 21 January 2010. The remaining balance is subject to
an additional performance condition, applicable for the vesting of the second tranche of awards, which requires the profits of each
business in the subsequent vesting period to be at least 75% of that achieved in the year the first tranche of awards became exercisable.
The options lapse to the extent unexercised by 30 September 2020. The remaining CAP 2010 share options were unlikely to vest and the
charge was released in 2017.
The CAP 2014 and CSOP 2014 was approved by shareholders on 30 January 2014 as a replacement for CAP 2010. The minimum
performance target under CAP 2014 and CSOP 2014 was not achieved and the options lapsed in 2017.
25 Acquisition commitments and deferred consideration
The Group is party to consideration arrangements in the form of acquisition commitments, acquisition deferred consideration payments
and deferred consideration receipts on disposals. Acquisition commitments comprise put options held by minority shareholders of
acquired businesses which are held at amortised cost. Deferred consideration payments comprise consideration contingent on the future
performance of acquired businesses held at fair value and deferred consideration payable at a set amount in the future. These liabilities
are recognised at the discounted present value and re-measured each period. The discount is unwound as a notional interest charge
and the re-measurement of these liabilities is recognised in the Income Statement.
At 1 October
Additions from acquisitions during the year (note 15)
Additions from disposals during the year
De-recognition on disposal of business
Payment/(receipt) during the year
Exercise of commitments
Net movements in finance income and expense during
the year (note 7)
Exchange differences to reserves
At 30 September
Within one year
In more than one year
Acquisition
commitment
Deferred consideration
payments
Deferred consideration
receipts
2018
£000
(13,125)
–
–
317
–
2017
£000
(11,771)
(4,997)
–
–
–
10,130
540
2,378
28
(272)
(97)
(175)
(272)
2,970
133
(13,125)
(9,904)
(3,221)
(13,125)
2018
£000
(350)
(209)
–
–
1,470
–
(1,245)
–
(334)
(209)
(125)
(334)
2017
£000
(480)
(700)
–
–
833
–
(3)
–
(350)
(350)
–
(350)
2018
£000
1,989
–
593
–
(1,607)
–
123
22
1,120
650
470
1,120
2017
£000
526
–
2,679
–
(1,386)
–
180
(10)
1,989
419
1,570
1,989
The non-controlling interest of NDR exercised their put options over the remaining 15% stake in NDR for a total consideration of £8.8m
(note 15). The Group’s equity shareholding in NDR increased to 100%.
On 3 May 2018, the Group acquired the remaining 39% of Layer123 for £1.3m and deferred compensation costs of £0.7m. The Group
acquired 61% of the share capital of Layer123 in April 2017 for £6.3m and the remaining 39% was due to be acquired in three equal
instalments based on the profits for the financial years 2018, 2019 and 2020.
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):
Re-measurement during the year
Imputed interest
Net movements in finance income and expense during
the year
Acquisition
commitment
Deferred consideration
payments
Deferred consideration
receipts
2018
£000
2,766
(388)
2017
£000
4,136
(1,166)
2018
£000
(1,245)
–
2,378
2,970
(1,245)
2017
£000
(3)
–
(3)
2018
£000
82
41
123
2017
£000
79
101
180
137
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
26 Operating lease commitments
At 30 September, the Group had committed to make the following payments in respect of operating leases on land and buildings:
Within one year
Between one and five years
After five years
Continuing operations
Discontinued operations
Total
2018
£000
9,432
29,891
44,879
84,202
–
84,202
2017
£000
8,161
28,500
45,496
82,157
2,169
84,326
The Group’s operating leases do not include any significant leasing terms or conditions.
At 30 September, the Group had contracted with tenants to receive the following payments in respect of operating leases on land
and buildings:
Within one year
Between one and five years
After five years
2018
£000
441
1,583
–
2,024
2017
£000
989
1,638
304
2,931
138
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018
27 Retirement benefit schemes
The Group operates a number of pension schemes under which contributions are paid by the employer and employees. The total net
pension costs from continuing operations of the Group for the year ended 30 September 2018 were £3.3m (2017: £3.1m).
Defined contribution schemes
The Group operates the following defined contribution schemes: Euromoney PensionSaver and the Metal Bulletin Group Personal
Pension Plan in the UK and a 401(k) savings and investment plan in the US.
In compliance with the Pension Act 2008, the Group operated a defined contribution plan, DMGT PensionSaver, up to 30 June 2017 and
thereafter the Euromoney PensionSaver, into which relevant employees are automatically enrolled.
The pension charge in respect of defined contribution schemes for the year ended 30 September comprised:
Euromoney and DMGT PensionSaver
Metal Bulletin Group Personal Pension Plan
Private schemes
2018
£000
2,111
17
1,061
3,189
2017
£000
2,048
14
966
3,028
Euromoney PensionSaver
The Euromoney PensionSaver is the principal pension arrangement offered to employees of the Group. Employees contribute at an
initial default rate of 3% 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 Group’s finances. The investment and administration is undertaken by Fidelity Pension Management.
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 Group’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 $52,000 a year) with the company matching up
to 50% of the employee contributions, up to 6% of salary.
Defined benefit schemes
The Group operates the Metal Bulletin plc Pension Scheme (MBPS) and participates in the Harmsworth Pension Scheme (HPS), which is
a scheme operated by Daily Mail and General Trust (DMGT), both of which are now closed to new entrants. In 2016, due to a change in
DMGT’s policy to allocate the assets and liabilities of DMGT group’s defined benefit plan on a buy-out basis, the Group’s share of HPS’s
liability was recognised at 30 September 2016.
In October 2018, the High Court ruled in the Lloyds Banking Group case that UK pension schemes which had contracted out of
the State Earnings Related Pension Scheme will need to equalise benefits for the effect of unequal Guaranteed Minimum Pensions
(GMP) between men and women. The judgement also provided comments on the method to be adopted to equalise these benefits.
Assuming that there is not a successful appeal, it is expected that the ruling will result in a non-cash past service charge.
Due to the timing of this ruling, DMGT cannot yet estimate the impact on HPS with any reasonable certainty until the Scheme Actuary
has carried out a full impact assessment. This is expected before the 2019 interim results announcement. The MBPS had not contracted
out of the State Earnings Related Pension Scheme, and so is not impacted by the October 2018 High Court ruling in the Lloyds Banking
Group case.
Harmsworth Pension Scheme
HPS is a multi-employer defined benefit scheme operated by DMGT and closed to further accrual.
A full actuarial valuation of the scheme is carried out triennially by the scheme actuary. Prior to its closure to future accrual on 1 January
2016, DMGT made annual contributions of 12% or 18% of members’ basic pay (depending on membership section) to HPS. Following the
results of the latest triennial valuation as at 31 March 2016, DMGT agreed a Recovery Plan involving annual funding payments of £13.0m
on 5 October 2016 to 2018, £16.2m on 5 October 2019 to 2025 and £76.2m on 5 October 2026. DMGT considers that these contribution
rates are sufficient to eliminate the deficit over the agreed period. This Recovery Plan will be reviewed at the next triennial valuation due
to be completed with an effective date of 31 March 2019.
In February 2014, DMGT agreed with the Trustees that should it continue its share buyback programme, it would make additional
contributions to its schemes amounting to 20% of the value of shares purchased. No contributions relating to this agreement were made
in the years to 30 September 2017 and 2018.
139
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
27 Retirement benefit schemes continued
DMGT enabled the Trustees of HPS scheme to acquire a beneficial interest in a Limited Partnership investment vehicle (LP). The LP
has been designed to facilitate payment of £10.8m as part of the deficit funding payments described above over the period to 2026.
In addition, the LP is required to make a final payment to the scheme of £149.9m, or the funding deficit within the scheme on an ongoing
actuarial valuation basis at the end of the period to 2026 if this is less. For funding purposes, HPS’s interest 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 disclosures below.
DMGT expects to contribute approximately £18.3m to the scheme during the year to 30 September 2019 including the deficit funding
payments described above. The Euromoney Group expects to contribute £0.1m during the year to 30 September 2019.
The International Financial Reporting Interpretations Committee, in its document IFRIC 14, has interpreted the extent to which a
company can recognise a pension surplus on its Statement of Financial Position. Having taken account of the rules of the schemes, the
Group considers that recognition of surpluses in the schemes on its Statement of Financial Position would be in accordance with the
interpretation of IFRIC 14.
Northcliffe Trustees Limited (the Trustee) has been appointed by DMGT as an independent trustee to administer and manage the HPS
on behalf of the members in accordance with the terms of the HPS Trust Deed and Rules and relevant legislation (principally the Pension
Schemes Act 1993, the Pensions Act 1995 and the Pensions Act 2004).
Metal Bulletin Pension Scheme
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 1 June 2016. As a result of the 2016 valuation, the Group agreed to make annual contributions of 38.9% per annum
of pensionable salaries, plus £55,900 per month to the scheme over the period to 2022. 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 £0.7m to the MBPS during the year to 30 September 2019.
Pension Legacy Trustees Limited (the Trustee) has been appointed by Euromoney Global Limited as an independent trustee to administer
and manage the MBPS on behalf of the members in accordance with the terms of the MBPS Trust Deed and Rules and relevant
legislation (principally the Pension Schemes Act 1993, the Pensions Act 1995 and the Pensions Act 2004).
A reconciliation of the net pension obligation 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)/surplus reported in the Statement of
Financial Position
MBPS
£000
(44,940)
40,070
2018
HPS
£000
(24,016)
25,953
Total
£000
(68,956)
66,023
MBPS
£000
(49,737)
39,757
2017
HPS
£000
(25,044)
25,070
Total
£000
(74,781)
64,827
(4,870)
1,937
(2,933)
(9,980)
26
(9,954)
The deficit for the year excludes a related deferred tax asset of £0.5m (2017: £1.7m).
The movements in the defined benefit liability over the year is as follows:
2018
At 1 October 2017
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 financial assumptions
Gain due to change in demographic assumptions
Experience gain
Total losses recognised in Statement of Comprehensive Income
Contributions – employers
Contributions – plan participants
Payments from the plans – benefit payments
At 30 September 2018
140
Present value
of obligation
£000
Fair value of
plan assets
£000
Net defined
benefit liability
£000
(74,781)
64,827
(9,954)
(73)
(1,246)
(1,319)
–
3,314
1,796
83
5,193
–
(7)
1,958
(68,956)
–
998
998
1,302
–
–
–
1,302
847
7
(1,958)
66,023
(73)
(248)
(321)
1,302
3,314
1,796
83
6,495
847
–
–
(2,933)
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 27 Retirement benefit schemes continued
2017
At 1 October 2016
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 financial assumptions
Gain due to change in demographic assumptions
Experience gain
Total losses recognised in Statement of Comprehensive Income
Contributions – employers
Contributions – plan participants
Payments from the plans – benefit payments
At 30 September 2017
The major categories and fair values of plan assets are as follows:
Equities
Bonds
Liability Driven Investments
Property
With profits policy
Cash and cash equivalents
Present value
of obligation
£000
Fair value of
plan assets
£000
Net defined
benefit liability
£000
(71,174)
(77)
(1,089)
(1,166)
–
824
(4,249)
(48)
(3,473)
–
(8)
1,040
(74,781)
61,179
(9,995)
–
887
887
3,153
–
–
–
3,153
640
8
(1,040)
64,827
2018
£000
24,607
29,334
5,025
4,957
1,640
460
66,023
(77)
(202)
(279)
3,153
824
(4,249)
(48)
(320)
640
–
–
(9,954)
2017
£000
25,231
32,752
–
3,835
2,583
426
64,827
Equities include hedge funds and infrastructure funds. All the assets listed above, excluding property and 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 £2.3m (2017: £4.0m).
The key financial assumptions adopted are as follows:
Discount rate
Price inflation
Salary increases
Pension increases
MBPS
2018
%
2.80
3.15
2.50
3.00
2017
%
2.55
3.10
2.50
3.00
HPS
2018
%
2.80
3.25
2.50
3.10
2017
%
2.60
3.20
2.50
3.00
The discount rate for both scheme liabilities and the fair value of scheme assets reflects yields at the year-end date on high-quality
corporate bonds and are based on a cash flow-based yield curve, calculating a single equivalent discount rate reflecting the average
duration of the schemes liabilities, rounded to the nearest 0.05% p.a. This methodology incorporated bonds given an AA rating from at
least two of the four main rating agencies.
RPI inflation is derived in a similar way to the discount rate but with reference to the Bank of England spot curve at the duration of the
schemes weighted average duration with an appropriate allowance for inflation risk premium (MBPS: 0.30% p.a., HPS: 0.20% p.a.).
The nominal and real spot curves provided by the Bank of England were extrapolated up to 50 years using a bootstrapping method
which uses gilt price information provided by the UK Debt Management Office.
Mortality assumptions take account of scheme experience, and also allow for further improvements in life expectancy based on the
Continuous Mortality Investigation (CMI) projections but with a long-term rate of improvement in future mortality rates of 1.25% p.a.
and a smoothing parameter of 7.5. Allowance is made for the extent to which employees have chosen to commute part of their pension
for cash at retirement.
141
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
27 Retirement benefit schemes continued
The average duration of the defined benefit obligation at the end of the year is approximately 19 years for MBPS (2017: 16 years) and 18
years for HPS (2017: 20 years).
Assumed life expectancy in years, on retirement1
Retiring at the end of the reporting year:
Males
Females
Retiring 20 years after the end of the reporting year:
Males
Females
1 MPBS – 62 years; HPS – 60 years.
MBPS
2018
26.3
28.3
27.8
29.8
2017
26.9
29.0
28.8
31.0
HPS
2018
26.2
28.2
26.7
29.2
2017
26.4
28.3
26.8
29.2
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
Inflation rate
Salary increases
Life expectancy
Change in
assumption
Change in
liabilities
Increase by 0.1%
Decrease by 0.6%
Increase by 0.1%
Increase by 1.0%
Increase by 0.25%
Increase by 0.1%
Increase by one year
Increase by 3.5%
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this 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 at 1 June 2016 forward to 30 September 2018.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.
These are the significant risks in connection with running defined benefit schemes, and the key risks are detailed below:
Discount rate risk
The present value of the defined benefit obligation is calculated using a discount rate set with reference to high-quality corporate bond
yields. A decrease in corporate bond yields will increase the present value of the defined benefit obligation, although this will be partially
offset by an increase in the value of corporate bonds held by the schemes.
Inflation rate risk
A significant proportion of the defined benefit obligation is linked to inflation, therefore increased inflation will result in a higher defined benefit
obligation. The Trustees have sought to acquire certain assets with exposure to inflationary uplifts in order to negate a proportion of this risk.
Life expectancy risk
The present value of the defined benefit obligation is calculated with reference to the best estimate of the mortality of scheme members.
An increase in assumed life expectancy will result in an increase in the defined benefit obligation. Regular reviews of mortality
experience are performed to ensure life expectancy assumptions remain appropriate.
Investment risk
This is a measure of the uncertainty that the return on the schemes’ assets keeps pace with the discount rate. The schemes hold a
significant proportion of equities and similar ‘growth assets’, which are expected to outperform the discount rate in the long-term.
28 Contingent liabilities
Claims in Malaysia
Four writs claiming damages for libel were issued in Malaysia against the Group and three of its employees in respect of an article
published in one of the Group’s magazines, International Commercial Litigation, in November 1995. The writs were served on the Group
on 22 October 1996. Two of these writs have been discontinued. The total outstanding amount claimed on the two remaining writs is
Malaysian ringgit 83.4m (£15.5m). No provision has been made for these claims in these Financial Statements as the Directors do not
believe the Group has any material liability in respect of these writs.
European Commission Inspection
In January 2018, the European Commission conducted an unannounced inspection at the Brussels office of RISI Sprl (RISI), a wholly
owned subsidiary within the Group, as part of an investigation into the sector of kraft paper and industrial paper sacks in the European
Union/European Economic Area. A provision is made for the outcome of tax, legal and other disputes where it is both probable that the
Group will suffer an outflow of funds and it is possible to make a reliable estimate of that outflow. No proceedings have been issued and
the Group is unable to make a reliable estimate of any potential liability. Therefore, no provision has been recognised.
142
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 29 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)
(ii)
The Group had borrowings under a $160m multi-currency facility with Daily Mail and General Holdings Limited (DMGH), a
Daily Mail and General Trust plc (DMGT) group company. This facility was terminated on 29 December 2016. In 2017, fees on the
available facility for the year were £153k.
During the year ended 30 September 2017, the Group expensed services provided by DMGT and other fellow group companies of
£379k. From January 2017, the services expensed include a charge under the transitional service agreement with DMGT signed on
3 January 2017.
(iii) During the year ended 30 September 2017, 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 to DMGT group at end of year
2018
£000
–
–
–
2017
£000
387
516
387
(iv) On 8 December 2016, the Group acquired 0.3% of the equity of Euromoney Consortium Limited from DMG Charles Limited for a
cash consideration of £0.7m.
(v)
On 6 January 2017, the Group completed the off-market purchase of 19,247,173 ordinary shares from the DMGT group for
cancellation at a price of £9.75 per share. The transaction was approved by shareholders at the Company’s general meeting held
on 29 December 2016.
(vi) The Group participates in the Harmsworth Pension Scheme (HPS), a defined benefit scheme operated by DMGT. The Group’s share
of the HPS surplus is £1.9m (2017: £26k).
(vii) During the year, the Group provided services to Risk Management Solution Ltd, a DMGT subsidiary, for HKD1,336,936 (2017:
HKD1,046,608).
(viii) During the year, the Group’s equity shareholding in NDR increased to 100%. During the year ended 30 September 2017, NDR, a
subsidiary undertaking, leased office space at market rates from a separate entity, Bird Bay Properties, LLC, which is owned by a
previous minority shareholder of NDR. The amount paid was $0.6m.
(ix) During the year, the Group sold sponsorship revenue to Trepp LLC, a DMGT subsidiary, for $60k (2017: $39k).
(x)
The Directors who served during the year received dividends of £0.2m (2017: £0.2m) in respect of ordinary shares held in
the Company.
(xi) 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 and benefits
Post-employment benefits
Other long-term benefits (all share-based)
Of which:
Executive Directors
Non-Executive Directors
Divisional Directors
Details of the remuneration of Directors are given in the Directors’ Remuneration Report.
2018
£000
8,143
622
316
591
9,672
2,914
622
6,136
9,672
2017
£000
7,884
496
285
524
9,189
3,126
496
5,567
9,189
143
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
30 Events after the balance sheet date
The Directors propose a final dividend of 22.30p per share (2017: 21.80p) totalling £24.0m (2017: £23.4m) for the year ended
30 September 2018. The dividend will be submitted for approval by shareholders at the AGM to be held on 1 February 2019.
In accordance with IAS 10 ‘Events after the Reporting Period’, these Financial Statements do not reflect this dividend payable which
will be accounted for in shareholders’ equity as an appropriation of retained earnings in the year ending 30 September 2019.
On 23 October 2018, the Group disposed of Mining Indaba to ITE Group plc for a consideration of £30.1m. Given that the IFRS 5
‘Non-current Assets Held for Sale and Discontinued Operations’ criteria to be classified as held for sale have been met at 30 September
2018, the assets and liabilities of Mining Indaba have been disclosed separately on the face of the Consolidated Statement of Financial
Position. Mining Indaba contributed £7.3m to the Group’s revenue for the year ended 30 September 2018 (2017: £6.3m) and £3.8m to
the Group’s operating profit for the year ended 30 September 2018 (2017: £2.6m).
There were no other events after the balance sheet date.
144
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 31 List of Subsidiaries
In accordance with section 409 of the Companies Act 2006, a full list of subsidiaries, the registered office and the effective percentage of
equity owned included in these Consolidated Financial Statements at 30 September 2018 are disclosed below.
Company
Proportion
held
Principal activity
and operation
Registered Office
Euromoney Institutional Investor PLC
n/a Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
ABF1 Limited
ABF2 Limited
Adhesion Asia Limited
100% Dormant
100% Dormant
100% Dormant
Asia Business Forum (Thailand) Limited
100% Dormant
Asia Business Forum SDN. BHD
100% Dormant
BCA Research, Inc.
100% Research and data services
Bright Milestone Limited
100% Investment holding company
Business Forum Group Holdings Limited
100% Dormant
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
38/F, Hopewell Centre, 183 Queen’s Road East,
Wanchai, Hong Kong
No. 193/78 Lake Rajada Building, 19th Floor
Rajadapisek Road, Klongtoey district and Klongtoey
sub-district, Bangkok, 10110, Thailand
Suite 30C, 3rd Floor, Wisma TCL, 470, Jalan Ipoh, 51200
3rd Mile, Kuala Lumpur, Malaysia
1002 Sherbrook Street West, Montreal, Québec,
H3A 3L6, Canada
38/F Hopewell Centre, 183 Queen’s Road East,
Wanchai, Hong Kong
No. 193/78 Lake Rajada Building, 19th Floor
Rajadapisek Road, Klongtoey district and Klongtoey
sub-district, Bangkok, 10110, Thailand
Centre for Investor Education (UK)
Limited
100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Centre for Investor Education Pty Limited
100% Events
Level 8, 168 Lonsdale Street, Melbourne, VIC 3000,
Australia
EII (Ventures) Limited
EII Holdings, Inc.
100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
100% * Investment holding company Corporation Service Company, 251 Little Falls Drive,
EII US, Inc.
EIMN LLC
Euromoney BML Limited
Euromoney Bulgaria EOOD
100% Investment holding company Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
100% Events
Wilmington, DE 19808, United States
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
100% Shared service centre
Polygraphia Office Center. 47A Tsarigradsko Shose
Boulevard, 1124, Sofia, Bulgaria
Euromoney Canada Limited
Euromoney Charles Limited
100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Euromoney Consortium 2 Limited
100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Euromoney Consortium Limited
100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Euromoney ESOP Trustee Limited
100% Dormant
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Euromoney Global Limited
100% Publishing and events
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Euromoney Guarantee Limited
100% Dormant
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Euromoney Holdings Limited
Euromoney Holdings US, Inc
100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
100% Investment holding company Corporation Service Company, 251 Little Falls Drive,
Euromoney Institutional Investor (Jersey)
Limited
Euromoney Institutional Investor
(Shanghai) Limited
Wilmington, DE 19808, United States
100% † Publishing, training and events 15 Esplanade, St Helier, JE1 1RB, Jersey
100% Publishing, training and events Unit 305C, 3/F, Azia Center, 1233 Lujiazui Ring Road,
Shanghai, China
Euromoney Jersey Limited
100% # Investment holding company
15 Esplanade, St Helier, JE1 1RB, Jersey
Euromoney Luxembourg S.a.r.l
100% Investment holding company
295 rue de Neudorf, L-220 Luxembourg, Grand Duchy
of Luxembourg, Luxembourg
Euromoney Publications (Jersey) Limited
100% Investment holding company
15 Esplanade, St Helier, JE1 1RB, Jersey
Euromoney Services Inc
100% Research and data services
Euromoney (Singapore) Pte Limited
100% Events
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
8 Marina Boulevard, #05-02, Marina Bay Financial
Centre, 018981, Singapore
Euromoney Trading Limited
100% Publishing, training and events 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Fantfoot Limited
100% Investment holding company 8 Bouverie Street, London, EC4Y 8AX, United Kingdom
145
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Consolidated Financial Statements
continued
31 List of Subsidiaries continued
Proportion
held
Principal activity
and operation
Registered Office
100% Research and data
Mannerheimintie 40 D 85, 00100, Helsinki, Finland
Company
FOEX Indexes Oy
Fastmarkets Limited
Fastmarkets Pte Limited
Fastmarkets Inc
services
100% Publishing
100% Publishing
100% Publishing
GGA Pte. Limited
100% Dormant
Glenprint Limited
Global Commodities Group Sarl
100% Publishing
100% Events
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
600 North Bridge Road, #23-01 Parkview Square, 188778,
Singapore
310 Alder Road PO Box 841, Dover, Kent, DE 19904, United
States
8 Marina Boulevard #05-02 Marina Bay Financial Centre
Singapore 018981
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Rue Boulevard de Saint-Georges 72, 1205 Geneva,
Switzerland
Insider Publishing Limited
100% Dormant
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Institutional Investor Networks Inc
100% Publishing and events
Institutional Investor LLC
100% Publishing and events
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808 , United States
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808 , United States
Institutional Investor Networks UK Limited
100% Information services
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Internet Securities Argentina S.A.
Internet Securities Egypt Ltd
Internet Securities, Inc.
85% Dormant
100% Dormant
100% Information services
Suipacha 1111, Piso 11, Buenos Aires, Argentina
3 El Badia street, Off Al Thawra street, Heliopolis, Cairo, Egypt
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808 , United States
Layer123 Events & Training Limited
100% Events
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Metal Bulletin Holdings LLC
100% Investment holding
company
Corporation Service Company, 251 Little Falls Drive,
Wilmington, DE 19808, United States
Ned Davis Research, Inc.
100% Research and data
600 Bird Bay Drive West, Venice FL 34285, United States
services
PL Holdings LLC
100% Research and data
services
National Registered Agents, Inc. 160 Greentree Drive, Ste 101
Dover, DE 19904, United States
Random Lengths Publications, Inc
100% Research and data
PO BOX 867, Eugene, OR 97440, United States
services
Redquince Limited
100% Investment holding
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
Reinsurance Security (Consultancy).CO.UK
Limited
company
83% Dormant
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
RISI Asia (Hong Kong) Limited
100% Research and data
services
RISI Consulting Beijing Co Ltd
100% Research and data
services
RISI Consultoria em Productos Florestais
100% Research and data
services
Room 909, 9/F., Wayson Commercial Building,
28 Connaught Road West, Sheung Wan, Hong Kong
Room 1561,Unit 01-06, Floor 15, Section A, Building 9
Dongdaqiao Road, Chaoyang, Beijing, China
Rua Bernadino de Campos, nº 98, Sobreloja, Bairro Paraíso,
CEP 04004-040, São Paulo, Brazil
RISI Inc
RISI US (Holdco) Inc
100% Research and data
services
National Registered Agents, Inc. 160 Greentree Drive, Ste 101
Dover, DE 19904, United States
100% Research and data
services
National Registered Agents, Inc. 160 Greentree Drive, Ste 101
Dover, DE 19904, United States
RISI Sprl
100% Research and data
Avenue Louise 523, 1050 Brussels, Belgium
Shanghai Leadway E-commerce Co Ltd
100% Research and data
services
Steel First Limited
Site Seven Media Ltd
Storas Holdings Pte Ltd
services
100% Dormant
100% Publishing
100% Dormant
Room 907, No. 388, West Nanjing Road, Huangpu District,
Shanghai, China
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
38 Beach Road, #29-11 South Beach Tower, 189767,
Singapore
Tipall Limited
100% Property holding
8 Bouverie Street, London, EC4Y 8AX, United Kingdom
* 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.
146
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 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.
The dormant companies listed above are exempt from preparing individual accounts and from filing with the registrar individual
accounts by virtue of s394A and s448A of Companies Act 2006 respectively.
A list of associates, joint ventures and joint arrangements is disclosed in note 14.
For the year ended 30 September 2018, 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 Charles Limited
EII (Ventures) Limited
Euromoney Partnership LLP
Redquince Limited
Steel First Limited
Reinsurance Security (Consultancy) .CO.UK Limited
Euromoney Consortium Limited
Euromoney Consortium 2 Limited
Fastmarkets Limited
Glenprint Limited
Euromoney BML Limited
Euromoney Holdings Limited
Centre for Investor Education (UK) Limited
Layer123 Events & Training Limited
Company
registration
number
04082590
05885797
OC363064
05994621
04002471
04121650
04082769
03803220
03879279
02703517
10975335
10925251
01951332
07162466
147
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Company Balance Sheet
as at 30 September 2018
Fixed assets
Tangible assets
Investments
Debtors
Current assets
Debtors
Cash at bank and in hand
Creditors: Amounts falling due within one year
Net current (liabilities)/assets
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
Total shareholders’ funds
Notes
5
6
7
7
8
8
10
2018
£000
333
2017
£000
402
1,231,729
1,086,904
151,680
152,026
1,383,742
1,239,332
67,109
529
67,638
104,259
941
105,200
(145,150)
(77,512)
(103)
105,097
1,306,230
1,344,429
(978)
1,305,252
(214,073)
1,130,356
273
103,790
64,981
56
1,842
(20,462)
39,687
–
273
103,147
64,981
56
1,842
(21,005)
38,395
1,358
1,115,085
1,305,252
941,309
1,130,356
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 £208.2m (2017: £419.5m).
The Financial Statements on pages 148 to 154 were approved by the Board of Directors on 21 November 2018 and signed on its
behalf by:
Andrew Rashbass
Wendy Pallot
Directors
148
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Company Statement of Changes in Equity
for the year ended 30 September 2018
Share
capital
£000
Share
premium
account
£000
Other
reserve
£000
Capital
redemption
reserve
£000
Capital
reserve
£000
Reserve for
share-based
payments
£000
Own
shares
£000
Fair value
reserve
£000
Profit
and loss
account
£000
Total
shareholders’
funds
£000
1,842
(21,005)
37,334
1,358
745,517
–
419,457
933,191
419,457
At 1 October 2016
Profit for the year
Own shares acquired in
the year
Credit for share-based
payments
Cash dividends paid1
Exercise of share options
321
102,835
64,981
–
(48)
–
–
–
–
–
–
–
312
–
–
–
–
–
8
–
48
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,061
–
–
– (193,465)
(193,465)
–
–
–
–
1,061
(30,200)
(30,200)
–
312
At 30 September 2017
273
103,147
64,981
56
1,842
(21,005)
38,395
1,358
941,309
1,130,356
Profit for the year
Change in fair value of
cash flow hedges
Credit for share-based
payments
Cash dividends paid1
Exercise of share options
–
–
–
–
–
–
–
–
–
643
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
543
–
–
1,741
–
(449)
– 208,231
208,231
(1,358)
–
–
–
–
–
(1,358)
1,741
(34,361)
(34,361)
(94)
643
At 30 September 2018
273
103,790
64,981
56
1,842
(20,462)
39,687
– 1,115,085
1,305,252
1 Refer to the Group Financial Statements note 9.
The investment in own shares is held by the Euromoney Employees’ Share Ownership Trust and Euromoney Employee Share Trust.
The trusts waived the rights to receive dividends. Interest and administrative costs are charged to the profit and loss account of the trusts
as incurred and included in the Consolidated Financial Statements.
Euromoney Employees' Share Ownership Trust
Euromoney Employee Share Trust
Total
Nominal cost per share (p)
Historical cost per share (£)
Market value (£000)
2018
Number
58,976
1,656,575
1,715,551
0.25
11.93
23,091
2017
Number
58,976
1,700,777
1,759,753
0.25
11.94
20,607
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, a total of £144.1m (2017: £66.2m) is distributable to equity shareholders of the Company, comprising the share-
based payments reserve of £39.7m (2017: 38.4m) and £124.9m (2017: £48.8m) of the profit and loss account less £20.5m (2017: £21.0m)
in relation to own shares by virtue of s381 Companies Act 2006. The remaining balance of the profit and loss account of £990.2m
(2017: £892.5m) is not distributable.
149
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Company Accounts
Impairment of investments in subsidiaries
Impairment reviews are performed when there is an indicator that
the carrying value of an investment could exceed its recoverable
value, being the higher of value in use and fair value less costs of
disposal as outlined below:
• Value in use is derived from the discounted cash flows
attributable to the subsidiary. These cash flows are extracted
from Board-approved budgets. The discount rate is based on
the Group's pre-tax weighted average cost of capital, adjusted
to reflect the characteristics specific to the subsidiary, such as
geographical region and size; and
• Fair value less costs of disposal is intended to reflect what the
subsidiary would be worth if sold in an arm's-length transaction.
The fair value is determined by applying a multiple to the
subsidiary's results and cash flows. This multiple is determined
with reference both to the Company's past acquisitions and
disposals and to data obtained from independent sources.
When the carrying value of an investment is greater than both the
value in use and fair value less costs of disposal valuations, an
impairment is recognised in the Income Statement.
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 rate that reflects
current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
Share-based payments
The Company makes share-based payments to certain employees
which are equity-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 period end the vesting assumptions are
revisited and the charge associated with the fair value of these
options updated. The Company operates the Group’s PSP and
other Group share-based payment schemes, details of which can
be found in note 24 to the Group accounts.
1 Accounting policies
Basis of preparation
These Financial Statements have been prepared in compliance
with United Kingdom Accounting Standards, including Financial
Reporting Standard 102, The Financial Reporting Standard
Applicable in the UK and Republic of Ireland (FRS 102), and the
Companies Act 2006. The accounts have been prepared under
the historical cost convention and in accordance with applicable
United Kingdom accounting standards 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. The going concern basis has been applied
in these accounts. No operating segments have been disclosed as
the Company operates as one operating segment.
Disclosure exemptions
The Company satisfies the criteria of being a qualifying entity as
defined in FRS 102. Its Financial Statements are consolidated into
the Financial Statements of the Group. As such, advantage has
been taken of the following disclosure exemptions available under
FRS 102 in relation to share-based payments, financial instruments,
presentation of a cash flow statement, certain related party
transactions and the effect of future accounting standards not
yet adopted.
Leased assets
Operating lease rentals are charged to the profit and loss account
on a straight-line basis over the term of the lease.
Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated
depreciation and any recognised impairment loss. Depreciation of
tangible fixed assets is provided on a straight-line basis over their
expected useful lives at the following rates per year:
Short-term
leasehold improvements:
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 tax arises from timing differences that are differences
between taxable profits and total comprehensive income as stated
in the Financial Statements. These timing differences arise from the
inclusion of income and expenses in tax assessments in periods
different from those in which they are recognised in Financial
Statements. Deferred tax is recognised on all timing differences at
the reporting date except for certain exceptions. Unrelieved tax
losses and other deferred tax assets are only recognised when
it is probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits. Deferred tax
is measured using tax rates and laws that have been enacted or
substantively enacted by the period end and that are expected to
apply to the reversal of the timing difference.
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost less
impairment. Cost is adjusted to reflect amendments from
contingent consideration. Cost also includes directly attributable
cost of investment.
Interest in associates
Investments in associates are held at historical cost less
accumulated impairment losses.
150
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 1 Accounting policies continued
Own shares held by Employees’ Share Ownership Trust and Employees Share Trust
Transactions of the Group-sponsored trusts are included in the Group Financial Statements. In particular, the trusts’ holdings of shares in
the Company are debited direct to equity. The Group provides finance to the trusts to purchase Company shares to meet the obligation
to provide shares when employees exercise their options or awards. Costs of running the trusts are charged to the Income Statement.
Shares held by the trusts are deducted from other reserves.
2 Key judgemental areas adopted in preparing these Financial Statements
Investments
Investments are impaired where the carrying value is higher than the recoverable value of the investment, assessed as the greater of the
fair value less costs of disposal and the net present value of future cash flows prepared on a value in use basis. The recoverable value for
the investments in Euromoney Canada Limited and EII (Ventures) Limited has been determined using the fair value less costs of disposal
methodology by applying profit multiples from third party valuations and recent acquisitions. A 1% decrease in the valuation multiples
would increase the impairment charge by £5.8m. Investments held in the Statement of Financial Position at 30 September 2018 were
£1,231.7m (2017: £1,086.9m).
3 Staff costs
Details of Directors’ remuneration are set out in the Directors’ Remuneration Report on pages 56 to 74 and in note 6 to the
Group accounts.
The Executive Directors do not receive emoluments specifically for their services to this Company. There are no employees remunerated
by this Company (2017: nil).
4 Remuneration of auditor
Fees payable for the audit of the Company's annual accounts
5 Tangible assets
Cost
At 1 October 2017 and at 30 September 2018
Depreciation
At 1 October 2017
Charge for the year
At 30 September 2018
Net book value at 30 September 2018
Net book value at 30 September 2017
2018
£000
16
2017
£000
16
Short-term
leasehold
improvements
£000
701
299
69
368
333
402
151
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Company Accounts
continued
6 Investments
At 1 October
Additions
Disposal
Impairment
At 30 September
2018
Subsidiaries
£000
Total
£000
Subsidiaries
£000
2017
Investments
in associates
£000
Total
£000
1,086,904
1,086,904
1,182,802
31,955
1,214,757
193,452
193,452
–
–
–
–
–
(95,898)
(31,955)
(127,853)
(48,627)
(48,627)
–
1,231,729
1,231,729
1,086,904
–
–
–
1,086,904
For the financial year ended 2018, the Company subscribed to 100 new ordinary shares of $1 each in Fantfoot Limited for a total
consideration of $253m (£193.5m). The Company and its subsidiaries underwent capital restructuring which included receiving a
dividend of $303.8m (£232.7m) from Euromoney Canada Limited. Following the restructuring and the reallocation of certain central
costs, an impairment review was performed and investments in EII (Ventures) Limited and Euromoney Canada Limited were written
down to their fair value less costs of disposal, resulting in an impairment of £48.6m.
For the financial year ended 2017, the Company sold its shareholding in CEIC Holdings Limited and Diamond TopCo Limited to
Euromoney Publications (Jersey) Limited, a subsidiary of the Company, for a consideration of $159m.
Details of the principal subsidiary and associated undertakings of the Company at 30 September 2018 can be found in note 31 to the
Group accounts.
7 Debtors
Amounts falling due within one year
Amounts owed by Group undertakings
Other debtors
Corporate tax
2018
£000
2017
£000
66,843
266
–
101,072
572
2,615
67,109
104,259
Amounts owed by Group undertakings include loans totalling £28.2m (2017: £27.3m) with interest rates of 3.0% (2017: from 2.9% to 4.0%)
and repayable in September 2019. The remaining balance of £38.6m (2017: £73.8m) is interest free and repayable on demand.
Amounts falling due after more than one year
Amounts owed by Group undertakings
Other debtors
2018
£000
2017
£000
151,097
583
151,680
151,097
929
152,026
Amounts owed by Group undertakings include a loan of £151.1m (2017: £151.1m) with interest rate of 2.8% (2017: 2.8%) and repayable on
demand or in September 2022.
152
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 8 Creditors
Amounts falling due within one year
Amounts owed to Group undertakings
Provisions (note 9)
Corporate tax creditor
Accruals
2018
£000
(137,919)
(149)
(6,210)
(872)
(145,150)
2017
£000
–
(62)
–
(41)
(103)
Amounts owed to Group undertakings include a loan totalling £133.0m (2017: £nil) with an interest rates of 2.1% and repayable in
February 2019. The remaining balance of £5.0m (2017: £nil) is interest free and repayable on demand.
Amounts falling due after more than one year
Amounts owed to Group undertakings
Provisions (note 9)
Other creditors
2018
£000
–
(492)
(486)
(978)
2017
£000
(213,221)
(366)
(486)
(214,073)
In 2017, amounts owed to Group undertakings included three loans totalling £213.2m with interest rates from 1.6% to 4.5% and repayable
between February 2019 and December 2021. In 2018, two of these loans were repaid and the remaining loan classified as amounts
falling due within one year as the loan is repayable in February 2019.
9 Provisions
At 1 October 2017
Provision in the year
Used in the year
At 30 September 2018
Maturity profile of provisions:
Within one year
Between one and five years
Dilapidation
provisions
£000
Other
provisions
£000
274
–
–
274
154
223
(10)
367
2018
£000
149
492
641
Total
£000
428
223
(10)
641
2017
£000
62
366
428
The other provision consists of social security costs arising on share option liabilities. The dilapidation provision represents the Directors’
best estimate of the amount likely to be payable on expiry of the Company’s property leases.
153
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Notes to the Company Accounts
continued
10 Called up share capital
Allotted, called up and fully paid
109,180,729 ordinary shares of 0.25p each (2017: 109,101,608 ordinary shares of 0.25p each)
2018
£000
273
2017
£000
273
During the year, 79,121 ordinary shares of 0.25p each (2017: 35,425 ordinary shares) with an aggregate nominal value of £198
(2017: £88) were issued following the exercise of share options granted under the Company’s share option schemes for a cash
consideration of £642,612 (2017: £311,658).
11 Commitments and contingent liability
At 30 September, the Company has committed to make the following payments in respect of operating leases on land and buildings:
Within one year
Between one and five years
2018
£000
889
3,243
4,132
2017
£000
647
61
708
The operating lease cost is charged to the profit or loss account of a fellow Group company.
Cross-guarantee
The Company and certain other companies in the Euromoney Institutional Investor PLC Group have given an unlimited cross-guarantee
in favour of its bankers.
12 Related party transactions
Related party transactions and balances are detailed below:
(i) The Company had a $160m multi-currency facility with Daily Mail and General Holdings Limited (DMGH), a Daily Mail and General
Trust plc (DMGT) group company. This facility was terminated on 29 December 2016. In 2017, fees on the available facility for the year
were £153k.
(ii) Other than the transactions disclosed above and in note 3, the Company’s other related party transactions were with wholly owned
subsidiaries and so have not been disclosed.
(iii) In accordance with Section 409 of the Companies Act 2006, a full list of subsidiaries and partnerships, the registered office and the
effective percentage of equity owned are disclosed in note 31 to the Group accounts.
13 Post balance sheet event
The Directors propose a final dividend of 22.30p per share (2017: 21.80p) totalling £24.0m (2017: £23.4m) for the year ended
30 September 2018 subject to approval at the AGM to be held on 1 February 2019. 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
30 September 2019.
There were no other events after the balance sheet date.
154
Financial StatementsEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Five year record
Consolidated Income Statement Extracts
CONTINUING OPERATIONS
Revenue
Operating profit before acquired intangible amortisation,
long-term incentive (expense)/credit and exceptional items
Acquired intangible amortisation
Long-term incentive (expense)/credit
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 from continuing operations
DISCONTINUED OPERATIONS
Restated
2014
£000
Restated
2015
£000
Restated
2016
£000
2017
£000
2018
£000
372,443
368,612
366,062
386,923
390,279
112,351
(16,559)
(1,980)
2,630
96,442
264
(2,304)
94,402
(24,185)
70,217
97,986
(16,543)
2,490
34,184
118,117
(381)
281
118,017
(15,634)
102,383
91,358
(16,817)
–
95,253
(20,566)
–
103,198
(22,739)
–
(37,264)
(31,253)
81,396
37,277
(1,823)
(2,010)
33,444
(11,118)
22,326
43,434
(1,890)
(856)
40,688
(3,390)
37,298
161,855
157
(786)
161,226
(51,360)
109,866
Profit for the year from discontinued operations
5,648
3,303
8,687
5,889
91,342
PROFIT FOR THE YEAR
75,865
105,686
31,013
43,187
201,208
Attributable to:
Equity holders of the parent
Equity non-controlling interests
Basic earnings per share
Diluted earnings per share
Adjusted diluted earnings per share
75,264
601
75,865
59.49p
59.15p
70.60p
105,444
242
105,686
83.42p
83.38p
70.12p
30,544
469
31,013
24.31p
24.29p
66.51p
42,718
469
43,187
37.98p
37.91p
76.44p
201,069
139
201,208
187.18p
186.96p
81.30p
Diluted weighted average number of ordinary shares
127,236,311
126,460,787
126,584,778
112,704,904
107,545,653
Dividend per share
23.00p
23.40p
23.40p
30.60p
32.50p
Adjusted profit before tax
Adjusted profit after tax
116,155
90,433
107,810
88,920
102,529
84,463
106,462
86,617
109,179
87,569
Consolidated Statement of Financial Position Extracts
Intangible assets
Non-current assets
Accruals
Deferred income
Other net current assets
Non-current liabilities
Net assets
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
551,139
50,753
(73,375)
(118,786)
107,779
(40,009)
477,501
593,962
54,814
(67,819)
(116,978)
41,633
(208,815)
296,797
588,225
27,394
(64,143)
(120,404)
101,591
(39,046)
493,617
The five year record does not form part of the audited Financial Statements.
155
Additional InformationEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Shareholder information
Thursday 22 November 2018
Thursday 29 November 2018
Friday 30 November 2018
Friday 1 February 2019*
Friday 1 February 2019
Thursday 14 February 2019
Thursday 16 May 2019*
Thursday 23 May 2019*
Friday 24 May 2019*
Thursday 20 June 2019*
Thursday 21 November 2019*
Financial calendar
2018 final results announcement
Final dividend ex-dividend date
Final dividend record date
Trading update
2019 AGM (approval of final dividend)
Payment of final dividend
2019 interim results announcement
Interim dividend ex-dividend date
Interim dividend record date
Payment of 2019 interim dividend
2019 final results announcement
* Provisional dates and subject to change.
Company Secretary and registered office
Tim Bratton
8 Bouverie Street
London
EC4Y 8AX
England registered number: 954730
Shareholder enquiries
Administrative enquiries about a holding of Euromoney Institutional Investor PLC shares should be directed in the first instance to the
Company’s registrars, Equiniti:
Telephone: 0371 384 2951 Lines are open 8:30 a.m. to 5:30 p.m. (UK time), Monday to Friday, excluding English public holidays.
Overseas Telephone: (00) 44 121 415 0246
A number of facilities are available to shareholders through the secure online site www.shareview.co.uk.
Advisors
Independent Auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Brokers
UBS
5 Broadgate
London EC2M 2QS
Solicitors
Cameron McKenna
Nabarro Olswang LLP
78 Cannon Street
London EC4N 6AF
Registrars
Equiniti
Aspect House
Spencer Road, Lancing
West Sussex BN99 6DA
156
Additional InformationEuromoney Institutional Investor PLC Annual Report and Accounts 2018 Designed and produced by Radley Yeldar www.ry.com
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Euromoney Institutional Investor PLC
8 Bouverie Street
London EC4Y 8AX
www.euromoneyplc.com